State Bank of New South Wales Limited v Oliver

SUPREME COURT OF VICTORIA
COMMERCIAL AND EQUITY DIVISION	Not Restricted

No. 6465 of 1996

STATE BANK OF NEW SOUTH WALES LIMITED (ACN 003 963 228)	Plaintiff
v.
GORDON HENRY OLIVER and HEATHER DOY OLIVER	Defendants

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JUDGE:	COLDREY, J.
WHERE HELD:	MELBOURNE
DATES OF HEARING:	5-7, 10-14, 17-19 MAY 1999 (Written Submissions June - July 1999)
DATE OF JUDGMENT:	19 JANUARY 2001
CASE MAY BE CITED AS:	STATE BANK OF NEW SOUTH WALES LTD. v. OLIVER & ANOR.
MEDIUM NEUTRAL CITATION:	[2001] VSC 1

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CATCHWORDS: Leasing Agreements – whether leases subject to preconditions with which the Bank had failed to comply or representations by the Bank creating an estoppel or breaching the Trade Practices Act 1974 – Consideration of whether leases void for uncertainty – whether failure by the Bank to execute leases created a tenancy at will and whether subsequent conduct by the Bank constituted repudiation.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr Marcus Clarke	Russell Kennedy
For the Defendants	Mr S.V. Palmer	The Law Offices of Barry Fried

HIS HONOUR:

Introduction

This is a claim by the State Bank of New South Wales Limited (“the Bank”) against Gordon Henry Oliver and his wife Heather Doy Oliver (“the defendants”) for $531,850.39 and interest. The Bank also seeks possession of the house property situated at and known as 16 Jennifer Road, Macleod and being the land more particularly described in Certificate of Title Volume 8931 Folio 386.

The Bank says that the money is outstanding pursuant to five lease agreements between it as lessor and the defendants as lessees in respect of four refrigerated trailers ("the trailers") and one panel van. The defendants provided collateral security for the leases in the form of a second mortgage over the land. The Bank also seeks the sum under the covenant to pay contained in the mortgage and, possession of the property under the terms of the mortgage following the default of the defendants.

In February 1990 the Bank purchased from Hickory Dale Pty Ltd trading as Rona Transport ("Hickory Dale"), four second-hand refrigerated trailers as follows:

(a)       one 1981 Maxicube tri axle jumbo freezer regd No. VT15AN      - $62,000
(b)      one 1986 Fruehauf jumbo refrigerated unit regd No. VT57BO     - $65,000
(c)       one 1984 Fruehauf jumbo freezer tri axel van regd No. VT55BO -    $63,000
(d)      one 1987 Fruehauf tri axle jumbo freezer VT56BO   - $68,000
The invoices show them to be for supply and delivery to the defendants.

At the same time the Bank purchased from Bayford of Preston a Ford Falcon van registered No. ECY 820 for $20,500. On the Bayford invoice the customer is again shown as Mr and Mrs Oliver. On or about 23 February 1990 at the office of Molomby & Molomby, the solicitors for the Bank, the defendants executed five lease agreements in which they are described as lessors and the Bank as lessee. One lease agreement was executed for each of the trailer and the panel van to which I have referred. The leases were, apart from the schedules, in standard form. Those relating to the trailers were for 36 months, whilst that for the panel van was 48 months, but none contained a commencement date or a termination date. None of the leases was ever executed by the Bank.

The Bank contends that the defendants fell into default under each of the leases in 1990. It was not, however, until 5 April 1995 that it gave notices of default and it commenced this proceeding on 29 July 1996. The trial itself occupied 11 sitting days. It had generated 1000 pages of transcript, and recourse was had to a similar amount of documentation.

The Issues

Subject to one very fundamental matter the proofs of the Bank were not challenged. A certificate of indebtedness prepared in accordance with cl. 12.5 of each lease agreement and cl. 4.1.05 of the common provisions of the mortgage was in evidence. In accordance with these terms, the certificate establishes that, as at 4 May 1999, the amount owing by the defendants to the Bank was $531,850.39. The required notices under the mortgage were duly given and the defendants remain in possession of the property.

Substantial issues in this case are contained in the Further Amended Defence and Counterclaim of the defendants filed on 13 May 1999. In this pleading, they raise a very large number of defences and claims most of which are variations on the same factual themes. I summarise them under nine headings.

First, none of the leasing agreements ever came into existence because:

(i)Each was subject to an oral condition precedent that it would not commence unless and until:
(a)the defendants had inspected the vehicles and trailers;
(b)Roadworthy Certificates in respect of each of the vehicles and trailers had been provided by the Vendor;
(c)legal title to the vehicles and trailers had been transferred to the plaintiff;
(d)possession of the vehicles and trailers had been given to the defendants ; and
(e)all of the issued shares in the company known as Hickory Dale which was the Vendor of the vehicles and trailers had been transferred to the defendants.

None of these events had come to pass
(ii)At the time of signing each leasing agreement the defendants had no intention of entering into a binding legal arrangement unless the five events referred to came to pass and they did not.
(iii)By cl. 2.2 of each of the lease agreements, the leasing did not commence until the lease had been executed by the Bank provided that, if the vehicles were delivered to the defendants they became tenants at will and liable only to pay rental calculated in accordance with that clause. The leases were not executed by the Bank and the defendants did not take delivery of the vehicles.
(iv)The leases are void for uncertainty since they have no commencement date or termination date of the leasehold.

Second, the mortgage, also, was subject to a condition precedent that it would not commence unless and until the lease agreements came into effect, an event which did not occur.

Third, the leases were terminated by the defendants’ acceptance of the Bank’s acts of repudiation as follows:

(i)Each of the leases contained implied terms to the effect that the Bank would obtain legal title to the vehicles; the Bank would give possession of the vehicles and trailer to the defendants; the Bank would take all reasonable steps to assist the defendants to obtain such possession; and the Bank would not obstruct the defendants or take a step which might hinder them from obtaining such possession. These terms are said to have been breached and this amounted to a repudiation by the Bank.
(ii)In or about January 1991 the Bank, then in negotiation for the sale of the vehicles and the trailer to Australian Refrigerated Transport Pty Ltd (“ART”), advised the defendants that the leases were at an end.
(iii)In or about April 1991 the Bank, then in negotiations with one Royce Fullard and one James Hanlon for the sale of the vehicles to them advised the defendants that the leases were at an end.

Fourth, the defendants were discharged from any liability under the leases by reason of the following:

(i)in or about April or May 1991 the Bank leased the vehicles to Rona Engineering Pty Ltd ("Rona Engineering") on the basis that that company would pay all arrears and make all future rental payments ; or
(ii)in or about April or May 1991 the Bank sold the vehicles to Rona Engineering on the basis that that company would pay all arrears and make all future rental payments.

Fifth, there follows an allegation of misleading and deceptive conduct contrary to s. 52 of the Trade Practices Act 1974. The conduct referred to is a series of representations said to have been made in order to induce the defendants to enter into the lease agreements. These representations resemble, but are different from, the conditions precedent. They are the following:

"Before the plaintiff paid the Vendor the purchase moneys for the vehicles and the trailers the Vendor would be required by the plaintiff to:
(i) allow the defendants to inspect the vehicles and trailers;
(ii)provide Roadworthy Certificates in respect of each of the vehicles and trailers;
(iii)transfer legal title to the vehicles and trailers to the plaintiff;
(iv)give possession of the vehicles and trailers to the defendants; and
(v)ensure that all issued shares in Hickory Dale had been transferred to the defendants."

It is said that, at the time, the Bank had no reasonable basis for making these future representations and that they were false. The defendants allege that they have suffered loss and damage in the sum of $9,168.78 being the sum they paid to the Bank under the leases. They seek declarations that the leases are void ab initio and orders that they be set aside.

Sixth, it is said that these false representations give rise to an estoppel which would prevent the Bank from enforcing the leases or the mortgage.

Seventh, the defendants counterclaim the sum of $9,168.78 as damages either for breaches of the implied terms or for its misleading and deceptive conduct.

Eighth, it is put that the Bank owed to the defendants a duty of care not to pay the vendors for the vehicles or trailers until the events constituting the conditions precedent mentioned had been fulfilled. The loss and damage is, again, the sum of $9,168.78 paid to the Bank.

Ninth, and finally, is a claim that the Bank, without the knowledge, consent or authority of the defendants, withdrew from their term deposit account the sum of $10,524.12 and applied this towards payment of moneys said to be owing under the lease agreements. The defendants seek repayment of this sum and damages for their loss of use of it.

The Factual Background

The first principal factual basis of these various defences and cross claims depends upon statements said to have been made in January and February 1990 by a Bank officer, Mr. Nicholas Driver, and by Ms. Irene Azzopardi, (now Mrs. Irene Power), an employee of Molomby & Molomby who were acting for the Bank in the preparation and execution of the leases and the mortgage. The second basis depends upon the conduct of the Bank in early to mid-1991 in treating with third parties in a manner which was said to be inconsistent with the rights of the defendants under the leases.

The Making of theLeases

A key witness in this case was Frank Main, a brother of the defendant, Heather Oliver, who had been involved in the trucking industry for some 30 years. At one stage he ran his own business of 30 trucks. During this period, a strong business association with Edgells and McCain Australia had developed. After certain financial vicissitudes which saw him sell his business in 1988 and thereafter lose the $1.4m. profit in property development, Frank Main was introduced to one Royce Fullard in 1989 by his brother Arnold Main.

At this time Arnold Main was working for Fullard in a joint venture business involving two trucks. Frank Main assisted Fullard in establishing a new company, Hickory Dale (which traded variously as Rona Transport and Rona Refrigeration). Fullard apparently contributed $600,000 in capital and Frank Main attracted work from his former business contacts. Fullard and Naomi Joyce Fullard of the same address are recorded in the company returns as two of the initial directors of Hickory Dale.

The major company operated by Fullard was Rona Engineering Pty Ltd which was, at this time, making fittings for the Gas & Fuel Corporation. Until Hickory Dale was established Frank Main was employed by Rona Engineering, and, ultimately, he became the General Manager of Hickory Dale. Among his duties was looking after the truck fleet and the company books. Prior to the existence of Hickory Dale a number of trailers and trucks were purchased in the name of Rona Engineering. It was planned to transfer them to Hickory Dale.

Towards the end of 1989, Fullard expressed an interest in regaining his capital from Hickory Dale by means of leasing back the equipment for which he had originally paid. The promise of the business was such that he believed the debt on the leased equipment could be serviced. To this end, Frank Main introduced him to a Rupert Legh of Interstate Finance Pty Ltd, a firm of finance brokers. Utilising Mr Legh, Frank Main arranged the lease-back through Esanda of 2 Kenwood Prime Movers previously purchased by Rona Engineering.

In November or December of 1989 Fullard conceived the idea of selling Hickory Dale to Frank Main or his family. At this time Frank Main's brother Arnold and the defendants' son Jamie Oliver were employed in the business. Frank Main discussed the matter with his sister, Heather Oliver, and her husband, Gordon, on the basis that they might be the purchasers. Thereafter, two or three meetings occurred between the defendants and Fullard at which Frank Main was present. According to him, those present made an agreement that the shares in Hickory Dale would ultimately be transferred to the defendants on the basis that this would not occur until Fullard received his capital from the financier. Additionally, he wished to retain a small shareholding because of moneys owing from outstanding accounts which he would initially leave in the company but which he desired to be collected efficiently in order that he ultimately receive his full financial entitlement. I should add that a debenture charge had been created in August 1989 which was held by Rona Engineering and Royce Fullard over Hickory Dale. Since the defendants had no capital, no money was to change hands. The transaction was to be financed under a lease-back arrangement whereby a financial institution would purchase the assets of Hickory Dale, notably the four refrigerated vehicles to which I have referred.

It was contemplated that Hickory Dale would remain the entity operating the trucking business with the defendants assuming control, through their shareholdings, at a later point in time. This agreement was struck on 15 January 1990 at the offices of Fullard's solicitors Young Hubbard & Co. On this date the defendants were appointed directors of Hickory Dale, and Mrs Oliver was appointed the Company Secretary.

According to Frank Main, before final takeover of the business could occur, other new equipment such as prime movers had to be acquired, and Fullard remained guarantor for much of that equipment.

It should be immediately stated that all of the witnesses in this case were endeavouring to recall events that had occurred almost a decade earlier. Inevitably memories become distorted by the passage of time and there was a tendency to rationalise the events in which the parties had participated. In such circumstances, I approach the unaided recollection of the witnesses with some caution. The contemporary documentation frequently provides the best guide to the facts and I have relied heavily on that material in the present case.

As far as the defendants are concerned, it would be fair to say that Mrs Oliver did not always do herself justice in her evidence, particularly in response to cross-examination. No doubt this was a product of her anxiety to justify her conduct in these transactions. Mr Oliver presented as a person who left his business and financial destiny in the hands of his wife and had no genuine unprompted memory of the relevant events. I do not intend, independently of my findings, to catalogue criticisms which have been made of their evidence, (or indeed that of other witnesses). It is sufficient that I record that I am reluctant to act upon the defendants recollection unless it is corroborated by a contemporary or other record in which I have confidence.

On 19 January 1990 an application was made above the name of Robert Legh of Interstate Finance Pty Ltd on behalf of the defendants to the Manager of the Wagga Wagga branch of the Bank. The application was accompanied by a statement of the defendants' assets and liabilities. Finance of $275,000 was sought for the purchase of the four refrigerated vehicles to which I have referred. The supplier was listed as Hickory Dale (trading as Rona Transport). Hickory Dale was listed as the guarantor.

Frank Main gave evidence that, in fact, Hickory Dale was meant to be the lessee of the trailers with the defendants as the guarantors. Further, the supplier should have been shown as Rona Engineering. This is because three of the trailers had been purchased by Rona Engineering prior to Hickory Dale coming into existence and were registered in the name of Rona Engineering. Main said that he had supplied descriptions of engines and registration numbers and chassis serial numbers of the trailers to Legh. Whatever be the truth of all of this, it was not disclosed to the Bank.

Mr. Main was also critical of details within the application, particularly the suggestion that the defendants were to operate the business separate from Hickory Dale. In her evidence, Mrs. Oliver, like her brother, criticised that portion of the application which suggested that work was to be accepted from Hickory Dale when in fact the plan was for the defendants to take over the company.

The evidence of Mrs Oliver was that, as far as the ownership of the trailers was concerned, she wanted them to be the defendants’ property, regardless of their purchasing the shares in Hickory Dale, and regardless of whether the deal ultimately went ahead. Mrs Oliver also gave evidence that, as part of the future planning, a family company called Danecorp Pty Ltd, involving the defendants and Frank Main was to be the entity for taking over the business from Hickory Dale. However, she did not know how many shares she would hold and stated that, in any event, Fullard would retain control of the company through the debenture charge which he held over the company’s assets.

As will be seen shortly there were a number of ongoing transactions in which vehicles were purchased in 1990 involving both the defendants and Fullard. Mrs. Oliver's brother, as Fleet Manager of Hickory Dale, and a potential business partner of the defendants, also had involvement in many of these dealings and, as is already clear, had a different perspective to Mrs. Oliver in relation to such important aspects as the ownership of the leased property.

Royce Fullard did not give evidence in this action. The result is that the intention of the parties at any given point of time in their mutual dealings is by no means easy to ascertain. Accordingly, I shall deal only with those aspects of that relationship that impinge upon the issues between the defendants and the Bank.

In terms of chronology it is clear that Mr. Frank Artuful, an employee of Interstate Finance, sent the finance application signed by Legh to the Bank, with the knowledge of the defendants. Artuful identified a number of documents required by the Bank and forwarded by him. These included valuations of the trailers obtained between 30 January and 7 February 1990; a statutory declaration dated 8 February 1990 by Fullard as a director of Hickory Dale (albeit an office he then did not hold) declaring his absolute ownership of the trailers ; and four invoices (which had originally been drafted by the Bank) and which also bore the date of 8 February and were signed by Fullard for and on behalf of Hickory Dale in relation to each of the vehicles.

The procedure followed thereafter was to obtain a valuation of the defendants' house. This was done on 30 January 1989. On 7 February consent was sought from the National Australia Bank, as the first mortgagee of the defendants' house, for a second mortgage limited to $50,000.

Meanwhile, on 8 February 1989, a further application was forwarded by Artuful to the Bank, seeking leasing finance of $20,500 for the Ford FX panel van. According to Frank Main this van was ordered by him and was to be used in the business of Hickory Dale as a unit to service breakdowns. It was later picked up by Hank Cornillieson, who was the mechanic for Rona Refrigeration.

Mrs Oliver said the obtaining of the panel van had been discussed and she believed it was needed and saw the benefit of it.

Letters were sent by Mr. Nick Driver, the Assistant Manager of the Business Banking Centre ("BBC") of the Bank to the Bank's solicitors Messrs. Commins Thompson, on 8 and 12 February 1990 requesting them, inter alia, to draw up the relevant documentation of the four leases of the trailers and the lease for the panel van. On 13 February these instructions were transmitted by facsimile letter to Molomby & Molomby, the Victorian agents of Commins Thompson. The instructions were confirmed on 15 February in a letter which contained the lease agreements and a certificate of witness.

By 16 February, the outstanding matter for resolution was the National Australia Bank's consent to a second mortgage over the defendants' property. On 19 February such consent was notified with the National Australia Bank priority being limited to $80,000, (although documentation was not obtained until 23 February). On about 20 February the trailers were insured, apparently through the offices of Artuful.

The Bank awaited the charge over the term deposit. This is apparently signed by the defendants on 27 February 1990 at Artuful's Box Hill office. The signatures were witnessed by Frank Main.

A further faxed letter from Commins Thompson to Irene Azzopardi dated 23 February recorded the desire of the defendants to settle the matter on 26 February 1990. On 26 February Driver forwarded to the Manager of the Wagga Wagga Branch of the Bank, Mr. Brian Walker, documentation including invoices for the trailers and the defendants’ cheque for $9,168.78 and a further six cents in cash, being the first leasing instalment. In addition, he forwarded the defendants’ cheque for $10,000 dated 20 February and signed by Mrs. Oliver in favour of the Bank, to be lodged on term deposit as security for their performance of their leasing contracts.

On 27 February a facsimile advising the settlement on that date of all leases save the panel van was similarly forwarded to the Wagga Wagga branch of the Bank. At 4.00 pm on the same day, a facsimile transmission from Driver to Artuful read: "Frank, we did it!" It appears from the material that the acquisition of the panel van was to be finalised next morning.

Again on the same day, an amount of $259,000, the total of the Hickory Dale invoices, was credited to the account of Hickory Dale trading as Rona Refrigeration and Distribution, at the Eltham branch of the Westpac Bank. On the following day, funds of $20,500 were remitted to the ANZ Bank Preston and credited to the account of Lennox Motors Pty Ltd trading as Bayford Preston. This payment was for the Ford panel van. Finally, the documentation records a letter dated 27 February 1990 from the Manager of the Wagga Wagga branch of the Bank, Walker to the defendants, advising of the details of the leases and the repayment requirements.

Preceding this settlement, a number of security documents were signed by the defendants. According to the evidence of Ms. Irene Azzopardi, who was employed as a law clerk for Molomby & Molomby in 1989, she witnessed the signature of the defendants of an instrument of mortgage. Additionally, she witnessed the signing by the defendants of the lease agreements for the trailers and the panel van. Ms. Azzopardi said it was not the practice of Molomby & Molomby to date such documents on the date of their execution, but rather on the date of settlement. Ms. Azzopardi wrote the date 27 February 1990 wherever it appeared in the lease documentation. This would have been the settlement date although the date may not have been written in on that day. Insofar as some of the documents bear the date 23 February 1990, this was not in her handwriting and she could not identify it. She ventured the view, however, that the documents were probably signed by the defendants on 23 February. This would appear to be borne out by correspondence from Molomby & Molomby to Commins Thompson on 23 February 1990. The former enclosed, (inter alia), five signed lease agreements and the mortgage in duplicate as well as the certificate of witness. Also included was the first mortgagee's consent to a second mortgage, which was dated 23 February. Indeed, in her evidence Mrs Oliver agreed that 23 February was the date of the meeting with Ms Azzopardi and I find that the leases and the mortgage were signed by the defendants on that date.

The documents I have canvassed thus far, demonstrate a conventional leasing process. There is nothing unusual in the procedures adopted by the Bank or its solicitors. However, Mrs Oliver (supported by her husband) asserted that no settlement of the leases was to occur until the couple took over the company (and its shares); and until ownership of the vehicles had been established as well as their roadworthiness. She said that she and her husband also wanted to sight the vehicles. All this was, it was alleged, conveyed to Driver of the Bank who expressed himself as quite happy with that arrangement. That conversation, she said, occurred at an indeterminate date after Artuful had given Mrs Oliver Driver's telephone number in relation to some queries she had of him. Similarly, Mrs Oliver deposed to informing Ms Azzopardi of the details of the conversation she had had with Driver. This was conveyed at the time of signing the leases. She said Ms Azzopardi agreed to her request to make a note of these matters and to leave the commencement date of the leases vacant to enable this to occur. Mrs. Oliver also deposed that she had informed Artuful of these preconditions on or about 20 February 1990.

The first thing that may be said about this evidence is that there is no extant documentation to support the defendants' claim. Indeed, such documentation as exists, belies such an assertion. I refer by way of example to the provision of the cheque for $10,000, the tenor of the letter of 26 February from solicitors Commins Thompson, and the subsequent signing of the Charge over the Term Deposit on 27 February 1990. Moreover, the evidence of each of the witnesses Driver and Ms Azzopardi and Artuful was that no such preconditions were ever specified by Mrs Oliver.

Further, the probabilities are quite contrary to the scenario postulated. Since Frank Main, (the prospective business partner and brother of Mrs Oliver), was the manager at Hickory Dale at this time, he not only had control over the trailers but was well aware of their state of road worthiness. Consequently there would be no need for the sighting of the trailers or the provision of roadworthy certificates.

Mrs Oliver claimed to have told Driver and Ms Azzopardi and Artuful that she would notify them by phone, probably followed by a letter, towards the end of March or the middle of April, when the company takeover had occurred. It was at this point that the leasing agreements could proceed. This piece of recent invention was never put to any of the witnesses concerned. I reject it. Similarly, I do not accept Mrs Oliver's allegation – never put to Artuful – that she instructed him to withhold the cheque for $10,000 and the first instalment cheque of $9,168.78 which she had signed.

It was further asserted by Mrs Oliver that, upon learning that Fullard had received the money from the Bank, she rang Driver to complain about the payment and was told by him that he didn't really care so long as the Bank got its money. Again, this conversation was denied by Driver.

Mrs Oliver's evidence does not sit well with her concession that she went along with the transaction. Not only did she not commit any grievance to writing, but the flavour of the Bank's letter to her of 9 April 1990, about arranging periodical payments, and including a copy of the 27 February letter detailing the leases (which she claimed not to have received), is one of mutual co-operation. No independent evidence of any acrimonious relationship exists. Indeed the evidence of Walker is that, in numerous conversations with Mrs. Oliver about bringing the lease payment up to date, there was never any complaint about a failure to abide by preconditions.

For completeness I should add that Frank Main supported his sister's account that settlement of the leasing agreement was to await the takeover of the company. He said she was upset when he informed her of the premature payment to Fullard a few days after the event. By contrast Mrs. Oliver's evidence was that she learned of the settlement some two weeks after it had occurred.

She also deposed to confronting Fullard who stated that he did not think the defendants would mind as they were taking over the company anyway. Nonetheless she was very suspicious of Fullard thereafter.

If there was such a dispute resulting in an aftermath of suspicion, it is not reflected in the defendants' dealings with Fullard in the ensuing months, which must also be seen in the context of Frank Main's control of the Hickory Dale fleet. In co-operation with Mr. Fullard, the man who was allegedly thwarting her business ambitions and had cheated her on the leasing arrangements, the defendants committed themselves to $1.3m. worth of debts between January and July 1990.

In short, I reject the evidence of the Mrs Oliver that in conversation with Driver or Ms Azzopardi she required, or they agreed, to any of the pre-conditions or representations mentioned in the pleadings which I have summarised.

Delivery of the Vehicles

One of the issues raised for determination is whether the defendants obtained possession of the trailers and van. In order to evaluate the situation it is necessary to examine the business relationship between Fullard, who was the original source of the vehicles, and the defendants.

I have already mentioned that relationship in passing. I do not intend to go into great detail about the transactions in which the parties participated. Some examples will suffice.

On 8 March 1990 an application was made to HFC Financial Services Ltd. ("HFC”) by Hickory Dale seeking finance for a new Maxicube Double Loader Pantechnicon. The resulting hire agreement was signed by the defendants as directors of Hickory Dale and they, together with Royce Fullard, signed as guarantors. The signatures were witnessed by Frank Main. Mrs. Oliver said she was happy to sign so as Hickory Dale could operate more efficiently although she did not remember being a personal guarantor.

Also on that date an application was made in the name of the defendants to HFC for a secondhand 1985 Fruehauf Jumbo Refrigerated Tri Axel Trailer. This application, (which was ultimately successful), was varied on 17 April to a 1982 Maxicube Refrigeration Jumbo Pantechnicon. The supplier was shown as Hickory Dale trading as Rona Transport. The defendants signed the lease with Frank Main as witness. The HFC payment went to Rona Engineering. After first claiming no memory of the transaction, Mrs. Oliver said she thought she was buying it from HFC for the Hickory Dale fleet.

Following a successful application to HFC initiated on 22 May 1990, Hickory Dale (with the defendants signing as directors) hired a secondhand Maxicube Refrigerated Jumbo Pantechnicon. The defendants also signed as guarantors, along with Royce Fullard. Mrs. Oliver said she had no memory of this transaction.

Finally, I refer to an application to Esanda Finance Corporation (Esanda) made on 12 July 1990 seeking finance of $186,800 to purchase a new 1990 Kenworth prime mover. The hiring agreement was signed by the defendants as directors of Hickory Dale. Indeed, the documentation indicates that the defendants and Fullard signed as guarantors.

Mrs. Oliver conceded that throughout this period she was making decisions in conjunction with Royce Fullard.

It is also instructive to note that, in a statement of Assets and Liabilities prepared by Interstate Finance Pty. Ltd. in May 1990 on the defendants' behalf, their assets are listed as including the four leased trailers and the panel van as well as the 1982 Maxicube Pantechnicon, the subject of the successful HFC application in March 1990. Artuful said the statement was prepared on instructions from the defendants. I prefer his evidence to that of Mrs. Oliver who denied this was so.

Although claiming to be seeking possession of the trailers throughout this period, Mrs. Oliver, even on her own version, made no effort to obtain the registration numbers from Frank Main for three or four months not to seek the aid of Main as Fleet Manager to retrieve the vehicles. Further, Mrs. Oliver was quite prepared for the leased panel van to be used on Hickory Dale business. Even in late 1990 to early 1991, a period of about two months, Mrs. Oliver's son Jamie was operating one of the leased trailers. These factors, in addition to the purchases to which I have just adverted, drive me to the conclusion that, whatever the state of flux of the business relationship between the defendants and Fullard, each of them, as well as Frank Main, were co-operating in the operation of Hickory Dale and the trailers at least up until the period after September 1990 when Frank Main went to gaol for fraud.

In light of this evidence, and for reasons I shall later elaborate, the claim not to have obtained delivery of the trailers and the panel van cannot be sustained.

It is also in this context that the evidence about the repayments must be assessed. Mr. Main gave evidence that Fullard agreed to make the repayments until the company takeover. He took the view that, since Frank Main was managing a profitable business, there was nothing to be concerned about. Main himself drew cheques from both Rona Engineering and Hickory Dale for Fullard to sign. This evidence is consistent with that of Mrs. Oliver that the only amount she actually paid was the initial instalment. No documentation produced by the Bank indicates further payments specifically from her.

The Defendants’ Defaults

I have already referred to the conversation between Driver and Mrs. Oliver on 9 April 1990 which was the subject of a file note. Next, in the sequence of relevant events was a further letter from Driver dated 13 June to the defendants at their home address. He stated that this was sent because there seemed to be some confusion by the defendants as to their commitments. The subsequent course of events suggests there was feigned obfuscation rather than genuine confusion. What then occurred, however, was the receipt of a cheque on 15 June from Rona Refrigeration, purporting to be the lease payment for the month of May. That cheque was returned unpaid on 22 June 1990 prompting Walker of the Bank to send a handwritten letter to the defendants on 5 July requesting an extra payment to bring the arrears up to date as at 27 June. On 11 July, Walker requested Driver to speak to the defendants about the arrears. He did so that day and his file note records Mrs. Oliver stating that she was sorting out the matter with her bank "that day". He described her demeanour as very helpful. Subsequently, after leaving a message on Mrs. Oliver's answering machine on 18 July, her brother Frank Main rang. He promised to arrange a remittance on 19 July and blamed the late payment on a slower than usual collection of debtors.

When nothing had occurred by 24 July, Driver left a further message on Mrs. Oliver's answering machine. The respondent to that message, on 25 July, was a Mr. Graham White. (He had apparently been employed in a customer service role by Hickory Dale in May because Frank Main was facing a criminal trial).

White essentially reiterated Main's account, adding that a cheque would be posted that evening.

In his evidence Main described this period as one of cash crisis at Hickory Dale. He attributed it to the immediate operational costs of new trucks as against the delay in the receipt of revenue from their activities.

Then followed a phone call by Mrs. Oliver to Driver. In essence she claimed difficulties in getting her bank to send the payment and expressed the belief that repayment books would facilitate timely future payments. A file note confirms that Walker forwarded the repayment books to Mrs. Oliver on 9 August.

Whilst Mrs. Oliver did not specifically remember getting the letter of 13 June confirming repayment details or the letter of 5 July about arrears, she did concede she received about four or five letters mostly chasing up arrears. She also acknowledged messages were left on her answering machine and said she would have requested Fullard or White, or even Frank Main, to ring the Bank. Mrs. Oliver was adamant, however, that she did not receive the letter containing the repayment books but first saw them in the possession of Mr. White. Since the books, like the letters, were specifically sent to her house, I do not accept that evidence.

In September 1990 Frank Main commenced a six month prison sentence for a number of counts of fraud arising out of previous business activities in a company called Ice Cream Distributors. Even prior to his incarceration he expressed concern to his sister about the cash flow and profits from the trucking business. According to Main once he was in prison the company went downhill rapidly and lost most of its contracts.

It is difficult to accurately piece together the business relationship with Fullard at this time. The records of the Australian Securities Commission, (ASC), indicate that the defendants ceased to be directors of Hickory Dale Pty Ltd on 29 October 1990. (Mrs Oliver claimed to have written to the ASC as early as August 1990 attempting to resign the directorship.) Regardless of the precise dates, there were clearly difficulties in negotiations between the parties. Frank Main gave evidence of meetings with Fullard and Mrs. Oliver at Pentridge in November/December 1990, where discussions occurred about the loss of business. Fullard expressed the view that he needed to sell out and, since the defendants had insufficient capital to operate the business, and since he was guarantor for the equipment, he needed to find another buyer.

In the meantime, correspondence was being sent from the Bank to the defendants. The first letter was from Mr G.L. Chudleigh, described as the Senior Manager, Wagga Wagga branch and dated 18 September. It noted that the arrears as at that time were $9,769.21. Some payments were evidently made thereafter because a further letter from Chudleigh to the defendants dated 10 October, stated that, following such payments, there was still one instalment in arrears. Moreover, the letter warned that unless this payment was made by 22 October the necessary funds would be withdrawn by the Bank from the term deposit (of $10,000). In the event, the arrears were not brought up to date and a handwritten letter from Walker to the defendants dated 29 October informed them that the deposit had been so utilised. It further threatened repossession of the trailers unless the two instalments owing on the leases as at 27 October were not paid by 16 November 1990. It mentioned a conversation with Graham White that payments were to be made by sub-contractors.

Mr Walker deposed to having numerous conversations with White in chasing up arrears. He said these conversations could have followed messages left on Mrs Oliver's answering machine. Mrs Oliver stated that she did not expect sub-contractors to make payments, but the evidence indicates that her son Jamie used one of the trailers and was required to make a lease payment on the vehicle. It was Jamie Oliver's evidence that Graham White informed him that this was the arrangement with all sub-contractors. In fact, a cheque with a deposit slip dated 14 December was sent to the Bank with an instalment payment. When that cheque was dishonoured, Mrs Oliver wrote to the Bank on 2 January 1991 requesting that it be re-presented. In addition, insurance premiums were paid on the trailer and deducted from Jamie Oliver's pay.

I have no doubt that, throughout this period, Mrs Oliver was agitated an anxious that the payments be made on the trailers. On some occasions she sought time by claiming confusion as to the method of payment, and on others by claiming failure to receive documentation. The problems of her business relationship with Royce Fullard, upon whom she relied for prime movers to pull her trailers and contracts to fill them, were not, as I have found, the result of any conduct of the Bank.

On 27 November, a conversation occurred between Graham Oliver, (another of the defendants' sons) and Walker. The tenor of the Bank file note is a discussion in which he claimed that his mother was not aware of the state of arrears. He was advised that this was not so and that letters informing her of the situation had been sent to her home. It is also clear that Graham Oliver rang to discuss the leasing of the panel van.

Mr Walker followed up that conversation with a letter dated 30 November which said, (inter alia), "your mum didn't contact us, difficult to hold off repossession action". The letter also referred to the need for authority to transfer the balance of the terms deposit towards the payment of instalments on the panel van lease. That provoked an immediate response from Mrs Oliver who faxed the authority required to Walker and expressed her thanks for his assistance.

The documentation indicates that, as early as 21 November, Graham Oliver had been discussing with the Bank taking over the lease of the panel van. Despite its earlier use in the Hickory Dale business by the mechanic Cornillieson, Graham Oliver clearly had the use of it by December 1990 at a time when he was operating an Autobarn business in Brunswick. Moreover, he made lease repayments with the blessing of his mother.

Various communications occurred in January and February including a query from Graham Oliver to the Bank, as to whether the leases could be consolidated. This was answered in the negative in a letter which was written to the defendants by a Mr John Harris who styled himself Senior Manager of the Wagga Wagga branch. There was also a query from Walker in a letter dated 15 February 1991 as to whether Graham Oliver was intending to pay out the panel van lease.

This did not occur but subsequently, on 18 March 1991, the panel van was insured for one month in Graham Oliver's name. The question of how long he retained possession of the van is a matter I will refer to later in this judgment.

The Events of 1991

Three separate transactions are relied upon in the pleadings as amounting to repudiation by the Bank of its agreements with the defendant. These are the transaction with ART in January 1991, the transaction with Fullard and Hanlon in April 1991 and the transaction with Rona Engineering in April or May of 1991. I turn to my findings of fact in relation to these issues.

Dealings with Australian Refrigerated Transport

In January 1991, consistent with Fullard's desire to sell out his business interests, and his perceived need to find a buyer other than the defendants, a meeting took place at the offices of his solicitors, Young Hubbard & Co. Apart from the solicitor, Graham Hubbert, those present were the defendants, Fullard, Mrs. Oliver's younger brother Arnold Main, and Rick Andrews who was representing ART. The directors of that company were apparently two brothers named Anderson. Mrs. Oliver conceded that the purpose of the meeting was for ART to purchase Hickory Dale and this included the trailers the subject of the lease with the Bank. As part of the scheme the defendants signed and dated a document resigning as directors of Hickory Dale. This was to enable the Andersons to take over as directors of the company.

Indeed, Mrs. Oliver gave evidence that she was not opposed to all of the equipment subject to the leases, as well as the company Hickory Dale, being sold to ART provided she and her husband were absolved from all liabilities to the Bank (and indeed all liabilities under leases entered into with other entities). As to what was occurring to the vehicles on the ground in the post January months, the evidence is not clear. Much of the material was of a hearsay nature. It appears, however, that ART had use of the equipment and made some payments to the Bank for its use. A file note in the handwriting of Walker, and probably made on 15 February 1991, may be interpreted as indicating that ART had taken over three units and were to forward lease payments. Such notation does not, of course, evidence any formal agreement with the Bank. However, Mrs. Oliver asserted that this was the result of a deal done between the Bank and ART. Indeed, she deposed to a conversation with Driver in January 1991 in which he told her that the Bank was making arrangements with Andrews and she was to mind her own business. (Such a conversation was denied by Driver.) Her evidence in chief was that, although unhappy about ART using the equipment, she had no further written or verbal contact with the Bank until April/May 1991. This is clearly incorrect.

The subsequent interaction between ART and the Bank and the Bank and Mrs. Oliver is spelt out in a series of letters and file notes.

Putting to one side correspondence between the Bank officer Walker and Graham Oliver about the panel van lease, the documentation reveals a letter dated 7 February 1991 from Harris, of the Bank, referring to a conversation with Mrs. Oliver on 6 February about arrears owing on the various leases and requesting that adjustment be made by 15 February of that year. Mrs. Oliver conceded that the letter looked "familiar". Significantly she did not respond to it by inquiring of the Bank how she could be liable following the deal with ART that Driver had allegedly informed her about it in January 1991. When taxed about whether she told Harris of the situation in the 6 February conversation, the witness initially professed no memory of the conversation, then said she would have mentioned the matter, but could not recall Harris' response. All this, in my view, was recent invention.

The next relevant item of documentation is a letter dated 22 March 1991 and written by Artuful on behalf of the defendants to Driver. On the face of it, the letter evinces the defendants' support of a proposal for ART to take over the leases of the four pantechnicons. It also seeks finance for the defendants to obtain a secondhand prime mover so as to be able to trade in their own right. The letter indicates a potential deal between the defendants and ART, but is quite contrary to any assertion of a deal involving the Bank and ART prior to that date. Driver said the letter would have been in response to his telling Artuful to put any proposals in writing. Mrs. Oliver claimed to have no recollection of any involvement in this correspondence. Given the tenor of the letter I regard that assertion as disingenuous.

On 26 March the Bank responded to Artuful's letter making its position on the lease repayments quite clear. The relevant parts of the letter state:

"We understand a company by the name of Australian Refrigerated Transport Pty. Ltd. is prepared to meet continuing monthly leasing commitments on Mr. and Mrs. Oliver's behalf regarding four refrigerated trailers.
The Bank is prepared to carry the existing leasing arrears subject to future leasing instalments being met by the due date each month. The present position of accounts are attached for your information.
As discussed on the telephone, ultimate responsibility for repayment still rests with Mr. and Mrs. Oliver. The Bank retains other security being a second mortgage over the customer's house as well as the equipment under lease.
Should the lease arrears position deteriorate further, the Bank may take legal action including repossession of the equipment and realisation of security in order to recover its debt."

A schedule containing details of the current state of the leases was annexed. On the same day a file note, including a copy of this letter, was sent by Driver to Walker. It included the comment:

"Mr. Frank Artuful of Pacific Royal has advised he will arrange agreement between the customers and Australian Refrigerated Transport to be signed. Once this is done, the company will forward the monthly leasing instalment due 27 March 1991 and will meet all future monthly payments.
Please closely monitor the arrears position and instigate repossession action should further deterioration of the account become evident."

On 3 April Driver spoke to Artuful and records the conversation as follows:

"He has given original letter to defendants to take to their solicitor for drafting agreement between themselves and Australian Refrig Tspt.
- Expects to have everything in order and March payt made by Friday."

A further conversation with Artuful on 8 April produced this note:

"Oliver's side of things have been fixed up. However, Frank has not heard from Aust. Refrig. Management.
Frank will let me know tomorrow when we will get our money."

This process was, however, superseded by a phone call from Mrs. Oliver on the same date to the effect that the deal with ART was not proceeding and proposing that the defendants retrieve their trailers, pursue their own contracts, and restructure the lease repayments.

The documentary material indicates a phone call from the Bank to Mrs. Oliver on 9 April informing her that the proposed repayment schedule was unacceptable. On the same day Driver was telephoned by Rick Andrews from ART. These various conversations were consolidated into an Office Minute signed by B.D. Ratcliffe, Manager and S.N. Driver, Assistant Manager on 9 April 1991. It bears reproducing in full:

"An arrangement was made between the defendants and a company by the name of Australian Refrigerated Transport Pty. Ltd. to have the company take over the trailers currently on lease with SBN which would result in the company immediately meeting the March lease instalments amounting to $9,168.85 on the defendants' behalf.
A letter was issued by the Bank to the intermediary, Pacific Royal Finance Pty. Ltd. advising the Bank would agree to carry leasing arrears subject to the March payment being made and all subsequent monthly instalments paid by their due date.
We were phoned by Mrs. Oliver on 8 April 1991 and were told the arrangement was not proceeding and that they were taking back their trailers and would commence carting for Birds Eye. Mrs. Oliver requested deferment of the March payment until the end of April with future monthly instalments to be made on a three weekly cycle thereafter in an endeavour to catch up the arrears.
We phoned Mrs. Oliver on 9 April 1991 to advise this arrangement was not acceptable to the Bank and that we required immediate adjustment of their March leasing instalments.
Following that telephone conversation we received a call from Mr. Rick Andrews (Manager, Australian Refrigerated Transport) who advised the March payment will be made as soon as the company received approval for purchase of prime movers to tow the trailers. Pacific Royal Finance had promised a decision on this matter yesterday, however as yet it has not been confirmed.
With these conflicting statements of whether Oliver's will take back their trailers or whether Australian Refrigerated Transport will meet leasing instalments we do not know what to believe. Until and unless instalments are paid, we recommend repossession action proceed.
Mr. Brian Walker of Wagga Wagga branch has been phoned to proceed with repossession action as soon as possible. He advises that Mr. Bob Cool (Repossession Agent) has an agent in South Australia who will attend to the matter on the Bank's behalf.
The situation will be reviewed should payments be received, however in view of the present serious arrears position we should continue with repossession action."

In cross-examination, Mrs. Oliver eventually said that she thought Artuful had informed her of the Bank's attitude that, even if a deal was done by Andrews of ART, the Bank would not release the mortgage security. After that she did not wish to proceed with the ART proposal. Further, Mrs. Oliver agreed it would have been about 9 April 1991 that she conveyed her views on the matter to Driver.

The documentary evidence to which I have referred, overwhelmingly supports the conclusion that the negotiations between ART and the defendants, (no doubt encouraged by Fullard), ultimately floundered when the Bank refused to relinquish its mortgage security and hence the defendants remained liable for the repayments. It seems clear that, in the course of these negotiations, the vehicles were used by ART with the permission of Fullard and probably with the consent of the defendants (whether reluctant or otherwise). Indeed, a file note dated 8 May 1991 by Driver states:

"I have had regular contact by phone with Mrs. Oliver to chase up the April payment $9,168.85, however despite being informed that Mr. Andrews posted the cheque to us last Friday 3/5/91, the funds have not been received."

Mrs. Oliver denied taking part in this telephone conversation. I do not accept that evidence.

A file note of 9 May 1991 refers to a Ted Marsden being phoned to attend to repossession unless cleared funds were paid immediately.

There was also documentation signed by Walker on 9 April 1991 authorising a Mr. John Wood [of Complete Litigation Pty. Ltd.] to undertake repossession. It is not clear what action was taken pursuant to that instruction. I note, however, that Mr. Marsden was an employee of Mr. Wood.

The perspective of the Bank throughout this period is exemplified by the evidence of the witness Driver. In the course of cross-examination this exchange occurred:

"What were your conversations with Mr. Andrews about?
I think he was offering to – saying that they had made arrangements with defendants to use their trailers and whilst ever he was using the trailers that he would meet the monthly leasing commitment. …
But that was, sir, that arrangement with Mr. Andrews was acceptable to you so long as you got your money?
- There was no arrangement. The arrangement was being made between defendants and Australian Refrigerated Transport. If the payments came to the Bank I was happy.
… What happened further on down the track after they had had them from February or earlier, I suggest, was that you decided that you wanted to keep security over the defendants' home, you wanted to retain …?
Nothing had changed in regard to the leasing agreement."

According, I find that there was never any leasing agreement between the Bank and ART which could possibly found a claim of repudiation by the Bank of the original lease agreements.

Dealings with Fullard and Hanlon

The starting point in examining this aspect of the case is a document dated 9 May 1991 signed by Royce George Fullard, which transferred the powers of Rona Engineering over Hickory Dale pursuant to a Debenture Charge, to a James Patrick Michael Hanlon.

In the days immediately following the production of that document, the file notes of the Bank detail ongoing efforts to repossess the leased vehicles under the supervision of the Bank's agent, John Wood. These activities were apparently frustrated by Hanlon and, in a report dated 3 June 1991 from Wood to Mr. John Caldwell, the Assistant Regional Lending Manager for the Bank, several lurid episodes are detailed. The report asserts that, as at 13 May, Hanlon had taken possession of the refrigerated vans for and on behalf of Hickory Dale. It details an offer made by Hanlon on 15 May 1991 and relayed via the repossession agency, to Caldwell at the Bank. It was to the effect that full arrears would be paid on the four trailers, (an amount of some $45,501), and thereafter, regular monthly instalments would be made. Significantly the report records Caldwell as agreeing to one and a half payments per month provided the units were made available for inspection and current registration and insurance details sighted.

At 1.30 p.m. on the same day, a faxed document headed "Agreement" signed on behalf of Rona Engineering by James Hanlon, was received by the Bank. It was sent for the attention of Mr. John Caldwell who was described as the Credit Administration Manager. Among the other documents included were details of the original debenture charge, and the 9 May document creating Hanlon as agent exercising the powers of Rona Engineering over Hickory Dale. The primary document sought confirmation of an agreement between Hanlon, acting for and on behalf of Rona Engineering, and the State Bank Wagga Wagga, N.S.W. After setting out details of the four trailers, the subject of the leases, the document continued:

"Regarding this leased equipment at your Wagga Wagga branch will be maintained in accordance with all agreements.
Reference original contracts and work within the framework of the original design, on the basis that payments at the rate of 1½ instalments per unit per month, total amount $13,753.26 will commence at the end of the 30 Day agreed period as per arrangements with John Wood.
Dated this 15th day of May 1991.
Awaiting your confirmation."

Mr. Walker, when cross-examined about the contents of the report agreed that it indicated that Caldwell had, on behalf of the Bank, reached an agreement with Hanlon. He identified a file note recording that, at 12.00 p.m. on 15 May, he had spoken to Caldwell about the offer made by Hanlon and, as a result, repossession was not to proceed. The witness said that the reference to one and a half payments per month in a file note of a conversation with John Wood dated 16 May, also related to the arrangements made between Caldwell and Hanlon through the repossession agents.

Thereafter a letter dated 23 May 1991 was sent by the Senior Manager of the Wagga Wagga Bank, Harris, to the defendants. Significantly, while requiring the repayments on the leased panel van be brought up to date, it makes no mention of the leases of the trailers. A letter in similar terms was written by Harris on 20 June 1991.

File notes made by Driver on 11 and 12 June 1991 reveal him to be communicating with Hanlon. Hanlon phoned Driver to tell him the 15 June payment would be a week late but that the Bank would definitely get it.

It seems that Mrs. Oliver rang Driver on 11 June with Hanlon's phone number. Apart from the file note, Driver had no independent memory of any conversation, and all he could say about it was that it was in the context of the trailers and indicating that Hanlon knew where they were. In any event it does not provide any basis for suggesting that Mrs. Oliver was supporting the activities of Hanlon.

A further file note, dated 21 June indicates that Driver rang Hanlon again seeking the 15 June payment. Driver confirmed in evidence that this would relate to all four trailers. On this occasion, he was advised by Hanlon that a meeting had been organised through John Wood between Hanlon and Caldwell for the following Tuesday (25/6/91). According to the file note, the fact of a future meeting was confirmed by Caldwell.

On 26 June 1991,the witness Walker recorded the following;

"John C defendants
Fullard and another bloke in today – report to follow.
Apply chq to 4 leases 1 payt on each – special answer needed.
Don't write to Olivers." [underlining in file note].

Questioned about this note, Walker confirmed that John C was John Caldwell. He claimed not to know whether Hanlon was the other person present but, given the earlier file notes the probabilities are that it was indeed Hanlon. The cheque referred to was drawn on the account of Longforde Forge Pty. Ltd. and signed by Royce Fullard. It was to be applied to all four trailer leases.
As for the notation "Don't write to Olivers", the witness professed not to know what that meant. The fact is, however, that from this point there is no evidence of correspondence being addressed to the defendants by the Bank in relation to the leases until legal action was commenced. Indeed, Walker deposed to having been informed by Caldwell that agreement had been reached with Hanlon in relation to one and a half payments per month. As to what may have been the obligations of the defendants under this arrangement, Walker professed to be unaware.

The version of events advanced by Mrs. Oliver was that, in about April/May, Driver rang her and informed her that the Bank had made arrangements with Hanlon to take over the equipment with Fullard; that the matter was completely out of the defendants' hands; and, as far as the Bank was concerned, that was the end of the matter. Further, she was told to deliver all Hickory Dale equipment to the Peateau Road Reservoir premises of Hanlon and Fullard.

I should indicate that Driver denies any such conversation and no file note records it.

Despite this message of release from liability, evidence was given by Mrs. Oliver of an unsuccessful attempt to retrieve the trailers from the Reservoir location. This was met by a phone threat of violence from Hanlon should any further such endeavours be made.

Dealing first with the conversation, I do not accept that it ever took place. I note that in the pleadings that it is alleged to have occurred in about April, which is prior to any of the events involving Hanlon having taken place. If an endeavour was made to retrieve the trailers, after the conversation with Driver, such action would be inconsistent with the defendants' claim to have delivered equipment to Hanlon and Fullard in accordance with Driver's instructions. In cross-examination Mrs. Oliver was alive to this problem and initially said the information was provided after the failed foray. When confronted with the earlier evidence that it had preceded the expedition, she immediately claimed that the Bank had told her "twice". I do not accept this glib response.

Of course, Mrs. Oliver had ultimately to maintain that she conversed with Driver before the visit to the trucking yard in light of her assertion in a letter to the Banking Ombudsman in September 1995 that Driver must have alerted the Hanlon forces to her intention because, on arrival, she was confronted with several men wielding lumps of wood. In both this, and an earlier letter of January 1995, written to Ms. Maree Cole of the Bank, Mrs. Oliver had herself present. In cross-examination she admitted she was never present. The initial letter fixes the date as at possibly June 1991. The insertion of such events into the narrative by Mrs. Oliver may well have been designed to bolster the defendants' claim to be innocent victims of the agreement between Hanlon and the Bank. The rejection of this portion of her evidence does not, however, conclude this matter.

On this aspect there is also the evidence of Frank Main which differs from Mrs. Oliver's account. He deposed that having gone to Hanlon's premises in about April or May and of having gained access to them. He offered to rent the trailers from Hanlon but ended up with a pistol at his face while being informed by Hanlon that he had done a deal with the Bank and to stay out of it. Main said he passed the information of the Bank deal on to Mrs. Oliver.

Several comments may be made about this version. The reaction of Hanlon, as described by Main, is consistent with his aggressive and abusive approach to those enquiring after the trailers which is detailed in John Wood's report. Further, the evidence of Main that he went to the premises on a day that his sister phoned the Bank and indicated that the defendants still wanted to obtain possession of the trailers, is not inconsistent with the evidence of Driver that the 11 June conversation with Mrs. Oliver related to trailers and Hanlon's knowledge of their whereabouts. Indeed, Driver volunteered the following in evidence. He was asked by the plaintiff's counsel:

"What about the allegation that in approximately June 1991, Mrs. Oliver managed to find out where the equipment was and advised the Bank that she was going to try and gain possession of the equipment the following day. What do you say to that?
I can't recall directly, but there was some conversations in regard to taking the equipment back, yes."

And finally, there is the evidence of the plaintiff's witness, Mr. Kenneth Loveridge, a commercial inquiry agent engaged by Walker on behalf of the Bank on 4 December 1992 to recover the leased vehicles. He deposed to obtaining information that Frank Main, together with another or others, attempted to retake possession of the goods from Hanlon. Whilst the details may differ, this evidence is generally supportive of Main's account.

Although critical of some of Main's evidence, I accept his account of an effort to regain possession of the trailers, Hanlon's response to it, and his relaying of that response to Mrs. Oliver. I also accept Main's evidence that she accepted, with resignation, the information of an accord between the Bank and Hanlon.

On the face of the documentation, the Bank agreed to enter an arrangement with Hanlon (with the active connivance of Fullard), for the leasing of the trailers. At least one payment was made pursuant to this agreement, (regardless of what bank account was used to provide the funds). From the date of that agreement, (whatever may be its precise terms), many months elapsed without any attempt by the Bank to enforce payments under the original leases for the trailers. This is in stark contrast to the two letters seeking payments for the leased panel van. Moreover, the file note recording the arrangement with Hanlon also bears the unexplained notation "Don't write to the Olivers". Certainly the defendants received no correspondence in relation to the leases.

It was submitted on behalf of the plaintiff, that such factors as the defendants' friendship with Fullard, (at least until June 1991); the failure to sue Fullard who, by January and April 1995, Mrs. Oliver was accusing of fraud; the failure to remove an unexplained caveat placed on their house in the name of Hickory Dale; the provision to Driver of Hanlon's phone number on 11 June; and Mrs. Oliver's illness after May 1991 which left her too sick to worry about the trailers, all lead to the inference of collusion between Fullard, Hanlon and the defendants.

In my view none of these matters leads to such a conclusion. On the evidence the defendants played virtually no role in the day to day operation of Hickory Dale. Nor, after the initial amount, did they make any of the actual lease payments, (albeit Mrs. Oliver endeavoured to ensure that payments were made). Their original agreement to the ART proposal, procured in the offices of Royce Fullard's solicitors, had been given reluctantly. The subsequent battle for possession of the trailers clearly involved bigger players with different agendas. Further, the swiftness with which the events unfolded between 9 and 15 May tends to undermine the suggestion of consultation or collusion by the defendants with Fullard and Hanlon. The cessation of communications between Mrs. Oliver and the Bank appears to have merely been coincidental with the onset of an illness.

The far stronger inference, and the one which I am prepared to draw, is that the Bank, through Caldwell, sought to salvage its financial position by entering into the agreement with the Hanlon-Fullard axis. On one view, unless the vehicles themselves generated income from which repayments could be made, the second mortgage security over the defendants' property would have been totally inadequate to cover the potential losses of the bank. The significant difference between this arrangement and the negotiations relating to ART, is the failure of the Bank, on the material, to inform the defendants of what was to transpire. In the former case the impediment to the ART deal was the insistence by the Bank on retaining its security and the reaction of the defendants to this stance. Here, the defendants were never informed of the implications of the Bank's actions and were given no opportunity to consent to them. The overwhelming likelihood is that the Bank, faced with the battle for possession being waged between ART and Hanlon, graphic details of which were being relayed by their repossession agents in the field, felt compelled to adopt a pragmatic course which offered some hope of financial salvation.

Although much of the evidence of Loveridge was of a hearsay, self-serving, or opinion nature, he nonetheless claimed to have been instructed by the Bank that in 1991 the Bank "had let Mr. Hanlon have the trailers", in the sense that the Bank was aware Hanlon had possession of them and that the Bank was taking payments from him. He also stated that Mrs. Oliver had asserted to him that she had not given permission for Hanlon to have the trailers. Furthermore, his investigations had revealed no link between Hanlon and the defendants.

It is most unfortunate that Caldwell, who could have shed more light upon the dealings of the Bank with Hanlon, was unable to be called. The failure of the plaintiff to call him in circumstances where the original pleadings nominated Driver as the purveyor of the news of the terminated agreements and in light of his absence overseas, does not, in my view, raise the spectre of Jones v. Dunkel [1]as asserted by the defence. Rather, one is left with a gap in the material and increased reliance upon the documentation, and any inferences that may be drawn from it. The failure to call John Wood, and Ted Marsden, also criticised by the defence, is effectively undermined by the production of the report of 3 June 1991 which essentially speaks for itself.
[1] (1959) 101 CLR 298

Ultimately Loveridge succeeded in repossessing all of the leased items. He stated that all four trailers were being used by Hanlon interests, (or interests with whom he was associated). By this stage, Fullard had gone to England. It appears that Hickory Dale equipment, leased through H.F.C., Esanda, and the Commonwealth Bank, was also recovered by Loveridge from Hanlon.

No company or person ever laid claim to the trailers repossessed on behalf of the Bank, and which were ultimately auctioned on the Bank's instructions. In January 1994, the 1984 Freuhauf Jumbo Freezer Tri axle Van was auctioned and a net sum of $16,025 was received by the Bank. Auctions in October 1994 of the 1981 Maxicube Tri axle Jumbo Freezer; in December 1994 of the 1986 Freuhauf Reefer Pan Thermoking Refrigeration Unit; and in September 1995, the 1987 Freuhauf Jumbo Freezer netted the Bank proceeds of $13,700, $19,850 and $5,100 respectively.

The Ford Falcon Panel Van

It was Mrs. Oliver's evidence that, not only did Driver tell her to deliver all Hickory Dale equipment to the Plateau Road, Reservoir premises of Hanlon and Fullard, but that her son Graham Oliver actually returned the panel van to those premises. Graham Oliver also claimed to have given the panel van back to "Royce Fullard and his mob wherever they were in Reservoir at the time".

In cross-examination of Mrs. Oliver about this matter this exchange occurred:

"So Mr. Driver had a telephone conversation with you and said to you he wanted the panel van returned?
His exact words were any equipment we had in our possession in the name of Hickory Dale was to be returned to Plateau Road, Reservoir as soon as possible.
In the name of Hickory Dale?
- Yes.
So what did you do? You told Graham to return the van, the panel van?
- I did. I did."

It was then pointed out to the witness that the panel van was in the defendants' own name. The cross-examination continued:

"You didn’t say, 'well, hang on a minute, the panel van is mine'?
- No, I didn't say that.
But Mr. Driver, correct me if I am wrong, didn't say, 'return the panel van'. He simply said 'return the equipment in the name of Hickory Dale'?
And he did say the panel van actually, I'd forgotten.
He did say the panel van?
- Yes, I forgot for the moment. It's a long time ago to try to remember every word of a conversation.
What did he say about the panel van? That, 'well, look you're no longer liable for it because Hickory Dale is now going to be liable for it'?
- No, he just said return them to there and it’s no longer any of your business.
What, this was a phone call out of the blue; was it?
- Yes, it was.
And you say still late April, early May?
- Yes."

I have already found that no such conversation occurred with Driver and this I regard this as another example of Mrs. Oliver's glibness.

The commercial agent Loveridge deposed to a conversation with Graham Oliver on 8 April 1993 in which he admitted that he drove the panel van until late 1991 when he gave it to Frank Main. Graham Oliver said he now believed Main to be in Queensland living under an assumed name. He further requested that his mother, Mrs. Oliver not be told of the information that he had provided.

Graham Oliver professed no recall either of Loveridge or of any such conversation. I do not accept his evidence to that effect.

Frank Main, in his evidence, denied ever having possession of the panel van in Queensland. Whilst it is not necessary to detail Loveridge's subsequent investigation it ought to be noted that, acting on information from an associate of Frank Main, the vehicle was located in a shed on a property at Yarrambat on 5 July 1993. In the meantime, surveillance of premises associated with Hanlon did not reveal the presence of the vehicle. Further, there is no evidence that Hanlon was ever interested in obtaining possession of the panel van.

In my view the probabilities are that Frank Main had control of the vehicle until it was repossessed. It is significant that when sent the letters by the Bank on 23 May and 20 June 1991 requesting payment of arrears on the panel van lease, Mrs. Oliver voiced no protest that financial responsibility for that vehicle had passed to Hanlon. Moreover, any deal between Hanlon and the Bank related to the trailer leases and did not include the panel van. Consequently, whatever the fate of the panel van once it left the custody of Graham Oliver, any liability for repayments under that lease remained with the defendants.

The panel van was auctioned on 23 August 1993 and the Bank received a net amount of $6,610.

The defendants’ Claims

Against this factual background I turn to consider, in short compass, the claims of the defendants in their defence and counterclaim.

The Conditions Precedent and Representations

I have found that none of the conversations relied upon as giving rise to the conditions precedent occurred. It follows from this that the contentions of the defendants that they lacked a intention to enter into a binding legal relationship with the Bank must fail. Likewise the claims that the mortgage was subject to similar conditions precedent and the claims based on such representations as constructing misleading and deceptive conduct, and as raising an estoppel, must also fail.

I should interpolate that it was submitted by counsel for the defendants that it was an express or implied term in the lease agreements that the plaintiff would acquire title to the four trailers. It was argued that this had not occurred and, accordingly, the four leases failed. (This does not of course apply to the panel van lease).

In developing this submission counsel for the defendants relied upon Certificates issued pursuant to s. 84 of the Road Safety Act 1986. These Certificates show that three of the trailers were, at the relevant time, registered in the name of Rona Engineering, (incidentally the company effectively owned and controlled by Royce Fullard) and one trailer was registered in the name of Eastoes Transport Pty. Ltd. It was put that the bank, having purportedly purchased the trailers from Hickory Dale had failed to acquire ownership.

In so far as is relevant, s. 84 of the Road Safety Act 1986 provides

"(1) A certificate in the prescribed form purporting to be issued by the Corporation certifying as to any matter which appears in or can be calculated from the records kept by the Corporation or a delegate of the Corporation is admissible in evidence in any proceedings and, in the absence of evidence to the contrary, is proof of the matter stated in the certificate…..
(3) A certificate in the prescribed form purporting to be issued by the Corporation certifying that on a particular date a motor vehicle or trailer was registered in the name of a particular person is admissible in evidence in any proceedings and, in the absence of evidence to the contrary, is proof that on any date that person was the owner of that motor vehicle or trailer."

Further, on behalf of the defendants, it was put that the evidence of Artufel and Frank Main supported the proposition that the Bank had never become the owner of the trailers.

In response, counsel for the plaintiff referred to s. 27 of the Goods Act 1958 (Vic) or its NSW equivalent, s. 26 (1) of the Sale of Goods Act 1923. Issue was joined as to which law applied to the present transactions and the capacity of either section to confer legal title on the plaintiff in the circumstances here existing. I do not think that this level of refinement is necessary to determine this matter.

In my view there is ample evidence to the contrary of the registration certificate. Firstly, there is the statutory declaration of ownership made by Royce Fullard as director of Hickory Dale, that the trailers were his absolute property. Secondly, there are signed invoices to the same effect. Thirdly, at no time in the history of this matter has any challenge been made by any third party either to the initial ownership asserted by the vendor or the subsequent ownership of the Bank in repossessing the trailers and selling them at auction. In so far as the evidence of Frank Main and Artufel is relied upon, the first is at best hearsay whilst the second is based upon an understanding of registration evincing ownership. Accordingly, the contention of the defendants is not made out.

The Clause 2.2 Submission

For reasons which did not become clear, the leases were never executed by the Bank. As a result, counsel for the defendants presented a submission based upon the provisions of clause 2.2 of each of the lease agreements which deal with this eventuality.

"2.2 (a)This Agreement shall not be binding upon the Lessor and the leasing herein contemplated shall not commence until it has been executed by the Lessor or its Authorised Officer. The provisions of this Clause shall not be affected or prejudiced by reason of any prepayment of moneys by the Lessee or the delivery of the Goods which pending the execution of this Agreement shall be deemed merely provisional but in the event of such provisional delivery the Lessee's obligations as to insurance care and use of the Goods under this Agreement shall bind the Lessee from the first to occur of its execution of this Agreement or the Lessee's possession of the Goods and the Lessee shall be a tenant at will of the Goods at a daily rental equal to the amount obtained by dividing the rental instalment amounts specified in Item 5 of the Schedule by the number of days in the first rental period specified in Item 5 of the Schedule.
(b) If the Lessor or an Authorised Officer executes this Agreement then any rent paid by the Lessee pursuant to sub-clause 2.2(a) to the Lessor shall be applied by the Lessor in reduction of rent payable under Clause 3.1 of this Agreement.
2.3The execution of this Agreement by the Lessor or its Authorised Officer shall of itself and without notice thereof to the Lessee constitute an acceptance creating a binding contract governed by the law of New South Wales."

The consequence of this, it was put on behalf of the defendants, is that none of these lease agreements ever came into operation. They contended, too, that, since the defendants did not take delivery of the vehicles, they did not become tenants at will or liable to pay rental. This last point may be shortly disposed of. I am satisfied that, on or about 27 February 1990, the vehicles were in fact delivered to the defendants. The vehicles, or at least the refrigerated trailers, were then in the possession of the seller, Hickory Dale, under the control of Fullard. At this time, too, the defendants were the directors of this company. There the trailers remained, at least for a considerable period of time. It was submitted that no delivery of these vehicles had been effected because the defendants did not exercise control over the operations of Hickory Dale or, presumably, over the vehicles themselves.

This submission is founded on the misapprehension of the nature of the delivery required. The invoices in favour of the Bank signed by Fullard on behalf of Hickory Dale note that the refrigerated trailers are for supply and delivery to Mrs. Oliver. The invoices from Bayford Preston for the van describes the defendants as purchasers. The insurance certificate issued by National Transport Insurance Ltd. with respect to the four refrigerated trailers shows the insured as Mr. and Mrs. Oliver trading as Hickory Dale. Clause 4.1 of the lease in each case imposes on the lessee the obligation to take delivery. What then happened to the vehicles? The evidence shows that the trailers remained under the control of Fullard as part of the Hickory Dale enterprise. The van was used by Hickory Dale as a fleet vehicle. As I have already found, in the months following 27^th February 1990 the defendants, together with Frank Main and Fullard were acting co-operatively in the use of all the vehicles in the business operations of Hickory Dale. In these circumstances it is clear that the vehicles were delivered to the defendants in the sense that they were in the possession and used by persons with whom they were associated and with their consent.

Under clause 2.2 the consequence of this is that the vehicles were held by the defendants as tenants at will of the Bank at the agreed rental. Counsel for the plaintiff sought to escape this consequence by invoking the doctrine of waiver. It was submitted that clause 2.2 was a provision inserted solely for the benefit of the Bank and, as such, was capable of waiver by that party and that it was in fact waived. This meant that the lease in each case came into existence as if the Bank had executed it. None of the cases to which I was referred was directly in point and counsel for the defendants urged me to reject this argument on the basis that clause 2.2 did not create a condition precedent to the existence of an agreement. It was argued that the clause provided a mechanism for the existence of one of two possible types of agreement. I do not accept this submission. The scheme of the lease agreements which the defendants signed is that they will come into force upon execution by the Bank. To adopt the words of Mason, J. in Perri v. Coolangatta Investments Pty. Ltd.[2], "until the occurrence of that event there can be no binding contract". I am satisfied that the execution by the Bank of the lease agreements was a condition precedent to the existence of the lease agreements.
[2](1982) 149 CLR 537 at 551-2

Next, it was put by the defendants' counsel that the condition was incapable of waiver by the Bank since it was not inserted for the benefit of that party only. Again, there is no substance in this argument. It is true that the terms of the lease as a whole represented a benefit to each of the parties. Clause 2.2, however, confers on the Bank an opportunity not to agree to these terms. It is of significance in this regard that clause 2.3 has the effect that no notice of execution need be given to the lessee. It follows, then, that the lessee, hearing nothing, would assume that the lease agreement was effective, as indeed was the case here. In these circumstances, the non-fulfilment of clause 2.2 confers no benefit on that party. I conclude that the condition is capable of waiver by the Bank.

Counsel for the defendants then put that no waiver had been demonstrated. It was said that, where the condition was one to be performed by the Bank, it cannot be that the Bank itself can waive it. It is as though a defaulter was entitled to excuse itself unilaterally from its own default. This misconceives the true nature of this type of waiver. True it is that the Bank must perform an act, the execution of the lease agreement, before the lease comes into existence. I have concluded that this provisions is for the benefit of the Bank in the sense that it provides an opportunity for the Bank not to commit itself to the lease which it had previously negotiated. The time for exercise of this right is not unlimited. Where, as here, the Bank has conducted itself as if the lease was on foot, it would be a remarkable result if it were able some time later to rely upon its non-execution of the document to escape the provisions of that lease. It is commercially desirable that each party to a transaction knows what legal obligations they have assumed. Where, as in this case, both the lessor and the lessees have accepted that the lease agreements are effective, it is proper that the law acknowledges this reality. As a matter of legal analysis, it seems to me that this must be because the Bank by its conduct waived its right not to commit itself to the leases. I find the alternative submission, that based on part performance, unattractive. Part performance, after all, is an equitable principle which has no role to play in this essentially common law arena.

Accordingly, in my view, the Bank waved its rights under clause 2.2, and in each case, the lease agreement came into force and bound the parties.

Uncertainty

This contention is that the lease agreements are void for uncertainty since they contain no commencement date or termination date of the leasehold. An argument of this kind must face two fundamental difficulties. First, on the evidence neither of the parties ever apprehended any difficulty in giving effect to the lease agreements. Second, the tradition inclination of the commercial courts to uphold contracts entered into by commercial parties at arm's length notwithstanding lack of clarity or omission of terms.[3]
[3]Meehan v. Jones (1982) 149 CLR 571 at 578, per Gibbs, CJ.; Vroon B.V. v. Foster's Brewing Group Ltd. [1994] 2 VR 32 at 67, per Ormiston, J.

It is, of course, true that in the forms of agreement in question no date has been inserted in either of the places in item 4 indicated for commencement date and termination date. However, the forms in each case specified the terms of the leases for the trailers to be 36 months, and the panel van 48 months so that, if one of the dates is given, the other must follow. Moreover the parties, conducted themselves on 27 February 1990 and thereafter on the basis that the leases had commenced on that date. I mention by way of example the Bank's letter of that date to the defendants and the fact that the defendants made payments of rental as from that date. It would appear that, in this way, each of the parties gave practical effect to the principle of tenancy law affecting real estate that, where no date is fixed for commencement of a lease it is usually taken to commence "at the date of the document or the act constituting the demise"[4]. I conclude that none of the leases therefore is bad for uncertainty.
[4]Bradbrook and Croft, Commercial Tenancy Law in Australia, 2nd ed. (1997) 2nd ed., para.1.5

Implied Terms

The leases and the mortgage contained detailed terms. The suggested implied terms must satisfy the five-fold test expounded in BP Refinery (Westernport) Pty Ltd v Shire of Hastings[5]. In short, they do not do so. None of the suggested terms is necessary to give business efficacy to the contracts; none is so obvious that it goes without saying; and none is capable of clear expression in the sense that the suggested term is the only term which could be supposed to achieve the commercial objective asserted. Furthermore, the suggested terms contradict the express terms of the contractual documents. It follows that, in my view, the case for implied terms has not been made out.
[5](1978) 180 CLR 266

Breach of Duty of Care

This claim, inasmuch as it depends upon the making of representations, must fall with my rejection of the representations. In any event, I am unable to accept the existence of the suggested duty of care. On the evidence as I have found it, the Bank was entitled to pay Hickory Dale and Bayford of Preston on the documentation presented to it on behalf of the defendants.

The Bank’s Repudiation in 1991

The broadness of the concept of repudiation is remarked upon by Gibbs C J in Shevill v Builders Licensing Board [6]. It is superfluous for a trial judge to analyse the various categories often asserted as falling within this umbrella concept. For present purposes it is sufficient to paraphrase the words of Gibbs C J that a contract, (which includes a leasing agreement), maybe repudiated if one party renounces its liabilities under it, that is, evinces an intention no longer to be bound by it, and the other party accepts the repudiation discharging itself from further performance of the contract. It is trite law that repudiation and acceptance may be based both on words or conduct.
[6](1982) 149 CLR 620 at 625-6

In light of my determination of the cl. 2.2 submission, the question of the plaintiff's actions resulting in a termination of any tenancy at will does not arise. Further, given my findings of fact, any dealings between the bank and A.R.T. could not constitute repudiation; nor was there evidence of any repudiation of the lease agreements by reason of any sale of the trailers by the Bank to Rona Engineering. That leaves the issue of repudiation of the four trailer leases by the Bank in entering into an agreement with Rona Engineering through Hanlon and Fullard which supplanted that between the bank and the defendants.

Apart from the submissions as to the facts, with which I have already dealt, it was argued by counsel for the plaintiff that the document of the 15^th May was not an agreement but an offer by Hanlon on behalf of Rona Engineering. This is undoubtedly correct. Nonetheless it was, on my reading of it, an offer to lease the four trailers on terms and conditions identical to those contained in the original leasing documents, save that the repayment regime was to be different, and the defendants were to be superseded as lessees by Rona Engineering. Further, that document cannot be viewed in isolation, but must be seen in context as part of the evidence which emerged during the case from the file notes and the evidence of the Banks' own witnesses such as Walker and Loveridge.

It was also submitted on behalf of the plaintiff that the precise terms of any agreement between the Bank and Rona Engineering was unclear and consequently any inference sought to be drawn about it was " hopelessly vague". However, I am, on the evidence, prepared to draw the inference of a leasing agreement in which Rona Engineering replaced the defendants albeit, in the absence of the evidence of Caldwell, the precise terms of such agreement cannot be known. In any event I do not regard that factor an insuperable impediment to a finding of repudiation.

It was also asserted that the granting of a second lease to Rona Engineering would not necessarily constitute a repudiation of the defendants' leases. In support of this contention a number of cases, referred to in Bradbrook and Croft [7] relating to concurrent leases were cited. The cases enunciated therein all relate to the rights of landlord and tenant where a concurrent lease has been granted. One effect of such a lease is that the concurrent lessee is interposed between the lessor and the original lessee who, thereafter, is liable to make lease payments to the concurrent lessee. Even if it could be argued that the concept of concurrent leases is applicable to personal property as distinct from real estate, there is not a scintilla of evidence to suggest that any concurrent lease was granted by the Bank to Rona Engineering.
[7] Ibid para 1.9

I do not intend to repeat my findings of fact in relation to this aspect of the case. At the time of the May/June activities by the Bank, it well knew, through its agents, of the situation "on the ground". In that knowledge it continued to seek to deal with Hanlon as agent for Rona Engineering and sought only the repayments due on the panel van lease from the defendants.

The defendants were not favoured with any other written communication from the Bank. Indeed the material suggests that such communication was countermanded by Walker. Nonetheless it is clear the defendants were aware of the Bank's attitude to these leases. Their acceptance of it may be inferred not only from their subsequent abandonment of any further efforts to regain possession of the trailers but also their lack of communication with the Bank upon the subject of the trailers and their liability for them.

In my view the documentation, (which includes the file notes of the Bank and the subsequent Bank letters to the defendants), together with the evidence of the Bank witnesses and, to a limited extent, that of Mrs Oliver and Frank Main, demonstrate repudiation of the trailer leases by the Bank and acceptance of it by the defendants. It would appear that the agreement with Rona Engineering was initiated on the 15^th May 1991. It had certainly crystallised by the 26^th of June 1991 when payment was accepted from Fullard in respect of those leases. But even prior to that date, (as early as the 11^th and 12^th June 1991), Driver was seeking to contact Hanlon for the 15^th June payment.

In my view given the lack of communication by the Bank with the defendants, it would not be unreasonable to limit liability of the defendants under the four leases to that having accrued as at the 15^th May 1991.

The Counterclaim for $9,168.78 and the misapplication of $10,524.12

In relation to the counterclaim for $9,168.78 and $10,524.12, it is sufficient to state in relation to the first amount that it was advanced as part of the legal obligation of the defendants pursuant to the legitimate leasing agreements into which they had entered. The second sum was deposited with the Bank by the defendants as security for their performance of their obligations under the leases. When they committed the defaults that I have found occurred, the Bank was entitled to have recourse to this security. Indeed as I have noted, at a later stage Mrs Oliver expressly authorised Walker to transfer the balance of this amount towards a repayment of the Panel van lease. Accordingly, the counterclaim cannot succeed.

Conclusion

It follows from the conclusions I have reached that, in so far as the four leases of the trailers are concerned, the liability of the defendants ceased on the 15^th May 1991. Liability under the lease for the panel van, however, continued thereafter. There being a sum of money remaining due and payable to the Bank, it is entitled to judgment for the amount owing and to such orders as would enable it to retrieve such sum.

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[2001] VSC 1

19 January 2001