Jackson, Philip W as Trustee for the Jackson Family Trust v Multiskip Pty Ltd

[1997] FCA 1477

FEDERAL COURT OF AUSTRALIA

CONTRACT - offer and acceptance - whether express oral terms made out - alleged term that business capable and would earn stated annual and monthly income - evidentiary conflict - credibility findings - relevance of written terms and other evidence

TRADE PRACTICES - misleading or deceptive conduct - alleged representations concerning capability and probability of business to earn stated annual and monthly income - whether representations made - evidentiary conflict - credibility findings - relevance of documents and other evidence.

Trade Practices Act 1974 (Cth), ss 52, 75B
Evidence Act 1995 (Cth), ss 103(1), 103(2)(a)

PHILIP W JACKSON AS TRUSTEE FOR THE JACKSON FAMILY TRUST v MULTISKIP PTY LTD (ACN 009 166 723) & ORS
WAG 104 of 1997

R D NICHOLSON J

PERTH

19 DECEMBER 1997

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	WAG 104 of 1997

BETWEEN:

PHILIP W JACKSON AS TRUSTEE FOR THE JACKSON FAMILY TRUST
Applicant

AND:

MULTISKIP PTY LTD (ACN 009 166 723)
First Respondent

KEITH SYDNEY MCCAWLEY
Second Respondent

NURUL SHAHEED
Third Respondent

JUDGE:

R D NICHOLSON J

DATE OF ORDER:

19 DECEMBER 1997

WHERE MADE:

PERTH

MINUTE OF ORDERS

THE COURT ORDERS THAT:

1.  The application be dismissed.

2.  The applicant pay the respondents’ costs to be taxed.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	WAG 104 of 1997

BETWEEN:

PHILIP W JACKSON AS TRUSTEE FOR THE JACKSON FAMILY TRUST
Applicant

AND:

MULTISKIP PTY LTD (ACN 009 166 723)
First Respondent

KEITH SYDNEY MCCAWLEY
Second Respondent

NURUL SHAHEED
Third Respondent

JUDGE:	R D NICHOLSON J
DATE:	19 DECEMBER 1997
PLACE:	PERTH

REASONS FOR JUDGMENT

HIS HONOUR:  The applicant is the trustee for the Jackson Family Trust, established on 4 October 1993, which has carried on the business of a waste disposal sub-contractor. The applicant brings claims in contract and under the Trade Practices Act1974 (Cth) (“the Act”) against the respondents said to have arisen in connection with a contract of sale dated 2 August 1995 (“the Contract”) by the first respondent to the applicant of a business (“the business”).  The business is said to consist of (1) a truck (“the Truck”); (2) a licence agreement dated 8 August 1995 (“the Licence Agreement”) to use certain patented systems comprising a ground level demountable hoist and detachable refuse bins and associated equipment (“the Equipment”) fitted to the Truck, for which a registered Australian design is current; and (3) a delivery round known as “Mobile 19” (“Mobile 19”), whereby the applicant obtained the right to receive requests to perform jobs involving hauling and collecting industrial, commercial and residential rubble, rubbish and waste materials and/or machinery or articles using the Truck and the Equipment.  The Truck was valued at $90,000; the Equipment at $10,000 and Mobile 19 at $30,000.

In outline it is claimed the Contract was breached because:

(i)  the first respondent failed to provide the applicant with a business capable of achieving an annual turnover of $120,000 and with a sufficient number of jobs to allow him to achieve a gross income average of $10,000 per month; (ii)  engaged an additional contractor; and (iii)  unreasonably terminated the Contract.

In respect of the Act it is claimed the third respondent, who was at the relevant times employed as the General Manager of the first respondent, engaged in misleading and deceptive conduct and made misleading representations about the activities of the Business in stating: (i) it was capable of achieving such an annual turnover; and (ii) it would be supplied with a sufficient number of jobs to enable it to achieve that turnover.

It is claimed the second respondent, who was a director of the first respondent, is liable with the third respondent by application of s 75B of the Act. The applicant claims to have relied upon the alleged representations concerning current and projected turnover in making his decision to purchase the business. It is common ground his income fell short of those alleged projections. He claims to have suffered loss and damage as a consequence of reliance on the representations as well as from the breach of the Contract.

It is common ground that whatever the terms of the Contract, it terminated in early October 1996 as the consequence of a notice given by the first respondent to the applicant on 2 July 1996.

Outstanding evidentiary issues

Of the seven rulings still said to be outstanding on the respondents’ objections to admissibility, the objection has been allowed in respect of two in terms of a minute of rulings annexed as an appendix to these reasons.

The applicant’s objections to four documents of which formal proof was required were not dealt with in the respondents’ case so the objections should be allowed.

On behalf of the respondents’ objection was taken to evidence proposed to be put to the third respondent in relation to a telephone call to him from a Lockyear (who gave the name of Shadbolt). It was evidence directed to impugning the credibility of the third respondent. It was agreed the evidence would be heard subject to objection and be ruled on in the course of these reasons. When the evidence was taken the third respondent was unable to recall the name of Shadbolt or any relevant statement in the terms put to him. He could not recall either the call or the response. The alleged statement was not made out. The evidence cannot tend to prove the witness knowingly or recklessly made a false representation when under an obligation to tell the truth: s 103(2)(a) of the Evidence Act1995 (Cth). It does not have “substantial probative value” as required by s 103(1) of that Act. The objection to its admission is therefore allowed.

THE CONTRACTUAL CLAIM

(1)  Express written terms

The defence accepts that insofar as the Contract was in writing, it was contained in the Contract and the Licence Agreement.

The Contract purported to “make formal” the “absolute acknowledgment” of the applicant to buy the Truck together with the Licence Agreement “for the total and inclusive price $130,000 as is, which is inclusive of the first year Licence Fee of $10,000.”  It also contained an offer by the first respondent to the applicant to provide certain benefits (credit, cash and driver assistance) on commencement of his business.

I do not accept the contention for the applicant that the effect of the Contract was to sell to him a business which included the title to the Truck.  The terms of the Contract make apparent that the subject of sale and purchase is the Truck and the Licence Agreement.  The provision for offer of other benefits was supplemental and not part of a business sale.

The Licence Agreement recited the first respondent’s authorisation to use the patented system in relation to the Equipment, its proprietorship in an Australian design for the Equipment and its agreement to engage the applicant to haul and collect industrial, commercial and residential rubble, rubbish and waste, material and/or machinery or articles (“services”) as and when requested by it from time to time on the terms and conditions of the Licence Agreement.  By cl 1 the agreement to engage and supply was effected for the term of the Licence Agreement.  No term was specified but in cl 10 provision was made for termination on breach of obligations under the Licence Agreement upon failure to remedy defaults on 7 days notice and other specified events.

By cl 2 it was provided the applicant as licensee would have the non-exclusive right and licence to use and operate the Equipment subject to payment of the fees and performance of obligations.  Clause 3 provided the licence fee would be the annual amount of $10,000, subject to review.

Clause 7.4 of the Licence Agreement provided:

“The Minimum Fee shall be sixty thousand dollars ($60,000) or in the event that the Licensee’s licence is terminated otherwise than on an Anniversary of the Commencement Date then such smaller amount as results from multiplying that sum by the portion of a year that has passed since the Commencement Date or the previous Anniversary of the Commencement Date (whichever is later).”

Although capitalised, the term Minimum Fee was not a defined term.

Clause 10 provided for the first respondent to have the right to terminate the Licence Agreement forthwith in certain limited circumstances.  Provision was made in the same clause for both the applicant and the first respondent to be able to terminate the Licence Agreement by giving three months written notice to the other.

Clauses 11.3 and 15 provided the Licence Agreement set forth the entire understanding between the parties and superseded all prior “commitments representations and warranties” made orally or in writing.

(2)  Oral terms

The applicant’s case pleads the Contract is subject to express oral terms that:

·   the business was capable of enjoying, currently enjoyed and would continue to enjoy a gross income of $120,000 per year and therefore $10,000 per month; and

·   the first respondent would supply the applicant with sufficient jobs to achieve a turnover averaging $10,000 per month.

For the respondents it is submitted this has the effect of pleading the first respondent guaranteed the applicant would receive a gross income of $120,000 per year or $10,000 per month because only then would the applicant have a claim if his gross income fell below those limits.  For the applicant it is submitted the pleading is not expressed in terms of a guarantee and so it is seen to be consistent with the conversations which it alleges took place between the applicant and the third respondent.  It is the case the pleading is not expressed in terms of a guarantee.  What the applicant’s pleading claims is that the applicant was told the business had a current capability of earning $120,000 per annum, and therefore $10,000 per month, and would continue to earn that amount.

It is therefore necessary to turn to the evidence of the content of the conversations in which it is claimed the representations were made.

(i) The applicant’s evidence

On 30 June 1995 the applicant sold a newspaper round and then commenced to look for a new business.

In early August 1995 he read a newspaper advertisement placed by Tony Batista of Goodwin, Mitchell, O’Hehir and Associates, business brokers (“the broker”), offering a trucking business which would earn $120,000 plus per year.  He spoke with Batista by telephone and arranged to see him a day or so later.  When he did so he was told the truck (identified as “Mobile 15”) belonged to the first respondent; the respondent had plenty of work; the owner/driver of Mobile 15 (Cooper) was ill and wished to sell; and Cooper had grossed $140,000-odd in the prior year.  He was told the first respondent’s business was well run and had plenty of work.  Batista stated there was a licence fee of $10,000 payable for the Equipment and gave him a brochure on Mobile 15 (“the brochure”) which included a statement of earnings for Cooper of $142,015.  In addition it contained a statement:

“The contract...stipulates...a guaranteed minimum gross income of $66,000 per annum.  The average is $120,000 per annum.
Mobile 15 has grossed $85,553 from mid October 1994 to 30 June 1995.”

The applicant took the brochure home and read it again.

In cross-examination the applicant testified he knew the only guaranteed minimum gross income was $66,000 per annum which had later been changed.  I understand this as a reference to the figure of $60,000 in the Licence Agreement.

It is common ground the applicant then made telephone contact with the third respondent.

On the applicant’s account the third respondent confirmed the reason for the sale of Mobile 15 and described the work of the first respondent in relation to big construction sites.  The applicant stated the third respondent then told him he had nearby a new truck for sale (“Mobile 19”) which had been working in the area adjacent to Cooper’s and which had earned similar amounts of money.  He offered to sell this to the applicant for $130,000, being $5,000 cheaper than Mobile 15.  Additionally the applicant’s evidence is the third respondent said he would waive the $10,000 licence fee if the applicant purchased a truck from him.

On the applicant’s account these matters were repeated to him at a meeting with the third respondent a few days later.  His evidence is he was told by the third respondent the Truck would earn similar figures to those in the brochure, which the applicant had taken with him from the meeting with Batista.  After going through the figures the applicant asserts the third respondent said to him the Truck would earn $120,000 per annum and at least $10,000 a month.  Following discussion, the applicant inspected Mobile 19 and considered it would be a better proposition to buy than Mobile 15.

A few days later the applicant met the third respondent in person.  He asked to go out on Mobile 19 but his request was refused.  This made him concerned about the viability of the first respondent.  The third respondent then showed him the monthly run sheets for the company trucks of which Mobile 19 was one.  The applicant’s evidence was he took the Broker’s brochure with him to his meeting.  He did not testify he had shown it to the third respondent, which is consistent with the latter’s evidence that he was not shown the document.

The applicant accepted that before he left this meeting with the third respondent he had said he was interested in the Mobile 19.  He said he would lease the vehicle and would organise his own finance.  He had inquired concerning the earnings of Mobile 19 and been told by the third respondent they were similar to Mobile 15. He was definite he had not been told there was no solid evidence of such earnings because it had not been operated by an independent contractor.

Concerning whether documents were referred to at the meeting, the applicant asserts he discussed the brochure with the third respondent but he could not recall the third respondent referring him to cl 7.4 of the Licence Agreement. However, he accepted that at the time of his first meeting with the third respondent he had been aware of the minimum gross income referred to in the brochure.  He recalled the third respondent saying to him something along the lines that during the first three months he would be learning the ropes and not to have high expectations.  He had been shown the run sheets for the trucks but had definitely not been shown a summary of the potential earnings of the vehicles.  Specifically the third respondent had not shown to him a document entitled “Approximate Gross Earnings of Truck” or “Approximate Expense of Truck based on Current Owner Drivers and Company Truck.”  A blank version of the Licence Agreement could have been given to him then.  He was happy with it and did not seek legal advice on it, although he referred it to his finance broker.

In cross-examination the applicant gave the following testimony concerning the figure of $120,000:

“Was it not the case that when [the figure of 120,000] was discussed it was always in terms of approximately? - No, I worked my figures out on 120,000.
And when did you work those figures out? - On the brochure that I got from Goodwin, Mitchell and 0’Hehir.”

He denied he had volunteered the figure of $120,000 at the first meeting, saying they had spoken in general regarding the brochure and the average earnings of the trucks was $120,000.  On his part there was no recollection of being told there was no way the first respondent could guarantee what the trucks would earn or that earnings depended on what work was available.

The applicant then saw his finance broker, Simon Line of Midland Finance.  He gave Line the brochure, told him the first respondent had offered to sell him a truck and would waive the $10,000 licensing fee, and that he had been told the Truck would gross at least $10,000 a month.  The applicant’s evidence was he based these statements on the brochure.  Line agreed Mobile 19 would be better proposition than Mobile 15.

On 2 August 1995 the applicant telephoned the third respondent and said he would purchase Mobile 19.  He then went to the first respondent’s yard where he signed the Contract.

In cross-examination the applicant accepted that when he entered into the Contract the major factor operating on his mind in relation to the issue of earnings was what he had been told concerning Mobile 15.  When he signed that agreement, he was aware of the provision in it for a non-refundable deposit.

In cross-examination the applicant could not recall executing the Contract twice to correct an error with reference to the liability to pay stamp duty.

On 8 August 1995 the applicant executed the Licence Agreement, initialling each page as well as amendments to cl 3.1 and cl 7.4.

On 14 August 1995 he commenced work with Mobile 19.

(ii) Third respondent’s evidence

The third respondent came to Western Australia in July 1989 after working in the Criminal Investigations Branch of the Metropolitan Police Office in the United Kingdom.  He became an administrative assistant to the senior partner in a legal firm.  In 1991 he joined a limousine company as operations manager.  After that company was bought out he travelled overseas, returning to Western Australia in 1993.  He then took up an appointment with the first respondent as a sales representative.  Shortly afterwards he was promoted to sales manager.  Later the same year, when the second respondent (who was the Managing Director) became ill, the third respondent was appointed as temporary general manager.  That employment ceased in 1997 and the third respondent took up a position as territory manager with a multi‑national organisation specialising in waste removal and specialised waste cartage.

While temporary general manager the third respondent was responsible for the staff of nine and for overseeing the contractors.  The business of the first respondent was mainly based on commercial clients who were large construction organisations, project builders and registered builders of the Master Builders Association.  In addition the first respondent operated company trucks and bins.

Around 19 July 1995 the third respondent received a telephone call from the applicant.  The applicant advised him he was interested in purchasing Coopers’ vehicle.  He questioned the applicant concerning his familiarity with the waste industry.  They then had a general conversation before organising a time for the applicant to call on the third respondent.

The third respondent was surprised at the reference to Cooper.  He telephoned Cooper and ascertained there were health reasons for his wishing to leave the industry.

On 21 July 1995 the third respondent first met the applicant.  The applicant expressed an interest in Cooper’s vehicle.  He told the applicant about the history of the first respondent and stated it had several trucks for sale.  He identified Mobile 19 and invited him to inspect it.

The applicant inspected Mobile 19 and inquired as to its price.  The third respondent told him $135,000.  Later he advised him there was a $10,000 licence fee to which the applicant replied “then that’s 145,000.”  The applicant told the third respondent that was the price Cooper was asking for Mobile 15.  This surprised the third respondent because Mobile 15 was a 1989 model vehicle whereas Mobile 19 was a 1994 model which had done 70,000-80,000 kms.  In cross‑examination the third respondent could not be absolutely certain the applicant had told him Cooper wanted $145,000 rather than $135,000 for his truck.

The applicant inquired concerning the likely earnings from Mobile 19.  The third respondent advised him he could not give him an accurate figure because Mobile 19 was not a contractor owned truck.  He testified and confirmed in cross-examination he told the applicant it was impossible to obtain figures for Mobile 19, that being a new truck, and any figures would be based on figures of other contractors working in areas adjacent to the area in which Mobile 19 would be working in.  He told him that, as stated in the Licence Agreement, the guaranteed minimum was $60,000 gross and he could guarantee that figure.  In cross-examination he could not recall saying to the applicant Mobile 19, being next-door to Mobile 15, would enjoy a similar income to it although he did not deny he could have said it. 

The third respondent provided the applicant with an unexecuted copy of the proposed licence agreement.  He went through the document with the applicant and specifically drew his attention to cl 7.4.

In addition he gave him a document entitled “Approximate Gross Earnings of Truck.”  It contained the subtitle “earnings would vary between $8,000 - $12,000 gross per month.”  These were derived from Mobile 15 and Mobile 16 expenditure obtained by telephone inquiry to their owners.  A total gross income of $131,577 was shown which was based on the gross earnings of Mobiles 14, 15 and 16.  He confirmed this in cross-examination.

The third respondent also handed to the applicant a document headed “Approximate Expense of Truck Based on Current Owner Drivers and Company Truck.”  This contained a list of expenses, the same list of earnings as the previous document and the statement “earnings would vary from $8,000 - $12,000 per month gross.”  In cross-examination he denied he had not done so.

With reference to the total gross income shown in these documents the applicant made the comment he would be happy with $120,000.  The third respondent replied he could not guarantee anything and all he could say was this was what trucks in adjacent areas could earn.  He offered the opportunity for the applicant to talk to existing contractors.  In cross-examination he testified he did not mention the figure of $120,000 to the applicant.

When the applicant inquired as to the sale price the third respondent advised him it was $135,000 but he would sell it for $130,000 and waive the $10,000 licence fee, subject to directors’ agreement.  He repeated this evidence on waiver in cross-examination.  He denied that when he structured the deal the $10,000 had been included as part of the whole purchase price so that no waiver was effectively given.

At this meeting the question of a deposit of $10,000 was discussed and the third respondent said if it was paid it would be non-refundable.

The third respondent then requested the applicant to go away and think about the purchase.  The applicant said he would do so and be in touch when he was ready and his finance broker would get in touch with the third respondent.

On 21 July 1995 the third respondent recorded a message to Michael Coff, director of the first respondent resident in the United Kingdom, in which he stated:

“...I had a prospect come to see me this week on the figures of one of the large trucks...so I took the opportunity to advise him and try and sell him one of ours.

This afternoon, he advised me to put the new [truck] aside, as he would purchase it.  I advised him that I would require a non refundable deposit, to which he agreed to provide me with a cheque on Wednesday for $10,000.  The deal was for $130,000 as is, with the first year license fee inclusive in the $130,000.

I will wait and see until Wednesday, and another day for the cheque to clear...”

In cross-examination the third respondent said the use of the word “figures” in the opening line of this message was a reference to the earnings of Mobile 19.  He denied that during this meeting he had volunteered the figure of $120,000 per annum as possible income.

In cross-examination the third respondent was also referred to par 2.1.6 of the “respondent’s reply to statement of claim by applicant dated 18th July 1996” (“the reply”).  In the relevant paragraph of the statement of claim it was claimed:

“the following were express terms of the Contract:

(a)  that the Business was a business that was capable of enjoying, currently enjoyed and would continue to enjoy, a gross income of approximately $120,000 per year and therefore at least an average of $10,000.00 per month;

(b)  that the First Respondent would arrange all of the Applicant’s jobs under the Contract and provide the Applicant with sufficient jobs to enable the Applicant to achieve a turnover averaging $10,000.00 per month;”

The reply denied this and asserted that at no time did the second or third respondent give any guarantees the applicant would get a gross income of $120,000 per annum.  It continued:

“It is admitted they did however state that it was a possibility that the Applicant’s gross earnings could be $120,000 this figure being calculated based upon 12 moves a day x 287 working days per year at $35 per move (i.e.) giving a maximum gross earning of $120,540 per annum.

This maximum earning by the Applicant would only be possible subject to the following:

(A)The Applicant’s vehicle being available for work 100% of all working days.  This is impossible in that the vehicle could not be available 100% of all working days due to it having to be serviced regularly and vehicle break-downs from time to time.

(B)The demand from the Respondent’s customers for bin moves.

This demand fluctuates by the amount of construction being carried out by the Respondent’s customers and the weather conditions both of which are completely out of control of the Respondent.

(C)The applicant working full hours and efficiently on those days demand for bin moves being high.”

The third respondent denied he had raised the possibility of the applicant earning $120,000.  He had not drawn up the reply or the examples or calculations in it, all of which had been drafted by Coff and required no input from the third respondent.  While he had signed the letter forwarding the document to the Court, he had done so after advising Coff he needed to ensure the document was correct.  In re-examination he testified he knew of no reason why it would be impossible for the applicant to earn $120,000 because other contractors were earning higher amounts.

The third respondent was then telephoned by Line requesting “the Licensing Papers” as well as information on the earnings of the vehicle.  The third respondent advised him he did not have the exact earnings for Mobile 19 but he would provide an estimation of earnings of adjacent vehicles or contractors.  He arranged for this to be sent to the applicant.

That was the document headed “Income of M19” which the applicant acknowledged receiving and which listed the same information under that heading as had been listed in the documents which the third respondent maintains he gave to the applicant at their meeting.  The third respondent said he thought it had been prepared in advance of Line calling.  In cross-examination the third respondent denied sending this document to Line without any proviso to qualify the title stating he had told Line in their telephone conversation he could not give him specific figures for Mobile 19 and would give him figures of contractors adjacent to the area, to which Line was amicable.

The third respondent’s next involvement with the applicant was when the applicant attended at his office for signing the Contract.  The third respondent read it aloud to the applicant and they each then signed it.

At that time the applicant stated if he could earn $120,000 he would be happy.  The third respondent pointed out again the guaranteed minimum was $60,000 as stated in the Licence Agreement.

The agreement then executed contained an error in that it provided for the vendor to pay the stamp duty.  When the third respondent discovered this he telephoned the applicant who agreed not to hold the vendor to the clause.  He therefore came in the next day and re-executed the Contract. The prior agreement was destroyed in his presence and with his consent.

No deposit was paid by the applicant on that occasion as he had decided to pay the full amount at settlement.

The third respondent next had contact with the applicant on 8 August 1995  when he came to the third respondent’s office to execute the Licence Agreement.  Aspects now appearing as deleted were marked by the third respondent.  This included the deletion in cl 7.4 of a reference to “twenty five thousand dollars ($25,000)” at which time he had pointed out the clause had the effect of guaranteeing income of $60,000.

The third respondent then did not have contact with the applicant until February 1996, after the Contract was on foot.

(iii)  Resolution of conflict of evidence

The evidence of the applicant and the respondent are in conflict on the issues central to the claim.  There are three principal considerations in resolving the conflict.

(a)  The evidence of Line

Line has specialised in property finance for residential and commercial properties since 1988.  He was contacted by the applicant on 25 July 1995.  The applicant told him he was looking at buying a truck from the first respondent.  He said he had been led to do this after receiving some information from a business broker.

Line sought information from the applicant which would enable a proposal to a lender to be assembled.  The applicant passed to him the information from the broker.  Additionally, he and the applicant agreed the simplest way for them to obtain the specific income the Truck was likely to generate was for an inquiry to be made to the first respondent to have them confirm the amount of the income.  Importantly, Line did not testify the applicant had told him he had been told the Truck would gross at least $10,000 per month nor was it put to Line that he had been told that.

Line made such inquiry by telephone to the third respondent.  On 25 July 1995 he was sent by facsimile from the first respondent a copy of the motor vehicle licence for Mobile 19 together with a document listing the monthly income for Mobile 19 for the 94/95 financial year and showing a total income of $131,577.  He formed the opinion, based on those figures, the applicant could afford the proposed purchase.  He incorporated the figures in the submission to a finance company in which he also stated:

“The vendor [the first respondent] has a mix of both company (three in total) and subcontract trucks.  The company made a decision to sell its trucks to subcontractors...They have provided us with two sets of income figures, one for a [company] subcontractor, and one for the truck in question, drawn from their records.

In both cases the returns are strong enough in our opinion to service the proposed commitment (sic) without difficulty.  They show an operating surplus of around $100,000 per annum, based on annual income of $140,000. 
From this surplus the lease rentals of around $22,000 should be deducted.
...

The sub contractor is paid $35 for each delivery, and $35 for each pick up, making a total of $70 for each turn around.  On the expected income per annum this equates to 2,000 jobs per annum, or around 40 per week.  Given that the applicants are taking over an existing area, with the potential to improve the figures as you would expect a committed private operator to do, they are confident of increasing their income even further.”

Also included in the submission was the page from the broker’s brochure on which the guaranteed minimum gross income was stated together with the statement the average income was $120,000 per annum and Mobile 15 had grossed $85,553 from mid October 1994 to 30 June 1995.

In cross-examination Line recalled the third respondent told him Mobile 19 was a company truck.  He could not recall him saying the best the third respondent could do was to provide him with some figures taken from other contractors to the first respondent.  He denied saying it did not matter whether the figures were for Mobile 19 provided he had some figures to put before the financier.  He was aware Mobile 15 was operated by an independent contractor who was earning around or a little over $10,000 a month or $120,000 a year.  He had not thought it strange that the company truck, Mobile 19, was said to have earned more than an independent contractor, regarding it as within the margin.

Line’s evidence does not provide any corroboration of the applicant’s evidence that he told Line he had been informed the Truck would gross at least $10,000 a month.  His evidence shows that the applicant, when instructing him, was reliant on the brochure rather than any statement made to him by the third respondent.  A reading of the applicant’s evidence is to the same effect, in that it shows him to have been so reliant in working out his figures.

(b)  The provisions of the Licence Agreement

The Licence Agreement expressly provided for a minimum guaranteed gross income of $60,000 and the applicant was aware of this.  Although the applicant denied having had cl 7.4 of the Licence Agreement drawn to his attention, he initialled the amendment to it.  The brochure clearly influenced him and it was that which stated the minimum income and described $120,000 as the average income.  The expectation of income which the applicant had was derived from the brochure and held by him prior to his meeting with the third respondent.  Given that the meeting led to him having concerns as to the first respondent’s viability, it is improbable he would have signed the Licence Agreement stating he had no claim beyond $60,000 per annum if he considered he had been put on a promise of earning $120,000 per annum.

(c)  The demeanour of the witnesses

For the applicant it is contended his evidence should be found to be more credible.  In support it is submitted that while he may have been unable to recount the exact dates and sequence of events in relation to the conversations, those are to be seen as ancillary matters.  Additionally, the events in question occurred some two years prior to the hearing.  Further, his recollection of the substance of the representations did not change under cross-examination.  It is said the reason for this is the applicant based his purchasing decision on those income figures so that they became central in his mind.

For the applicant it was also contended the veracity of the third respondent’s evidence ought to be called into question.  It is submitted for the applicant the forthright manner in which the third respondent gave his evidence should lead the Court to the conclusion his evidence cannot be seen as flowing naturally from actual unadulterated memory.  This, it is said, is to be assessed in the light of the knowledge the third respondent had previously experienced considerable exposure to legal battle, reflected in his role in drafting court documents.  Furthermore, the Court is asked to contrast the third respondent’s failure to recall a telephone conversation with Shadbolt with his recall of the conversations taking place with the applicant two years ago.  The submissions for the applicant seek to have the Court find the third respondent has a tendency to frame matters in a way which suits him at any given time.

It is correct the third respondent gave his evidence smoothly, and in that contrasted with the applicant, a matter to which I will return.  Despite the best efforts of counsel for the applicant, I was not left with the impression the third respondent was giving evidence of a contrived character or that he was so smooth in the giving of evidence that he should not be believed.  I do not consider anything can be inferred concerning the credibility of the third respondent from his inability to recall one telephone call from Shadbolt, which was of brief duration in comparison with his dealings with the applicant.

The veracity of the third respondent’s evidence is also to be assessed in the context of the content of the respondents’ reply to the statement of claim.  For the applicant it is contended the third respondent’s evidence is to be seen as entirely inconsistent with his assertion in that reply.  The evidence, however, does not establish that it was his reply, only that he wrote down what Coff instructed him to do.  Coff was not called as a witness.  The contents of the reply were not shown to contain an assertion of the third respondent and so cannot reflect on his veracity.

For the applicant it is submitted that during his evidence in chief he stated he would not have purchased the business had he been told it would be capable of achieving an income in the area of $8,000 per month and that this was not challenged in cross-examination.  On my reading of the evidence that question was put to the applicant in re-examination so that it did not open itself to cross-examination.

In hearing the applicant’s evidence I formed the view that the manner in which he gave it, including disjointed accounts, confusion in sequence of events and inability to recall, was of more significance than the submissions on his behalf allow.  My impression of his evidence was the lack of clarity and consistency intruded into his ability to distinguish with precision what had actually been said by the third respondent and what had remained foremost in his mind as a consequence of reading the brochure.  His adherence to the substance of the representations alleged to have been made by the third respondent appeared to me to be uncharacteristic when viewed in the context of his evidence as a whole and so less to be viewed as his accurate recollection of what was in fact said to him on the occasions on which his case is based.

It follows that I am unable to accept that the applicant’s evidence is to be preferred to that of the third respondent.

This is a case where there is no choice for the Court but to rely quite fundamentally on an assessment of credibility based on seeing and hearing the witnesses.  Little assistance is given to the resolution of the evidentiary conflict apart from that.  The two matters previously referred to are adverse to the applicant and therefore are consistent with the observations of demeanour.  It follows the case that there were the express oral terms in the Contract is not made out.

(c) Implied Terms

The case for the applicant seeks to imply into the Contract a term that the first respondent would not terminate it without reasonable grounds and a further term that he would engage only a sufficient number of contractors to carry out the jobs that were required to be carried out and no more, so as to ensure an adequate turnover for the applicant.  In view of the effect of the finding in relation to the express oral terms it is not necessary to deal further with these claims and their relationship to issues of loss and damage.

TRADE PRACTICES CLAIM

The findings which I have made concerning the express oral terms in the Contract are fatal to the applicant’s case that representations were made to him the business had the capability of achieving an annual turnover of $120,000 (as the applicant expresses the effect of the pleadings).  I find the applicant’s case that the representations were made is not established.

CONCLUSION

For these reasons I consider the applicant’s claim should be dismissed.

I certify that this and the preceding eighteen (18) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice R D Nicholson

Associate:

Dated:            19 December 1997

Counsel for the Applicant:	S H Bluemmel
Solicitor for the Applicant:	Picton‑Warlow & Co
Counsel for the Respondent:	P C Doherty
Solicitor for the Respondent:	Minter Ellison
Date of Hearing:	3 & 4 September 1997
Date of Judgment:	19 December 1997

APPENDIX

MINUTE OF RULINGS ON

RESPONDENTS’ OUTSTANDING OBJECTIONS TO ADMISSIBILITY

Index No.	Page	Rulings
1	1 - 5	Objection not material because applicant’s case does not rely on truth of statements in the brochure.  While the applicant’s evidence was that he took the brochure to his meeting with the third respondent, he gave no evidence he showed it to him, which is consistent with the third respondent’s evidence.
13	26 - 35	Objection as to relevance overruled as document part of chain of causation between alleged representations and applicant’s loss. Evidence not led as to truth of conversations on p 28 so hearsay objection inapplicable.
16	39	Objection as to relevance allowed.  No evidence to connect document with delight of third respondent at sale of truck.
26	68	Respondent’s objection not pursued at hearing (see T24).
41 - 43	93 - 95	Objection allowed as evidence relates to June 1996 not to an early stage in the contract.
56	159 - 250	Formal proof not required.  Relevance and hearsay not pursued at hearing (see T119-121).
2/1	251 - 318	Not pursued at hearing.  (See T39)