MediVac Limited v Mark Henry Butler

[2008] NSWDC 330

CITATION:	MediVac Limited v Mark Henry Butler [2008] NSWDC 330
HEARING DATE(S):	2/12/08 - 4/12/08 and 10/12/08
JUDGMENT DATE:	10 December 2008
JURISDICTION:	Civil
JUDGMENT OF:	Rolfe DCJ
DECISION:	See paragraphs 68-72 of Judgment
CATCHWORDS:	Loan made by Company to director - Whether Contracts Review Act 1980 applied to the Loan Agreement - Estoppel by representation - Consideration of whether director's employment contract was lawfully terminated on the grounds of serious and persistent neglect.
LEGISLATION CITED:	Contracts Review Act 1980 Corporations Act 2001 Long Service Leave Act 1955 Civil Procedure Act 2005
PARTIES:	MediVac Limited (Plaintiff) Mark Henry Butler (Defendant)
FILE NUMBER(S):	4241/07
COUNSEL:	J J Loofs (Plaintiff/Cross-Defendant) S B Loughnan (Defendant/Cross-Claimant)

JUDGMENT

1 Mark Henry Butler, the defendant and cross-claimant in these proceedings, was a physiotherapist by training who worked in hospitals for many years. During the early part of the 1990’s he began work on a medical waste treatment process which would easily dispose of waste.

2 In January 1997 Mr Butler purchased a shelf company through which the waste system was to be developed. It was originally known as MediVac Australia Pty Limited but changed its name on 16 September 1998 to MediVac Technology Pty Limited (“MediVac Technology”). MediVac Technology is the second cross-defendant in these proceedings. The original shareholder in MediVac Technology was Engineering Solutions Pty Limited (“ES”) which held its shares on behalf of Mr Butler’s family trust.

3 Between 1998 and 2002 ES progressively sold its shareholding in MediVac Technology and the proceeds of sale were advanced to MediVac Technology for working capital purposes.

4 As a result of the sale of the shares, the Australian Taxation Office ruled that Mr Butler had made an unrealised capital gain and assessed his liability to pay tax in this respect in an amount of approximately $200,000.

5 On 22 September 2002 and again on 21 February 2003, Mr Butler spoke with two other directors of MediVac Technology, Mr Brian Mathiesen and Mr Michael Conroy. During these two discussions it was suggested to Mr Butler by Mr Conroy that as MediVac Technology had obtained the benefit from the share sale transaction it should pay the capital gains tax. In this respect, in the first conversation, Mr Conroy suggested to Mr Butler that this outcome could be achieved by the preparation of a formal loan agreement between MediVac Technology and Mr Butler, whereby Mr Butler would be the borrower. Mr Conroy said to Mr Butler at the time:

“ … but under the circumstances we would expect the loan to be forgiven in the future.”

6 At the meeting on 21 February 2003 Mr Butler told Mr Conroy and Mr Mathiesen that he did not want to be required to repay any money advanced for the tax liability and Mr Conroy responded:

“You know we think the ATO ruling is ridiculous in light of what occurred. Don’t worry about it because we expect that the loan will be forgiven.”

7 Over a period commencing on 1 July 2002 MediVac Technology lent Mr Butler $200,000 to pay his tax liabilities. The obligation to repay these moneys was never forgiven.

8 By 2003 Mr Butler and other directors realised the only effective way the waste systems product could be developed was through a listing on the Australian Stock Exchange. As a result, a company formerly known as Nautilus Australia Limited was acquired and changed its name to MediVac Limited, which is the plaintiff and first cross-defendant in these proceedings.

9 The plaintiff is the parent company in the Medivac Group. The corporate structure of the group is shown in the diagram contained in the agreed bundle of documents (exhibit A) at A 200. MediVac Technology is the principal operating company in the MediVac Group.

10 A meeting of directors of the plaintiff was held on 18 June 2004 (A 88) at which it was resolved as follows:

“3. LOAN TO THE CHIEF EXECUTIVE OFFICER

After some discussion it was RESOLVED THAT the following recommendations of the Remuneration Committee be presented to the Board for its adoption:

(a) $200,000 Loan to the Chief Executive Officer

The Company would make a $200,000 loan to the Chief Executive Officer for the purpose of repaying an existing loan of $200,000 made by MediVac Technology Pty Ltd to the Chief Executive Officer. The terms of the loan would be substantially the same as the terms of the existing loan. A loan agreement would be prepared and forwarded to members of the Remuneration Committee for review prior to execution.”

11 On 30 June 2004 the plaintiff and Mr Butler entered into the Loan Agreement at A 91.

12 Relevantly, Recitals 1-4 provided as follows:

“1. (Mr Butler) is an executive director of the (plaintiff) and (MediVac Technology);

2. (Mr Butler) incurred certain personal tax liabilities as a result of acting on advice received from advisors to (MediVac Technology) in relation to initiatives to raise working capital for (MediVac Technology);

3. (MediVac Technology) lent (Mr Butler) the sum of two hundred thousand dollars ($200,000.00) over a period commencing on 1 July 2002 to pay the tax liabilities as and when they fell due;

4. The (plaintiff) wishes to advance a sum of money to (Mr Butler) to enable him to repay the loan received from (MediVac Technology).”

13 And Clauses 2 and 3 provided as follows:

“2 THE LOAN

Subject to the terms and conditions of this Agreement, the (plaintiff) has loaned to (Mr Butler), and (Mr Butler) has borrowed from (the plaintiff), on the date hereof, the amount of two hundred thousand dollars ($200,000.00) (herein called the “Loan”).

3 THE PURPOSE OF THE LOAN

The Loan is made to (Mr Butler) for the express purpose of repaying an existing loan to (MediVac Technology), such loan having been made to (Mr Butler) for the purpose of paying personal tax liabilities that arose as a result of (Mr Butler) acting on the advice of the (MediVac Technology’s) advisors in relation to initiatives to raise working capital for (MediVac Technology).”

14 The loan was interest free and for a term of three years.

15 Mr Butler’s evidence was that prior to executing the Loan Agreement he told Mr Conroy in the presence of the company secretary, Mr Quartermaine, that his understanding was that the loan would be forgiven. Mr Conroy replied:

“Don’t worry. That’s our understanding as well.”

16 Mr Butler said in his evidence that he executed the Loan Agreement based on the “representations” made by Mr Conroy set out above.

17 In these proceedings the plaintiff claims the amount of $200,000 from Mr Butler under the Loan Agreement plus interest from 1 July 2007 to date.

18 Mr Butler did not deny in his defence that he had received a loan from the plaintiff. Nor was it in dispute that MediVac Technology, by 30 June 2004 a subsidiary of the plaintiff, had already lent Mr Butler the sum of $200,000.00 over a period commencing on 1 July 2002 to pay his tax liabilities as and when they fell due. The plaintiff’s loan was used to repay this debt. As already mentioned, the tax liabilities had been incurred by Mr Butler as a result of the sale by ES of shares in MediVac Technology.

19 Notwithstanding the foregoing, Mr Butler, in his amended cross-claim, seeks an order against the plaintiff that the Loan Agreement be set aside under the Contracts Review Act 1980.

20 The plaintiff contends that Mr Butler cannot obtain relief under the Act because of the restrictions on grant of relief set out in s 6(2) of the Act as follows:

“A person may not be granted relief under this Act in relation to a contract so far as the contract was entered into in the course of or for the purpose of a trade, business or profession carried on by the person or proposed to be carried on by the person, other than a farming undertaking (including, but not limited to, an agricultural, pastoral, horticultural, orcharding or viticultural undertaking) carried on by the person or proposed to be carried on by the person wholly or principally in New South Wales.”

21 Counsel for Mr Butler submitted that s 6(2) of the Act did not apply because the Loan Agreement was not entered into in the course of or for the purpose of the trade, business or profession carried on by Mr Butler. Rather, the purpose of the loan was simply for Mr Butler’s private use to repay his personal debt to MediVac Technology.

22 I reject the submission made on behalf of Mr Butler. At the time he incurred the tax liability, Mr Butler was acting in his capacity as an investor who sold shares in MediVac Technology. The purpose of the loan made under the Loan Agreement was to assist Mr Butler in repaying the earlier loan which had been made to him in such a capacity and so that he could pay his tax. More importantly, at the time he executed the Loan Agreement, Mr Butler’s professional business undertaking was that of chief executive officer of the plaintiff, a public company. In this capacity Mr Butler was responsible and accountable to the plaintiff for its financial management. The loan would not have been made by the plaintiff to Mr Butler but for the fact that he was in this position.

23 It follows that s 6(2) of the Act applies and Mr Butler cannot be granted the relief sought by him.

24 Even if the Act were to apply to Mr Butler, the Court would not grant the relief sought by him. Most importantly, Mr Butler never sought to contest the fact that he had a tax liability in the first place, nor did he ever seek to impugn the transaction which gave rise to that taxation liability. What the plaintiff did was to assist Mr Butler to extinguish a previous borrowing by him of $200,000 from MediVac Technology which had been made to assist him with payment of his taxation liability. The advance made by the plaintiff to Mr Butler was made on generous terms because it was interest free for three years.

25 In addition, where a corporation loans monies to a director, the corporation is obliged to record those loans in its accounts pursuant to the mandatory disclosure requirements of the Corporations Act (2001). The Loan Agreement and the other steps taken by the plaintiff ensured compliance with the plaintiff’s obligations under the Corporations Act (2001). In those circumstances it would be an improper use of the Act for the Court to set aside the Loan Agreement.

26 The advice of Pitcher Partners demonstrates that if the plaintiff forgave the loan to Mr Butler, this would have resulted in a fringe benefits tax liability for the plaintiff of $170,000. Once the loan was on the plaintiff’s books therefore, it could not be forgiven without incurring this FBT liability. In this respect Mr Butler did not bother to obtain any advice for either the plaintiff or MediVac Technology about the consequences of any loan made to him by either company being forgiven. That is another reason why in the circumstances relief should not be granted under the Act.

27 Alternatively, counsel for Mr Butler submitted that the plaintiff was estopped from enforcing the Loan Agreement because of the so called representations made by Mr Conroy that the loan would be forgiven. I reject this submission.

28 The situation that Mr Butler found himself in was not of the plaintiff’s making. Mr Butler was ignorant about his potential tax liability but sought no personal advice or any advice for his family trust of a legal or accounting nature with regard to such liability before the sale of the shares, which triggered the liability, occurred. In addition, Mr Butler recognised that the words used by Mr Conroy were nothing more than Mr Conroy’s personal view about what ought to happen. Mr Conroy was not authorised by MediVac Technology or the plaintiff to make any binding representation on behalf of either of those companies to Mr Butler. Mr Butler realised that this was the case because he conceded in cross-examination that he trusted that Mr Conroy would bring this about but he agreed that there was in fact no certainty or guarantee that it would occur. Moreover, the statements made by Mr Conroy were contrary to the position of the plaintiff and Mr Butler recorded in the minutes and disclosed to the public. In those circumstances there was no reliance by Mr Butler on what Mr Conroy said which would give rise to an estoppel preventing the plaintiff from enforcing the Loan Agreement.

29 I turn now to consider the balance of Mr Butler’s cross-claim against MediVac Technology (the first part of it dealt with the relief sought under the Act which I have already dealt with).

30 Mr Butler claims the amount of $373,368.50 from MediVac Technology comprising liquidated damages for unlawful termination by MediVac Technology of the employment agreement dated 1 September 2006 (A 163), plus $76,707.70 for accrued annual leave and $43,660.80 for accrued leave under the Long Service Leave Act 1955.

31 MediVac Technology says that the employment agreement was lawfully terminated. It denies that Mr Butler is entitled to accrued long service leave, but admits that he is entitled to the amount claimed for annual leave.

32 In the event that Mr Butler succeeds entirely on his cross-claim, MediVac Technology does not dispute that Mr Butler would be entitled to the whole amount claimed by him.

33 The background to Mr Butler’s termination is as follows.

34 As a result of a reverse takeover which occurred on or about 3 August 2007, Daikyne Pty Limited owned the whole of the shares in the plaintiff. Mr Paul Ralph became a director and was appointed executive chairman.

35 Mr Butler’s uncontested evidence was that at a meeting shortly prior to this in late July 2007 with Mr Ralph at the plaintiff’s offices, Mr Ralph told Mr Butler he was taking over the management duties of the plaintiff and would be making the important decisions. He told Mr Butler to report to him. When Mr Butler asked what his role with the plaintiff was going to be, Mr Ralph told him the board would think about it and let him know. As a result, Mr Butler said he would work from home.

36 Mr Butler then worked from home for a short period and on 9 August 2007 the plaintiff made the announcement to the Australian Stock Exchange, which is at A 183. Both counsel for Mr Butler and counsel for the cross-defendants agreed that the effect of the discussion between Mr Butler and Mr Ralph, culminating with the announcement to the Stock Exchange on 9 August 2007, constituted a termination by MediVac Technology of Mr Butler’s employment agreement on or about 9 August 2007. In the circumstances, the question for the Court to determine is whether or not such termination was lawful.

37 Mr Butler’s employment agreement with MediVac Technology records that he commenced employment with MediVac Technology as its executive chairman and chief executive officer on 19 January 2004.

38 Mr Butler’s duties and performance obligations are referred to in clause 2 and are also set out in schedule 1. Schedule 1 records that Mr Butler was responsible for giving direction and leadership in the achievement of MediVac Technology’s annual goals and objective and that he was accountable for its strategy development, capital raising, supervision, financial management, risk management, human resource management and community and public relations. This responsibility extended to the plaintiff by virtue of the MediVac Group structure.

39 Termination of the employment agreement is dealt with in clause 6. Relevantly, the provisions are as follows:

“6.1 Termination by the Company

The Company may terminate this agreement without liability to Mr Butler:

6.1.1 Immediately for material breach of this Agreement including, without limitation, intentional disobedience, dishonesty, misbehaviour, serious or persistent breach of duty or serious or persistent neglect on the part of Mr Butler.”

40 MediVac Technology’s case is that Mr Butler was guilty of a serious or persistent breach of duty or a serious or persistent neglect with reference to his duties and performance and his obligations under clauses 2.1.1, 2.1.3 and 2.1.4 of schedule 1. To make good these breaches MediVac Technology relies on the following.

41 At the director’s meeting on 18 June 2004 the chief financial officer reported that the cash balance of $3,145,038 was lower than anticipated “due to a higher than expected cash burn rate” (A 206). The expression “cash burn rate” was referred to in the evidence and was simply a reference to the amount of expenses being incurred from time to time by the plaintiff.

42 Mr Paul McPherson became a director of the plaintiff on 14 August 2006 and was its non-executive chairman until 2 August 2007. His evidence at A 188, paragraph 23, was that he became concerned immediately upon his appointment as a director that without urgent sales the plaintiff would not be able to preserve a viable cash flow. In this respect, from November 2006 to January 2007, Mr Butler reported to Mr McPherson several times a week so that Mr McPherson could monitor the cash flow position.

43 The directors’ minutes of the plaintiff dated 23 January 2007 at A 297 record, with reference to cost cutting, that the recommendations arising from discussions between the chairman, Mr McPherson, Mr Butler as managing director and Mr Savage as chief financial officer, were tabled and that implementation of the recommendations would occur in late January/February 2007. There was also a lengthy discussion on the operational staffing costs.

44 At about this time Mr McPherson spoke to Mr Butler and told him that his monthly managing director’s report to the board should focus on costs and sales as key priorities. Mr Butler said he understood.

45 In his managing director’s report of 9 February 2007 at 303, Mr Butler simply reported, in relation to cost costing, that such measures would be updated by the chairman Mr McPherson. For his part, Mr McPherson had expected the matter to be detailed in that report. Mr Butler, who was a very honest and truthful witness, appears to have misunderstood what was required of him at that point. He and Mr McPherson had a number of discussions prior to the board meeting on 9 February 2007 and I accept Mr Butler’s evidence in this respect that he had assumed from those discussions that Mr McPherson would elaborate on what was to happen at the board meeting.

46 However, as recorded in item (vii) at A 298, it was resolved at the meeting that there would be a costs revision plan. It was very clear at that point that Mr Butler would be responsible for its implementation.

47 On 15 February 2007 Mr McPherson met with Mr Butler. The agenda for the meeting is at A 307. It again identified the need to take cost revision action.

48 Mr McPherson’s evidence at A 190, paragraph 31, was that by early March 2007 very few cost reduction initiatives had been implemented and key sales targets had not been met, in particular, sales to hospitals at Coffs Harbour, the Alfred Hospital in Victoria and on a deal involving Qantas referred to in the evidence as the “Sita” project. Because of these problems, Mr McPherson said he decided to assist Mr Butler by providing him with a clear statement of the tasks he needed to undertake and a clear statement of those responsibilities. This “role clarity” document is at A 309. Mr McPherson handed it to Mr Butler before Mr Butler prepared his managing director’s report for the 9 March 2007 board meeting. The role clarity document referred to the closure of the sales at the three locations as well as the need to implement a cost revision action plan as discussed at the 9 February 2007 board meeting.

49 On 6 March 2007 Mr Butler handed Mr McPherson his managing director’s report for the 9 March 2007 board meeting. This is at A 311.

50 Notwithstanding the fact that Mr McPherson had handed Mr Butler the role clarity document, there was nothing in the managing director’s report of 9 March 2007 regarding cost cutting measures other than the reference to the fact that it would be “updated by chairman”. However, Mr Butler was fully aware that the ball was in his court in this respect.

51 At the board meeting on 9 March 2007, the chief financial officer recorded that the plaintiff’s year to date loss had blown out to $1.766m due to delays in achieving budgeted sales and a higher spend in administration overheads. The chief financial officer also tabled the cash flow document which is exhibit B. Mr McPherson identified exhibit B in his evidence. Mr Butler was a little unsure about whether that was the document which was tabled but did not deny it. I am satisfied on the balance of probabilities that exhibit B was the cash flow document tabled at the meeting. Importantly, it provided for the plaintiff’s cash flow to be reduced significantly in the months of May, June, July and August 2007.

52 Mr McPherson’s evidence was that by March 2007 the plaintiff had virtually no cash available to it. Accordingly, to provide it with liquidity, a loan facility of $262,145 was established. This was organised by Mr McPherson and Mr Butler played no part in it. Whilst the loan provided the plaintiff with an immediate cash injection, it also meant that the bulk of the plaintiff’s monthly income from its site at Cairns was used to repay the loan.

53 On 16 April 2007 Mr Butler gave Mr McPherson a copy of his proposed managing director’s report for the next board meeting on 23 April 2007. The document is at A 344 and once again simply refers to cost cutting measures being updated by the chairman. Naturally enough, this concerned Mr McPherson; so he spoke to co-directors Messrs Conroy and Mathiesen over the phone on a number of occasions and the result was the preparation of the document headed “CEO – Performance - Discussion Points” at A 346. With regard to expenses it recorded that the cash management of the plaintiff was out of control and nine particular concerns were listed in this regard. The document also recorded that Mr Butler had not done anything about a cost revision plan because he did not seem to think the plaintiff needed to cut costs.

54 Mr McPherson was not alone in his concerns about Mr Butler’s performance as the email from Mr Conroy to Mr Dulhunty at A 348 discloses.

55 In the result, Mr McPherson, Mr Butler and Mr Mathiesen prepared a CEO performance review document (A 351) which was handed to Mr Butler at the plaintiff’s board meeting on 23 April 2007. In particular, Mr Butler’s attention was drawn to an agreed 90 day action plan. This plan is at A 358 and was tabled at the meeting and attached to the minutes. The cash flow forecast, exhibit B, was itself attached to the 90 day action plan.

56 Mr McPherson’s evidence was that Mr Butler did not take issue with anything in the 90 day action plan or indicate he would not comply with the instructions contained in it. Mr Butler said nothing in his cross-examination to suggest that the 90 day action plan was unrealistic or unachievable.

57 Mr McPherson’s unchallenged evidence was that by late April 2007 the plaintiff’s cash position had deteriorated to the point where it had become dire. As a result, Mr McPherson called an informal board meeting as his house on 30 April 2007 to discuss this deteriorating cash position. Prior to the meeting he circulated an email to directors, including Mr Butler, in which he drew attention to the position regarding cash (A 360-361) and said:

“You don’t have to be Einstein to see that the above is precarious unless we start actioning our cost reductions and/or get more sales.”

58 Mr McPherson’s agenda for the meeting is at A 363. Again it identifies costs and the revised action plan as important matters.

59 Mr McPherson’s evidence about what took place at this meeting is at A 192, paragraph 43 as follows:

“McPherson: Our cash situation is critical – we still do not have the money from Cairns or St Vincents – we’ve got forty grand in the Bank, our accounts payable are 350 grand and we need another 150 grand to pay payroll for May and June. Unless we get these sales and pull out these costs, we’re stuffed.

Conroy: Mark, I agree with Paul, things are looking pretty grim. We’ve got to take some action.

McPherson: Mark, here’s the action plan again – this is what we’ve got to do … these are the things you need to do.

Butler: OK. I know.

McPherson: If we can’t do these, then maybe we don’t have a choice. We may just have to do the Diakyne deal to survive.”

60 Mr McPherson said Mr Butler did not say that the plan was unnecessary or that it was something he could not comply with.

61 At the time of this discussion the plaintiff had $40,000 in the bank and $350,000 owing to creditors, with $150,000 due in tax in May and June 2007. In this respect, Mr Butler knew from exhibit B that cash expenditure for April 2007 had to be reduced to $317,424, for May to $138,071 and for June 2007 to $141,071. Mr Butler did not suggest that the figures were unachievable, unrealistic or even unreasonable. As I have said, he gave his evidence honestly and truthfully and proffered no explanation during the course of his evidence-in-chief or cross-examination as to why he did not give his attention to cost cutting matters to achieve the board’s projected reductions. As it turned out, the targets set for May and June fell short by $150,000 in each month.

62 By 30 June 2007 Mr Butler had failed to implement any of the requirements under “cost management”, he had failed to implement the requirements of the costs revision plan with the exception of ending the employment of Ms Laurie and he failed to finalise the sales at Coffs Harbour Hospital, the Alfred Hospital and with Sita. Mr McPherson’s evidence about the latter was unchallenged by counsel for Mr Butler.

63 The Court gave Mr Butler an opportunity to explain his position. When asked whether he had been focussing on matters other than cost cutting, he denied this was the case but did not elaborate on what he had actually done. In this respect, when he received his performance review, Mr Butler wrote a letter to the chairman of the remuneration committee at A 488 in which he referred to the plan which he had been given by the board of directors. He said that he was working in accordance with it. I should add that, although there is a reference in his letter to some health issues, those matters were not put forward by Mr Butler at the hearing as an explanation for a failure to deal with the company’s dire financial position. To the extent that his counsel sought to put the dismissal down to a clash of personalities between Mr Butler and Mr McPherson, I reject this submission because it is not made out on the evidence.

64 The evidence establishes that the extreme deterioration of the plaintiff’s financial position made it imperative that cost cutting measures be implemented. The matter was raised with Mr Butler time and time again and he knew it was important from the plaintiff’s point of view at the beginning of 2007 and by March 2007 I am satisfied he realised it was critical. The performance review of 18 April 2007 demonstrates the board’s lack of faith in Mr Butler’s performance at that date to undertake his financial management duties. In this respect, Mr Butler’s continued failure to meet the specific cost reduction targets amounted to a serious and persistent neglect on his part in the performance of his duties and obligations under the employment agreement. By 30 June 2007 there had been three months of continued failure by Mr Butler to ensure cost reductions occurred. In those circumstances, MediVac Technology was entitled to terminate Mr Butler’s employment agreement. Accordingly, Mr Butler’s claim for damages for unlawful termination fails.

65 As mentioned earlier, MediVac Technology admits Mr Butler is entitled to the amount claimed for annual leave.

66 So far as long service leave is concerned, counsel for MediVac Technology acknowledged that Mr Butler was entitled to receive this unless the Court found that he had been guilty of serious and wilful misconduct within s 4 (2) (a) (iii) of the Long Service Leave Act (1955).

67 Whilst the Court has found that Mr Butler’s actions amounted to serious and persistent neglect of his duties and obligations, I am not satisfied that his actions constituted “wilful misconduct”, which connotes behaviour which is intentional or deliberate or even perversely obstinate or intractable (see the definition of “wilful” in the Macquarie Dictionary, 3rd Edition). To my mind, Mr Butler simply demonstrated in the witness box a failure to realise the importance and significance of the need to implement the cost cutting plan. He was probably distracted by having to do a whole lot of other things in his role as managing director and I am not satisfied, therefore, that he did not deliberately intend to neglect his duties. Mr Butler was therefore not guilty of serious and wilful misconduct and is entitled to recover $43,660.80, the amount of long service leave claimed by him.

68 In the result, on the plaintiff’s claim, there will be a verdict for the plaintiff against the defendant in the amount of $200,000. The plaintiff will be entitled to interest on the verdict in accordance with s 100 of the Civil Procedure Act 2005.

69 On the amended cross-claim, as between the cross-claimant and the first cross-defendant, the cross-claim is dismissed.

70 As between the cross-claimant and the second cross-defendant, there will be a verdict for the cross-claimant in the amount of $120,368.50. The cross-claimant will be entitled to interest on the verdict in accordance with the Civil Procedure Act 2005.

71 I will stand the matter down so the parties can do the calculations. If necessary, I will then hear from them on the question of costs.

72 I direct the exhibits be returned.

**********