Fruition Marketing No 2 Pty Ltd v. Advanced National Services Pty Ltd

[2009] QSC 88

SUPREME COURT OF QUEENSLAND

CITATION:

Fruition Marking No. 2 Pty Ltd v Advanced National Services Pty Ltd [2009] QSC 88

PARTIES:

FRUITION MARKETING NO. 2 PTY LTD
(ACN 117 447 337)
(plaintiff)
v
ADVANCED NATIONAL SERVICES
(ACN 096 450 190)
(defendant)

FILE NO/S:

5375/07

DIVISION:

Trial

PROCEEDING:

Claim

ORIGINATING COURT:

Supreme Court

DELIVERED ON:

22 April 2009

DELIVERED AT:

Brisbane

HEARING DATE:

20-22 April 2009

JUDGE:

Fryberg J

ORDER:

The court orders that:

1.   On or before 15 May 2009, the defendant pay to the plaintiff $150,000 in respect of the Compromise Agreement, in exchange for a document in the form of the document entitled “SURRENDER DEED (TROLLEYS)” appearing at tab 9 of exhibit 1, duly executed by the plaintiff.

2.   On or before 15 May 2009, the defendant pay to the plaintiff interest on the said $150,000 in the amount of $36,155.67.

3.   On or before 15 May 2009, the defendant pay to the plaintiff the amount of $5,637.18 in respect of finance repayments made by the plaintiff on motor vehicles used in the business by the plaintiff after 23 October 2006.

4.   An account be taken of the dealings and transactions of the business known as “Advanced National Services – North Brisbane Trolleys” from and including 23 May 2006 until and including 23 October 2006.

5. The defendant file and serve on the plaintiff an account of such dealings in the form provided by rule 530 of the Uniform Civil Procedure Rules on or before 1 June 2009, provided that such account shall set out the dealings on two bases, namely:

(a)   as though the defendant is entitled to recover as an expense from the plaintiff any amount paid to Mr Ces Ruddell; and

(b)  as though the defendant is not so entitled.

6.   The account be verified by affidavit on behalf of the defendant.

7.   Costs of the account and of the proceeding are reserved.

CATCHWORDS:

Contracts – General contractual principles – Abandonment of contract – Particular instances –  Plaintiff’s letter to defendant did not constitute unequivocal abandonment – No mutual abandonment of agreement – Agreement remained on foot

COUNSEL:

Plaintiff:  N H Ferrett
Defendant:  C Jennings

SOLICITORS:

Plaintiff:  Ffrench Commercial Lawyers
Defendant:  Minter Ellison

SUPREME COURT OF QUEENSLAND

[2009] QSC 88

CIVIL JURISDICTION

FRYBERG J

No 5375 of 2007

FRUITION MARKETING NO 2 PTY LTD	Plaintiff
and
ADVANCED NATIONAL SERVICES PTY LTD (ACN 096 450 190)	Defendant

BRISBANE

..DATE 22/04/2009

JUDGMENT

HIS HONOUR:  In early 2006 the plaintiff purchased the right

to engage in collecting shopping trolleys within a given area

at a nominated number of shopping centres.  It purchased that

right by taking an assignment of a contract from another

person who held the right pursuant to contract from the

defendant.  The defendant in turn had the right to collect

trolleys at shopping centres pursuant to a series of contracts

which it had made with the owners of the shopping centres.

Rather than do the work itself it subcontracted the work first

to the predecessor of the plaintiff and then after the

assignment to the plaintiff.  It did so pursuant to a document

called a "Franchise Agreement".  It may be doubted whether the

document really was a franchise agreement but nothing turns on

that.

To give effect to its obligations under the franchise

agreement the plaintiff engaged a number of sub-subcontractors

to do the work at particular shopping centres.  Those

contractors employed the people, usually juveniles, who

actually did the work.

The flow of money was from the owners of the trolleys to the

defendant by weekly payments which were made in such a way as

to identify the shopping centre in question.  The defendant

would then pay that amount of money less 9.5 per cent to the

plaintiff, which would then pay from those funds the amounts

which it had agreed with its subcontractors to pay them.  They

would then pay the people who did the work.

From February until May the plaintiff carried out that work

under the franchise agreement so-called, but it was not a

happy relationship.  Disputes arose between the plaintiff and

the defendant regarding the quality of the work being done.

It is unnecessary to go into the merits of those disputes.  By

May both the plaintiff and the defendant had had enough.

The defendant engaged a business consultant, a man named

Shelley, to negotiate on its behalf with Mr Furness, a

director of the plaintiff.  They reached a Heads of Agreement

on the 23rd of May 2006.  It is unnecessary to set out the

Heads of Agreement in full.  They basically provided for the

sale of the plaintiff's business to the defendant.  The

defendant was to pay the plaintiff an amount comprising

$750,000, which was what the plaintiff had originally paid to

the outgoing franchisee, and a further $100,000, which under

the Heads of Agreement was to be paid upon the sale by the

defendant of a new franchise carved out of the existing

territory.

That was explained to mean that the parties envisaged the

defendant breaking up the franchise into a number of smaller

areas and reselling it to others.  Upon the first such resale,

the plaintiff was to get the additional $100,000.  The heads

of agreement envisaged that the $750,000 would be paid on or

before the 30th of June, a process which it described as

settlement of the money.

The heads also provided that in the meantime, the seller, that

is, the plaintiff, would receive an account from the defendant

of the profits of the operation after deduction of expenses

and a management fee of not more than $1,350 a week.

In accordance with the heads of agreement, the defendant

immediately took over the running of the business.  The

practical effect of that was that the defendant took

possession of a number of motor vehicles and trailers the

property of the plaintiff which were used by the

subcontractors to carry out their work.  That equipment which is identified in the material before me, had been acquired by the plaintiff during the time of the franchise agreement between it and the defendant by way of chattel mortgage from Toyota Finance Australia Limited. 

The heads of agreement were subsequently reduced or, more accurately, expanded into a business sale contract in the REIQ Form, Second Edition.  Substantial amendments to that form were made.  The "Items" schedule in it had a number of paragraphs struck out and they were replaced by a fresh Items schedule with similarly numbered paragraphs.

In addition, there were 10 special conditions inserted on a

separate page and a schedule of plant and equipment was also

included.  That schedule sets out the vehicles and trailers as

well as an amount of office equipment which was to pass under

the contract.

The operative term of the contract was cl 6 which provided

that the balance of the purchase price set out in item L (I

interpolate there had been an amount of $1,000 paid at the

time of the making of the heads of agreement which I infer was

a deposit) was to be paid "on the date of completion" in exchange for, among other things, supporting documentation as may be necessary to effect registration of the business assets.

The expression "date of completion" as used in the clause

meant the date of completion set out in Item P or as varied by

agreement.  Item P in the printed form of contract was headed

"date and place of completion".  It was not struck out but was

left blank.  In its place, an Item P was included in the typed

Items schedule.  It read:

"P.  Date and Place of Settlement: As to $750,000 on or before
30 June 2006 and the balance of $199,000 on the sale of the
first franchise within the existing territory the latter date
being the completion date.

Where the parties may mutually agree."

It will be noted that in the typed version, the word

"completion" was replaced by the word "settlement" in the

heading of the item.  The reference to $199,000 rather than $99,000 as being the balance is explained by the parties (and this is common ground, though, one would not naturally read the clause this way), as including, in effect, an obligation upon the defendant to pay $100,000 to Toyota Finance Australia Limited in respect of the vehicle mortgages.  It is not suggested by either party that the amount to be paid clear to the plaintiff was more than $850,000.

The heads of agreement were incorporated subject to the terms

of the contract. 

Under the special conditions, the plaintiff acknowledged that the defendant had assumed possession, control, responsibility and operation of the business as from the date of the heads of agreement. 

Clause 3 of the special conditions provided as follows:

"The Buyer will account to the Seller each Thursday for the
period from 23 May 2006 until settlement.  Such account shall
be based upon the current contract price less a management fee
which shall not exceed $1,350 per week less the subcontract
price and any reasonable expenses which would normally be
incurred by the business."

Clause 4 provided:

"The parties agree that the Purchase Price will be paid in the
following manner: $750,000 on or before 30 June 2006, a
further $100,000  in the form of vehicles subsequently
acquired by the seller and subject to a chattel mortgage which
debt will be assumed by the buyer on or before completion
date."

Clause 10 provided:

"Completion date shall be the date upon which the sale of the
first franchise within the existing territory takes place or
so soon thereafter as may be practicable in the
circumstances."

It is common ground that by mutual agreement, the date 30 June

2006 was extended to 13 July 2006.  On that day, Mr Shelley,

as the defendant's representative, met Mr Furness, the

plaintiff's director.  He handed Mr Furness a cheque for

$750,000.  According to Mr Furness, Mr Shelley did not ask for

any transfers of the registration of the vehicle at that time.

According to Mr Shelley, he did and Mr Furness said he'd left

them at home but would get them and bring them to the
defendant.

It is probably not critical to resolve which version I accept.

I should, however, make some comment on my findings as to

credibility in case the matter should go further.

I did not find Mr Furness a satisfactory witness.  I thought

his answers tended to be unresponsive and self-serving.  He

put himself forward as an experienced businessman but did not

act in the way in which an experienced businessman would have

acted in many respects.  I thought a considerable amount of

his evidence was loaded in his own favour.

I did not find Mr Shelley a satisfactory witness either.  I

thought he was an honest but unreliable witness.  He was not a

young man, and I did not get the impression that he attended

to detail, nor did I think his memory of events was

particularly reliable.

I am not inclined to act on the evidence of either of them

unless it is in some way supported either by commonsense or by

other evidence.

I think it is likely that Mr Furness did tell Mr Shelley that

he would bring the registration papers to him on the day of

the meeting.  Whether he said that at the meeting or

subsequently, I cannot determine.  It became plain in

subsequent weeks and months, however, that Mr Furness was

using the registration papers as a lever to extract his

further $100,000 from the defendant.

The defendant did not have the vehicles registered and that

was a matter of some concern to its officers, and in

particular, to Mr Klimowicz, the managing director.  Quite why

that was of such concern is not clear to me.  The transfer of

vehicle registration would not, as far as I am aware, have had

any impact on proprietary rights.

The execution of the agreement on the 2nd of June would

probably have been effective to assign the equity of

redemption in the chattels which was possessed by the

plaintiff as well as equitable title to the office equipment,

(assuming it was owned by the plaintiff), but although the

defendant had the use of the vehicles, it made no attempt at

that time to pay the amount owing to the finance company.

It did, however, contend that it was not obliged to continue

to account for the profit of the business beyond the 13th of

July.  It still maintains that position.  It justifies that on

the basis that "completion" and "settlement" are words used differentially in the contract.  It submits that that must be so because otherwise the obligation to pay the $750,000, the bulk of the purchase price, would have existed without any right to receive anything in return.  That is correct, and it is a somewhat absurd outcome but it is no more absurd than that completion should take place much later than settlement and that settlement refers to the events of the 13th of July, that is, the payment of the $750,000.

The obligation to pay for the vehicles under cl 4 of the

special conditions remained with the plaintiff, the seller,

until completion date.  If completion date was indeed when the

franchise was to be sold and there was no time limit on this,

then it would be an extraordinary commercial result.

The contract was not a well drawn contract.  Ridiculous

outcomes can be multiplied if one tries to approach it with

too fine a sense of reading the words or with all of the

weapons that are normally employed in the construction of

contracts.

It seems to me that the way to approach it is to try to find a

meaning which will best give commercial sense to the contract

which the parties made.  What they envisaged, as one infers it

from the documents, is that the bulk of the price would be paid on the 30th of June or the 13th of July as it became, that the defendant would immediately operate the business, that the defendant would be paid a management fee and would take over the obligation to pay for the vehicles when that fee ceased to be payable.

Quite possibly, the defendant thought that that obligation would remain only until the 13th of July, that is, the date of payment of the money.  But clause 10 of the special conditions read with clause 4, it seems to me, did not give effect to any such subjective intention.

In my judgment (though I think it does not matter for the

purposes of the proceedings before me), the contract contained

within it an implied term that the defendant would either

procure the sale of the further franchise within a short time

or would within that time pay the $100,000 due under the

contract.  When read that way, the obligation of the plaintiff as vendor to go on paying for the vehicles and of the defendant to run the business on its management fee and to account for the profits, makes some commercial sense. 

Unfortunately, the parties thereafter did not approach the matter in a particularly commercial way.  That is particularly the responsibility of Mr Furness.  Mr Furness ceased to be a director of the plaintiff on the 4th of July 2008 and I infer

the reason for that was his bankruptcy.  He remains an

undischarged bankrupt.  Nonetheless, I have no doubt that he

effectively controls the plaintiff through the director who is

his wife.

He continued to refuse to hand over the transfers without

payment of the $100,000.  The defendant took the attitude that

without the registration of the vehicles in its name, it was

unable to effect a resale.  That form of stand-off continued

until Mr Klimowicz decided it was time to put an end to it and

negotiations took place with a view to resolving the matter.

There was not much challenge to Mr Klimowicz' evidence and I

found him a persuasive and reliable witness.  There were some

limitations to his evidence because he did not actually have

the direct personal conduct of a number of relevant events and

consequently was relying upon what he was told by his

employees, but to the extent that he was involved, I accept

his evidence without reservation.

Negotiations took place in particular on the 23rd of October

2006.  The plaintiff was represented by Mr Furness, the

defendant by Mr McDonald (who did not give evidence) and Mr

Putland, the financial controller of the defendant.

The negotiations resulted in an agreement.  Mr Putland, who

recorded it, headed the document "Minutes of Meeting" but it

is common ground that it records an agreement between the

parties.  The document was signed by Mr Furness and Mr Klimowicz.  It recorded that Mr Furness had agreed to finalise the sale of the business to the defendant as at the date of the minutes, that is, the 23rd of October, subject to a number of conditions.

Relevantly they were:

"1.  The sum of $150,000 will be paid to Ian Furness, as
     director of Fruition Marketing No. 2 Pty Ltd, as final
     payment and for completion of the original sale agreement
     dated 2 June 2006, to be provided on the supply of all
     signed transfer documents within 48 hours of the closing
     of this meeting;

1. Ian Furness, as director of Fruition Marketing No. 2 Pty
        Ltd, agrees to enter into a surrender document for his
        franchise, to be effective from the date of these
        minutes;

1. Ian Furness, as director of Fruition Marketing No. 2 Pty
        Ltd, agrees to provide Advanced National Services with
        the transfer documents and all keys for equipment and
        motor vehicles forming part of the original sale
        agreement within 48 hours of the closing time of this
        meeting;

1. Ian Furness and the company, Fruition Marketing No 2. Pty
        Ltd, agrees not to make any further demands with respect
        to the sale of the franchise, and recognise that this
        agreement brings to end the original sale contract dated
        2 June 2006;

1. Ian Furness and the company, Fruition Marketing No. 2 Pty
        Ltd, agree not to take any legal action against Advanced
        National Services Pty Ltd, or any associated companies,
        directors or employees;

1. Advanced National Services agrees to pay out the chattel
        mortgages on 4 x Toyota Utilities as per the original
        sale agreement dated 2 June 2006;

11.  Both parties agree that the completion date for this
     agreement, as well as the original sale contract dated
     2 June 2006 is effective from the date of these minutes,
     and that the conditions of this agreement cannot vary or
     modify this contract completion date".

Mr Furness signed as a director of the plaintiff, Mr Klimowicz

as a director of the defendant, and the document recorded that

it was signed as a true and accurate record.

It is that document which forms an important part of the

defence of the defendant in these proceedings and of a

counterclaim.

The defendant belatedly alleged by an amended defence and counterclaim filed in March 2008 that by that agreement the plaintiff compromised any rights under the sale agreement.  The defendant counterclaimed for specific performance of so much of the compromise agreement as remained unperformed.

The position in the days following the compromise agreement was that the defendant had the equipment, which was part of the business, was running the business, but was not paying for the mortgage payments on the vehicles, and was not paying the profits of the business to the plaintiff and had not been doing so since the 13th of July.

Two days after the agreement Mr Furness sent an e-mail to

Mr Putland.  I will not quote it in full.  It seems to

envisage the compromise agreement as constituting

an addendum to the original sale agreement of the 2nd of June

not as a stand alone substitution.

Mr Furness tried to suggest in his oral evidence that this was

the position.  That was not a position which was taken in the

pleadings and it was not a position which was relied on by the

plaintiff's counsel in the litigation.

There is perhaps some support for it if it is understood

simply as meaning a reference to the opening words of the

agreement of the 23rd of October (referring to his agreement

to finalise the sale).  To some extent the terms of the sale

agreement must be taken into account to give meaning to the

compromise agreement, but I think I must resolve the

litigation on the basis that that latter agreement is a

stand alone agreement, not an addendum.

In any event, Mr Furness' e-mail of the 25th of October

proposed substantial amendments that would change the terms of

the agreement.  He also suggested that completion of the

compromise agreement should take place on the 30th of October.

By a letter of the same date, the 25th of October,
Mr Klimowicz rejected Mr Furness' proposal, asserted that a

binding agreement was in force, and forwarded a deed for

execution in accordance with cl 2 of the agreement.  He

inquired what steps had been taken to transfer the

equipment and the motor vehicles.

On the 30th of October some further fax was sent by

Mr Furness.  It has not been put in evidence before me.  I

infer from a letter of that date in response that it made some

proposal for a time for completion of the agreement of the

23rd of October.  The letter urged that Mr Furness arrange a suitable time for delivery of transfer documents and paying out the amount owing.  It will be noted that the compromise agreement gave the plaintiff an additional $50,000 on top of

what had been originally agreed.

Again there was further correspondence.  Mr Furness sent

something to the defendant on the 9th of November.  It has not been put into evidence but again I infer it was proposing further delay.

Mr Putland replied by e-mail on behalf of the defendant, and

this time there was some agreement to delay proceedings.

Mr Putland wrote:

"Ian, Eddie has asked me to thank you for your correspondence
this morning.

Also, since yesterday, there have been a few developments with
regards to the sale of your franchise to us.  In particular,
we have received some last minute advice from our solicitors
that there may be some adverse tax implications for both
parties with respect to the sale transactions involved.  In
light of this, we are now taking up discussions with the
Australian Taxation Office (ATO) before we proceed to settle
this matter with you.  We feel that we should undertake these
discussions before finalising the sale so that both you, and
Advances National Services, are transacting to the latter of
all taxation laws.

We hope that you can hold off on this matter until we receive
sufficient advice from the ATO."

That e-mail is the first in a chain of events which amount, according to the amended reply and answer filed on the first day of trial, to abandonment of the compromise agreement.  That e-mail is said to be the first act by the defendant of abandonment.

The plaintiff does not suggest that it is sufficient standing

by itself.  It seems to me that it is not sufficient on any

view of things.  I do not construe it as in any way abandoning

rights under the compromise agreement.  It simply takes up a suggestion for an extension of time but for a different reason.  It doesn't really matter whether Mr Furness

had made a suggestion for an extension of time or not,

however, for, even viewed in isolation, the letter does no

more than seek time.

It does so on the basis that the defendant had received advice

from its solicitors that there may be some adverse tax

implications from the way the agreement of October had been

put together.  It asserted that the defendant was undertaking

discussions with the Australian Taxation Office and was doing

so before the matter was settled.

No evidence was called that such discussions actually took

place.  Mr Putland assumed that they took place, but I am not

persuaded either that there were such discussions or that any

advice of the sort described in the e-mail was ever actually

given.

No attempt was made to show that any payment for such advice

was made.  No attempt was made to produce any document

containing such advice.  Mr Putland suggested that it was not

a major matter and might have been given orally, but one would

expect that a firm of solicitors such as those acting for the

defendant would have at least kept a diary note of having

given such advice.  No attempt was made to call evidence from

the solicitors about whether or not they had given such

advice.  I would not be prepared to find that it was given,

and am satisfied on the balance of probabilities that the

reference to it by Mr Putland was a ploy to gain time.

There was a reason why the defendant wanted to gain time.  It

seems that the defendant had until about November been

operating on the basis that it could not get the registration

of the vehicles transferred except by getting a transfer

signed by the plaintiff.

It is plain that by early November the defendant had realised

that that was not correct, and that a course of action was

open to it unilaterally to have the vehicles registered.  The

defendant approached the Main Roads Department.  It had the

vehicles checked by an engineer and obtained roadworthiness
certificates and applied to have them registered in its name.

One of the vehicles, at least, was inspected by an engineer

on the 7th of November and on the 10th of November

applications were lodged with the Department for the

registration of the vehicles.  Subsequently that registration

took place.

That removed the perceived bargaining lever which the

plaintiff was using against the defendant.  It removed it, I

suspect, not only in the defendant's eyes but also, when he found out about it, in those of Mr Furness.  At the time he was unaware of what the defendant was doing.

Mr Furness responded to Mr Putland's e-mail on the 17th of

November in these terms:

"Hi, apologies for the delay in replying.

I am happy to renegotiate the terms of any agreement so that
neither of us fall foul of the ATO on the condition that the
trading profits continue to be paid to me until the new
completion date and any unforeseen extra costs incurred by me
are also reimbursed.

Exactly what is the underlying problem?

What sort of time delay do you envisage?

Regards Ian".

It is plain, I think, that at that time he still envisaged

performance of the compromise agreement.

What happened next is unclear.  The parties did not go into

evidence about it, and the next event which is before me is

the writing of a letter of the 12th of December 2006 by Minter
Ellison, solicitors for the defendant, to Ffrench Commercial

Lawyers, the solicitors for the plaintiff.  Evidently by then

both sides were dealing with each other through solicitors.

What brought that state of affairs about has been kept out of

evidence.

I will not set out the letter in full.  It seems clear that

the solicitors were asserting rights based on the original

contract of sale, that is the contract of the 2nd of June.

The letter makes no reference to the compromise agreement and

it asserts things that are inconsistent with that agreement.

Read with further letters sent by those solicitors on the 18th

and the 19th of December it persuades me that the defendant

had decided, having obtained the transfer of the vehicles or

at least got itself into a position where it was about to do

so, that there was no reason why it should adhere to the

agreement of the 23rd of October and no reason why it should

pay the extra $50,000 payable under that agreement, or,

indeed, anything.

The letter of the 12th of December evoked a response dated the

15th of December.  That response dealt with the assertions in

the first letter only to a limited extent.  It did assert

that:  "It is quite clear that your client had management of

the franchise business as it was being paid a management fee

of $1,350 per week.  Your client does not just have a duty to

account from 23 May 2006 to 13 July 2006, it has an ongoing

duty after 13 July 2006 to account for the trading profits
which our client says is payable to him under the sale of

business contract."

It is accepted by both side before me that any termination of

a contract by abandonment must be the result of mutual

abandonment, that is, either both parties abandoning the

contract and evidencing that abandonment by some action, or at

least one party abandoning it and the other accepting that

abandonment.  Unless it can be seen that the plaintiff abandoned the compromise contract or accepted the defendant's abandonment of it, it would have remained on foot.

The plaintiff submits that the letter last quoted is

sufficient by itself to indicate abandonment by the

plaintiff.  I do not agree.

While I do not accept the defendant's submission that the

letters written by the defendant amounted to negotiation, I do

not think that the letter of the 15th of December 2006 from

Ffrench Commercial Lawyers is an unequivocal abandonment by

the plaintiff of the compromise agreement.  It seems to me

that that letter is to be construed as dealing with what had

been raised by the solicitors for the defendant but not as

dealing with the existence or otherwise of the still

relatively recently made compromise agreement.

It also seems to me that the letter should be construed in the

light of the fact that the compromise agreement simply failed

to deal with the questions of the payment for the vehicles,
which had been made by the plaintiff up until that time, and

in fact continued to be made by the plaintiff until early

2007, and the rights of the plaintiff to the profits until

completion under the original agreement.

It is, of course, quite possible to read cl 1 of the

agreement as a complete satisfaction of the plaintiff's

claims.  However, the plaintiff argues that in fact it was

entitled under the original contract to receive the profits up

until this time.

The fact that the topic was not dealt with in the compromise

agreement does not, it seems to me, preclude the plaintiff

from subsequently asserting the right.  That is particularly

so when it is clear that the compromise agreement remained

uncompleted.

The fact is that there is not a necessary inconsistency between what was written in the letter of the 15th of December 2006 and an intention to adhere to the compromise agreement if the occasion arose in the future to do so.  In particular, I do not think that the letter, properly construed, is sufficient to evince abandonment of the compromise by the plaintiff.

Subsequent events can be dealt with quickly.  The registration

of the vehicles was effected in the name of the defendant.

The defendant took over payment for the chattel mortgages in

February 2007.  The plaintiff had authorised the defendant to
pay out the finance company back in October 2006 but the

defendant did not do so and did not take over the payments, as

I have said, until February 2007.

Mr Putland's explanation for this was a rather lame, "Oh,

there was some problem in doing that in reaching an

agreement".  No documents were put before me and no detailed

explanation was given.

The action was commenced in June 2007.  It proceeded without

due diligence on the part of the plaintiff and, in fact, at

one point reached that list maintained by the Court which

might in religious terms be described as "limbo".  It was,

however, resuscitated and eventually came on for trial.

The counterclaim by the defendant did not surface until an

amendment to the defence in March 2008.  The plaintiff

suggests that the defendant's failure until then to plead the

compromise agreement evinced its intention not to perform

and thus to abandon the compromise agreement, but I am not

satisfied that this form of inaction by solicitors in the

circumstances of this case can be so regarded.  Nonetheless,

as I have said, I think the letters in December 2006 are

fairly clear in that regard.

The plaintiff did not treat the defendant's actions and

conduct as repudiation of the compromise and did not at any

time seek to terminate the agreement.  It was, therefore,

open to the defendant to reverse its stance in March
of 2008 and to plead the compromise agreement.  It had not

been terminated because the plaintiff had not abandoned it.

In my judgment, the agreement was an effective bar to the

claim of the plaintiff beyond the 23rd of October 2006.

On balance, I think that the better interpretation of the

compromise agreement is that up to that date, the plaintiff

was entitled to receive the profits of the business in

accordance with the agreement which ceased on the 23rd of

October, and the defendant was obliged to make the payments

for the vehicles from that date forward.

What form of order should be made on the claim and the

counterclaim to give effect to these findings is a matter on

which I am presently a little unsure.  It is profoundly to be

hoped that it is not necessary to order an account to be taken

in the Court.

I am emboldened to think that it will not be necessary to do

that by what has come from the Bar table by counsel on both

sides.  I understand that it is expected that calculations can

be made by the parties to give effect to the outcome which I

have just enunciated.

The further hearing is adjourned until the 1st of May.

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