Eurest (Aust) Catering and Services Pty. Lt.d v Independent Foods Pty. Ltd.

[2000] NSWSC 898

Reported Decision: [2000] 35 ACSR 352

New South Wales

Supreme Court

CITATION:	Eurest (Aust) Catering & Services Pty. Lt.d v. Independent Foods Pty. Ltd. & Ors. [2000] NSWSC 898
CURRENT JURISDICTION:	Equity Division
FILE NUMBER(S):	SC 3477/00
HEARING DATE(S):	30 and 31 August 2000
JUDGMENT DATE:	31 August 2000
PARTIES :	Eurest (Australia) Catering & Services Pty. Ltd. - Plaintiff Independent Foods Pty. Limited - First Defendant Apex Pacific Foods Pty. Limited - Second Defendant Deborah Ann Arnold - Third Defendant
JUDGMENT OF:	Hodgson CJinEq at 1

COUNSEL :	Mr. G. Palmer QC with Mr. A. Spencer for Plaintiff Mr. M. Holmes QC with Ms. J. Stuckey-Clarke for Defendants
SOLICITORS:	Holding Redlich, Sydney for Plaintiff Matthews Solicitors, Paddington for Defendants
CATCHWORDS:	CONTRACT - Sale of shares - Restraint on competition - Promise by purchaser not to tender for certain business on its own account or jointly with another - Whether breached by tender by subsidiary. CORPORATIONS - Holding and subsidiary companies - Whether tender by subsidiary was as agent of holding company - Whether holding company tendered jointly with subsidiary.
CASES CITED:	Smith Stone Knight v. Birmhan Group (1934) 4 AllER 116 Pioneer Concrete Services Ltd. v. Yelnah Pty. Ltd. (1986) 6 NSWLR 254 ICT Pty. Ltd. v. Sea Containers Ltd. (1995) 39 NSWLR 650. Kidson v. Macdonald (1974) 1 AllER 849 UDC v. Brian Pty. Ltd. (1985) 157 CLR 1. Allstate Life Insurance Co. v. ANZ Banking Group (1995) 58 FCR 26.
DECISION:	See end of judgment

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

CORAM: HODGSON, CJ in Eq.

Thursday 31st August 2000

NO. 3477 OF 2000
EUREST (AUST) PTY. LIMITED V. INDEPENDENT FOODS PTY. LIMITED & ORS.

JUDGMENT

1   HIS HONOUR: In these proceedings the plaintiff, Eurest, seeks declarations and injunctions in relation to a tender made by the first defendant, Independent, for a contract to supply prepared food to the State Rail Authority (which I will refer to as the SRA). I will commence with a brief outline of the facts.

OUTLINE OF FACTS

2   During 1997 and 1998 the second defendant, Apex, carried on a business of supplying prepared foods for consumption on airlines and trains, including trains operated by the SRA. The shares in Apex were then owned by the plaintiff, which was then called P & O Catering Services Pty Limited (which I will refer to as POCS.) 3   In 1998, the SRA called for tenders for a new contract for the supply of foods for its Countrylink trains. The third defendant, Ms Arnold, prepared a tender for this contract on behalf of an associated company P & O Support Services Pty. Limited (which I will refer to as POSS). This tender was successful. Thereafter POSS carried out the contract with the SRA, using food prepared by Apex. 4   About the end of 1998, there were negotiations between the general manager of POCS and Ms Arnold concerning the sale of Apex or its business. Ms Arnold arranged with one Laurence Gormley for the financing of the purchase and the subsequent conduct of this business. 5   In January 1999, the first defendant was incorporated. Almost all of its shares were issued in the name of Ms Arnold, and she executed a declaration of trust in respect of the shares in favour of Mr Gormley. 6   On 8 January 1999, a shareholders' agreement was entered into between Ms Arnold, Mr Gormley and one Colin Redman. This agreement recited that the company had been constituted for the purpose of purchasing all the shares in Apex, and with a view to causing Apex to conduct its business. Clauses 6 and 9 of that agreement were in the following terms:

6. DIRECTORS OF THE COMPANY
6.1 The only Directors of the Company will be those appointed by Laurence and such appointment is within the absolute discretion of Laurence. The Chairman of the Directors will also be appointed by Laurence from time to time.
6.2 Deb is the first Director appointed by Laurence and at the date of this Agreement is the sole Director and Secretary of the Company.
6.3 The Directors are responsible for the day to day management of the Business.
6.4 In addition to the circumstances in which the office of a Director becomes vacant by virtue of the Corporations Law and the Constitution, on the occurrence of any one of the following events the office of the relevant Director ceases:
6.4.1 the death of the Director;
6.4.2 at the request of Laurence;
6.4.2 if a Director is also a Shareholder, on exercise of Call Option or Put Option in accordance with the terms of this Agreement.

6.5 The Directors' rights to appoint a Chairman or a nominee or alternate director pursuant to the Constitution of the Company are hereby expressly excluded.
6.6 A Director need not hold shares in the Company.

9. OBLIGATIONS OF THE SHAREHOLDERS
9.1 The parties agree that the Company shall, during the currency of this Agreement, with the full co-operation and assistance of the parties cause Apex to conduct the Business.
9.2 Each party must consult with the other and give each other the full benefit of their advice and experience in carrying out the day to day activities required to conduct and develop the Business.
9.3 Each party must keep all information relating to the Company, Apex, the Business including but not limited to any trade secrets, operations or know-how related to the Business confidential and not disclose such information to third parties other than to their consultant advisers.

‘Laurence’ is Mr. Gormley, and ‘Deb’ is Ms. Arnold.

7   On 2 March 1999, an agreement was made for the sale of the Apex shares from POCS to Independent. Ms Arnold was also a party to this agreement, as guarantor of Independent's obligations. 8   Clauses 6.5 and 6.6 of that agreement were in the following terms:

6.5 SRA Contract
The parties acknowledge that P&O Support Services Pty. Limited (“POSS”) has a contract for the supply of services with SRA (the “SRA Contract”). The Company currently supplies to POSS prepared meals and meal components (“product”) in respect of the SRA Contract. The Vendor will procure POSS continue to acquire services from the Company after Completion and will ensure that POSS will not use another supplier to supplement the quantities of product produced by the Company during the initial term of the SRA Contract and any renewal or extension of the term, provided that:
(a) the cost of the product supplied by the Company does not increase for the balance of the initial 12 month term of the SRA Contract; and
(b) at all times the Company must maintain quality and service of a level favourably comparable to competitors of the Company.

6.6 SRA Contract Expiry
(a) In consideration of the Vendor entering into this Agreement, the Purchaser undertakes to the Vendor that, within any of the periods specified in sub-paragraph (b), the Purchaser shall not, whether:
(i) on its own account, or
(ii) jointly with or on behalf of any other person or corporation as an officer, employer, independent contractor (except of the Vendor or its related bodies corporate), partner, joint venturer or agent,
carry on or be engaged in any business or tender for any business being the business currently carried on pursuant to the SRA Contract by POSS.
(b) The periods of non-competition are:
(i) for a period of five years after the Completion Date;
(ii) for a period of four years after the Completion Date; or
(iii) for a period of three years after the Completion Date;
(iv) for a period of two years after the Completion Date; or
(v) for a period of one year after the Completion Date.

9   Ms Arnold became the sole director of Independent and the managing director of Apex. She and another manager of Apex, and also Apex's accountant, came to be employed by Independent, and their services were contracted to Apex. The other persons involved in Apex's business continued to be employed directly by Apex. 10   In about November 1999, certain businesses in what has been called the P & O Group were taken over by what has been called the Spotless Group. POCS changed its name to the plaintiff's current name, and the plaintiff took over the SRA contract from POSS. This contract is to expire in November 2000. 11   On 4 May 2000, the SRA called for tenders for provision of prepared food for its Countrylink services as from November 2000. The form of contract in the tender documents included clause C2.2, in the following terms:

C2.2. Personal Guarantee of Director Shareholder
C2.2.1 Where the Contractor is a corporation, that is subsidiary of, or is related to, another corporation, the Principal may require the Director or Shareholders of the Contractor or other persons concerned with the management and control of the Contractor to lodge a Deed of Guarantee, Undertaking, and Substitution in the form contained in Appendix C2 for the performance of the obligations and the discharge of the liabilities of the Contractor under the Contract

C2.2.2 Where the Deed of Guarantee, Undertaking and Substitution is required under this clause the Deed must be lodged by the Contractor with the Principal:
1) Within 14 days of the date of execution of the Formal Instrument of Agreement, or
2) Within 14 days of the date of receipt of the Principal’s Letter of Acceptance, whichever is the earlier; or
3) Within such further time as may be approved in writing by the Principal.

C2.2.3 Failure on the part of the Contractor to lodge the Deed within the time allowed under subclause C2.2.2 shall constitute a substantial Breach of Contract and the Principal may:


1) Withhold from the Contractor any payment otherwise due until such time as the Contractor lodges with the Principal the Deed under subclause C2.2.2;

2) if the Principal so elects, give to the Contractor a notice in writing that the Principal is discharged from all further obligations on the Principal’s part under the Contract;

3) institute proceedings in any court of competent jurisdiction to recover any damages that the Principal may have sustained by reason of the breach; and

4) exercise all or any other rights or remedies conferred on the Principal whether at common law or in equity or under the provisions of the Contract.

C2.2.4 For the purpose of this subclause:

(a) a corporation is a subsidiary of another corporation if, under the Act of the State or the Act or Ordinance of the Territory under which the firstmentioned corporation is incorporated or registered, it is deemed to be, for the purposes of the Act or Ordinance. a subsidiary of that other corporation; and

(b) a corporation is related to another corporation if, under the Act of the State or the Act or Ordinance of the Territory under which the firstmentioned corporation is incorporated or registered, it and the other corporation are deemed to be, for the purposes of that Act or that Ordinance, related to each other.

12   The form of guarantee referred to in that clause included clause 1, in the following terms:

1. Guarantee
1.1 The Guarantor guarantees by this Deed to the Principal the due and proper performance and observance by the Contractor of the obligations of the Contractor under the Contract and the discharge of the liabilities of the Contractor under the Contract in accordance with the terms of this Deed

1.2 If the Contractor breaches or causes or permits any breach of its obligations under the Contract the Guarantor must:
(1) if and to the extent requested by the Principal, undertake the obligations of the Contractor and carry out the Services in accordance with the Contract in so far as the Contractor has failed to do so; and
(2) pay to the Principal on demand any and all sums of money being or representing compensation for costs, damages or losses arising from, caused by or connected with the breach.

1.3. For the purposes of this Clause the Guarantor will be substituted for the Contractor as the party to the Contract to the intent that:
(1) the Guarantor, in respect of any obligations of the Contractor undertaken or any of the Services carried out from the date of substitution, is subject to the obligations and liabilities and entitled to the rights of the Contractor in all respects as if the Guarantor had been named as the Contractor under the Contract: and
(2) compliance and observance by the Principal of the terms of the Contract with respect to the Guarantor in all relevant respects constitutes due performance of the Contract on the Principal's part.

13   Ms Arnold obtained advice from Mr Matthews, a solicitor and also a director of Apex, that Apex would not be in breach of clause 6.6 of the share sale agreement if it submitted a tender for the SRA contract. 14   On 14 June 2000, Apex submitted a tender for the SRA contract. The tender was signed by Ms Arnold on behalf of Apex. The tender included no signature or seal purporting to be on behalf of Independent. However, clause B7.2 of the tender stated as follows:

Independent Foods Pty Limited is the parent company of Apex Pacific Foods Pty Limited (trading as Independent Prepared Foods). Independent Foods shall provide the guarantee for this contract as per the bid appearing in the appendix part C of the tender specification.

15   The tender also included a letter from the accountant for both Apex and Independent in the following terms:

In my capacity as accountant for the above entities, I enclose the following documents:

Apex Pacific Foods Pty. Ltd.
Balance Sheet as at 31st December 1999 and Trading and Profit Loss Account for the ten months ending 31st December, 1999.

Please be advised that the company/business was acquired from the previous owners (namely the P&O Group) on the 1st March 1999.

Independent Foods Pty. Limited
Balance Sheet as at 30th June, 1999 together with Profit & Loss Account for the four months ended 30th June, 1999.

This company is the Parent Company of Apex Pacific Foods Pty. Lted.

No audit is carried out on either company.

The accounts referred to in that letter were included as part of the tender.

16   By its amended summons, Eurest seeks declarations that clause 6.6 of the share sale agreement prohibited Independent from providing the guarantee referred to in the tender, that Independent was in breach of clause 6.6 in that it has jointly with Apex tendered for business the subject of clause 6.6(a), and that Apex has knowingly and intentionally procured a breach of that contract by Independent. The amended summons also seeks consequential injunctions and damages.

ISSUES

17   Turning to the issues that have been debated before me, as I understand it there is no dispute that the business tendered for does fall within the words in clause 6.6(a) "business currently carried on pursuant to the SRA contract by POSS". There is also no dispute that the restraint in the clause is reasonable, at least to the extent of a restraint for one year. 18   It is common ground that, if I decide this case adversely to the defendants, they shall have an opportunity in these proceedings to raise an issue as to whether the restraint is unreasonable in relation to any longer period. 19   The essential issues that have been debated are these. Firstly, whether in the circumstances the tender by Apex, which was not itself the purchaser or a party to the share sale agreement of 2 March 1999, amounts to a breach of clause 6.6 by Independent. Secondly, whether the giving of the guarantee by Independent as proposed by the tender would be a breach of that clause. Thirdly, whether performance of that guarantee by Independent, if called on under it to take over the conduct of the business, would be a breach of clause 6.6. 20   I note that the defendants objected to the third issue being raised, on the basis that it was not within the amended summons or written submissions, and that if it had been raised earlier there would have been an opportunity to conduct negotiations with the SRA as to whether a guarantee in those terms was really required. I should say that, in my opinion, that is not a sufficient ground to exclude this issue. In my opinion, the issue is within the general scope of the relief sought in the summons and within the general scope of the written submissions of the plaintiff. There is no suggestion that it could not be dealt with by way of evidence or submissions at the hearing of the case and it seems to me that, even if I were to decide that issue adversely to the defendants, it would still be open to the defendants now to negotiate some different arrangement with the SRA. So I do propose to treat that matter as an issue in the case. 21   The next issue is whether the tort of inducement of breach of contract by Apex has been established. 22   Finally, there is the question of what relief should be granted, if I decide any of these issues in favour of the plaintiff.

SUBMISSIONS

23   Both sides have provided written outlines of submissions which I will leave with the papers. 24   Mr Palmer QC for the plaintiff submitted that Independent had, on its own account, either tendered or engaged in a tender, within the meaning of clause 6.6. Alternatively, he submitted that Independent had jointly with Apex either engaged in a tender or tendered, within the meaning of the clause. Thirdly, he submitted that Independent, by providing key executives for the tendering and performance of the contract, had engaged in a tender or had tendered as an independent contractor. Finally, he submitted that Apex had procured the breach. 25   Dealing with the clause itself, Mr Palmer submitted that "tender", where it appears in clause 6.6(a), should be read as a noun. The clause was plainly intended to protect against breaches occurring in a variety of ways, including covertly. It would be unreasonable to think it was intended to prohibit being engaged in a business, and yet not being engaged in a tender. He submitted that the tender was, in substance, made by Independent by reason of its relationship with Apex, or alternatively that, at the very least, Independent was engaged in the tender. 26   Next, Mr Palmer submitted that there had been a joint tender by Apex as principal and Independent as guarantor, in which both parties were committed to contracting with the SRA. He submitted that the words in clause 6.6(a)(ii) following "corporation" should not be read as qualifying the preceding words, but as further separate categories, because some of those following categories did not make sense if they were read as qualifying the preceding words. For example, it did not make sense to say that a party should not do something “jointly with or on behalf of any other person” as an “employer”. 27   Alternatively, he submitted, if the words following "corporation" should be read as qualifying the preceding words, then plainly the word "jointly" and the words "joint venturer" would need to be construed broadly, and what had been done in this case would amount to being engaged in a tender or tendering by Independent jointly with Apex as a joint venturer. Alternatively, he submitted that it was done jointly with Apex as an independent contractor, because of the participation as guarantor and participation as the contractor supplying management services for the purposes of the proposed contract. 28   In support of these submissions that what had been done by Apex should be considered as being done as Independent's agent, or alternatively as a joint project with Independent, Mr Palmer submitted that the business of Apex was controlled by Independent, of which it was a wholly owed subsidiary. The effect of the shareholders' agreement was that Apex business was itself controlled by Independent, and the senior management of Apex were all employed by Independent. Mr Palmer submitted that the decision to tender was a decision made in discussion between Ms Arnold and Mr Gormley. In substance, he submitted, Independent was or provided the controlling mind of Apex, and Apex should be considered as Independent's agent. 29   Finally, Mr Palmer submitted that Ms Arnold and Apex had intentionally procured the breach by Independent by making the tender. They knew the relevant terms of the contract. They intended to do what was in fact a breach of the contract; and Mr Palmer submitted that they did not have a belief held in good faith and reasonably that what was done was not a breach of the contract. Although Mr Matthews' advice had been sought, he was not provided with copies of the tender documents or even informed that the guarantee was required. Furthermore, Mr Matthews was not an independent, impartial adviser, but rather someone very interested in the subject of the advice. Mr Palmer submitted that it would encourage wrongdoing if this was regarded as sufficient. He submitted that the prudent and proper steps would have been to go to an independent solicitor and give that solicitor all relevant documents. 30   Mr Holmes QC for the defendants submitted that the restraint was in a form submitted on behalf of the plaintiff to the defendants, and in a form requested on behalf of the plaintiff. He submitted that such restraint clauses should be construed strictly, and if there were uncertainty or deficiency in the language, the court should not resolve the doubt in favour of the party that proffered the clause. The clause was to be construed in the context of the sale of a business to the manager of that business, with no objection being taken to her having the ongoing operation of the business. Neither the manager herself, nor the legal entity sold, was sought to be made the subject of any restraint. 31   Mr Holmes submitted that the evidence showed a clear distinction and separation of Independent and Apex. The financial and business records demonstrated this clear separation. The mere circumstance that the holding company provided management services to the subsidiary did not in any way negative this separation. 32   Turning to clause 6.6, Mr Holmes submitted that the court cannot seek out the subjective intention of the parties, but must look for the natural meaning of the language used. The clause did not include words such as "directly or indirectly" or "in any way involved in". The court should not insert such words by implication, but rather should take note of the absence of those words and the significance of the absence of words of that kind. 33   Mr Holmes submitted that the word "tender" should be read as a verb: that was the natural reading. Furthermore, the words "be engaged in" suggested some ongoing activity, rather than the single act of submitting a tender. 34   Mr Holmes submitted that Independent did not, either on its own account or jointly, tender for any business. This was done by Apex for itself, and not as Independent's agent. The submission of the tender was not done jointly. The tender imposed no obligation on Independent as part of the tendering process, until it subsequently gave the proposed guarantee. Even the giving of the guarantee would not amount to carrying on or being engaged in the business by Independent either on its own account or jointly. The question whether the actual carrying on of the business, if called upon by the SRA, should be a breach, is not a matter that arises at present. 35   In response to the submission that Independent has jointly, as an independent contractor or joint venturer, been engaged in the business or tendered for a business, Mr Holmes submitted that the two companies were engaged in different businesses and different activities. Independent's business would merely be the business of supply of management services for reward. It was Apex that had the staff of around eighty, and the resources to engage in the SRA business. He submitted that the provision by a company of management services to another did not establish joint activity. He submitted that the relationship between the companies in no way negatived their separate existence and separate operation. 36   He submitted that the notions of incurring concurrent obligations and profit sharing, which are distinctive of joint venturers, were missing. It was only Apex that would carry on the business. The profits of the business were obtained from the staff and kitchens of Apex, and treated as Apex's profits. The success of the venture depended upon the skill and knowledge of the general manager of Apex and its staff. The decisions in relation to the business were left to Ms Arnold, as the manager of the business, and likewise its effective control. 37   Finally, Mr Holmes submitted that, even if I were to hold that there was a breach, there was no tort of inducement of breach. Apex and Ms Arnold were advised by the solicitor that there would be no breach, and it has not been established that such a belief would be other than bona fide and reasonable.

DECISION

38   I will consider first the wording of clause 6.6. It is, as submitted by Mr Holmes, significant that the clause does not contain words such as "directly or indirectly" or "in any way involved in" or, following the word "agent", the words "or otherwise". I should certainly not construe the clause as if those words were in it, and I think I can give some weight to the circumstance that those words are not there. 39   Furthermore, the words "through an agent" are not there. However, in my opinion, if any of the prohibited acts were done in truth through an agent, then it would satisfy the provision dealing with acts done by the purchaser on its own account. 40   I accept Mr Holmes' submission that the word "tender" in clause 6.6(a) is a verb, for the reasons he gave. 41   On the question whether the words following the word "corporation" in clause 6.6(a)(ii) are to be read as qualifying the preceding words, or as setting up a separate category, I think it quite probable that the words were put there with the subjective intention of giving rise to a further category, because of the incongruity of reading words such as "employer" as qualifying the words "jointly with or on behalf of any other person". However, I do not think such an intention appears objectively, with sufficient certainty, to read the clause as if the word "or" had been inserted between the word "corporation" and the word "as". 42   I think it does follow then, as Mr Holmes submitted, that the words "as an officer, employer, independent contractor ... joint venturer or agent" must be construed as qualifying the preceding words, and as being exhaustive of the categories that can satisfy the provisions of clause 6.6(a)(ii). 43   As I said earlier, in my opinion, if something is done by an agent it is done on the principal's own account; and in this case, if the tender was made by Apex as Independent's agent then, in my opinion, it would be a tender by Independent on its own account. There are circumstances in which actions done by a subsidiary can be considered as being done as agent for the principal: see for example Smith Stone Knight v. Birmhan Group (1939) 4 All ER 116 at 121. 44 However, I do not think it is shown in this case that what has been done by Apex was done as Independent's agent. It is true that the affairs of the two companies are very closely inter-related, having regard to the involvement of Ms Arnold in both companies, and having regard to the terms of the shareholders' agreement. However, they are separate companies, their businesses and finances are treated separately. There is no suggestion that the corporate structure was set up to evade the provisions of clause 6.6. I do not think the arrangement can in any sense be called a sham: see Pioneer Concrete Services Limited v. Yelnah Pty Limited (1986) 5 NSWLR 254; ICT Pty Limited v. Sea Containers Limited (1995) 39 NSWLR 650. 45 However, there is, in my opinion, a substantial case that Independent has tendered for the business jointly with Apex as an independent contractor or joint venturer. In my opinion, Independent did participate itself in the tender. It authorised Apex to offer its guarantee, and it authorised the provision of its financial accounts in support of the tender. The question is, does this amount to tendering jointly with Apex, and if so, does it amount to tendering jointly with Apex as an independent contractor or joint venturer? 46 The word "jointly" is not a technical, legal word: see Kidson v. Macdonald (1974) 1 All ER 849 and 848. In my opinion, as suggested in that case, it simply is referring to something done in conjunction or in common. Furthermore, having regard to the association of the word "jointly" with the words following the word "corporation", it is clear, in my opinion, that the word "jointly" has to be given a fairly broad construction for the paragraph to make sense. 47 I find, therefore, that the tender was a tender made by Independent jointly with Apex. The next question is whether it was made by Independent either as an independent contractor or a joint venturer. 48 The expression "joint venture" or "joint venturer" is also not a technical expression: see UDC v. Brian Pty Limited (1985) 157 CLR 1 at 10. A joint venture usually refers to an association of persons for the purpose of a particular endeavour with a view to mutual profit. The association in this case between Independent and Apex is not an association for the particular endeavour of the SRA contract, but rather is a long term association of a holding company and subsidiary, with the close inter-relationship of their affairs that I have already referred to. 49 However, in connection with this particular endeavour, there is the additional association of the holding company participating in the tender by authorising the offer of its guarantee and authorising the provision of information about its financial position. Furthermore, in relation to this particular endeavour, it can be construed that this is for the mutual profit of both organisations. Independent will receive fees paid for the management services it provides, and can expect to benefit from whatever profits are made through increase in share value or through dividends. 50 I do not think "joint venturer" where it appears in this clause should be given a narrow construction. I think there is an objective intention disclosed in the clause to cover a fairly wide field, notwithstanding the absence of any catch-all provision; and indeed the absence of the catch-all provision, coupled with the incongruity of strict interpretation of the conjunction of words to which I have referred before, point towards not giving the words "joint venturer" a narrow construction. 51 On the whole, in my opinion the tender in this case is a tender by Independent jointly with Apex as a joint venturer. 52 If I were wrong in that view, it would in my opinion be a tender by Independent jointly with Apex as an independent contractor. I believe that its participation as a contractor providing a contract of guarantee, and also contracting to provide management services, would bring it within that category as well. 53 So for those reasons, the plaintiff is entitled to a declaration. The terms of the declaration may have to be considered carefully, because it is, in effect, the participation of Independent as a prospective guarantor authorising the offering of the guarantee, and authorising the provision of financial information, that causes the breach of the clause, not the mere making of the tender itself. 54 Turning to the other question in the case, I believe it is clear that, if Independent does enter into the proposed guarantee and if it is called upon to take over the business of supplying food to the SRA pursuant to that guarantee, for it to do so would be a direct breach of clause 6.6(a). However, I do not believe that the entry into the guarantee would of itself amount to such a breach. I do not think the mere giving of a guarantee would itself amount to the carrying on or being engaged in the business either on its own account or jointly. 55 Finally, on the question of inducement, in my opinion Ms Arnold, and therefore Apex, did hold a bona fide belief that no breach was involved and, in my opinion, that belief was not unreasonably held. Accordingly, there has been no tort of inducement of breach of contract: see Allstate Life Insurance Company v. ANZ Banking Group (1995) 58 FCR 26. 56 Apart from the questions raised by the offer of the guarantee, in my opinion the legal advice they were given was correct. There was no deliberate withholding of the guarantee from the solicitor. As will be apparent from my reasons, even having regard to the guarantee the question was not a clear one, and the view that I have reached is a view that I have reached only after some difficulty and after some hesitation. 57 I will hear submissions as to the precise orders to be made.

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Last Modified: 09/27/2000