Lojies Pty Ltd v Wu, Xun
[2009] VCC 1395
•20 November 2009
| IN THE COUNTY COURT OF VICTORIA | Revised |
Not Restricted
AT MELBOURNE
CIVIL DIVISION
COMMERCIAL LIST – GENERAL DIVISION
Case No. CI-08-02299
| LOJIES PTY LTD (ACN 116 359 516) | Plaintiff |
| v | |
| XUN WU (also known as JIMMY WU) | Defendant |
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| JUDGE: | HER HONOUR JUDGE KENNEDY |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 5, 6, 9 & 10 November 2009 |
| DATE OF JUDGMENT: | 20 November 2009 |
| CASE MAY BE CITED AS: | Lojies Pty Ltd v Wu, Xun |
| MEDIUM NEUTRAL CITATION: | [2009] VCC 1395 |
REASONS FOR JUDGMENT
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Catchwords: Contract for sale of business – claim for amount outstanding- whether contract varied orally so that no amount is outstanding- whether amount of $20,000 received by related company reduces outstanding balance
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| APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr C. J. King | T F Grundy Lawyers |
| For the Defendant | Mr. J. R. Werner | DKP Lawyers Pty Ltd |
| HER HONOUR: |
1 Lojies Pty Ltd seeks the sum of $163,924.13 from Mr Wu for the outstanding balance pursuant to a sale of a Blockbuster video business entered into on 17 April 2007.
2 Following entry into the sale agreement, Mr Wu also entered into a loan agreement for $200,000 with a company related to Lojies, Streamlined Manufacturing Pty Ltd, on 16 August, 2007. Mr Pepper was a director of both Lojies and Streamlined at this time. In consideration of the loan, Streamlined was to issue 15 shares of the company on completion of the loan payments.
3 Mr Wu says that he does not owe the outstanding balance under the sale agreement because of an oral agreement reached on 31 October 2007, or alternatively 9 January 2008, with Lojies, Streamlined and himself whereby:
(a) he agreed to release Streamlined from its obligation to issue shares to him
pursuant to the loan agreement;(b) he agreed to release Streamlined from its obligation to repay all moneys
which he had advanced to it;(c) Lojies agreed to reduce the outstanding balance payable by Mr Wu under the sale agreement by the amount which Mr Wu had advanced to Streamlined.[1]
[1] Further Amended Defence to Amended Statement of Claim and Second Further Amended Counterclaim of the Defendant dated 9 November 2009 paragraph 38
4 Mr Wu thereby says that, as he advanced $170,000 in total to Streamlined, that he has actually overpaid for the purchase of the business and thereby counterclaims in the amount of $6,075.87 ($170,000 less $163,924.13 owing).
5 Lojies denies that any such variation was made and further alleges that any such variation agreement is void as it was not supported by consideration.
6 In terms of quantum, Mr Wu accepts that if the defence and counterclaim fails the Court must give judgment in the amount claimed with one exception. That is, he claims that an amount of $20,000 paid to Streamlined in November 2007 was received by Streamlined as nominee for Lojies in reduction of the outstanding balance owing under the sale agreement in which case Lojies is entitled to judgment in the sum of $143,924.13.[2]
[2] Case Summary of the defendant presented in opening paragraph 24
7 Lojies had earlier sought an amount of interest at the rate specified in the sale of business agreement. However, this was abandoned in closing and Lojies seeks interest pursuant to statute from the date of the issue of the writ.
8 Accordingly, the issues are:
(a) whether a variation was effected to the sale agreement as alleged by Mr
Wu on 31 October 2007 and/or 9 January 2008; and(b) if no, whether the amount of $20,000 paid to Streamlined in November
2007 should be deducted from the balance owing under the sale agreement.
Background Facts
9 Mr Graham Pepper and his wife, Jan, are directors of Lojies. Mr Pepper was also the sole director of Streamlined from 2 July 2007 and ceased being a director of Streamlined on 30 June 2008.
10 Mr John Graham was the day to day manager of Streamlined in 2007. He was appointed director of Streamlined on 10 July 2008.
11 Streamlined makes circuit boards, particularly for electric guitars. Mr Graham’s evidence was that the company had been purchased from a liquidator.
12 Mr Wu is a young man nearly 25 years old (born 14 December 1984) who generally gave his evidence through a Mandarin interpreter although he also, at times, gave his evidence in English. He has previously studied Commerce at Swinburne University and has previously owned a fish and chips business in Melbourne during 2006-7.
13 In around Easter 2007 Mr Wu was looking to buy a business and was introduced to Mr Pepper at the Blockbuster store by Mr Y of Valentine’s Business Brokers.
14 On 12 April 2007 Mr Wu executed a contract for the purchase of the blockbuster Ivanhoe video business; the contract was later executed by Lojies on 17 April. The sale price was $635,000. By general condition 8.1 Mr Wu was also obliged to pay Lojies the value of the stock to a value of $100,000. The agreed deposit was $63,500 which had been paid on 5 April, 2007. The settlement date was specified as 1 August, 2007 or earlier by mutual agreement.
15 The contract was subject to the purchaser being approved by the franchisor. (clause 4 special conditions). Further, pursuant to general condition 5.2 the vendor was to obtain for the purchaser by the settlement date a lease of the premises either by transfer of the current lease with the landlord’s consent or by a new lease.
16 In late July, Mr Wu and Mr Pepper agreed that Mr Wu would take possession of the business on 1 August notwithstanding the fact that, at that stage, there was no approval of the franchisor or transfer of lease. Mr Wu paid a further sum of $300,000 as a payment for the sale at this time.[3]
[3] The parties agreed that the “Plaintiff’s Chronology of Payments” document correctly sets out the payments made save that the defendant said that the amounts described as “streamlined loan advance” in November 2007 were not properly characterised as payments on the loan
17 During mid 2007, Mr Pepper also introduced Mr Wu to Mr Graham with a view to possible investment in Streamlined. Mr Wu then inspected the Streamlined factory and entered into a loan agreement.
18 By a loan agreement dated 16 August, 2007 between Streamlined and Mr Wu, Streamlined acknowledged that Mr Wu had already loaned it an amount of $120,000 on 16 August, 2007 with a second instalment of $80,000 due on the 31st August 2007. In consideration of the loan funds, Streamlined was to issue 15 shares of the company to Mr Wu “on the completion of the loan payments as per this agreement.”
19 On 7 September 2007 Mr Wu made payments pursuant to the Streamlined loan of $25,000 and $5,000 (cash), with the result that the amount advanced to Streamlined was $150,000.
20 On 1 October and 10 October Mr Wu made further payments for the Blockbuster sale of $20,000 and $100,000 respectively, leaving an amount outstanding on the sale at $251,500.
21 On 10 October 2007 the lease was transferred and at some point in October, the approval of the franchisor was also secured.
22 On 31 October 2007 a meeting occurred between Mr Pepper, Mr Wu and Mr Graham at the Radisson hotel. The precise discussions are a matter of dispute.
23 In early November, 2007, Mr Wu then made further payments as follows: a payment of $80,000 payable to a company, JM and GP (Mr Pepper was a director of this company) which the parties accept was made in respect of the sale; and a further payment of $20,000 to Streamlined (paid in two lots of $15,000 and $5,000).
24 The result was that an amount of $170,000 had been paid to Streamlined.
25 On 9 January 2008 a further meeting took place at the office of Mr Sykes, an accountant, between Mr Pepper, Mr Wu and Mr Graham. There is dispute regarding what was said at this meeting.
26 A further meeting was also held on 18 March 2008 at which Mr Pepper, Mr Sykes, Mr Beyer, a finance consultant, and Mr Wu and his accountant, Ken Jin also attended. This meeting will be referred to further below.
27 A complicating feature was that the parties were in dispute over the question of adjustments regarding the sale agreement from Mr Wu’s trading under Lojies’ account from 1 August, 2007. In the result, the parties have agreed that the value for adjustments should be $7,575.87 which should be payable to Mr Wu. However, the question of adjustments was contested during late 2007 and 2008.
28 The end result is that, absent any variation as pleaded (and leaving aside the status of the further $20,000 paid to Streamlined in November, 2007) Mr Wu accepts liability for the agreed balance of $163, 924.13.
29 The crucial question is therefore whether a variation was effected during the meeting of 31 October, 2007 or 9 January, 2008.
Witnesses
Lojies’ witnesses
30 Lojies called Mr Pepper, Mr Graham, and Mr John Beyer (who was present at the 18 March 2008 meeting). The parties also agreed that no adverse inference should be drawn from Lojies’ failure to call Mr Sykes as a witness as to what took place at the meeting on 9 January.
31 A substantial attack was made on the credit of Mr Pepper by Mr Wu although much of the attack was made on peripheral matters with little direct attack on Mr Pepper’s evidence as to the relevant events of 31 October, 2007 and 9 January, 2008.
32 There were suggestions that Mr Pepper had provided inaccurate information to Mr Wu prior to entry into the sale agreement and/or the loan agreement. For example, it was suggested that Mr Pepper had misrepresented the number of shareholders in Streamlined although Mr Pepper’s explanation was that he was holding shares for others. Mr Pepper also admitted that there were mistakes in the financials forwarded to Valentine’s business brokers although he advised Mr Y of these mistakes.
33 Mr Wu has made no misrepresentation allegation in this proceeding with the result that limited evidence was adduced to test such matters. In these circumstances I have no reason to doubt Mr Pepper’s explanations.
34 A serious allegation was also made against Mr Pepper that he had taken cash, CDs and DVDs from behind the counter at the video shop after hours on 9 and 14 October during the period after Mr Wu had gone into possession.
35 Mr Pepper’s explanation was that he was given permission to enter the shop after hours as this was the only time he could get there (as he had purchased a shaver business where he worked full time). He also readily admitted to removing $5000 in cash which he said was his money which had been put there by a friend, Mr Birch, who used to drop money in quite regularly to him. He also admitted to taking CDs and DVDs stating that he was given permission to take them and pay for them at cost price later which he did.
36 I accept these explanations of Mr Pepper and am not satisfied that his credit was undermined by these serious allegations which were not proved. However, I accept, consistent with the evidence of both men, that Mr Wu accused Mr Pepper of stealing from him on 15 October. This affected the relationship of the two men which had hitherto been a co-operative one.
37 I also accept that there were some inconsistencies in Mr Pepper’s evidence (for example, whether discussions continued at a pub with respect to resolving the outstanding debt at the meeting in March, 2008). Further, that he demonstrated some lapses in memory (for example, he was unable to be precise as to how Mr Wu came into the possession of a signed share certificate and he recalled a written offer of 31 October which did not apparently exist).
38 Nevertheless, I am satisfied that any inconsistencies and lapses in memory are explicable by the passage of time. More significantly, I am generally satisfied that Mr Pepper’s evidence was honest and credible as to the relevant significant conversations which evidence he did not resile from under cross examination.
39 Mr Graham was generally a straightforward witness who was called under subpoena by Lojies. His evidence will be referred to below.
40 Mr Wu made criticism of Logies’ alleged “failure” to adduce evidence from Mr Graham that his company, Streamlined, owes Mr Wu $170,000. However, Mr Wu made no claim in this proceeding against Streamlined and Streamlined was not a party to this proceeding. In such circumstances any such “failure” was inconsequential.
41 Mr Beyer was not present at the pivotal meetings. However, he did give evidence regarding a meeting which took place in March 2008 which evidence will be referred to, below.
Mr Wu
42 In considering the evidence of Mr Wu, Mr Wu’s Counsel urged me to consider him as naive. I do not accept this characterisation. Rather, although young, he presented as an intelligent person who appeared to have a good grasp of English notwithstanding it was not his first language. As mentioned already, he had also studied in Australia (without an interpreter) and had already owned a business in Melbourne.
43 He did, however, present as a person who held strong opinions about his entitlements even in circumstances where an entitlement was not borne out by objective facts. Thus, for example, he maintained “I think since he [Mr Pepper] signed on this [loan] document, that means I own 15 per cent of the shares.” This despite having earlier agreed that the written loan document actually provided that he would only get his 15 shares on completion of the loan payments.
44 Mu Wu also appeared to be motivated by considerable hostility towards Mr Pepper which hostility had apparently arisen from his disappointment and anger at Mr Pepper going into his shop in October. However, despite this, he did not obtain something in writing after allegedly forming an agreement on 31 October. This was despite his claim that he could no longer trust Mr Pepper after he watched footage of him removing DVDs on 15 October. In circumstances where there was such a lack of trust that accusations of theft had been made, the failure to obtain or otherwise document an alleged agreement was telling.
45 There was also evidence from Mr Graham that Mr Wu believed he had had paid too much for the business and also that he was unhappy with the takings of the business (as referred to in an email of Mr Wu of 3 November 2007). Mr Wu actually admitted under cross-examination that “all he wanted to do was to get out of the purchase agreement.”
46 In the light of all of these matters above, then, I am unable to be sure that Mr Wu’s account of events and issues is substantially reliable and unaffected by his own subjective opinions. Further, to the extent he does have difficulties with English, this did not assist his case since the meetings were all conducted in English. In these circumstances, it was possible that Mr Wu misunderstood what was actually said.
47 However, it remains to consider the question of variation in the context of all the evidence in the case.
Whether agreement reached on 31 October 2007
Evidence
Evidence of Mr Wu
48 In relation to the meeting of 31 October 2007 at the Radisson in William Street, Mr Wu says that Mr Pepper asked him for payment of the outstanding balance on the sale of Blockbuster. Mr Wu told him he had paid in full and Mr Pepper told him that $170,000 was for Streamlined and that was different.
49 Mr Wu said that there was then discussion concerning the Streamlined shares as follows:
“…I told him I wanted to be released from the shares of the Streamlined.
What did Graham Pepper say to that?---He agreed with that, but he wants
$70,000 for the adjustment.
When you say he agreed with that, can you tell the judge exactly what he said, or a gist of what he said?---(Direct) He said, “I can take over the Streamlined money as part of Blockbuster payment, but I need to - $70,000 for my accounts money”.
Did you agree to make any payment that day?---Yes, I did.
What did you agree to do?---He said I still owe him $100,000 for the stock of the
shop and I said, “I will pay you on the 1st of November”.
Did you agree to make any payment in relation to the adjustment of accounts?--- Not at that time. I told him that I need my accountant to check every statement. If everything is correct, then I will pay.
What was Graham Pepper’s response to that?---He agreed and he said for that $100,000, $80,000 goes to his company, payable his company, and $20,000 payable to the Streamlined.” (emphasis added)
50 Even on Mr Wu’s own version of this meeting, Mr Pepper was only offering to “release the shares” on condition that he received a $70,000 separate payment for “adjustments” or “accounts money.” However, Mr Wu did not agree to make a payment in this amount.
51 In relation to the meeting of 9 January 2008, Mr Wu claimed that there was further discussion about “releasing” his shares in Streamlined as follows:
“What did you say and what did Graham Pepper say?---I said to Graham Pepper that since you haven’t registered with ASIC of my shares that I do not want those shares anymore. So in that case I want – I want him to release the shares from Streamlined.
What did Graham Pepper say to that?---He said OK, he agreed with that.
Why did you ask Graham Pepper to give you something in writing?---Because I want to have something as evidence because on 31 October he agreed then later he disagreed, so I need to have something. And also because after I watched the DVD from my shop I feel that I can no longer trust him and whatever he said orally, any oral agreement is useless so I want a written proof.
Did you explain to Graham Pepper the reason why you wanted something in writing?---(Direct) I told him I want something in writing, otherwise you don’t admit later on.
What did he say to that?---(through interpreter) Well, he said he agrees and he will ask him his accountant to re-issue a new statement and deduct that $170,000.
Was there any discussion about the adjustment of the accounts?---Well, I told him that regarding the adjustment I need my accountant to check first to see everything is right, then I will pay.
What did Graham Pepper say to that?---He agreed.
Sorry, not did he agree, what did he say?---He asked me when can I get ready
for those figures.
What did you say?--- I said I cannot tell you as for when.
Did he say anything further in relation to that?---No.”
52 On 9 January the question of an amount for “adjustments” continued to remain unresolved, even on Mr Wu’s own evidence.
Evidence called on behalf of Lojies
53 In terms of the meeting of 31 October, Mr Pepper’s evidence was that the figure he said that was owed was $220,000 and in this context he put two options to Mr Wu.
54 One was that he “pay me $200,000 within seven days and I would discount it $20,000.” The other was that he would “take over the money that Jimmy had lent Streamlined” which was $150,000 at that point with “Jimmy to pay me $70,000 as a residual to complete the deal at $220,000.”
55 Both options involved a payment of a sum certain by Mr Wu to Mr Pepper.
56 In terms of the Streamlined shares, Mr Pepper said that he told Mr Wu that the shares were not being issued until the loan of $200,000 was paid.
57 Mr Pepper maintained that Mr Wu said he wanted to “keep” the shares at this time.
58 The next day Mr Pepper rang and asked Mr Wu, “seeing that he wanted to keep the shares” if he could pay some more money. Mr Wu said yes and Mr Pepper said he needed $100,000 and Mr Wu said he only had $100,000. Mr Pepper said he also needed to pay some money to Streamlined. Mr Wu then said he would give Mr Pepper $80,000 and pay $20,000 to Streamlined.
59 In terms of the meeting of 9 January, Mr Pepper’s evidence was that the meeting was held to “try to finalise the statements and invoices and to close the deal off.” However, Mr Wu would not make any decisions without his accountant telling him. In the result, no offers were made at that meeting.
60 Mr Graham’s evidence was that at the meeting on 31 October, there was an offer put to Mr Wu to exchange the $170,000 he had invested “plus $65,000 that was outstanding over and above that.” He spoke of Mr Wu “virtually in principle” agreeing to do that but that in a conversation the next day he told Mr Graham that he did not want to go ahead with “undertaking” that he “might have” swapped over the shares.
61 Mr Graham also described the meeting in January 2008 as a “very, very short meeting.” He recalled Mr Pepper asking Mr Wu whether he would accept the transfer of shares and “a certain amount of cash” and Mr Wu acknowledged that he would “accept that.” Mr Graham left shortly afterwards because he did not need to know about the sale of the video shop.
62 When asked to clarify “who accepted what”, he said that Mr Wu “accepted that he would accept the change over of the shares for a reduction in the money that he owed and he would, you know, pay the difference” but that “they were arguing about the difference.”
Whether variation established on 31 October or 9 January
Whether evidence discharges defendant’s evidentiary burden
63 As proponent of the issue (that a variation was made to the written agreement as alleged) Mr Wu bears the evidential burden of persuading the court to decide that issue in his favour.[4]
[4] St George Bank Limited v Quinerts Pty Ltd [2009] VSCA 245 at [22]
64 Mr Wu submitted that both his evidence and that of Mr Graham supported the variation alleged.
65 In terms of the meeting of 31 October, even on Mr Wu’s own evidence, Mr Pepper was only offering to “take over” the Streamlined money if he received $70,000 as “adjustments.” However, on Mr Wu’s version he was unprepared to make a payment for adjustments until his accountant checked the statements. In these circumstances there appeared to be no meeting of minds such as to constitute a variation on 31 October.
66 Mr Wu’s counsel submitted that the absence of an agreement amounting to full accord and satisfaction or resolution of the adjustments was not fatal to Mr Wu’s case since the defendant did not plead full accord and satisfaction.
67 However, Counsel accepted that the Court’s task was to ascertain from the dealings between the parties whether they intended to make a concluded bargain or not.[5] The evidence of Mr Wu suggests that Mr Pepper was only prepared to conclude a bargain by taking into account the Streamlined payments in circumstances where a substantial and certain amount of $70,000 was paid. There is nothing to suggest that an offer was being made to “release the shares” and reduce the indebtedness by the amount paid to Streamlined in circumstances where there was no extra payment received and adjustments were to be worked out later. In the absence of an agreement to make the $70,000 payment, there was simply no acceptance of Mr Pepper’s offer.
[5] Defendant’s written submissions at page 2, citing Cheshire & Fifoot, Law of Contract, 9th edition, at [3.9]
68 The evidence of Mr Graham is also insufficient. Thus, the highest the evidence gets is a suggestion that there was “virtually in principle” an agreement in circumstances where the offer was premised on an extra payment of $65,000. Mr Graham’s evidence does not establish the agreement pleaded by Mr Wu in this case.
69 In terms of the meeting of January, 2008, the evidence of Mr Wu was also insufficient to substantiate the agreement alleged. Although, on his evidence, Mr Pepper agreed to issue a new statement with the $170,000 deducted, the question of “adjustments” remained at large in the absence of approval from Mr Wu’s accountant. Although this question has now been resolved, the evidence of Mr Wu is that Mr Pepper had been speaking of a payment for “adjustments” in the order of $70,000 before he would treat the Streamlined payments as reducing the Blockbuster debt. In circumstances where the amount of such payment remained uncertain there was no concluded bargain on 9 January even on Mr Wu’s own evidence.
70 The evidence of Mr Graham regarding January also does not assist the defendant’s case since he suggests that the “certain amount of cash” was still being negotiated.
71 In these circumstances, I consider that the evidence relied on by Mr Wu is so equivocal and so lacking in supporting documentary evidence that he failed to meet his evidential burden to propose a variation as alleged.
72 However, if I am wrong on this, it is necessary to determine whether Mr Pepper’s evidence to the effect that no variation was made should be accepted.
Whether Mr Pepper’s evidence should be accepted
73 Mr Wu suggested I should reject Mr Pepper’s evidence. He particularly relied on the following matters:
(a) that Mr Pepper’s evidence as to the meeting on 9 January was
“inexplicably thin”;(b) that Mr Pepper made two “telling” admissions;
(c) that an email of 12 January 2008 was unambiguous and constituted an
admission by Lojies;(d) that Mr Pepper conceded that he agreed in the 9 January meeting to have
his accountant issue a new statement;(e) the unchallenged evidence of Mr Wu that he asked Mr Pepper to confirm
an “agreed reduction” in writing on 9 January; and(f) that Mr Pepper gave an improbable explanation that he would have
required something in writing from Mr Wu if an agreement had been reached.Thin evidence
74 Although Mr Pepper conceded that the meeting on 9 January went about one hour his evidence was that no offer was made in the absence of Mr Wu’s accountant. The fact that he was unable to detail all the discussions that “got really back to nothing” was immaterial in my view and perfectly consistent with Lojie’s case that the parties were still negotiating.
75 The evidence of Mr Graham was also that the meeting was “very, very short.”
76 This “thin” criticism does not undermine Mr Pepper’s evidence.
Admissions
77 In terms of admissions, Mr Pepper did concede that Mr Wu “may have” said at the meeting on 9 January that “since you haven’t given me my shares, you can release them now and you won’t need to register them with ASIC.
78 This admission is insignificant. Rather it was perfectly consistent with Mr Wu putting a position without resolution.
79 Mr Pepper also conceded that he said he would “take over the $170,000 as part of Blockbuster but you still owe me accounts money.”
80 This was again equivocal evidence which takes the matter no further for Mr Wu in terms of the reaching of a variation on clear terms.
Email of 12 January
81 Mr Wu claims that an email of 12 January from Mr Pepper constitutes an admission.
82 In considering this submission, it is important to set out the series of emails following the meeting of 9 January since it has been established that conduct or correspondence subsequent to an alleged offer and acceptance can be used as evidence to show whether or not a contract was concluded.[6]
[6] See Cheshire & Fifoot, 9th edition at [3.9] and cases cited at footnote 69 therein
83 On Saturday 12 January at 1:42 p.m., Mr Wu wrote an email referring to an “old statement” and stating “It can not going any further unless you take out 170, 000 (manufactory). I am waiting your new statement…”
84 Significantly, although the email requests the “taking out” of the $170,000 it does not cite a pre-existing agreement. Rather, in suggesting that Mr Wu will not be “going any further” absent the exclusion of the $170,000 it is suggestive of a position Mr Wu wanted to achieve in terms of future negotiating rather than any pre-existing and binding arrangement.
85 On 12 January at 2:35 p.m., Mr Pepper wrote saying that “Attached is copy of final invoice, still awaiting for your email.” The attached invoice showed the money outstanding to Lojies as $243,833.38 with the money paid to Streamlined of $170,000 deducted and an amount shown (incorrectly) due of $70,833.38. The money was to be paid “within 7 days from date of invoice.”
86 Taken in isolation this may be suggestive of a pre-existing “deal.” However, there was also evidence of another statement forwarded on the very same day by facsimile at 4:57 p.m. In this statement, the money outstanding to Lojies was different and shown to be $252,023.38 which was said (incorrectly) to produce an amount due of $80,023.38 after deducting the $170,000. This money was also to be paid within 7 days from date of invoice.
87 Although Mr Wu was no doubt frustrated by these inconsistent statements, they are hardly suggestive of a binding arrangement having taken place. Rather, given the fluidity in the balance and short time for payment, the statements were consistent with Mr Pepper’s evidence that the emails of 12 January were offers.
88 This construction is further corroborated by a further email of 18 January 2008 at 7:43 a.m. addressed to Mr Wu, wherein Mr Pepper wrote “Jimmie my offer ends as of tomorrow about Streamline and you still have not finished paying for the shop.” This email was also consistent with Mr Pepper’s oral evidence that this was sent because an offer had again been made to Mr Wu that he was prepared to take Streamlined money into account on the sale on the basis that Mr Wu made some extra payment.
89 In my view then, the email of 12 January, seen in context, was consistent with the parties continuing to negotiate an outcome to settle the transaction but being unable to do so.
Issuing of statement
90 Mr Pepper conceded that he agreed in the 9 January 2008 meeting to have his accountant issue a new statement. This was said to be inconsistent with Mr Pepper’s case.
91 However, the forwarding of the statement was consistent with Mr Pepper’s position that the $170,000 would only be deducted in circumstances where an extra payment was received (and received within a short period of time). For reasons already given, I am satisfied that the forwarding of the statement(s) on 12 January formed part of an ongoing process of negotiation.
Alleged unchallenged evidence and improbable response of Mr Pepper
92 Mr Wu gave evidence that he asked Mr Pepper to commit himself to writing on 9 January. However, this does not substantiate an agreed variation.
93 In any event, Mr Pepper did not accept that this occurred, saying that if he had agreed to “release the shares” he would have asked for something by way of a document of acknowledgment in return, and that with Mr Sykes being present, “it would have been said.”
94 I did not find this suggestion “improbable” as suggested by Mr Wu. Rather, in my view, it is more improbable that neither Mr Wu nor Mr Pepper would have sought to document a variation to a contract involving a business priced at some $735,000. This matter is developed further, below.
Resolution
95 After consideration of all of the matters raised by Mr Wu in closing submissions, I am satisfied that I can rely on Mr Pepper’s evidence. As indicated already, I found that evidence to be generally credible, particularly as to the pivotal meetings.
96 There are also a number of other factors which suggest that no variation agreement was made as alleged by Mr Wu as follows:
(a) the absence of writing in the context of a transaction of considerable value
where Mr Wu alleged that trust had broken down;
(b) the evidence as to the meeting of 18 March;(c) the pattern of payments after 31 October, 2007; and
(d) the preponderance of the evidence, including that of Mr Wu, suggesting that a variation of the kind alleged would only be agreed to by Mr Pepper if some payment of a sum certain was made by Mr Wu.
Lack of writing
97 The parties were able to, and did, document the sale agreement and the loan agreement. Mr Wu also obtained an acknowledgment of receipt signed by Mr Graham for the payment of $150,000 made to Streamlined of 26 October, 2007.
98 Despite this, there was no documentation which clearly evidenced a variation on either 31 October or 9 January.
99 The parties were also well able to, and did, engage in email communication from time to time. The emails tendered are not always clear but, at their highest, appear to generally put Mr Wu’s desired position in terms of ongoing negotiations (see, for example, emails of 29 November 2008 and 19 February 2008). Nowhere does Mr Wu clearly allege that Mr Pepper was resiling from an agreement on terms now alleged. Significantly, there is also an absence of any reference to such an agreement in Mr Wu’s email of 3 November 2007, notwithstanding that it is dated shortly after the meeting of 31 October.
Meeting of 18 March
100 As mentioned earlier, there was also a further meeting which occurred on 18 March 2008.
101 The evidence of Mr Wu was that “there were many meetings and at the various meetings he [Mr Pepper] talked about taking over that [$170,000] figure and at that specific meeting he said about that again.”
102 Although Mr Wu gave evidence that he raised the deduction of the $170,000 in the 12 January email, his evidence did not clearly suggest a variation had already been reached on either 31 October or 9 January.
103 The evidence of Mr Pepper was that nothing was resolved at this meeting in March.
104 The evidence of Mr Beyer also tended to confirm that the parties were still in negotiations in March since the role he played at the meeting was to help resolve the amount due and payable “for the purchase of the Blockbuster business”. He also confirmed that Mr Pepper was willing to accept “50 to 60 grand, 80 grand” if he took some of the Streamlined shares into consideration.
105 The evidence as to the meeting of 18 March tends to confirm that no earlier variation had been agreed, consistent with the evidence of Mr Pepper.
Pattern of payments
106 Not only did Mr Wu fail to document the alleged arrangement of 31 October but he also made a subsequent payment of $100,000 (including payments of $20,000 to Streamlined) in November 2007.
107 Under cross-examination, Mr Wu accepted that, consistent with the evidence of Mr Pepper, the “top figure” which was discussed on 31 October was $220,000. If, then, an agreement was struck to reduce the balance by the payments to Streamlined, an amount of $150,000 should have been deducted which would bring the outstanding balance to $70,000. On this evidence, in paying $100,000, Mr Wu paid more than what was due on his own version of events.
108 Moreover, it seems highly improbable that Mr Wu would make specific payments to Streamlined after forming an alleged agreement to “release” the Streamlined shares in circumstances where he claimed that he no longer wanted those shares.
109 The evidence of payment is more consistent with the evidence of Mr Pepper that he requested payment in respect of both the loan agreement and the sale agreement in circumstances where both agreements continued to independently exist (unvaried) because Mr Wu had not accepted his proposals.
Preponderance of evidence that an additional payment was necessary
110 The evidence of each of Mr Pepper, Mr Graham and Mr Beyer was consistent with the notion that Mr Pepper would only take into account the payments to Streamlined in circumstances where an extra payment of a specified amount was made.
111 As highlighted already, the evidence of Mr Wu was also consistent with this outcome since, on his own evidence, Mr Pepper was only offering to “take over” the Streamlined payments as part of the Blockbuster payment on 31 October if he was paid a sum of $70,000.
112 Such an outcome also made commercial sense since it is inherently probable that Mr Pepper would require some payment on top of the amount already advanced to Streamlined (of $150,000 as at 31 October) in order to satisfy a debt he believed to be $220,000.
113 The preponderance of the evidence therefore supported Mr Pepper’s version that he only ever offered to take into account the Streamlined payments as part of the payments on the Blockbuster sale if there was a further payment made.
Summary
114 On consideration of all the evidence, including my views as to the reliability of the witnesses, I prefer and accept the evidence of Mr Pepper. More particularly, I accept that, although proposals were made on 31 October, they were not accepted by Mr Wu; nor was any subsequent agreement made to vary the sale agreement on 9 January 2008.
115 I am thereby satisfied that the sale agreement was not varied as alleged by Mr Wu.
116 It follows that it is unnecessary to consider the alternative submission of Lojies that any variation was void for lack of consideration.
Payment of $20,000 to Streamline
117 The evidence of Mr Wu as to the $20,000 payment is summarised at paragraph 49 above; namely that the $20,000 formed part of the stock for the sale price notwithstanding that the amount was paid to Streamlined.
118 The evidence of Mr Pepper is described at paragraph 58 above in a context wherein Mr Wu was specifically invited to pay some money for Streamlined in circumstances where he had said that he still wanted to keep his shares.
119 I accept and prefer the evidence of Mr Pepper. A separate payment to Streamlined was consistent with the continued existence of both the sale agreement and the loan agreement, unvaried, as I have found, above. In such circumstances, the separate payments to Streamlined should be deducted from the loan agreement and not the balance under the sale agreement.
120 It follows that the agreed amount outstanding under the sale agreement is $163,924.13.
Conclusion
121 There will be judgment for Lojies for $163,924.13 together with interest at the rate fixed pursuant to the Penalty Interest Rate Act 1983 from the date of issue of the writ.
122 The counterclaim is dismissed.
123 I will hear from the parties on the question of costs.
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