COSMAG Pty Ltd (formerly known as Trugrade Pty Ltd) v Chembro Pty Ltd - [2012] WADC 128

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: COSMAG PTY LTD (formerly known as TRUGRADE PTY LTD) -v- CHEMBRO PTY LTD [2012] WADC 128

CORAM: SCOTT DCJ

HEARD: 3-5 APRIL 2012, 21 MAY 2012

DELIVERED : 20 AUGUST 2012

FILE NO/S: CIV 1993 of 2007

BETWEEN: COSMAG PTY LTD (formerly known as TRUGRADE PTY LTD)
Plaintiff
AND
CHEMBRO PTY LTD
First Defendant
PETER MICHAEL KEARNEY
Second Defendant
DENNIS KERRY McILWAIN
Third Defendant

Catchwords:

Whether enforceable guarantee - Appropriation of payments - Turns on own facts

Legislation:

Law Reform (Statute of Frauds) Act (WA) s 2

Result:

Judgment for plaintiff against second and third defendants for $76,646.01 and interest

Representation:

Counsel:

Plaintiff:     Mr R I Viner QC & Ms N Robinson
First Defendant              :     No appearance
Second Defendant         :     Mr A W Pass
Third Defendant            :     Mr A W Pass

Solicitors:

Plaintiff:     Mony De Kerloy
First Defendant              :     Not applicable
Second Defendant         :     Frank Unmack & Cullen
Third Defendant            :     Frank Unmack & Cullen

Case(s) referred to in judgment(s):

Allied Pastoral Holdings Pty Ltd v Federal Commissioner of Taxation [1983] 1 NSWLR 1
Alonso v SRS Investments (WA) Pty Ltd [2012] WASC 168
Browne v Dunn (1893) 6 R 67
Carr v JA Berriman Pty Ltd (1953) 89 CLR 327
Cory Brothers & Co Ltd v Owners of the Turkish Steamship 'Mecca' [1897] AC 286
Delaney v Purves [1930] QWN 6
Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8
Farrow Finance Co Ltd (in liq) v ANZ Executors and Trustee Co Ltd (1996) 23 ACSR 488
Jones v Dunkel (1959) 101 CLR 298
Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17
Scottish Amicable Life Assurance Society v Reg Austin Insurances Pty Ltd (1985) 9 ACLR 909
Toll (FGCT) Pty Ltd v Alpha Pharm Ltd (2004) 219 CLR 165
Village Cay Marina Ltd v Acland [1998] 2 BCLC 327

SCOTT DCJ:

Background

The plaintiff changed its name in 2009. During the course of these proceedings and in this judgment the plaintiff is referred to as Trugrade.
Trugrade at all material times carried on business importing cleaning cloths/wipes and other cleaning products and supplied them to distributors around Australia. It conducted its business in Western Australia.
The directors of Trugrade at all relevant times were Richard Kennedy and Patrick Kennedy.
The first defendant (Chembro) was de‑registered on 16 April 2010. It played no part in this trial.
The second defendant (Mr Kearney) and the third defendant (Mr McIlwain) were at all material times directors of Chembro.
Prior to March 2005 Power Protection Products Pty Ltd (Power Protection) trading as The Chemical Brokers (Chemical Brokers) carried on business in New South Wales during the course of which it bought products from Trugrade and on‑sold them. Chemical Brokers was not an appointed distributor of Trugrade.
During the period of about 10 months prior to March 2005 it had bought approximately $15,000 worth of Trugrade products for resale.
Trugrade operated its business from premises at O'Malley Street, Osborne Park in Western Australia but leased premises in Smithfield, Sydney comprising a warehouse and an office facility.
Roger Morrison (Mr Morrison) was in March 2005 employed by Trugrade in sales working from the warehouse and office facility in Smithfield. He was intending to resign from Trugrade.
On the pleadings there is no issue between the parties that:
(a)on 11 March 2005 a meeting was held between Patrick and Richard Kennedy, Mr Kearney and Mr McIlwain. The meeting was held in Trugrade's Osborne Park office;
(b)the purpose of the meeting was to discuss the prospect of Chembro taking on the representation of Trugrade on the east coast as a distributor;
(c)following an exchange of a number of emails, in a telephone conversation between Richard Kennedy and Mr McIlwain on or about 5 June 2005, Trugrade and Chembro agreed that Chembro would distribute Trugrade's goods to Trugrade's customers in New South Wales, Queensland and Victoria, commencing on 1 July 2005 in return for a commission/fee (distribution agreement) and that Chembro would sublease the Smithfield premises from Trugrade at a rental of $1,980 (inclusive of GST) per month;
(d)on or about 12 August 2005 a credit contract (credit contract) was entered into pursuant to which Trugrade was to supply goods to Chembro on credit. The terms of the credit contract were contained in two documents entitled 'Trugrade Pty Ltd – Customer Credit Application' dated 12 August 2005 and 'Trugrade Pty Ltd – Trading Terms';
(e)from on or about 1 July 2005 Trugrade supplied goods ordered by Chembro in accordance with the distribution agreement and/or the credit contract pursuant to which Trugrade would either:
(i)supply the goods directly to a customer if this was the customer's preference and then credit Chembro with commission in a sum being the difference between the price payable by Chembro to Trugrade for those goods and the price paid by the customer; or
(ii)supply the goods to Chembro which would then purchase those goods on credit and on‑sell the goods to a customer;
(f)between on or about 1 July 2005 and 12 June 2007 Chembro sub‑leased the Smithfield premises.

Pleadings

The pleadings at trial comprised:
1.Re‑amended substituted statement of claim dated 27 March 2012 (statement of claim).
2.Re‑amended defence dated 27 March 2012 (defence).
3.Amended reply (reply).

Issues

The issues which fall for determination in this action are as follows:
1.Whether Messrs Kearney and McIlwain guaranteed the liability of Chembro to Trugrade pursuant to the credit contract.
2.Whether Chembro agreed to pay Trugrade for the saleable stock in the warehouse as at 1 July 2005 the subject of a stocktake carried out by Mr Morrison on 30 June 2005 (warehouse stock) within three months of that date.
3.1.Whether there was an agreement reached between Mr Kearney and Richard Kennedy on 23 February 2006 that Trugrade would take back and Chembro would return to Trugrade a quantity of the warehouse stock totalling $38,628.01 and that Chembro would remain liable for the price of the balance of the warehouse stock viz $37,621.46.
3.2.Whether following 23 February 2006 Chembro used warehouse stock priced at $2,025.99 being part of the stock agreed to be returned to Trugrade (if there was such an agreement).
4.Whether there was a repudiation of the distribution agreement and/or the credit contract by Chembro on and from 1 November 2006, resulting in a termination of that agreement and/or contract.
5.Whether Chembro was entitled to commissions after 1 November 2006 and whether commissions credited by Trugrade to Chembro on invoices 9937, 9941, 9945 and 9960 were credited by mistake and were capable of being reversed by Trugrade.
6The amounts (if any) pleaded in par 9 and par 15 of the defence in respect of which the defendants dispute various sums claimed by Trugrade (par 9) and seek a set‑off (par 15).
7.The sum (if any) due by Mr Kearney and Mr McIlwain to Trugrade.

Failure by Mr McIlwain to attend or give evidence at trial

At the commencement of the trial, counsel for Messrs Kearney and McIlwain told me that Mr McIlwain would not be appearing on the first day of trial. Counsel said that he had received an email citing medical reasons but nonetheless his (counsel's) intention was to proceed with the trial.
Counsel said that his instructions were that Mr McIlwain had had a flare up of a 'herniated umbilical and associated problems'. He said that Mr McIlwain was in Sydney. I told counsel that it was a matter for him to make a decision as to whether he wanted Mr McIlwain to be available to listen to the evidence that was to be given on behalf of Trugrade and whether or not Mr McIlwain could give evidence by video‑link. The matter was left with counsel to raise the matter further with me if he wished. As it transpired, no application was made by counsel for Mr McIlwain and he played no part in the proceedings.
Counsel for Trugrade submitted that the failure by Mr McIlwain to give evidence at trial ought to result in an inference being drawn by me that his evidence would not have assisted the defendants' case. To that end he relied on the principles enunciated in Jones v Dunkel (1959) 101 CLR 298.
That rule might have no application if the failure on the part of Mr McIlwain to give evidence was adequately explained. Relevantly, if there was a reasonable explanation for his absence based upon illness, then that would be a matter which would militate against such an inference being drawn.
An opportunity was given to counsel to make an application for Mr McIlwain to participate in this trial by video‑link however no such application was made. Further, no application was made to adjourn the trial.
I am satisfied that there was no reasonable explanation for his failure to attend the trial and/or to give evidence. True it is that counsel informed me that he had been instructed that Mr McIlwain had suffered a flare up of a medical condition. There was however no supporting evidence of that condition and nor was there any explanation given as to why it was that any condition prevented him giving evidence in person or by video link.
Mr McIlwain was, I would have thought, an important witness in the defendants' case. He was present at the March 2005 meeting in which there is a dispute between the parties as to what was said, he was primarily the person who entered into communications with Richard Kennedy concerning the negotiation of the terms of the distribution agreement and was involved in other communications of relevance to the matters in issue in this trial.
With respect to certain issues in this case to which I later refer I am of the view that the failure on his part to give evidence leads to an inference that his evidence would not have assisted the defendants' case.

Failure to cross‑examine Richard Kennedy ‑ Browne v Dunn

In his closing submissions, counsel for Trugrade submits that there were a number of occasions upon which Richard Kennedy was not cross‑examined about matters in respect to which Mr Kearney subsequently gave evidence. As a consequence, Richard Kennedy was not given the opportunity to address the matters about which Mr Kearney later gave evidence. To that end, counsel for the plaintiff submits that the 'rule' in Browne v Dunn (1893) 6 R 67 (HL) ought to apply.
The rule was referred to by Hunt J in Allied Pastoral Holdings Pty Ltd v Federal Commissioner of Taxation [1983] 1 NSWLR 1, 16 as follows:
It has in my experience always been a rule of professional practice that, unless notice has already clearly been given of the cross‑examiner's intention to rely upon such matters, it is necessary to put to an opponent's witness in cross‑examination the nature of the case upon which it is proposed to rely in contradiction of his evidence, particularly where that case relies upon inferences to be drawn from other evidence in the proceedings. Such a rule of practice is necessary both to give the witness the opportunity to deal with that other evidence, or the inferences to be drawn from it, and to allow the other party the opportunity to call evidence, either to corroborate that explanation or to contradict the inference sought to be drawn.
If a court is to be invited to disbelieve a witness, the grounds upon which the evidence is to be disbelieved should be put to the witness in cross‑examination so that the witness may have an opportunity to offer an explanation: Village Cay Marina Ltd v Acland [1998] 2 BCLC 327, 338.
The consequence of a party failing to cross‑examine a witness on a particular matter may result in a number of possible consequences, one of which can be that the failure to cross‑examine the witness might be a very good reason for the judge to accept that witness's evidence, particularly if it is uncontradicted by other evidence. The basis being that it would usually be unfair to reject evidence on which there has been no cross‑examination where the rule in Browne v Dunn has not been complied with.
I will deal, specifically, with this issue when dealing with counsel's submissions on certain evidence.

Guarantee by Messrs Kearney and McIlwain

In its statement of claim, Trugrade pleads that:
(a)On 11 March 2005 Mr Kearney and Mr McIlwain met with Richard Kennedy and Patrick Kennedy at which meeting it was agreed that:
(i)Chembro would become Trugrade's distributor of its products in New South Wales, Queensland and Victoria (which was admitted);
(ii)Chembro would sublease the Smithfield premises and purchase, inter alia, such of Trugrade's existing stock as it required (the agreement to sublease was admitted but the agreement to purchase Trugrade's stock was denied); and
(iii)Mr Kearney and Mr McIlwain would personally honour any agreements made by Chembro with Trugrade (which was denied); (par 5)
(b)On or about 5 June 2005 Trugrade and Chembro entered into the distribution agreement (which was admitted) (par 6);
(c)On or about 12 August 2005 Trugrade and Chembro entered into the credit contract. The credit contract was in writing, the terms of which were contained in two pages, the first entitled 'Trugrade Pty Ltd – Customer Credit Application' dated 12 August 2005 and the second entitled 'Trugrade Pty Ltd – Trading Terms' (trading terms) (which was admitted) (par 8);
(d)By signing the first page of the credit contract on behalf of Chembro and themselves, Mr Kearney and Mr McIlwain personally guaranteed payment by Chembro to Trugrade of outstanding goods invoices (par 15) (which was denied).
In the defence, Mr Kearney and Mr McIlwain:
(a)Deny that at the meeting on 11 March 2005 they agreed to personally honour any agreements made by Chembro with Trugrade (par 4(b));
(b)Deny that they executed any valid personal guarantee in respect of the liability for goods supplied by Trugrade to Chembro.
In Trugrade's closing submissions, counsel submitted that:
(a)Clause 13 of the trading terms bound Messrs Kearney and McIlwain to personally guarantee the debts of Chembro arising under the trading terms;
(b)Clause 13 was but one term of the credit contract constituted by the application (first page) and the trading terms (second page);
(c)The reference to and signatures by Messrs Kearney and McIlwain in the credit application page bound Messrs Kearney and McIlwain to all of the trading terms which included cl 13.
In the second and third defendant's closing submissions, counsel submitted that:
(a)the first acknowledgement in the application, namely 'I acknowledge that I have read and understand Trugrade's contract terms endorsed hereon and agree that all transactions will be on the basis as set out in those terms' only referred to the application, ie, the first page and not the trading terms;
(b)the acknowledgment underneath the signatures on the application, namely 'We acknowledge receipt of, and have read page 2 of Trugrade's trading terms' did not result in any guarantee on their behalf without their signatures in that capacity in cl 13 of the trading terms;
(c)the first page comprised a credit application and the second page comprised the trading terms and given that there was provision in cl 13 of the trading terms for signature by Chembro and any purported guarantor, for Messrs Kearney and McIlwain to be bound in that capacity, they would need to have signed where there was provision in cl 13.
The credit contract is exhibit 20. The first page headed 'Trugrade Pty Ltd – Customer Credit Application' refers to Chembro as the 'Applicant'. There is then provision for the names of 'shareholders/proprietors' in respect to which the names and addresses of Messrs Kearney and McIlwain appear.
Underneath named referees, there appears the following:
I authorise Trugrade Pty Ltd to obtain credit and/or trading reference reports from named referees and/or other Credit Providing Bodies or from Credit Reporting Agencies at the date of this application. I acknowledge that I have read and understand Trugrade's contract terms endorsed hereon, and agree that all transactions will be on the basis as set out in those terms.
I do not accept the contention on behalf of Messrs Kearney and McIlwain that reference to Trugrade's contract terms 'endorsed hereon' refers only to the terms in the credit application. The reference must, on any reasonable construction, refer to the trading terms. There are no 'contract terms' in the credit application.
There is then the following:
Signed on behalf of ……. (Applicant)
Signed by applicant's shareholders/proprietors ......……. (Names) ………..
Date: 12.8.05
(We acknowledge receipt of, and have read page 2 of Trugrade's trading terms)
Chembro Pty Ltd is the name completed in the provision for the applicant and Mr Kearney and Mr McIlwain have signed as shareholders/proprietors.
The second page is headed 'Trugrade Pty Ltd – Trading Terms' under which there are 13 clauses.
Clause 13 is in the following terms:
13.Personal Guarantee
The Shareholders/Proprietors of the Customer personally guarantee the foregoing on behalf of the Customer.
Applicant ……………..
Signed by Applicant's Shareholders/Proprietors ………………..
Print names ……………………
This clause has not been completed by the inclusion of the name of Chembro as applicant or the signatures and printed names of Mr Kearney or Mr McIlwain as shareholders/proprietors.

Evidence as to guarantees

Patrick Kennedy

Patrick Kennedy is a director of Trugrade and worked primarily in sales. He met Mr Kearney and Mr McIlwain through Mr Morrison.
He said that his brother Richard's role was primarily in administration and purchasing stock from overseas.
In March 2005 he was at the meeting with Richard Kennedy, Mr Kearney and Mr McIlwain at Trugrade's premises in Osborne Park.
The purpose of the meeting was to discuss Chembro taking on representation for Trugrade on the east coast.
Chembro had a product in which Trugrade was interested, namely the Spillfix range being a line of absorbent products for oil spills, etc.
He said that he understood that Mr Kearney was primarily involved in administration and looked after the accounts and invoicing and Mr McIlwain was more involved in sales and promotion.
He said the meeting took two or so hours. He said that what was proposed was that Chembro would service Trugrade's existing customers and receive a commission from Trugrade's major customers, namely Metwood, Bunzl and one other whose name escaped him. It is common ground that that customer was Corporate Express.
He said that it was proposed that Chembro would take over the warehouse at Smithfield, hold stock there and Trugrade would send product to that warehouse. Trugrade would also purchase the Spillfix products from Chembro.
At the meeting Richard Kennedy produced a written credit application which was an application for Chembro to become an agent for Trugrade and included particulars of each of Mr Kearney and Mr McIlwain, references with respect to previous dealings and guarantees in addition to Trugrade's trading terms. The document contained two sheets (a blank copy is exhibit 1).
When Richard Kennedy showed Mr Kearney and Mr McIlwain the two sheets he pointed out where they were to sign on both sheets. Richard said that there needed to be a personal guarantee signed by both of them. He said that Richard referred to the need for a guarantee from both of them a couple of times.
In response, Mr McIlwain said in a throw‑away, humorous type comment, 'Don't you trust us', but they (Mr Kearney and Mr McIlwain) both said that they were fine, they would take the document back with them, fill out the other details, which they did not then have and send it back to Trugrade.

In response to Mr McIlwain's remark, he said that Richard or both Richard and he said that it was a standard procedure and that was how Trugrade dealt with all their clients and it was pretty standard in the industry.
The meeting ended amicably with the four of them shaking hands and saying, in effect, that they all looked forward to furthering their business relationships with each other.
Shortly after that meeting he said he visited Sydney and he introduced Mr McIlwain to Trugrade's clients.
When he received from Chembro the pricelist for the Spillfix products he queried the cost of the freight component with Mr McIlwain.
When the price was received it was quoted as being FIS on the east coast and FOB to Perth. The implication of the price being FOB to Perth meant that Trugrade would have to pay the freight from Sydney, for example, to Perth.
He said that he pointed that out to Mr McIlwain and Mr McIlwain agreed to a 7.5% discount on the price of the Spillfix products.
He said in cross‑examination that Power Protection had dealt with Trugrade before March 2005 but he did not recall whether there was any credit application and did not know if Mr Kearney and or Mr McIlwain had any personal guarantees. He said Mr Morrison would have probably set the arrangement up.
He said that the credit application was handed to Mr Kearney and Mr McIlwain at the meeting.
He said that his recollection was that Chembro would probably start on 1 July 2005.

Richard Kennedy

He was and is a director, secretary and shareholder of Trugrade. Trugrade had by March 2005 been in the business of selling cloths and wipes for about 20 years.
He looked after the administration and finance side in Trugrade.
Prior to March 2005 he had not met Mr Kearney or Mr McIlwain but had spoken to them. He was at the meeting in March 2005 at Trugrade's premises at Osborne Park. The meeting lasted a couple of hours or so.
The essence of the discussion was to give Chembro a list of Trugrade's customers in the eastern states to whom Chembro would sell Trugrade products.
He said that he gave a copy of the two‑page document (exhibit 1) to Mr Kearney who handed it on to Mr McIlwain. In cross‑examination he said that he did not recall whether Mr Kearney and Mr McIlwain took the credit application and trading terms away with them or whether the pages were stapled together.
He said he told Mr Kearney and Mr McIlwain that the document needed to be read and signed as personal guarantors by them and that it was standard practice that customers were given these documents to fill out. Mr Kearney said that that was okay.
Mr McIlwain made a remark about not trusting him in response to which Richard Kennedy said that it was standard practice and that he was sure that other suppliers would have expected them to do the same thing.
Mr Kearney and Mr McIlwain said that they would need to get the details necessary to complete the credit application from Sydney, they would fill it out and send it back when they had those details.
The meeting finished amicably with the four of them agreeing to carry out business together.
There then followed a number of emails backwards and forwards between him and Mr McIlwain with respect to the terms of the distribution agreement. Those emails are exhibits 13, 14, 15 and 16. The email of 2 May 2005 (exhibit 13) also refers to the credit contract being attached for signing and return.
By email dated 1 August 2005 (exhibit 17) from Richard Kennedy to Mr McIlwain (but addressed to Mr Kearney and Mr McIlwain), Richard Kennedy referred to a telephone conversation of that day and requested that the credit application be completed and signed on both pages with a copy being facsimiled and the originals mailed as soon as possible.
By email dated 9 August 2005 (exhibit 18) from Richard Kennedy to Chembro but addressed to Mr Kearney and Mr McIlwain, Richard Kennedy said 'As discussed, please complete both pages of attached CR applic; fax back copies and mail originals'.
By email dated 16 August 2005 (exhibit 19) from Richard Kennedy to Chembro addressed to Mr McIlwain, Mr Kennedy said (inter alia), 'Have you sent the CR Applic? P/s advise'.
Exhibit 20 is the credit contract comprising both pages and bearing the date 12 August 2005 (on page 1). I note from this exhibit that there are facsimile details dated 16 December 2005 on page 1 but not on the top of the second page being the trading terms.
In cross‑examination Richard Kennedy said that when the meeting in March 2005 ended not all points had been agreed. He agreed that before March 2005 Power Protection was dealing with Trugrade as were Chemical Brokers. He could not recall whether there were personal guarantees from Messrs Kearney and McIlwain with respect to Chemical Brokers.
Before 1 July 2005 Richard Kennedy agreed that they were dealing with the Chemical Brokers and issuing invoices to them. He said that he had not done a search of Chembro or Chemical Brokers. He considered them to be one and the same.
In re‑examination he said that before the March 2005 meeting, Trugrade had not conducted a great amount of business with Chembro or The Chemical Brokers or Power Protection.
He said that there was a difference between the business arrangement with the Chemical Brokers where that entity was buying a relatively small amount of stock and the appointment by Trugrade of Chembro as its distributor in the Eastern States in respect to which Trugrade gave Chembro a list of all of their customers.

Peter Kearney

Prior to March 2005 he said that Power Protection t/as the Chemical Brokers was buying and selling products from Trugrade. He was the sole director of Power Protection and Mr McIlwain was the sales manager.
Sometime before March 2005 a shelf company, namely Chembro, was purchased but it had not traded as at March 2005.
Until March 2005 he had not met Richard Kennedy but had spoken with him on the telephone. He had met Patrick Kennedy beforehand in Sydney.
When they left the meeting in March 2005 the intention as he understood it was that the parties would discuss the terms of an agency agreement and that they would do that progressively.
He said that the subject of the guarantee was not brought up at the meeting and they were not handed a credit application and terms and conditions.
Power Protection was already operating under a credit contact with Trugrade. There was no personal guarantee given by him to Trugrade with respect to Power Protection.
After the meeting in March 2005 there were a number of emails and telephone calls between Richard Kennedy, Mr McIlwain and himself endeavouring to settle on the terms of an agency agreement.
He said that after the meeting in March 2005 he and Mr McIlwain received a number of credit applications from Trugrade from in about April or May even before they had decided to go ahead. Given that they had not yet made a decision he did not pay too much attention to those documents.
He said he filled out the front page being the credit application and gave it to Mr McIlwain. The handwritten details on the front page are his.
He said he did not really take much notice of the next page (that is the trading terms) until Richard Kennedy rang him in about December 2005 and said that he had received page one and told Mr Kennedy that he had not signed page two. He said that he said 'Well, page two is giving personal guarantees. We didn't want to sign that'.
He said Richard Kennedy said 'Oh well, I need it signed' and Mr Kearney said 'Well, we're not prepared to sign it'. He said Richard Kennedy kept on saying 'I want it signed'.
This conversation was never put in cross‑examination to Richard Kennedy. It was, quite obviously, a conversation of great importance with respect to this issue as to whether any guarantees were given.
In cross‑examination he denied that Richard Kennedy presented him with a copy of the credit application in the meeting in March 2005. He said that Richard Kennedy did not produce a copy of that document at all.
He said that there were no financial arrangements discussed at that meeting in the event that they went into business. He said that the only discussion that they had was that he and Mr McIlwain thought they might end up with a separate entity and that Power Protection would finance it during that initial period. He did not know whether that was discussed at that meeting or not long after.
He said that after he signed the credit application before Mr McIlwain sent it back he did not give Mr McIlwain a written instruction that they would not give personal guarantees.
He said that when he had the telephone conversation with Richard Kennedy where Richard Kennedy said that he required page 2 to be signed and he (Mr Kearney) refused he did not regard it as a deal breaker at all. He said obviously Richard Kennedy did not either, otherwise he would have stopped the agency there and then.
He denied that at the March 2005 meeting Richard Kennedy said 'You will need to give your personal guarantees' whereupon Mr McIlwain said something like 'What, don't you trust us' and Richard Kennedy said 'It's not a matter of trusting you. It's normal business to require a personal guarantee'. He said that that conversation never occurred. He denied that he and Mr McIlwain said 'Well, that's ok. That's fine'.
The meeting was left he said with the intention of actually developing a dialogue to discuss the terms of an agreement. That was when all the emails passed between them and Trugrade.
He said that he read the credit application form and glanced at the trading terms but what loomed out at him was cl 13 and he and Dennis McIlwain were not happy with it.

Findings on evidence as to the guarantee

Where there is a conflict between the evidence of Richard Kennedy and Patrick Kennedy on the one hand and Mr Kearney on the other, I accept the evidence of Messrs Kennedy.
The evidence given by Richard Kennedy and Patrick Kennedy as to what was said at the 11 March 2005 meeting concerning the credit application and trading terms and the requirement for a guarantee from both Mr Kearney and Mr McIlwain was clear. Neither of them was shaken in cross‑examination.
Mr McIlwain did not give evidence. What was discussed at this meeting was obviously important. In my view the inference can reasonably be drawn that his evidence would not have assisted the case for him or Mr Kearney. Jones v Dunkel.
The matters discussed at the March 2005 meeting marked a significant difference in the nature and scope of the business arrangements which at that time had been in place between Trugrade and the entity or entities of which Mr Kearney was the principal.
The evidence given by Patrick and Richard Kennedy concerning the production of the credit application and trading terms was consistent with the emails which were subsequently forwarded to Mr McIlwain and Mr Kearney, namely exhibits 13, 17, 18 and 19. True it is that the word 'guarantee' was not referred to in those emails however this was a composite document comprising two pages. There was no emailed response from Messrs Kearney and McIlwain which I would have expected in the event that they were not prepared to be guarantors.
Mr Kearney said in his evidence that he noticed cl 13 in the trading terms and that he told Richard Kennedy on a number of occasions during a telephone call in December 2005 that both he and Mr McIlwain would not give personal guarantees and would not sign the second page. This conversation was not put to Richard Kennedy in cross‑examination. It was a significant conversation. I am not prepared to accept his evidence that it took place.
There was no evidence given by Mr Kearney that he had any specific discussion with Mr McIlwain to that end and Mr McIlwain gave no evidence from which I infer, given the importance of this issue, that Mr McIlwain's evidence would not have assisted his position or Mr Kearney's position on this issue. If it be the case that neither Mr Kearney nor Mr McIlwain were prepared to give personal guarantees, I would have expected there to have been some communication between them to that end.
I am satisfied that Mr Kearney and Mr McIlwain agreed at the March 2005 meeting to give personal guarantees in the event that Trugrade and Chembro entered into an agreement by which Chembro would service Trugrade's customers in the manner discussed. The evidence did not bear out the pleading in the statement of claim that that agreement was to personally honour any agreements made by Chembro with Trugrade.
In closing submissions, counsel for Messrs Kearney and McIlwain does not advance the argument that the signatures of Messrs Kearney and McIlwain as shareholders/proprietors on the first page of the credit contract were qualified in that they were affixed for and on behalf of Chembro.
The submission is that the failure on the part of Messrs Kearney and McIlwain to sign the second page of the credit contract, namely cl 13 of the trading terms, results in no guarantee being given by them because there was provision for them to sign that document in the event that the liability of Chembro pursuant to the credit contract was to be guaranteed by them.
The credit contract contains two pages. The question which falls for determination is whether by signing the first page as shareholders/proprietors but not cl 13, binds them as guarantors for the liability of Chembro to Trugrade pursuant to the credit contract having regard to the construction of the document and the surrounding circumstances.
Although the formal requirement in s 4 of the Statute of Frauds (incorporated in the Law Reform (Statute of Frauds) Act 1962 (WA), by s 2) has not been specifically pleaded by Messrs Kearney and McIlwain, it is relevant to make reference to that provision.
The formal requirement in s 4 of the Statute of Frauds is that a written memorandum or note be 'signed by the party to be charged therewith'.
To that end, in my view, the credit contract is one document comprising the two pages. As I have earlier observed, the second page to exhibit 20 would not appear to have been facsimiled to Trugrade with page 1 on 16 December 2005. Nonetheless I am satisfied that Messrs Kearney and McIlwain were handed both pages at the March 2005 meeting and in addition received both pages under cover of the email of 2 May 2005 (exhibit 13).
In Delaney v Purves [1930] QWN 6 in which Macrossan SPJ said:
I am of the opinion that the document is one single and indivisible whole, and that the signatures of the defendants, even as directors merely, would be sufficient to bind them as sureties …
The question is not one of intention but simply one of evidence against them …
That decision was approved by Mahoney JA in the majority of the New South Wales Court of Appeal in Scottish Amicable Life Assurance Society v Reg Austin Insurances Pty Ltd (1985) 9 ACLR 909.
The credit contract was reduced to a written form. The question as to the enforceability of any alleged guarantee requires consideration of the construction of the credit contract and the circumstances surrounding that contract.
An intention to be legally bound in the capacity as a guarantor is not answered by reference to a person's thoughts or intentions. The relevant intention is an intention objectively manifested: Alonso v SRS Investments (WA) Pty Ltd [2012] WASC 168, 46 and the cases therein referred to.
The intention is manifested in light of the 'subject matter of the agreement, the status of the parties to it, their relationship to one another and other surrounding circumstances': Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8.
In Scottish Amicable v Reg Austin, McHugh JA said at 923:
The formation of a contract does not depend upon the actual intention of the parties. A contract exists because the law attaches rights and obligations to the external conduct of the parties, one at least of whom has expressly or impliedly made a promise …
The meaning which a party intends that his words or conduct should have is irrelevant. Words and conduct are interpreted according to what was said and not according to what was meant …
The present case, therefore, depends on what the parties did and not what they intended to do when they signed the Indemnity and the Agency Agreement. And what they did depends on the construction to be placed on the documents which they signed. A commercial document, however, must be construed in its commercial setting – in accordance with the surrounding circumstances known to the parties.
The High Court said in Toll (FGCT) Pty Ltd v Alpha Pharm Ltd & Ors (2004) 219 CLR 165, 179.40:
This court, in Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe …
The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction.
In my view Messrs Kearney and McIlwain are liable as guarantors of the liability of Chembro to Trugrade pursuant to the terms of the credit contract which regulated the supply of goods to or at the direction of Chembro.
As to the two‑page document itself:
(a)on the first page headed 'Customer Credit Application':
(i)the applicant is referred to as Chembro Pty Limited.
(ii)the names of Mr Kearney and Mr McIlwain and their respective addresses appear in the description of shareholders/proprietors.
(iii)both Mr Kearney and Mr McIlwain signed as shareholders/proprietors and acknowledged receipt of and having read page two being the trading terms, and confirmed having read and understood those terms and further agreed that all transactions would be on the basis as set out in those terms.
(b)as to the trading terms, cl 13 provides under the heading 'Personal Guarantee – reference to the applicant's shareholders/proprietors' being the same description of Messrs Kearney and McIlwain which appeared on the first page.
As to the surrounding circumstances, I take into account that this was a commercial transaction between Trugrade and Chembro pursuant to which Trugrade was to provide a list of its customers to Chembro with whom Chembro via Messrs Kearney and McIlwain would deal. Chembro was, as part of the overall arrangement, to acquire goods on credit and I accept that it was a usual commercial practice on the part of Trugrade to require personal guarantees from those in control of a corporate entity.
As I have already found, at the March 2005 meeting Messrs Kearney and McIlwain agreed to personally guarantee the liability of Chembro to Trugrade if an overall agreement was reached between them. Further, I am satisfied that notwithstanding the emails from Richard Kennedy requiring the execution and return of the two‑page credit contract, Messrs Kearney and McIlwain did not at any stage inform Richard or Patrick Kennedy that they were not going to act as guarantors. I am satisfied that the two page document was handed to Mr Kearney at the March 2005 meeting and in any event a copy was emailed to Mr McIlwain on 2 May 2005 (exhibit 13).
In all the circumstances I am satisfied that by completing the credit contract and affixing their signatures on the first page thereof, Messrs Kearney and McIlwain were bound as guarantors in respect to the liability of Chembro pursuant to the credit contract. That is, for goods supplied by Trugrade to Chembro.
Counsel for Trugrade conceded that the personal guarantees do not extend to the liability on the part of Chembro to pay rent for the Smithfield premises.

Stock in the Smithfield warehouse

It is common ground that on 30 June 2005 Mr Morrison did a stocktake at the Smithfield warehouse. Messrs Kearney and McIlwain were not invited to attend that stocktake.
The stocktake figure compiled by Mr Morrison was $76,249.47. By email dated 26 February 2007 from Mr Kearney to Richard Kennedy (exhibit 27), Mr Kearney referred to Mr Morrison's stocktake of 30 June 2005 and said:
We therefore consider the stocktake to be an accurate account of the stock at the time that we took over Smithfield.
Richard Kennedy said that the terms of the distribution agreement were agreed on 5 June 2005 following exchanges of emails and a number of telephone conversations primarily between him and Mr McIlwain.
The relevant emails relating to the negotiations and finalisation of the distribution agreement are as follows:
(a)By email dated 2 May 2005 from Richard Kennedy to Mr McIlwain (but addressed to Mr McIlwain and Mr Kearney) (exhibit 13) Richard Kennedy requested that they peruse a draft agreement contained in that email which provided (inter alia):
Your company undertakes to:
- purchase all stock at Trugrade's Britton Street, Smithfield warehouse
(b)By email dated 11 May 2005 from Mr McIlwain to Richard Kennedy with a cc to Mr Kearney (exhibit 14) Mr McIlwain said:
Gidday Richard
Howsa bout these terms and Conditions …
6.We agree to purchase all saleable stock presently in your Smithfield warehouse.
(c)By email dated 17 May 2005 from Richard Kennedy to Mr McIlwain (exhibit 14), Richard Kennedy added to par 6 the words 'within 3 months'.
(d)An email dated 30 May 2005 from Mr McIlwain to Richard Kennedy (exhibit 15) incorporated an email from Richard Kennedy dated 28 May 2005 containing par 6 in these terms:
6.Chembro agrees to purchase all saleable stock presently in Trugrade's Smithfield warehouse within 3 months.
In that email Mr McIlwain made reference to pars 15 and 16 of Mr Kennedy's email of 28 May 2005 which related to the sale to large volume order customers. There is no reference by Mr McIlwain to par 6.
(e)By an email dated 5 June 2005 (3.02 pm) from Mr McIlwain to Richard Kennedy (exhibit 16) Mr McIlwain advised:
Spillfix is the name.
On the same day at 4.53 pm, Richard Kennedy responded:
Hi Dennis – try this on for size. Remembered what you had previously mentioned about Skillfix manufacturer so added 16.
Hopefully this is it.
Clause 6 was retained in the same terms as appeared in exhibit 15.
There was then no further emailed response. In the defence, the defendants admit that on or about 5 June 2005 Trugrade and Chembro entered in to the distribution agreement.
Mr Kearney said in evidence that there was no agreement on the part of Chembro to purchase the saleable stock in Trugrade's Smithfield warehouse within three months. He said that he and Mr McIlwain were not interested in buying the stock and that his understanding of the term 'saleable stock' was stock that they could actually feel that they could sell but, at the time, they had no knowledge of the market and did not know what the customer requirements were going to be and did not accept that term. As a consequence he said that a final agreement was never actually made because the terms of purchasing the warehouse stock within three months was never accepted.
I do not accept the evidence of Mr Kearney. Putting aside for the moment what is meant by 'saleable stock', I am of the view that if par 6 relating to the warehouse stock was not agreed then inevitably, there would have been an emailed response by Mr McIlwain to that effect. There was no emailed response. In addition Mr McIlwain did not give evidence and I infer, for reasons already expressed, that his evidence would not have assisted the defendants.
I am satisfied that Chembro agreed to purchase the saleable warehouse stock within three months of 1 July 2005 for the sum of $76,249.47. That obligation to purchase stock was within the terms of the credit contract – varied as to payment in accordance with par 6 of the distribution agreement.
Richard Kennedy gave evidence that he sought payment of the sum of $76,249.47 on a number of occasions but it was not paid. I accept his evidence.
There is no need to make a determination as to what was meant by the words 'saleable stock' because of what I find to be an agreement reached on 23 February 2006.
Richard Kennedy said that on 23 February 2006 he met with Mr Kearney at the Smithfield warehouse. He said that he told Mr Kearney that Trugrade would give Chembro a credit for any stock in the warehouse that Chembro did not want and Chembro should return that stock to Trugrade. He said Mr Kearney agreed.
He said that he and Mr Kearney went through the stock at the warehouse and he wrote down details of the stock that Chembro did not require. The handwritten list is exhibit 24. Chembro's facsimile number is handwritten on that list.
He said that he then raised a credit note (8426 – exhibit 25) against the sum of $76,249.47 and then an invoice (8978) listing the balance of the stock in the Smithfield warehouse to be returned by Chembro to Trugrade totalling $38,628.01 (exhibit 26).
The memo on invoice 8978 states:
Stock to be ret'd by Chembro as agreed Peter and Richard 23/02/06
This left a balance due by Chembro in the sum of $37,621.46.
As to the meeting on 23 February 2006 at the warehouse, Mr Kearney said that that meeting resulted from Richard Kennedy continually asking them to purchase the stock in the warehouse and as a consequence, he asked Richard Kennedy to come to Sydney to inspect the stock. Mr Kearney said that some of the stock was rain damaged and obsolete.
He said that Richard Kennedy did not accept that there was rain damaged stock and wanted to come over and have a look at it.
An intensive stocktake was undertaken at the warehouse and he identified rain damaged and dormant stock and when they had finished, Richard Kennedy said that he would send a credit for that stock and asked Mr Kearney to give him an order for the remaining stock to which Mr Kearney said that he refused. He told Richard Kennedy that they did not know what stock they wanted to keep and they were not interested in what had been left and what was dormant.
He said that he told Richard Kennedy that he and Mr McIlwain would speak with Richard Kennedy about the market place and then make a decision.
He said it was the rain damaged and dormant stock which was to be returned to Perth. He said that he asked Richard Kennedy when he wanted that stock to be sent and Richard Kennedy asked him not to send it straight away because they did not have enough space in the Perth warehouses.
Mr Kearney said that he told Richard Kennedy that he should let them know when he wanted it back and they would arrange it.
Richard Kennedy said that the purpose of him meeting with Mr Kearney on 23 February 2006 was as a goodwill gesture for the purpose of informing him that whatever stock they did not want, he would take it back.
He denied that Mr Kearney said that he would talk to Mr McIlwain about the stock which would remain in the warehouse and then think about what they would do with it and said that in accordance with the distribution agreement Chembro had already agreed to purchase the warehouse stock.
He denied that he told Mr Kearney not to send the stock straightaway because he did not have room to store it. He said he would not give someone a credit and then not expect the stock to be returned.
He denied seeking an order from Mr Kearney for the stock remaining in the warehouse because Chembro had already agreed to purchase it. His evidence is supported by the fact that he raised credit note 8426 and invoice 8978.
He denied that there was any rain damaged stock at the warehouse.
By email on 13 April 2006 from Richard Kennedy to Mr Kearney, (exhibit 31) Richard Kennedy said 'Please advise when you will return the unwanted stock on the list we compiled when I was in Syd'.
That email is not consistent with the evidence given by Mr Kearney that Richard Kennedy did not have room for the returned stock and would advise him when he wanted the stock returned. The only reasonable interpretation of this email is Richard Kennedy seeking Mr Kearney's advice as to when the unwanted stock was to be returned as agreed when he was in Sydney. There was no response to this email.
Exhibit 29 is a copy of Trugrade's age receivables dated 9 March 2006 upon which there is a handwritten note from Richard Kennedy to Mr Kearney in which he seeks a payment schedule for the outstanding amount of $172,278.21. In that document there is, as the first item, invoice 8426 in the sum of $76,249.47 and the last item, invoice 8978 being a credit for $38,628.01. That document was facsimiled to Mr Kearney. It is consistent with the evidence of Richard Kennedy concerning the agreement struck on 23 February 2006.
There was no response from Mr Kearney or Mr McIlwain disputing the sum of $76,249.47, or the credit. I am of the view that if these items were in dispute it is likely that there would have been a response.
I have elsewhere made comment about matters of credibility relating to the evidence of Mr Kearney.
My overall impression of him was that he was not a credible witness. As I have observed, his evidence, on a number of occasions, was not supported by emails and other documentation which I would have expected to have existed.
In light of that observation and the matters to which I have referred above concerning this issue as to the meeting on 23 February 2006, I accept the evidence of Richard Kennedy where it is in conflict with the evidence of Mr Kearney.
The only inference which I can reasonably draw from the evidence I accept is that the balance of the stock was acceptable to Mr Kearney.
I am satisfied that following the meeting on 23 February 2006. Chembro was obliged to pay for the stock for which there was no agreed credit viz $37,621.46.
Finally, with respect to the issue of the warehouse stock, Richard Kennedy gave evidence that after Chembro vacated the Smithfield premises in June 2007, he undertook a stocktake at the warehouse and compiled a reconciliation as at 20 June 2007 (exhibit 47) in which he listed stock which was to have been returned to Trugrade consequent upon the stocktake taken on 23 February 2006 but which was not then in the warehouse. He then raised an invoice for the missing stock for $2,025.99, (invoice 10293 (exhibit 48)). I accept that evidence from Richard Kennedy. Mr Kearney said in evidence that the first time he saw invoice 10293 was after the writ was served. That may be so however I accept Richard Kennedy's evidence that this stock was missing from the warehouse when he did the stocktake.
I am satisfied that Chembro is liable to Trugrade for the sum of $37,621.46 plus $2,025.99 namely $39,647.45.

Whether repudiation/termination in November 2006 – Reversal of Commissions

Trugrade's contention is that by reason of the continued failure on the part of Chembro to pay the sums due by it, Chembro repudiated the credit contract and distribution agreement and that repudiation was accepted thereby terminating both agreements as and from 1 November 2006.
The evidence from Richard Kennedy was that Trugrade used MYOB software which took into account stock coming in and going out and was used for invoicing, reconciling, creating aged debtors' lists and receipts.
Richard Kennedy said that he would undertake the day‑to‑day invoicing in addition to which Trugrade had a bookkeeper who would reconcile the books at the end of each month. The bookkeeper was an accredited MYOB expert and user.
He said that whilst it appeared to him that Chembro was using MYOB as well, it appeared to be using it like a service industry software which did not account for stock movements.
He said that his observation was that the use of that software resulted in a situation that when an invoice was raised it could not show stock coming out because there was no stock in.
He said that he made that observation because of the nature of the queries which were made from time to time by Mr Kearney with respect to accounting issues.
On the other hand Mr Kearney said in evidence that his role at Chembro was primarily administration. He said that Chembro's accounts system was the same as Trugrade's. It was a MYOB premier version and was employed as an inventory based system.
He said that Chembro employed an accounts clerk, Nicola Thompson who was a qualified accountant who had worked for BHP in its accounts department. She handled the accounts as they came in from time to time.
Richard Kennedy said that after three months had elapsed after 1 July 2005 he began regularly asking for payment of the sum of $76,249.47, being the sum due on the stocktake undertaken by Mr Morrison. The amount was not paid and subsequently he met with Mr Kearney at the Smithfield warehouse on 23 February 2006 in the manner to which I have already referred.
He said that from February 2006 payment from Chembro became very tardy and that he was constantly requesting payments from Chembro.
He said that the payments made by Chembro were usually lump sum payments which he would apply to the oldest invoice.
He said that on 10 March 2006 he facsimiled a copy of Trugrade's Aged Receivables (exhibit 29) showing the sum due by Chembro to be $172,278.21 upon which there was a handwritten note seeking a payment schedule which would bring the sum due up to date.
Subsequently a copy of Trugrade's Aged Receivables dated 13 April 2006 showing a balance due by Chembro of $194,615.25 (exhibit 30) was forwarded to Chembro.
Richard Kennedy said that there were queries raised by Mr Kearney from time to time to which he responded.
He said that the last goods invoiced to Chembro were on 20 October 2006 being invoice 9564 (exhibit 40) and that Trugrade did not thereafter conduct any further business with Chembro.
Exhibit 79 is a document prepared by Chembro for trial, about which there was no dispute, listing payments by it to Trugrade. That schedule shows that apart from specific rent payments, the majority by far of the payments made by Chembro to Trugrade were lump sum payments rather than payments on an invoice by invoice basis. The payments were:
March 2006:  $15,000.00
April 2006:$15,000.00
June 2006:$20,000.00
July 2006:$20,000.00
August 2006:  $20,000.00
9 August 2006:  $ 3,049.20
September 2006:  $20,000.00
October 2006:  $10,000.00
November 2006:  $20,000.00
January 2007:  $10,000.00
Richard Kennedy said that the last payment from Chembro was the sum of $10,000 paid in January 2007. He said that he then instructed CCI Legal to recover the sum due by Chembro and Messrs Kearney and McIlwain as a consequence of which that firm wrote a letter of demand.
Exhibit 43 is a response to the letter of demand by email from Mr Kearney in which Mr Kearney said that they had been attempting to reconcile the matter of outstanding monies with Richard Kennedy for some time. He said that Trugrade had embarked on an unusual and highly unorthodox accounting system which from the start he felt was inept and they could not hold any confidence with the stated amounts owing.
Richard Kennedy said in his evidence that Trugrade had used the MYOB software in its business for a number of years and had not previously experienced any difficulty with that software.
Mr Kearney gave evidence that the difficulties in reconciling the sum due from time to time was due to Trugrade's accounting system. I do not accept that evidence as being credible nor accurate. I do not find that any difficulties said by Mr Kearney to require reconciliation were due to the deficiencies in Trugrade's accounting system. Rather any difficulties were in my view likely due to the manner in which Chembro accounted for transactions between the parties in the use of its own systems and/or were a means of justifying tardy payments.
That finding is borne out by the inconsistencies in the various claims made by Chembro as to the accounting position between the parties leading up to and during the course of this trial.
To that end:
(a)in his email to CCI Legal dated 18 May 2007 (exhibit 43) Mr Kearney asserted that Trugrade owed Chembro 'some $20,000' for goods and services dating as far back as September 2005;
(b)in the defence dated 29 January 2008 Chembro denied owing any sum to Trugrade;
(c)in its counterclaim dated 24 September 2008 (now part of the set‑off) Chembro claimed Trugrade owed it $54,260.89;
(d)in its defence dated 9 July 2010 Chembro alleged that it had overpaid Trugrade $82,730.92;
(e)in its letter of 16 November 2010 (exhibit 85) the solicitors for Chembro asserted that Chembro had overpaid Trugrade $84,277.63;
(f)in the defence filed 27 March 2012 Chembro admitted underpaying Trugrade $47,092.88; and
(g)during the trial and reflected in sch B to the defendant's closing submissions that figure of $47,092.88 was altered to $53,280.04.
During the course of being cross‑examined about lump sum payments made by Chembro Mr Kearney acknowledged that it was clear from Chembro's remittance advices that Chembro was paying by lump sum invoices that were months and months old. He said that he and Richard Kennedy went through the invoices as a process of reconciling the sums due and when they were both happy with the amounts, the invoices were paid (ts 270).
He said that the lump sum payments followed a progression of reconciliations which resulted in the cheques being issued (ts 271).
He said that there were a number of emails that went backward and forward with queries and answers following which payments were made on the basis of reconciliations then reached.
Mr Kearney said that there would be emails about two weeks before each payment was made reflecting the agreed reconciliations. When given the opportunity during the course of this trial to locate those emails his counsel said that they had not been able to come up with any particular email.
I reject the evidence of Mr Kearney in this regard. The sums sought by Trugrade had to a significant extent been outstanding for a considerable period of time and in the main well past the time for payment. The remittance advices bear out the fallacy of Mr Kearney's explanation that once invoices in dispute were reconciled payment was made. The remittance advices are contained in exhibit 84. They demonstrate that most payments were made by lump sum and invariably well after the date of invoices reflected in those remittance advices.
In addition the remittance advices show that on many occasions the payments made were in part payment only of invoices. For example, the remittance advice of 17 March 2006 in which a lump sum payment of $15,000 was made shows that that sum was allocated to invoices for goods the first of which was 8536 dated 8 September 2005 in respect to which the invoice was in the sum of $10,751.40, previous payments totalled $3,139.95 and the current payment was the sum of $7,611.45.
In remittance advice 1078 dated 9 June 2006 accompanying a payment of $20,000 there appears invoice 8656 dated 1 November 2005 for $1,980 being for rent. Rent payments had never been the subject of dispute between the parties and yet this sum was paid more than six months after it fell due and could not, it would seem, to have followed discussion and agreed reconciliation.
I accept the evidence of Richard Kennedy that he was continually seeking payment and that payments were made sporadically by Chembro in lump sums.
The contractual obligation of Chembro to pay for goods purchased on credit was contained in the credit contract which was varied as to the date for payment by the distribution agreement.
In the trading terms cl 2 provides 'unless otherwise agreed in writing, the company's terms of payment are net cash payable by end of the month following the month of delivery which shall be construed as the due date'.

Clause 7 of the distribution agreement (exhibit 16) varies the credit contract such that Chembro's obligation to effect payment of all Trugrade invoices was within 45 days from the end of the month that the invoices were processed.
Whilst I accept that there were queries raised by Mr Kearney on a number of occasions with respect to the supply of goods those queries together with any relevant supporting materials were answered within a short time by Richard Kennedy.
In my view by reason of continued defaults in payment, by 1 November 2006 there had been clear breaches of the credit contract amounting to repudiatory conduct on the part of Chembro.
It is clear from the evidence that on or about 1 November 2006 Richard Kennedy told Mr Kearney that Trugrade was not going to extend further credit to Chembro. As a fact no goods were thereafter sold by Trugrade to Chembro on credit. Notice of Trugrade's election to terminate the credit contract by Chembro's repudiation was given.
The position with respect to the distribution agreement after 1 November 2006 is in my view a different issue.
Trugrade submits that the credit contract and the distribution agreement are essentially part of the overall agreement between Trugrade and Chembro and that Trugrade was entitled at common law to terminate the credit contract and the distribution agreement by reason of Chembro's repudiatory conduct in failing to pay sums due by it.
In the event that Chembro was in breach of the distribution agreement such that the breach amounted to a repudiation on the part of Chembro then Trugrade would have an election to terminate the distribution agreement or allow it to remain on foot and sue for damages.
If it elected to terminate the distribution agreement by the repudiation of Chembro it would need to give notice to Chembro of termination.
Breach of a contract by repudiation occurs when a party evinces an intention no longer to be bound by it, or to fulfil it only in a manner substantially inconsistent with its obligations Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17, 33, or the manifestation of an intention to perform only if and when it suits Carr v JA Berriman Pty Ltd (1953) 89 CLR 327, 351. It is common ground between the parties that pursuant to the distribution agreement, with respect to goods ordered by Chembro Trugrade might supply the goods directly to customers and then credit Chembro with commission.
In the event that there was a supply of goods directly to customers that would not involve a sale of the goods to Chembro because Trugrade would recover the price of the goods direct from the customer.
In those circumstances the goods would not be sold on credit to Chembro. The goods would be delivered by Trugrade to the customer which would pay Trugrade for those goods and Trugrade would then credit Chembro for commission.
At ts 47 there was the following exchange during the cross‑examination of Richard Kennedy:
Q:Okay. Now, from 1 November 2006 wasn't it the case that you made the arrangement and said 'look, there is going to be no more credit' to Chembro, and that it would be purely - dealings would be on a purely commission basis after that date?
A:By our actions that would have been the case.
Q:Yes. And with respect to - with respect to that, from then on, from 1 November 2006 onwards, as I understand it, all dealings then were done on a commission basis only between yourself and - and Chembro?
A:Right.
Richard Kennedy said that had the business relationship between Trugrade and Chembro not been terminated in November 2006 Chembro would have been entitled to the commissions which were subsequently reversed by him in credit invoice 10318 dated 1 August 2007 (exhibit 49).
By email dated 28 February 2007 from Richard Kennedy to Mr Kearney Richard Kennedy said 'I'll do credit invoices for last few months commissions in the next day or two'.
The four invoices by which Richard Kennedy credited commissions to Chembro (and which by credit invoice 10318 he purported to reverse) were as follows:

Date

Invoice No

Description

12.03.07

9937

Sales to various named customers x WA to New South Wales and Victoria between 16.11.06 - 24.11.06

13.03.07

9941

Sales to various customers x WA to New South Wales and Victoria between 01.12.06 - 21.12.06

14.03.07

9945

Sales to various customers x WA to New South Wales, Victoria and Queensland between 01.09.07 - 25.01.07

17.03.07

9960

Sales to various customers x WA to New South Wales and Queensland between 01.02.07 - 19.02.07

Mr Kearney said in evidence that he first saw invoice 10318 after the writ was issued.
In cross‑examination he agreed that in or about November 2006 Richard Kennedy told him that Trugrade was not going to extend any more credit and he understood that that meant that Trugrade was not going to sell anymore goods to Chembro on credit. He agreed that and after November 2006 no new orders were placed by Chembro with Trugrade.
He said that Richard Kennedy told him (ts 281) that he was not prepared to issue anymore credit but he would continue to pay commissions for all sales Chembro made on the eastern seaboard and to do that Chembro had to get all its customers to change the supplier from Chembro to Trugrade and the orders would be sent in that way.
He said that Richard Kennedy told him that he would pay commission for all business - not just for the sales to the major customers.
He said that after 1 November 2006 Chembro was continuing to service the eastern states' customers with whom it had dealt by introducing new product to them and if there were any problems Chembro would sort those problems out and try to steer those customers into buying more of the Trugrade product (ts 283).
He said that Chembro was still promoting Trugrade's product to customers however he was unable to give any specific examples given that Mr McIlwain was the sales manager.
In support of his evidence reliance was placed by him on emailed correspondence between him and Richard Kennedy being emails dated:
(a)24 and 25 May 2007 (exhibit 71);
(b)29 May 2007 (exhibit 72);
(c)12 June 2007 (exhibit 73.14, 73.2); and
(d)14 June 2007 (exhibit 74).
This correspondence related to ongoing sales to customers for goods to be supplied by Trugrade and evidence of ongoing communications between Chembro and Trugrade's customers.
Further, Chembro continued to lease the Smithfield premises until 12 June 2007 and continued to be liable for the monthly rent. In the event that there had been a termination of the credit contract and distribution agreement and no further business was to be conducted between the parties from 1 November 2006, I would not have expected Chembro to continue to lease those premises. There would not have been any point.
In reality the overall business arrangement between Trugrade and Chembro comprised the credit contract, the distribution agreement and the agreement for Chembro to sub‑lease the Smithfield premises. Those agreements were interrelated in that they each related to the performance by Trugrade and Chembro of their respective obligations. But they were separate agreements.
I am not satisfied that Trugrade elected to treat any continued failure to pay as a repudiation by Chembro of the distribution agreement. Even if it did I am not satisfied that there was any communication of that election
Indeed, the actions on the part of Trugrade were to the contrary. That was admitted by Richard Kennedy in the exchange during his cross‑examination to which I have already referred.
I accept the evidence of Mr Kearney that the conversation with Richard Kennedy to which he refers above took place. That is, that although Trugrade was not prepared to further supply goods on credit it was prepared to pay commissions to Chembro in the event that there were supplies of goods direct by Trugrade to customers on the eastern seaboard with which Chembro dealt.
Even if I am wrong in my determination that there was no termination of the distribution agreement by repudiation, I am satisfied that Mr Kearney and Richard Kennedy reached a new agreement in these terms.
Although I have previously expressed reservations about Mr Kearney's credibility as a witness, other evidence supports his account and the finding that I have made. That evidence being:
(a)Richard Kennedy conceded that Trugrade's actions were consistent with there being dealings after 1 November 2006 which were on a commission basis;
(b)by his email dated 28 February 2007 Richard Kennedy advised Mr Kearney that he would prepare credit invoices for the last few months' commissions;
(c)commission invoices were prepared by Richard Kennedy and credits were given for the commissions referred to in each of those invoices;
(d)Chembro continued to lease the Smithfield premises and incur a liability for rent;
(e)the correspondence in May and June 2007 to which I have referred which confirms an ongoing arrangement.
Credit for the commissions was not purportedly reversed until August 2007 by which time Trugrade had taken legal advice. It seems to me to be likely that it was as a consequence of that advice that the credits for commissions were reversed on the basis that there had been an effective termination by repudiation of the credit contract and distribution agreement as and from 1 November 2006 which resulted in no commissions being payable.
However, Richard Kennedy clearly turned his mind to the entitlement of Chembro to commissions. It is in my view inconceivable that had he been of the understanding that all business arrangements between the companies were at an end as and from 1 November 2006 he would have credited commissions for specific transactions and entered into the email communications to which I have referred.
I do not accept that there was any mistake on the part of Trugrade and as a result those commissions were payable and Trugrade was not entitled by reason of mistake or otherwise to reverse the credits for those commission payments.

Denial of liability for sums claimed by Trugrade/sums sought by way of set‑off in the defence

Paragraph 9(a) - claim for $37,621.46

I have found that by the distribution agreement Chembro agreed to purchase the saleable stock pursuant to the stocktake undertaken by Mr Morrison on 30 June 2005 and that following the agreement between Richard Kennedy and Mr Kearney on 23 February 2006 Trugrade allowed a credit in the sum of $38,628.01 for goods which Chembro did not wish to retain leaving the sum of $37,621.46 owing by Chembro.

Paragraph 9(b) - the sum of $7,986 for goods the subject of invoice 9034, which were alleged not to have been supplied to Chembro

Mr Kearney gave evidence that the goods the subject of that invoice (exhibit 50) were not ordered. The Trugrade invoice (9034) comprises exhibits 50.1 and 50.2. The order quotes a customer order number (210217) and refers to Sadleirs as the shipping agent.
In exhibit 50.2, being a copy of invoice 9034, there is an endorsement by hand 'Sent 31/3/06' and at the top of the invoice the words 'Faxed 30/3/06' which Richard Kennedy said was in his handwriting.
Exhibit 50.3 is a copy consignment note from Sadleirs Transport dated 2 April 2006 in which the sender reference is the number of the invoice (9034) and endorsed on that consignment note is a handwritten note 'Paid 18/5/06' which signifies the date upon which funds were credited against that invoice.
Mr McIlwain was the person involved in sales for Chembro. He did not give evidence and I infer that his evidence would not have assisted the defendants' case. I accept the evidence of Richard Kennedy in light of the documentation the subject of exhibit 50. I am satisfied that the goods were supplied to Chembro.

Paragraph 9(c) – the sum of $2,025.99 the subject of invoice 10293

I have found that Chembro is liable to Trugrade for this sum.
In his closing address counsel for Messrs Kearney and McIlwain contended that the goods the subject of that invoice formed part of invoice 8426 and that Trugrade could not claim twice for the same goods.
This submission is misconceived. The sum claimed by Trugrade is $37,621.46 after giving credit against invoice 8426 in the sum of $38,628.01, being the stock which was to be returned to it. The sum of $2,025.99 relates to part of the stock for which a credit of $38,628.01 was given to Chembro but which was not available for return to Trugrade because it was not in the warehouse. I consider the only reasonable inference to be drawn is that the stock had been used by Chembro. This sum is due to Trugrade given my findings with respect to the agreement reached between Richard Kennedy and Mr Kearney on 23 February 2006.

Paragraph 9(d) – invoice 10318 for the reversal of credits for commissions and the sum of $5,940 for rent for March, April and May 2007

I have found that Trugrade is not entitled to reverse the credits for the commissions.
Counsel for Messrs Kearney and McIlwain submits that the sum of $5,940 is already referred to and included in the overall claim for rent viz, $43,560. That may be so however Trugrade's claim is based upon its payment reconciliation document attached to Mr Pickup's report as Appendix 1 (appendix 1).
The sum of $133,446.46 referred to in Mr Pickup's report is based upon appendix 1 to and including 14 February 2007. The last entry being rent due on that date.
Invoice 10318 refers to (inter alia) rent due for the months of March, April and May 2007 totalling $5,940. Those sums are not included in the figure of $133,446.46.
I am satisfied that the specific invoiced entries in Trugrade's payment reconciliation are accurate. There was no issue in this trial that any invoiced sum in appendix 1 was inaccurate. The sum of $5,940 is, in my view, due to Trugrade.

Set-off ‑ (par 15)

(a)Invoice 20050918. Messrs Kearney and McIlwain concede that the amount to be set‑off is $333.15 not $360.16. This sum reflects the agreed 7.5% discount.
(b)Invoice 20051044. Messrs Kearney and McIlwain concede that the amount to be set-off is $6,285.31 not $7,272.08. This sum reflects the 7.5% discount.
(c)Invoice 20060109. Messrs Kearney and McIlwain concede that this invoice for $70.69 ought to be reduced to nil, it having already been credited in invoice 8942.
(d)Invoice 20060461. Messrs Kearney and McIlwain concede that the amount ought to be $95.48 not $2,749.23. This sum reflects the credits given by Trugrade.
Trugrade, in its closing submissions, submitted that whilst concessions were made with respect to invoices 20050918, 20060109, 20051044 and 20060461 the balance still claimed by way of set‑off is denied.
To that end Trugrade's submission is that invoices 20050918 and 20051044 were off‑set by Richard Kennedy against the amount owing by Chembro and those invoices were reflected in Mr Pickup's report in calculating the sum of $160,249.40 said to be owed by Chembro and as a consequence these sums ought not be deducted as set‑offs against that amount.
Counsel further contends that Trugrade ought to receive the benefit of the amount of the reduced claims made with respect to the conceded invoices increasing the sum of $160,249.40 by $3,740.22 being the amount of the concessions.
That proposition is not, in my view, supported by the evidence. In Mr Pickup's report the sum of $160,249.40 is calculated as being the total of:
(i)the balance due for rent and goods in the sum of $133,446.46 being the difference between the rent and the price of goods sold on the one hand and the total of credits and customer payments on the other;
(ii)the sum of $26,802.94 being invoices 10293 (stock not returned – exhibit 48) and 10318 (exhibit 49 – reversed commissions and three months' rent).

There is no evidence that the full sum initially claimed by Chembro as a set‑off was credited by Mr Pickup in that calculation.
In its reply (par 4) Trugrade specifically pleads the sums in respect to which credits were given by it.
As a consequence with respect to the abovementioned four items (numbered (a) – (d)) the set‑off allowed against Trugrade's claim is $6,711.94 calculated as follows:
20050918$   333.15
20051044$6,285.31
Invoice 20060109     Nil
Invoice 20060461  $     95.48
$6,711.94

(e)Invoice 20060520. This is a claim made by Chembro for the sum of $1,006.19 for the replacement of batteries for a forklift and Mr Morrison's motor vehicle and repairs to a forklift.
Mr Kearney said in evidence that the forklift was an asset of Trugrade and on a couple of occasions it broke down and needed attention. He said when he raised the issue with Patrick Kennedy he was told to send an invoice to Trugrade. The invoice also included a battery for Mr Morrison's car which Richard Kennedy wanted to be returned to Perth.
Patrick Kennedy said the invoice was in the name of Chembro Environment which he had never heard of. He said that he never spoke to Mr Kearney about these matters.
Mr Kearney said that he spoke to Richard Kennedy by telephone and told him that they could not move the vehicle because the battery was flat. Richard Kennedy, he said, told him to replace the battery and add it to the invoice for the other repairs.
He said that he also had telephone conversations with Richard Kennedy with respect to the forklift. There were two breakdowns with the forklift and when he advised Richard Kennedy that it needed attention he was told by Richard Kennedy to get it fixed and to invoice Trugrade later.
Richard Kennedy denied there to be any agreement to pay those costs. He said that Chembro was using the forklift free of charge and there was no reason for him to agree to pay any repairs or to replace any batteries for the forklift.
Richard Kennedy gave evidence that the first time that he had seen this invoice was during the discovery process in these proceedings. He said that the invoice was headed 'Chembro Environmental', a name he did not recognise.
In cross‑examination Mr Kearney agreed that Trugrade was not doing business with Chembro Environmental. He said that he prepared the proforma invoice but not in the name of Chembro Environmental. He said that the invoice was printed off for the purpose of the proceedings but Chembro Environmental was not on the letterhead on the original.
He said that the original of the invoice had not been produced in these proceedings.
The only invoice upon which Chembro relies is exhibit 10 which was conceded by Mr Kearney to have been printed off for the purpose of these proceedings, albeit with an incorrect letterhead.
The original or a copy of the original invoice was not in evidence. In the absence of that original being produced I am not prepared to accept the evidence of Mr Kearney in preference to the evidence given by Patrick Kennedy and Richard Kennedy.
I am not satisfied that if these costs were incurred by Chembro, they were incurred pursuant to an agreement by which Richard Kennedy or Patrick Kennedy accepted responsibility.
This item is not allowed as a set‑off.

(f)Invoice 20060664 in the sum of $3,259.63 – alleged to have the subject of double invoicing
The evidence of Richard Kennedy was that his handwriting appears on invoice 20060461 (exhibit 52) in which he adjusted the unit price by 7.5% in accordance with the agreement made between Patrick Kennedy and Mr McIlwain to accommodate the FOB liability in addition to which he noted that a credit had already been given for the 90 dispenser rolls in invoice 10293.
He then referred to invoice 20060664 which he said has his handwriting endorsed on it.
He said that the invoice was a duplicate of invoice 20060461 in respect to which a credit had already been given for each of the items.
Although Mr Kearney contended that these were different invoices and in particular because the unit price for the first item was different, I accept the evidence of Richard Kennedy as being credible. He has by his endorsement on invoice 20060664 reflected that invoice to be a duplicate. On the face of it the items are the same in addition to which in the second line of the first item there appears the following, '20? ctn', from which I infer that these are the same items.

This item is not allowed as a set‑off.

(g)Invoice 20060667. This claim for set‑off was abandoned at trial.
(h)Invoice 20061009 in the sum of $2.613.60 for goods supplied by Chembro (exhibits 56.1, 56.2 and 56.3). Exhibit 56.1 is headed 'Chembro Environmental', 56.2 is headed 'Chembro' and 56.3 is headed 'Chembro'.
Richard Kennedy said that he had not seen any of those invoices before. There was no explanation given by Mr Kearney as to why it was that these invoices were generated in this manner.
I accept the evidence of Richard Kennedy that he had not sighted these invoices before and I am not satisfied, as a consequence, that the goods referred to therein were delivered by Chembro to Trugrade.
I am fortified in that view by the fact that there is no evidence of the goods having been shipped to Trugrade which may have otherwise supported the claim made by Chembro.

(i)Invoice 20061026 in the sum of $269.01. The defendants abandoned this set‑off at trial.
(j)Invoice 20070228 (exhibits 58.1 and 58.2) being in the sum of $1,039.50 for one‑half of advertising costs.
Patrick Kennedy and Richard Kennedy each denied agreeing to meet this cost. Richard Kennedy said that neither of these invoices were sighted by him before they were discovered by Chembro during the course of these proceedings. Exhibit 58.1 is in the name of Chembro, exhibit 58.2 is in the name of Chembro Environmental and exhibit 58.3 is in the name of Chembro Environmental.
Mr McIlwain was alleged to have made the agreement. He did not give evidence and I draw the inference that any evidence he may have given would not have been of assistance to the defendants.
I am not satisfied that this claim has been made out. The fact that the headings on these invoices is inconsistent casts considerable doubt upon the veracity of these invoices. This set‑off is not allowed.

(k)Invoice 20070507 in the sum of $1,633.50, being goods alleged to have been sent to Perth as requested by Richard Kennedy (exhibits 59.1 and 59.2).
Exhibit 59.1 is headed 'Chembro' and exhibit 59.2 is headed 'The Chemical Brokers'.
Richard Kennedy gave evidence that he had not seen either of the documents before discovery was given by Chembro's solicitors.
No evidence was given by Mr Kearney as to the circumstances in which these invoices were raised or concerning any agreement made by Richard Kennedy to which reference is made in the pleading. I am not satisfied that this claim is made out.

The total set‑off which I allow against Trugrade's claim is $6,711.94.

Amount due with respect to goods and rent

I accept that appendix 1 is a true reflection of the transactions detailed therein between Trugrade and (inter alia) Chembro as they relate to goods. The parties do not contend otherwise.
The parties agree that the total rent due by Chembro was $43,560 ie, 22 months. In fact the period 1 July 2005 to the end of May 2007 is 23 months.
I note however that there is no entry for rent for January 2007. Nor is there any invoice for that month in evidence. No reference was made by any witness or counsel with respect to that month's rent.
The matters which fall for determination with respect to this issue are:
(a)The appropriate 'cut-off' point insofar as it relates to transactions between Trugrade and Chembro.
(b)The amount outstanding by Chembro for rent.
(c)The amount outstanding by Chembro and Messrs Kearney and Mr McIlwain for goods.

Cut-off point

It is common ground between the parties that the transactions between Trugrade and Chembro pursuant to the credit contract, the distribution agreement and the rental agreement were to commence as and from 1 July 2005.
The liability of Messrs Kearney and McIlwain as guarantors was restricted to the liability of Chembro for goods supplied to it or at its direction pursuant to the credit contract. They were not liable as guarantors for rent.
In his evidence Richard Kennedy said that before 1 July 2005 Trugrade was dealing with Chemical Brokers. He said that as far as he was concerned Chemical Brokers and Chembro were one and the same. In that assumption he was mistaken.
Mr Kearney gave evidence that Power Protection traded as Chemical Brokers. Chemical Brokers and Chembro were not the same entity.
Determining the liability of Chembro to Trugrade and thereby the liability of Messrs Kearney and McIlwain, entails consideration being given to the date from which Chembro's liability to Trugrade for the price of goods, commenced.
Mr Pickup, in his report and during the course of his evidence, made it clear that he did not undertake an audit of the transactions between Trugrade and Chembro to establish the financial position between them.
He said that his task was to consider the transactions on a macro level with a view to identifying the differences between the parties on the pleadings having regard to the financial information appended to his report.
The parties agreed that the payments made by Chembro to Trugrade totalled $173,652.75 and the total credits to which Chembro was entitled totalled $224,385.10.
In appendix 1 there are a number of invoices which pre‑date 1 July 2005. The total payments made to Trugrade with respect to the invoices detailed in appendix 1 was, from that document, $194,295.90.
As a consequence, for the purposes of his consideration Mr Pickup said that he adopted a cut‑off point to and including invoice 8126 dated 15 March 2005 because he said the total to and including that invoice was $20,641.95 which sum when deducted from $194,295.90 was approximately one dollar different from the admitted payments by Chembro viz $173,652.75.
On my calculations the figure of $20,641.95 is incorrect. The total of the invoices marked by Mr Pickup in appendix 1 is in fact $22,587.70. Be that as it may that difference will not affect my determination in this matter.
There are four invoices below that cut‑off point adopted by Mr Pickup in respect to which counsel for Messrs Kearney and McIlwain contends relate to goods ordered prior to 1 July 2005 for which Chembro could not be liable and in respect to which Trugrade has inappropriately credited the sums paid by Chembro.
Counsel for Trugrade says that even if that contention was correct the result would be no different and to that end refers to the evidence of Mr Pickup in support of that contention. In particular counsel refers to Mr Pickup's evidence at ts 189 and submits that the effect of that evidence was that if one was to remove those invoices from appendix 1 then one would remove the payments as well leaving the result the same.
I cannot agree with that submission. The parties have agreed that the sums paid by Chembro total $173,652.75. In the event that any part of that sum was paid in satisfaction or part satisfaction of invoices for which Chembro was not liable (that liability falling on Chemical Brokers) then on a proper appropriation of those payments to sums for which Chembro was liable, the sum due by Chembro to Trugrade would be correspondingly reduced.
The invoices which fall into this category are contended by counsel for Messrs Kearney and McIlwain to be as follows.

Invoice 8433

Invoice 8433 is dated 29 July 2005. However there are two consignments on 28 June 2005 and a consignment note (exhibit 62.2) evidencing delivery.
Richard Kennedy agreed that the goods the subject of this invoice must have been ordered before 1 July 2005 but said that Mr McIlwain 'presumably' ordered the goods before 1 July 2005 so that they would be delivered in July 2005. The order was not exhibited at trial.
Exhibit 63 is a copy of invoice 8433 which is dated 29 July 2005 and addressed from Trugrade to Chemical Brokers for delivery to Chemical Brokers. The invoice was facsimiled on 29 July 2005 as appears from the detail at the top of the invoice.
Exhibit 28 is another copy of invoice 8433 but is addressed to Chembro for delivery to Chemical Brokers.
Mr Kearney gave evidence that the goods the subject of this invoice were not ordered by Chembro.
Although, as I say, I have reservations as to the credibility of Mr Kearney's evidence there is independent evidence in support of what he said in the form of exhibit 63.
It may be that Richard Kennedy considered Chemical Brokers and Chembro to be one and the same entity however his assumption was incorrect. The appropriate inference in my view to be drawn from exhibit 63 and from the date of the first two consignments of goods on this invoice is that Chemical Brokers had ordered the goods not Chembro.
As a result the amount which was Trugrade appropriated from monies paid by Chembro to pay invoice 8433 was a sum which I am satisfied was for a debt for which Chembro was not liable.
Richard Kennedy said in evidence that when he received monies from Chembro he applied those monies to the oldest debt. He was however not entitled to apply those monies for any debt for which Chembro was not liable.
The result is that the sum of $25,659.70 ought not to have been appropriated in payment of invoice 8433 and ought to be credited against Chembro's liability to Trugrade.

Invoices 8209, 8281 and 8364 (totalling $6,652.80)

These invoices ought to be treated in the same way. I note from appendix 1 that certain dates are shown in the American style, that is, with the month followed by the day. Taking that into account it is clear that invoice 8209 was dated 12 April 2005, invoice 8281 was dated 5 May 2005 and invoice 8364 was dated 24 June 2005.
None of the invoices were tendered nor were any of the orders to which they related.
The goods the subject of each invoice must have been ordered before 1 July 2005 and the only inference which can reasonably be drawn is that Chembro did not order these goods and was thereby not liable for payment.
Payments made by Chembro totalling $6,652.80 should not have been appropriated to the payment of these invoices and ought to be credited to Chembro.

Rent

The parties agree that the sum of $133,446.46 referred to by Mr Pickup in his report includes rent to and including 14 February 2007.
The parties agree that the total rent for which Chembro was liable was $43,560.
In appendix 1 Trugrade has credited payments made by Chembro towards rent with the last credit being 3 May 2006. In all, Trugrade credited payments towards rent due for 12 months. The rent for the remaining 10 months was not the subject of any credits.
However, in determining the liability of Chembro for rent (for which sum Messrs Kearney and McIlwain are not liable as guarantors) the principle of appropriation applies.
Where several separate debts are due from a debtor to a creditor the debtor may, when making a payment, appropriate the money paid to a particular debt or debts. If the creditor accepts the payment so appropriated he must apply it in the manner directed by the debtor.
If, however, the debtor makes no appropriation when making a payment the creditor may do so. Chitty on Contracts 29th ed, par 21-059 et seq; Cory Brothers & Co Ltd v Owners of the Turkish Steamship 'Mecca' [1897] AC 286, 293 cited and approved in Farrow Finance Co Ltd (in liq) v ANZ Executors and Trustee Co Ltd (1996) 23 ACSR 488.
Richard Kennedy said that when payments were received from Chembro he applied the payments to the oldest invoices. He was entitled to do so unless there had been an appropriation by Chembro.
If there had been an appropriation by Chembro then Trugrade was bound by it.
In this case payments were made by Chembro by lump sums and, insofar as certain rent payments were concerned, by a single payment directed to a month's rent.
Exhibit 84 comprises copies of bank statements remittance advices and cheque butts. The total of those payments is $164,929.20 which is $8,723.55 less than the sum which the parties agreed was the total paid by Chembro. Counsel agree that there are earlier payments from Chembro which were not included in the evidence at trial.
Mr Kearney said that when payments were made by cheque they were accompanied by remittance advices. Richard Kennedy did not dispute the receipt of remittance advices. I accept Mr Kearney's evidence, in light of there being no issue raised by Richard Kennedy, that remittance advices accompanied cheques.
From exhibit 84 it is apparent from remittance advices that the following rent payments were appropriated by Chembro.

Invoice for rent/month

Date of payment

Description

8427 July 2005

2 August 2005

Remittance advice 1902 and cheque butt

8435 August 2005

2 August 2005

Remittance advice 1902 and cheque butt

8526 September 2005

16 September 2005

Remittance advice 1926 and cheque butt

8656 November 2005

9 June 2006

Remittance advice 1078 and cheque butt

8750 December 2005

9 January 2006

Remittance advice 1974 and cheque butt

8969 March 2006

13 March 2006

Remittance advice 1056 and cheque butt

9114 May 2006

5 May 2006

Remittance advice 1067 and cheque butt

9260 July 2006

20 November 2006

Remittance advice 1124 and cheque butt

By that evidence there are eight payments of rent made by Chembro in which it designated those payments as rent in the respective remittance advices. Those payments total $15,840.
As I say, there is no direct evidence as to the manner in which the unaccounted sum of $8,723.55 was paid. I note that in Trugrade's aged receivables of 9 March 2006 (exhibit 29) the rent due for October 2005 does not appear and therefore a payment of $1,980 must have been credited by Trugrade against the rent payable for that month.
There is no evidence of an appropriation of that payment by Chembro to rent or goods. As a consequence the right to appropriate devolved on Trugrade which appropriated the sum towards rent and gave notice by forwarding exhibit 29 to Chembro. As a result the sum of $1,980 for the October 2005 rent should be brought to account. The total appropriated to rent is therefore $17,820 being rent for nine months.
Otherwise I am satisfied that the payments made after January 2006 are those included in exhibit 84 and conceded to have been made by Trugrade in exhibit 79. Each of those payments are accompanied by remittance advices.
Trugrade is bound by the appropriations by Chembro as to rent and goods to which each remittance advice refers. Trugrade was not entitled to credit payments to any debts contrary to these appropriations.
In the premises I am satisfied, on the evidence, that the sum of $17,820 was appropriated to rent. As a consequence the sum of $25,740, being the balance due for rent (13 months) is a sum for which Messrs Kearney and McIlwain are not liable pursuant to their respective guarantees.

Summary of sums due by Messrs Kearney and McIlwain

The amount due by Chembro to Trugrade is as follows:
The sum referred to in appendix 1 as due             $133,446.46
Plus:
Invoice 10293
(warehouse stock not returned)     $   2,025.99
Part invoice 10318 being rent
for March, April and May 2007     $   5,940.00     $   7,965.99
$141,412.45
Less:
Invoices credited from monies paid by
Chembro for which Chembro was not liable:
Invoice 8433  $25,659.70
Invoices 8209, 8281 and 8364       $ 6,652.80     $ 32,312.50
$109,099.95
Set‑off allowed:
Invoice 20050918  $    333.15
Invoice 20051044  $ 6,285.31
Invoice 20060461   $      95.48     $   6,713.94
Sum due by Chembro  $102,386.01
Sum due by Messrs Kearney and
McIlwain – (deducting the outstanding
rent for which the guarantees do not
respond):  $ 25,740.00
$76,646.01

Interest

Pursuant to the provisions of the credit contract (cl 2 of the trading terms) interest is to be charged on all overdue accounts at the rate of 1.5% per month calculated daily. In the statement of claim this term is pleaded (par 9) and interest calculated on this basis is claimed in the prayer for relief.
By their defence Messrs Kearney and McIlwain (relevantly) admit the terms of the credit contract including cl 2. The claim for interest is therefore contractually based and is made out.
I have made a finding that Messrs Kearney and McIlwain guaranteed the liability of Chembro under the credit contract. That liability extends to Trugrade's contractual entitlement to interest.
I will leave it to the parties to confer as to the interest calculation. In the event that agreement cannot be reached, the matter should be relisted before me for determination.
I will hear the parties as to costs.

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: COSMAG PTY LTD (formerly known as TRUGRADE PTY LTD) -v- CHEMBRO PTY LTD [2012] WADC 128 (S)

CORAM: SCOTT DCJ

HEARD: 3-5 APRIL, 21 MAY & 23 OCTOBER 2012

DELIVERED : 20 AUGUST 2012

SUPPLEMENTARY
DECISION :6 NOVEMBER 2012

FILE NO/S: CIV 1993 of 2007

BETWEEN: COSMAG PTY LTD (formerly known as TRUGRADE PTY LTD)
Plaintiff
AND
CHEMBRO PTY LTD
First Defendant
PETER MICHAEL KEARNEY
Second Defendant
DENNIS KERRY McILWAIN
Third Defendant

Catchwords:

Costs order - Removing limits under Costs Determination - Plaintiff generally successful in action - Second and third defendants successful as to certain issues - Percentage reduction in plaintiff's costs

Legislation:

Nil

Result:

Second and Third defendant's to pay 90% of the plaintiff's costs
Limits not removed

Representation:

Counsel:

Plaintiff:     Mr R I Viner QC & Ms N Robinson
First Defendant              :     No appearance
Second Defendant         :     Mr A W Pass
Third Defendant            :     Mr A W Pass

Solicitors:

Plaintiff:     Mony De Kerloy
First Defendant              :     Not applicable
Second Defendant         :     Frank Unmack & Cullen
Third Defendant            :     Frank Unmack & Cullen

Case(s) referred to in judgment(s):

Amaca Pty Ltd (formerly James Hardy & Co Pty Ltd) v Hannell [2007] WASCA 158 (S)
Bowen v Alsanto Nominees Pty Ltd [2011] WASCA 39 (S)
Como v Helmers [2011] WASC 179 (S)
Frigger v Lean [2012] WASCA 66
Heartlink Ltd v Jones as liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S)
Mackinnon v Peterson, (Unreported, NSWSC, Case No 14017 of 1988, 19 April 1989)
Miller v Evans [2010] WASC 127 (S)
O'Rourke v P & B Corp Pty Ltd [2008] WASC 36
Oshlack v Richmond River Council [1998] HCA 11
Permanent Building Society v Wheeler (No 2) (1993) 10 WAR 569
Pourzand v Telstra Corp Ltd [2012] WASC 210 (S)
Smith v Madden (1946) 73 CLR 129

SCOTT DCJ: Following my reasons published on 20 August 2012, the parties were left to confer on the calculation of interest and the matter of costs.
Agreement has been reached with respect to the calculation for interest and on 23 October 2012, following written submissions there was a short appearance by counsel with respect to costs.
The unresolved matters in issue as to costs are as follows.

Trugrade Pty Ltd

(a)whether the limits in items relating to the statement of claim, giving discovery and getting up in the relevant Legal Practitioners (Supreme Court) (Contentious Business) Costs Determination being the 2006 Determination (2006 Scale) and the 2010 Determination (2010 Scale) ought to be removed;
(b)whether briefing senior counsel was reasonably necessary in all the circumstances.

Second and third defendants

The second and third defendants contend that they should have their costs for those issues in the set‑off in respect to which they were successful. Alternatively, the costs awarded to Trugrade ought to be reduced by an appropriate percentage to reflect those issues.

Costs determination – removing limits

Section 280(2) of the Legal Profession Act 2008 provides:
… if a court or judicial officer is of the opinion that the amount of costs allowable in respect of a matter under a costs determination is inadequate because of the unusual difficulty, complexity or importance of the matter, the court or officer may do all or any of the following –
(a)order the payment of costs above those fixed by the determination;
(b)fix higher limits of costs than those fixed in the determination;
(c)remove limits on costs fixed in the determination; and
(d)make any order or give any direction for the purposes of enabling costs above those in the determination to be ordered or assessed.

There are two matters that fall for determination. The first is whether, in my opinion, the amount of costs allowable with respect to these three items is inadequate. The second is whether any inadequacy is because of the unusual difficulty, complexity or importance of the matter.
The requirement of inadequacy will be demonstrated if the applicant shows that there is a fairly arguable case that the bill to be presented to the taxing officer may tax at an amount which is greater than the limit which would be imposed by the relevant Costs Determination: HeartlinkLtd v Jones as liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S) [15], [16], [22]; Pourzandv Telstra Corp Ltd [2012] WASC 210 (S) [11]. Evidence of the costs actually incurred by an applicant will not always be required. In some cases it may be necessary to prove the criteria in s 280(2) by specific evidence. In other cases the court may be able to form a view from its knowledge of the case particularly when the judge hearing the application was the trial judge: Frigger v Lean [2012] WASCA 66 [81] – [82].
An applicant is not required to demonstrate that a limit is inadequate by reference to a detailed evaluation of a draft bill for taxation: Heartlink [20] – [21]; Frigger [82]. All that is required of a court is that it form a view on the question of whether there is an arguable case to be put before a taxing officer to the effect that the limit imposed by the relevant scale would be inadequate because of the 'unusual difficulty, complexity or importance of the matter': O'Rourke v P & B Corp Pty Ltd [2008] WASC 36 (S) [20 – 21].
'Unusual difficulty' suggests that a matter was more difficult than would ordinarily be expected in a matter of the kind under consideration: Como v Helmers [2011] WASC 179 (S) [18].
The reference to 'importance' includes consideration of whether the work done was appropriate to the significance of the issues that arose in the litigation. The significance can be to the parties themselves or to other prospective parties, or to the public, or to the community generally: Heartlink [17- 19]. However, the fact that the matter is considered to be of great importance to the parties or even a matter of significance to others beyond parties may not be enough: Miller v Evans [2010] WASC 127 (S) [36] – [37].
The assessment of the question of whether or not there is 'unusual difficulty, complexity or importance' is essentially a value judgment having regard to the court's experience of the particular case and compared to the usual run of cases: O'Rourke [23] – [24].

Whether scale items inadequate

The relevant scale items are as follows:

Item 2006 Scale 2010 Scale

Statement of claim 3,630 4,290

Giving discovery of documents 3,630 4,290

Getting up 36,300 51,480

There is no evidence in support of Trugrade's application detailing the chargeable time spent with respect to each of these items. True it is that as the trial judge I can rely upon my knowledge of the case to gain an impression as to the tasks which were likely required to be undertaken by the solicitors for Trugrade.
However, without any evidence as to the chargeable time spent by the solicitors for Trugrade it is extremely difficult to form an opinion as to the asserted inadequacy of any scale item.

Statement of claim

As to the statement of claim counsel for Trugrade submits that the limit is inadequate because there were four amendments to the statement of claim largely due to the ongoing accounting reconciliation by Trugrade and amendments to the defence and set‑off.
Because there were amendments to the statement of claim both the 2006 Scale and the 2010 Scale will apply.
The statement of claim comprised 17 paragraphs plus the prayer for relief. Essentially what was pleaded were the material facts relating to the guarantee alleged by Trugrade to have been entered into by the second and third defendants, the asserted repudiation by Chembro in November 2006 and the consequences flowing from it. The sum claimed by Trugrade against the defendants reflected the conclusions in Mr Pickup's report.
The pleading was neither lengthy nor evidently complex. I am not persuaded that the limit in either scale is inadequate.

Discovery

Counsel for Trugrade submits that the discovered documents in the plaintiff's trial bundle numbered 385 pages consisting primarily of single page invoices and emails. Counsel says that the defendant's discovered documents in its trial bundle comprised 315 pages in one volume and a further 43 pages in another and that there was progressive discovery given by the defendants.
As to the defendant's discovery I note that there is a separate item in those scales affording costs to Trugrade for inspecting those documents.
Because of the nature of this case there was inevitably a need to collate invoices and other documents relating to the business transacted between Trugrade and Chembro. I have no way of knowing the time spent by Trugrade's solicitors in undertaking that task.
From the evidence at trial I know that Trugrade had an MYOB accounting system which generated the invoices. I assume that the invoices were readily retrievable.
On the evidence before me and the matters known to me as the trial judge I am not satisfied that there is a fairly arguable case that the taxing officer may tax the discovery item in an amount which is greater than the limit in either scale.

Getting up

As to this item counsel for Trugrade submitted that great deal of work was undertaken as part of the preparation for trial including:
(a)detailed proofs of evidence from non‑expert witnesses in relation to the complex legal issues of termination/repudiation and the scope of the guarantee. A number of witness statements were not used at trial;
(b)detailed perusal of over 700 pages of documents including correspondence and invoices and the compilation of the trial bundles; and
(c)consultation with the plaintiff's expert witness and cross‑referencing his reports to the trial bundle.
Counsel said that there were 90 exhibits at trial in addition to which Trugrade prepared a number of lever arch files containing documents which may have been required at trial.
Primarily the issues in this case related to:
(a)whether there was a guarantee given by the second and third defendants in favour of Trugrade which, in essence, was a matter of construction and the application of appropriate legal principles; and
(b)whether Chembro repudiated the agreements between the parties resulting in the termination of those agreements; and
(c)a consideration of contentious items in the accounting between the parties.
Again, I am hampered in my determination by the absence of any evidence with respect to the time taken in getting this case up for trial. I would expect that the majority of work under this item was undertaken after the implementation of the 2010 Scale as to which the total allowed (item 17) is $51,480.
This was a four day trial plus a further short appearance during which counsel spoke to written closing submissions. There were four witnesses who gave evidence at trial including Mr Pickup, the independent expert retained by Trugrade. One of the witnesses, Patrick Kennedy, was a brief witness.
On the evidence available to me and having regard to my overall impression of this case and the work reasonably required to get it up for trial, I am not persuaded that the relevant item is inadequate.

Whether there was unusual difficulty, complexity or importance

Given my determination with respect to the adequacy of the items in the respective scales there is, in reality, no need to deal with the issue of difficulty, complexity, or importance to which s 280(2) refers. Nonetheless I will briefly do so.
Counsel for Trugrade submitted that this was a case where there were unusual difficulties or complexities. They involved, she said, consideration as to whether there was an enforceable guarantee by the second and third defendants and whether there was conduct which amounted to a repudiation of the agreements between Trugrade and Chembro. There was an examination of voluminous materials relating to the accounting between the parties, the identification and collation of those documents to which reference needed to be made at trial and the requirement to brief an appropriate accounting expert to give evidence at trial.
This was not a lengthy trial. Whilst there were a number of discovered documents as I say, in the main, they comprised invoices and emails between the parties. Whilst the parties were not ad idem with respect to the documents which related to particular transactions and specifically the manner in which there were credits which pertained to various orders and deliveries, those matters were no more difficult nor complex than issues about which one would ordinarily expect to require exploration during the course of a civil trial.
In, my view of the issues raised in this case were not unusually difficult nor complex.
Certainly, as is the case with all litigation, the outcome is important to the parties. This was not a case which raised issues which were important in the public interest. Nor was it a case in which there were issues or an outcome which was of relevant interest to other than the parties.

Briefing senior counsel

Until the 2006 Costs Determination, there was a need for the trial judge to certify the retention of senior counsel or second counsel. In the 2006 Costs Determination that requirement was removed, leaving it to the taxing officer to make an assessment as to whether he/she is satisfied that the briefing of senior counsel was reasonably necessary in the circumstances. Consequently, that is not a matter for me. Counsel agree.

Issues in respect to which Trugrade not successful

In Amaca Pty Ltd (formerly James Hardy & Co Pty Ltd) v Hannell [2007] WASCA 158 (S), the court said:
The power to adjust an order for costs by reference to particular issues upon which the generally successful party has failed, is properly exercised only where there are discrete and severable issues upon which the generally successful party has failed, and which have added to the cost of the proceedings in a significant and readily discernable way [7].
Whilst the court may, in the exercise of its discretion, order that a successful party recover only a portion of its costs where that party has been unsuccessful in respect of certain discrete issues, that should not be done as a matter of course. To embark as a general practice upon an analysis of which party was successful on each issue, or necessarily to deprive a successful party of some portion of its costs if it has lost on a particular issue, would be likely to add further uncertainty and complexity to the outcome of litigation, derogate from the prospect of settlement and oblige the court to hear lengthy and frequent arguments in relation to costs as an additional burden on its resources and the costs of the parties: Bowen v Alsanto Nominees Pty Ltd [2011] WASCA 39 (S) which cited with approval, Mackinnon v Peterson, (Unreported, NSWSC, Case No 14017 of 1988, 19 April 1989); Oshlack v Richmond River Council [1998] HCA 11.
In Bowen the court added that while parties should be encouraged to consider carefully what matters they put in issue, justice may not be served if by too ready a resort to deciding questions of costs according to success on particular issues, parties are dissuaded by the risks of costs from canvassing all issues which might be material to the decision in the case.
In the event that a defendant succeeds on its counterclaim then generally the defendant should have the costs of the counterclaim which ought to be referable to the further or increased costs reasonably incurred in bringing the counterclaim: Smith v Madden (1946) 73 CLR 129, 133. That is particularly so where the claim and the counterclaim deal with different issues.
Counsel for the first and second defendants submitted that in this case if Chembro was not deregistered, it would have raised as a counterclaim matters asserted in the set‑off.
The items which could conceivably have been the subject of a counterclaim are those pleaded in par 15 of the set‑off which I dealt with in par 236 and par 237 of the Reasons. Those items totalled $6,711.94. Out of 11 items, only three were determined in a manner favourable to the first and second defendants. The matters the subject of those items occupied very little time in the context of these proceedings.
The issues in which Trugrade was unsuccessful and which were of more significance comprised:
(a)the consequences of repudiation in November 2006 specifically as to whether Trugrade was entitled to reverse commissions which were credited to Chembro after November 2006 (par 14(b) of the statement of claim); and
(b)the amount due by Chembro to Trugrade with respect to goods and rent so as to determine the liability of the second and third defendants as guarantors. This required consideration of the date from which Chembro (as opposed to one of its associated companies) dealt with Trugrade and the appropriation of payments to goods and/or rent.
These were matters which were raised by the first and second defendants in response to Trugrade's claim and in respect to which the first and second defendants were successful, thereby resulting in Trugrade being awarded a sum significantly less than that which it claimed. To that end the first and second defendants were successful in contending that:
(a)Trugrade was not entitled to reverse the commission payments which it had credited to Chembro after November 2006. Those payments were in the vicinity of $17,000;
(b)the total sum of $32,312.50 was not an amount for which Chembro was liable to Trugrade having regard to the date from which Chembro ordered goods; and
(c)the sum of $25,740 related to rent for which the first and second defendants were not liable pursuant to the guarantee Trugrade had maintained that the amount of the rent outstanding was $7,880.
The court needs to consider the realities of the case (in respect to costs) in an attempt to do justice between the parties: see Permanent Building Society v Wheeler (No 2) (1993) 10 WAR 569, 574.
In my view, the first and second defendants in the context of this case, have had success in respect to certain issues which were sufficiently discrete in their nature to make an appropriate determination as to the costs consequences which ought to favourably flow to them.
Those issues in which the second and third defendants were successful were of some consequence in the scope of this litigation – bearing in mind that, in the end, Trugrade was the generally successful party.
The repudiation issue required exploration in the evidence given by Richard Kennedy and the second defendant. The issues of the date from which Chembro was liable to Trugrade and the appropriation of payments were the subject of examination and cross‑examination of Mr Pickup, Richard Kennedy and the second defendant. In addition these matters were dealt with albeit rather briefly, by counsel for the second and third defendants in oral and written submissions.
In my view the order which I consider reflects the justice between the parties is to reduce the costs recoverable by Trugrade by 10%.
I will hear the parties as to the costs of this application.

Summary

The orders which should be made are:
1.There be judgment for the plaintiff against the second and third defendants jointly and severally in the sum of $157,231.29 being $76,646.01 for claim and $80,585.28 for interest.
2.The limits fixed in the Costs Determinations shall not be removed.
3.The second and third defendants to pay 90% of the plaintiff's taxed costs. Those costs to include one expert witness, the plaintiff's additional written submissions dated 30 July 2012 and all reserved costs.

Date	Invoice No	Description
12.03.07	9937	Sales to various named customers x WA to New South Wales and Victoria between 16.11.06 - 24.11.06
13.03.07	9941	Sales to various customers x WA to New South Wales and Victoria between 01.12.06 - 21.12.06
14.03.07	9945	Sales to various customers x WA to New South Wales, Victoria and Queensland between 01.09.07 - 25.01.07
17.03.07	9960	Sales to various customers x WA to New South Wales and Queensland between 01.02.07 - 19.02.07

Invoice for rent/month	Date of payment	Description
8427 July 2005	2 August 2005	Remittance advice 1902 and cheque butt
8435 August 2005	2 August 2005	Remittance advice 1902 and cheque butt
8526 September 2005	16 September 2005	Remittance advice 1926 and cheque butt
8656 November 2005	9 June 2006	Remittance advice 1078 and cheque butt
8750 December 2005	9 January 2006	Remittance advice 1974 and cheque butt
8969 March 2006	13 March 2006	Remittance advice 1056 and cheque butt
9114 May 2006	5 May 2006	Remittance advice 1067 and cheque butt
9260 July 2006	20 November 2006	Remittance advice 1124 and cheque butt

Item	2006 Scale	2010 Scale
Statement of claim	3,630	4,290
Giving discovery of documents	3,630	4,290
Getting up	36,300	51,480