Tri-Global (Aust) P/L v Colonial Mutual Life Assurance Society Ltd

[1993] FCA 328

32Y	W3	i
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JUDGMENT No. ........ .......,.,I .,..,.,,...,	L
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IN THE FE~ERAL COURT OF AUST~ALIA ) L

1 , I ' :

QUEENSLA~D DISTRICT WGISTRY	1	No.	~ G 3 9	of 1992
1

'GENERAL DIVISION 1, 1

BETWEEN :  TRI-GLOBAL, (AUST~ PTY L T ~

~ i r s t	applicant
L.M.K. FINANCIAL SERVICES	,
PTY LTD Second applicant LLOYD REGINALD ROSS Third applicant KEVIN THOMAS BROWNE
~ourth	applicant

MICHAEL JAMES IRWIN

~ifth applicant

SUZANNE GAI ROSS
sixth applicant
LLOYD ROSS INSURILNCES PTY

Seventh applicant

DIANE W E E BROWNE

Eighth applicant

Respondent

KEVIN BROWNE & ASSOCIATES

PTY LTD

Ninth applicant

srt~ ELIZABETH IRWIN

Tenth applicant

MICHAEL J. IRWIN I ~ S ~ ~ U ~ C E S

PTY LTD

Eleventh applicant

AND COLONIAh MUTUAL LIFE
ASSURANCE SOCIETY LIMITED

CORAM!	Beaumont J.
m:	5 May 1993

PRELIMINARY INDICATION OF FINDINGS ON THE

SEPARATE (PRELIMINARY) OUESTIONS DEALT WITH TO bATE

, In order that the parties may prepare for the next stage of the proceedings, I now give the following preliminary indication of findings which I will later make (formally) when

I publish my reasons on the separate (preliminary) qtlestions. (I expect to publish those reasons in the week commencing 17

May 1993 at the latest.)

1.   In my opinion, the applicants have established the existence of a contract between ~ri-~lobal and CML, which contract was terminable by either party upon reasonable notice.

2 .    In my opinion, the alleged "forfeiture rate" ground of

termination cannot be relied upon by CML.

3.    In my opinion, the applicants have not established any contravention by C vision of Part V of the Trade practices Act:.

Teleuhone directions hearing at 3 . 0 0 u.m. to-day

AS earlier directed, there will be a telephone directions hearing at 3.00 p.m. this afternoon in order to give directions for the future conduct of the proceedings (inclbding the cross-claims) at the resumed hearing commencing

next Tuesday, 11 May. At this afternoon's hearing, I wotiid like, in particular, to hear from the parties on the question whether I should now give a direction that by, say, 3.00 p.m. on 10 ay, the parties file and serve statements of facts, issues and contentions in respect of each of the matters in

which any party is propodnding a claim or cross-claim not yet

dealt with in the findings now indicated.

i

9) ;

i

1

PUEENSLAND DISTRICT REGISTRY ) NO. QG39 of 1992

) I

GENERAL, DIVISION 1 i

BETWEEN:  TRI-GLOBAL (AUST) PTY LTD I I

First	applicant	I
l

L.M.K. FINANCIAL SERVICES

PTY LTD

Second applicant
LLOYD REGINALD ROSS
Third applicant
KEVIN THOMAS BROWNE

Fourth applicant

i

MICHAEL JAMES IRWIN	I
Fifth applicant	!'
SUZANNE GAI ROSS	;
Sixth applicant
LLOYD ROSS INSURANCES PTY	i
-	LTD
Seventh applicant
DIANE M E	BROWNE

Eighth applicant

KEVIN BROWNE & ASSOCIATES

PTY LTD

Ninth applicant

SUE ELIZABETH IRWIN

Tenth applicant

MICHAEL J. IRWIN INSURANCES
PTY LTD

Eleventh applicant 2

AND	COLONIAL MUTUAL LIFE
ASSURANCE SOCIETY LIMITED --
Respondent

CORAM :	Beaumont J.
DATE :	1 7 May  1993

FURTHER INDICATION OF FINDINGS ON

SEPARATE (PRELIMINARY) OUESTIONS ( N O . 2 1

On 5 May 1993, I i n d i c a t e d my f l n d i n g s on t h r e e

m a t t e r s a r i s l n g i n t h e s e p a r a t e ( p r e l i m i n a r y ) questions. I

have informed t h e p a r t i e s t h a t I w i l l p u b l i s h reasons f o r

t h o s e f l n d i n g s tomorrow.

I n d i c a t e d f i n d i n g 1 was a s fo l lows:

" 1 . In my oplnion, the applicants have established the existence of a contract between Tri-Global and CML, which contract was terminable by el ther party upon reasonable notice. "

I have now heard f u r t h e r ev idence and argument on

t h e remaining m a t t e r t h a t a r i s e s i n t h e s e p a r a t e ( p r e l i m i n a r y )

q u e s t i o n s , namely, whether t h e n o t i c e of t e r m m a t i o n given by

CML was reasonable .

I now i n d i c a t e t h e fo l lowing f u r t h e r f i n d i n g :

4 . I n my op in ion , a p e r l o d of t h r e e months' n o t i c e was

reasonable . S ince it i s common ground t h a t CML gave T r l -

Global on ly seven days ' n o t i c e , it must fo l low t h a t , i n

t h i s r e s p e c t ,	CML	was	i n breach	of	i t s c o n t r a c t w i t h T r i -
Global ,

-- --.- -

. ,

-

. - - I,.

I expect to give reasons for this finding later this

week.

IN THE F E D E W COURT OF AUSTRALIA	)
1
QUEENSLAND DISTRICT REGISTRY	) No. QG39 of 1992
1
GENERAL DIVISION	1

BETWEEN:	TRI-GLOBAL (AUSTI PTY LTD
First applicant
L.M.K. FINANCIAL SERVICES PTY LTD
Second applicant LLOYD REGINALD ROSS Third applicant KEVIN THOMAS BROWNE Fourth applicant MICHAEL JAMES IRWIN Flfth applicant SUZANNE GAI ROSS
Sixth applicant
LLOYD ROSS INSURANCES PTY LTD
Seventh applicant DIANE MAREE BROWNE Eighth applicant

KEVIN BROWNE & ASSOCIATES

PTY LTD

Nlnth applicant

SUE ELIZABETH IRWIN

Tenth applicant

MICHAEL J. IRWIN INSURANCES
PTY LTD

Eleventh applicant

AND	COLONIAL MUTUAL LIFE ASSURANCE SOCIETY LIMITED
Respondent

TRI-GLOBAL [AUST) Pm. LTD. h ORS. V. COLONIAL MUTUAL L I F E

ASSURANCE SOCIETY LIMITED

I N D E X

Introduction

The issues arising on the pleadings

- The allegations made in the amended statement

of claim

The claim in contract

The claim under Part V of the Trade Practices Act

- CML's amended defence

- The applicants' amended reply

The history of the events now in question
The applicants' version of events

The evidence in chief of Mr. Ross

- Mr. Ross' version of the background facts
- Mr. Ross' version of his meeting with Mr. Condon

in Brisbane in October 1988

- Mr. Ross' version of his meeting with Messrs

Irwin, Beard and Condon in Brisbane in March
1989 and the execution of the Master Agents

Agreement

- Mr. Ross' version of Cm's letter of appointment

as master agent dated 20 March 1989

- Mr. Ross' version of his meeting with Messrs

Irwin, Beard, Browne and Condon in Brisbane in

May 1989

- Mr. Ross' version of his meeting with

Mr. Steendam in February 1988

- Mr. Ross' version of the execution by Ross

Insurances of the agreement for master agents

bearing date 24 March 1988

- Mr. Ross' version of the submission by Ross

Insurances of the agency application bearing
date 15 April 1988

- Mr. Ross' version of the meeting in July 1989

in Mr. Condon's office in Brisbane

- M r . Ross' version of the memorandum from

Mr. Zukerman dated 1 August 1989

- Mr. ~oss' version of his discussion with

Mr. Williamson in Greece in late July or early

August 1989

- Mr. Ross' version of his meeting with Messrs

Browne, Williamson and Condon in Brisbane in

August 1989

- Mr. Ross' version of Mr. Williamson's letter to

him and Mr. Beard dated 11 September 1989

- Mr. Ross' version of his meeting in Brisbane

between Messrs Beard, Browne, Irwin, Williamson

and Condon in November 1989

- Mr. Ross' version of his discussions about the

grant of assistance by CML towards the cost of
the fit-out of Tri-Global's new premises on the

Gold Coast

- Mr. Ross' verslon of the execution of an agency

agreement by Tri-Global in April 1990

- Mr. Ross' version of the execution of the agency

development agreement dated 5 June 1990

- Mr. Ross' version of the events surroundino ~- - ~

=

Tri-Global's agency application submitted to

CML in March 1989

- Mr. Ross' version of the events surrounding the

agency application submitted by LMK in January

1990

- Mr. Ross' version of the events surrounding the

agent's agreement executed by LMK

- Mr. Ross' version of his discussion with

Mr. Condon in March 1989 concerning forfeiture

rates of agents to be engaged by Tri-Global

The evidence in chief of Mr. Irwin

- Mr. Irwinrs version of his meeting with

Mr. Steendam in Sydney early in 1988

- Mr. Irwin's version of the execution of the

agreement for master agents by Irwin Insurances

- Mr. Irwin's version of his meeting with

Mr. Condon in March 1989

- Mr. Irwin's version of his meeting with

Mr. Condon in May 1989

- Mr. Irwin's version of his meeting with

Messrs Williamson and Condon in August 1989

- m. Imin's version of the meeting in

November 1989

The evidence in chief of Mr. Beard

- Mr. Beard's version of his meeting with

Mr. Steendam in September or October 1988

- Mr. Beard's version of his meeting with

Mr. Zukerman in November 1988

- Mr. Beard's version of his meeting with

Mr. Condon in March 1989

- Mr. Beard's version of the meeting in May 1989

- Mr. Beard's version of the meeting in July 1989

- Mr. Beard's version of the meeting in

November 1989

The evidence in chief of Mr. Browne

- Mr. Browne's version of his meeting with

Messrs Steendam and Zukerman in April 1988

- Mr. Browne's version of his meeting with

Mr. Condon in the middle of May 1989

- Mr. Browne's version of the events surrounding

the execution of the agents agreement by

Browne & Associates dated 29 May 1989

- Mr. Browne's version of his meeting with

Messrs Ross, Beard, Irwin and Condon in

late May 1989

- Mr. Browne's version of the meeting in July 1989

- Mr. Browne's version of the meeting in

November 1989

- Mr. Browne's version of his discussion with

Mr. McCormick in late 1989 with respect to the signing of the agent's agreement

- Mr. Browne's version of his discussion with

Mr. Condon in late 1989 as to the role of LMK	93
CML's version of the events	94
The evidence in chief of Mr. Steendam	9 4

- Mr. Steendam's version of his meeting with

Mr. Ross in late January or early February 1988 9 4

- Mr. Steendam's version of his meeting with

Mr. Ross on 5 February 1988 9 5

- Mr. Steendam's version of his meeting with

Mr. Irwin in April 1988 97

- Mr. Steendam's version of his meeting with

Mr. Beard in April 1988	97
The evidence in chief of Mr. Williamson	98

- Mr. Williamson's version of the development

of ADLs 98

- M r . Williamson's version of his meeting with

Mr. Ross in early February 1988 98

- Mr. Williamson's version of Tri-Global's

application in March 1989 to set up as a master

agent 101

- Mr. Williamson's version of his meeting with

Messrs Condon, Ross, Browne and Irwin In

November 1989	101
The evidence in chief of Mr. McCormick	101
The evidence in chief of Mr. Condon	102
- Mr. Condon's version of his discussions with
Mr. Ross in early 1989	102

- Mr. Condon's version of his discussions with

Mr. Browne early in 1989 103

- Mr. Condon's version of the meeting in

November 1989	104
Conclusions on the separate (Preliminary) Questions	104
My reasons for these conclusions	104
The claim in contract	104

- The express terms of the Tri-Global contract

as pleaded by the applicants 105

- The allegations pleaded by the applicants as to

the implied terms of the contracts pleaded 109

- The further particulars of the terms of the

alleged contracts provided by the applicants 109

- The contractual relationship pleaded by CML in

its amended defence 122

- The contract between CML and Ross Insurances

as alleged in the defence 122

- The contractual position of Irwin Insurances

as pleaded in CML's defence 126

- The contractual position of Browne & Associates

as pleaded in CML's defence 126

- The contractual position of Tri-Global as pleaded

in CML's defence 126

- The contractual status of LMK as pleaded in

CML's defence 128

- The contractual status of loans by CML to

Ross Insurances and to Mr. and Mrs. Ross as

pleaded in CML's defence 128

- The status of the motor vehicle loans as pleaded

in CMLf s defence 130

- The status of the agency development loan of

$225,700 to Tri-Global for the Gold Coast fit-out

as pleaded in CML's defence 131

- The status of funds advanced by CML to Tri-Global

pursuant to the agency development agreement

dated 5 June 1990 as pleaded in CML's defence	131
- The denial by CML in its defence of the implied
term alleged by Tri-Global	133

Findings on the contract claim	133
The express oral terms alleged in para.6 (and para.6A) of the statement of claim
The meeting with Mr. Condon in March 1989	135
The meeting in May 1989	142
The meeting in June 1989	146
The meeting in July 1989	147
The meeting in August 1989	149
The meeting in November 1989	149
The meeting in January 1990	151
Conclusions on the terms alleged by the applicants

in para.6 and (alternatively) 6A of the statement

of claim 154

Conclusions with respect to the alleged implied

term that the agreement was terminable on

reasonable notice 156

Conclusions with respect to implied term alleged

in para.E(ii) of the statement of claim 156

The finding indicated on 5 May 1993 that the

alleged "forfeiture rate" ground of termination

cannot be relied upon by CML 158

Conclusions with respect to the allegations of

contravention of the provisions of Part V of

the Trade Practices Act made in paras. 14, 15

and 16 of the statement of claim 162

Conclusions on the applicants' claimed

contravention of Part V of the Trade

Practices Act

CORAM: 

Beaumont 3.

DATE : 

- 

18 May 1993

REASONS FOR JUDGMENT (NO. 1 L
(On the preliminary issues)

INTRODUCTION

By their amended application, the first applicant ("Tri-Global"), and the second applicant ("LMK"), claim against the respondent ("CML") damages for alleged contraventions of Part V of the Trade Practices Act 1974 ("the Act"). They also claim damages for breach of contract.

The third applicant (Mr. Ross), the fourth applicant

(Mr. Browne), the fifth applicant (Mr. Irwin), the sixth

applicant (Mrs. Ross), the seventh applicant ("Ross

Insurances", a company controlled by Mr. Ross), the eighth applicant (Mrs. Browne), the ninth applicant ("Browne & Associates", a company controlled by Mr. Browne), the tenth

applicant (Mrs. Irwln) and the eleventh applicant ("Irwin	Insurances", a company controlled by Mr. Irwin) claim the
following relief: (1) an order pursuant to 6.87 of the Act declaring void certain loan agreements, guarantees and bills of mortgage entered into by several of them with CML; (2) an order pursuant to s.87 that such loan agreements, guarantees and bills of mortgage not be enforced against them; (3) an order pursuant to s.87 varying the terms of such loan agreements, guarantees and bills of mortgage; (4) damages for alleged contraventions of Part V of the Act and for breach of contract.
By consent, on 29 October 1992, an order was made that certain issues in the action be tried in the first instance. The trial of the following issues was deferred: (1) The question whether CML had breached any of the terms of the contract as alleged; (2) the quantification of any loss or damage alleged to have been suffered by the applicants in respect of their claims. This order was varied by consent on 15 April 1993 by excluding from the issues now to be tried the question whether CML was justified in terminating the contract sued upon because the forfeiture rate for proposals submitted by Tri-Global exceeded 11.5% (see cl. 7.2 of the master agency agreement referred to below).

The applicants' case (see M.F.I. "6") is as follows:

(1) Messrs. Ross, Irwin and Browne were each highly

successful National Mutual Life Association of
Australasia Ltd. ("NML") agents in 1988/89.

(2) In 1988, CML had embarked upon a vigorous campaign of recruiting successful agents of other life companies so as to create a large non-tied agent group as opposed to its traditional district sales office structure. Mr. Ross was a major recruiter.

(3) CML in early 1988 had only appointed master agents who had one or two employed sales persons associated with the master agent.

(4) Compared with a "standard agent", a "master agent" had the benefit of accumulating the commissions earned by his employees and this "bulking" or combining of such commissions led to "over-riders" or incentive or performance bonuses being earned by the master agent. ~urther, there were benefits of administration being performed by the master agent leaving the managing agents with more time to sell.

(5) At the time when Messrs Ross, Irwin and Beard were appointed in 1988, CML allowed master agents to have approved employees only, whereas NML master agents (as the Tri-Global directors then were) had a structure whereby the agents working "under" the master agents were

in fact agents of NML in their own right.

(6) In February 1988 Mr. Ross discussed in general terms with

Mr. Steendam (CML's State Manager) his intention to

create a "big master agency" or a "super master agency" with as many as 50 agents working underneath him in the NML style, that is to say, each being an agent of CML, but working under Mr. Ross.

( 7 ) Messrs Ross, Browne and Beard were all mindful of leaving

NML and discussed at length the term or duration of the

proposed agreement:-

(i) In the case of Mr. Ross, it was suggested that he would remain with CML at least until he had the opportunity to have "vested" his agency development

loan ("ADL") of $925,000.00;

(ii) In Mr. Browne's case, he was told by Mr. Condon (CML's Queensland State Manager) that "we only want long termers";

(iii)In Mr. Beard's case, he was informed similarly by Mr. Steendam that the agreement would be for as long as he required and it was envisaged that he would retire with CML, at age 60, and that by that time the ADL would have hlm forgiven.

(8) In the course of recruiting Messrs Ross and Irwin (in February 1988) and Mr. Browne (in April 1988) Mr.

Steendam made the following oral representations:

(i) that sizeable interest-free ADLs would be offered to the agents if they would change to become master agents of CML (in the case of Mr. Ross $925,000.00; in the case of Mr. Irwin $250,000; in the case of Mr. Browne $420,000.00); and that the formula for

(v) That a long service leave bonus of $34,000.00 would be given after 10 years' service with C m ;

(vi)That commissions would be paid "up front" and the responsibility period was 13 months whereas with NML the responsibility period for lapses and cancellations was 5 years;

(vii) That there were no territorial restrictions in other words an agent could sell insurance anywhere in Australia.

(9) Messrs Ross and Irwin commenced as CML agents in April 1988; Mr. Browne commenced in May 1989. Each had prepared and slgned an agency application form and in the case of Messrs Ross and Irwin, master agency agreements between their respective companies and CML were executed. In Mr. Browne's case a "standard" agents agreement was signed because the Tri-Global master agency had been formed by then.

(10) As a consequence of CML's inability to split commissions other than in half, Messrs Ross, Irwin and Beard chose to amalgamate their existing master agencies and create a new "super master agency" through the vehicle of Tri- Global Financial Services Pty Ltd (which company changed its name and is the applicant in these proceedings), to which would be paid all over rider commissions.

calculating the size of such loans was that $1.50 would be loaned for every dollar earned by way of commission;

(ii)That the ADLs would be forgiven (vest) using a formula in three parts:-

(a)	that for every $10.000 premium earned, $1.00 of loan would be forgiven;
(b)	that if the loan was validated (in other words production levels remained at least the same) for every year of 10 years, the debt would be forgiven by CML;

(C) that if the loan had not been forgiven by retirement, CML would take over the agency in exchange for the balance of the outstanding loan.

(iii) That concessional car loans and home loans would be given, the size of which would depend upon perfonance;

(iv)That notwithstanding any written terms of the master agency agreement, clauses 7.1 (giving either party the right to teninate on seven days' notice) and 7.2 (giving CML the right to terminate summarily for cause, as there specified) thereof "did not apply to Ross"; with respect to Mr. Beard, he was informed by W. Zukerman (CML's Queensland Sales Manager)

that he could only be terminated for fraudulent act
or bankruptcy;

(11) Although there were a number of informal meetings between Tri-Global's directors and Mr. Condon during the period of formation of the agreement, certain important meetings took place at which the contractual relationship between Tri-Global and CML was discussed. These meetings occurred in March, May, July, August and November of

1989.

It is the applicant's primary case that, at these four meetings, several promissory statements were made by CML's officers to the representatives of Tri-Global and that, as a result, a contract came into existence between those parties which had a number of express terms and two implied terms. The express terms are said to be to the effect of the several promissory statements attributed to CML's officers. Breaches of these terms are alleged. The implied terms were first, that the contract could only be terminated upon reasonable notice and secondly, that each

party would do all things reasonably necessary on its	part to enable the other party to enjoy the benefit of
the contract. Breaches of the implied terms are also alleged.
The applicants further rely upon the statements allegedly made by Cm's officer's at these meetings as representations which were false and misleading and thus in contravention of s.52 of the Trade Practices Act.

The applicants' case is as follows:

(12) The March 1989 meetinq:

(a)	At a meeting in March 1989 at Brisbane (attended by Messrs Ross, Irwin, Beard and Condon,) Mr. Ross informed Mr. Condon that if they (the then directors and shareholders of Tri-Global) were to proceed to create a "large agency", that in order that it be managed properly, and in order that it would be financially successful, the agents appointed by Tri- Global would have to be agents of CML having their own agency agreement and that responsibilities for lapses and cancellations would be that of the individual agent.
(b)	Mr. Condon, in reply, informed the directors of Tri- Global that he (on behalf of CM.) agreed to the appointment of agents by Tri-Global as individual agents having their own agency together with the
did not know how this would be implemented as such responsibilities of forfeiture rates; however he

an arrangement had not been created before by CML.

(c)	Two blank copies of a "master agency" agreement in identical terms to that signed by Messrs Ross and Irwin in April 1988 were made available by Mr. Condon for signature by the company Tri-Global.
(d)	At the time of proffering these blank agreements for execution, and before they were executed, Mr. Condon

informed Messrs Ross, Irwin and Beard that he did not know how the new arrangement would be put in place, but that in order that the parties "could get the ball rolling and get things up and running so that [Tri-Global] gets an account number", the blank documents should be signed.

(e)	Prior to signing the documents, Mr. Beard, with reference to clauses 7.1 and 7.2 therein inquired of Mr. Condon about those two clauses, and was informed by Mr. Condon that notwithstanding the written terms of the blank documents, Tri-Global would not be terminated by CML except in the case of criminal activities, fraud or bankruptcy of its directors or liquidation of the company.
(f)	Mr. Beard then inquired "Why are we signing it?" In response to this, Mr. Condon said the document did not contain all of the details that the parties had discussed but that if it was not signed, the new
buslness could not be written by the new entlty. entity would not be given a number and without that,

(13) The Mav 1989 meetlnq

(a)	This meeting was called by Tri-Global's directors for two purposes:
(i) to acquaint Mr. Browne with the contractual arrangements in place thus far, as he had not been a director of Tri-Global in March;

(ii)to cover in more detail the matters which had been "brushed over" in the March meeting.

(b)	At that meeting Mr. Ross (on behalf of the directors and Tri-Global) proffered to Mr. Condon a document entitled "Tri-Global Financial Services Pty Ltd" and used that document as an aid for summary of the matters to be discussed.
(c)	Mr. Condon agreed with every aspect of what was

referred to in the document but still was unsure as to how it would be implemented - he had not worked out the "mechanism" yet. He intended to discuss the "mechanism" with Mr. Williamson, CML's National Sales Manager.

(d)	Specifically the following matters were repeated or resolved:-
(i) That the agents appointed by Tri-Global would be CKL agents in their own right and not approved employees (as had been the traditional

CML master agents arrangement).

(ii)That agents so appointed would be fully responsible for their own business written and Tri-Global would have no such responsibility.

(iii)That Messrs Ross, Irwin, Beard and Browne would "maintain and retain" all the benefits which they had as individual master agents including the development loans and the arrangements as to vesting or forgiveness.

(iv) That all "over-rides" or production quality bonuses, together with commissions earned by the directors themselves would be "bulked" so as to "validate" the existing development loans.

(v) That Mr. Condon was aware of the benefits which had been promised by Mr. Steendam in early 1988 for Messrs Ross, Irwin and Browne and that those benefits flowed in as benefits in the new agreement.

(vi)That Tri-Global would be responsible for recruitment, training and support (Or maintenance) of the individual agents.

(vil)That Tri-Global would provide CML and CML's appointed agents with each of the services listed in the document referred to in (b) above.

(viii)That commissions and "over-riders" would be

paid monthly.

(ix)That the "over-rider" bonus would be 70% of the commissions of the respective agents.

(X) That Tri-Global would receive a further bonus of 4% as superannuation.

(xi)That Tri-Global would have no territorial restrictions.

(xii)That CML would not appoint (directly) any agent who had been a Tri-Global Managed Agent, and who had resigned as or had been terminated as a Tri-Global Managed Agent.

(xiii) It became clear from the conversations that:-

(a)	Tri-Global intended seeking financial assistance from CML when Tri-Global relocated to the Gold Coast;
(b)	That Tri-Global intended to have agents managed by it in each of the eastern seaboard States and eventually in Adelaide (which was contrary to CML's single state structure);
(c)	That CML may consider buying the entity and business created as a consequence of the agreement which had been formed after perhaps 10 years.

(14) July meetlnq

(a)	This meeting was called by Tri-Global's directors as
implementing the "mechanism" for the new arrangement a consequence of concern over inactivity by CML in

between CML and Tri-Global.

(b) Mr. Condon was still confused about how to structure these Tri-Global arrangements explained to Mr. Ross that he would set it up as a "unit" by which Mr. Condon explained that Tri-Global would operate in a similar fashion to a district sales unit of CML, but with Tri-Global having the benefits of being a

master agency.

(c)

When questioned about the "structure" Mt. Condon repeated :

(i)	The appointment of agents would be as individual agents of CML and not as approved agents as was Cm's previous master agency structure;
(ii)	that Tri-Global and its directors would retain the master agent's benefits they already had including loans, vesting and the like;

(ill) that the agreement would remain as discussed in March and May;

(iv)that over-ride bonuses and commissions earned by the directors would be "bulked" so as to validate loans.

(d) Financial assistance with respect to office space

was discussed in general terms.

(e)	Mr. Ross explained to Mr. Condon that once the Tri-
Global agreement was fully operational the directors' master agencies would be wound down

(within say 12 months) but that in its place would be a new entity which would be an appointed agent of CML under the Tri-Global management.

(15) Auaust meetinq

(a) This meeting took place as a consequence of the availability of Mr. Williamson, in a visit to Brisbane. The purpose was to "bring Jack Williamson up to date" with what Mr. Condon and the directors of Tri-Global had by then discussed and agreed.

(b) All matters previously agreed were discussed.

(c)	The "new" matter for consideration was accommodation for Tri-Global - the company's growth had been far greater than could be imagined and additional premises were required.
(d)	In any event the thrust of the meeting for Tri- Global was to elicit financial support for the establishment of premises for Tri-Global on the Gold Coast.
(e)	Mr. Willlamson informed Mr. Ross that if a "fit-out" were to be provided by CML (and that it probably would be) it would be in the order of $250,000.00 to

$300,000.00.

(f) Mr. Williamson explained (with respect to the

request for financial assistance for fit-out and/or

Brisbane personally later in the year by which time accommodation) that he would be returning to

this aspect could be "finalised".

(16) November meetinq

(a) A written proposal (similar to that prepared for the May meeting) was tabled by Mr. Ross for the consideration of Messrs Condon and Williamson. Mr. Ross was requested by Mr. Condon to prepare this submission.

(b) Mr. Ross went through the document point by point.

(c)	The reason for the meeting had been spelt out in ~ugust - it was to discuss primarily financial assistance with regard to provision of office accommodation. By November Tri-Global had grown from 3 directors to 45 managed agents and support staff.
(d)	Mr. Williamson agreed to the proposal of writing off the fit-out debt at the rate of 20% per annum so that the cost of the fit-out would be forgiven in 5 years.

(17) The executed aareements

With reference to the several agreements apparently executed on behalf of CML and by its directors and companies controlled by their directors, the applicants say:

(a)	The written agreements were solely to facilitate other ends, namely:-
(i) The obtaining of an account number through which income could be earned.

(ii) In order that ADLs could be paid.

(b) The documents were invariably in blank.

(c)	They were produced for purposes other than reducing the terms of an agreement to writing.
(d)	Important "side benefits" (for example, ADLs, housing loans, superannuation, overseas travel) which were plainly part of each bargain were not documented.
(e)	The agreement between Tri-Global and CML formed from March 1989 through to November 1989 was unique and not reflected by the written agreements for master agents and agents agreements which are relied upon by CML; for example, the relationship of Tri-Global Managed agents having an individual agency with CML and being responsible for their own Lapses and cancellations is not reflected in the executed Tri- Global "master agency agreement."

THE ISSUES ARISING ON THE PLEADINGS

The issues arlslng on the pleadings may be

summarised as follows:

(a) The alleaations made in the statement of claim

By their further amended statement of claim ("the statement of claim") the applicants make the following allegations:

(l) CML carried on business as an insurer (para. l(v)).

(2) Ross Insurances, Browne & Associates and Irwin Insurances were "master agents" of CML (para.l(viii)).

(3) Messrs Ross, Browne and Irwin were directors of Tri- Global and of LMK (para.l(vi)).

(4) In February 1989, Messrs Ross and Irwin and Mr. Alan Beard were appointed directors of Tri-Global (para.2) and in May 1989, upon the appointment of Browne & Associates as a master agent of CML, Mr. Browne was appointed a director of Tri-Global (para.3).

(5) In ~anuary Global (para.4). 1990, Mr. Beard resigned as a director of Tri-

A. The claim in contract

(6) Between March 1989 and January 1990, Tri-Global entered into an oral agreement with CML (para.5) havlng the following, inter alia, express terms (para.6):

(i) that Messrs Ross, Irwin, Beard and Browne would combine their master agencies so as to trade as one

entity (Tri-Global) (sub-para. (i)).

(ii)that future business of the directors would be written in the name of LMK as a Tri-Global appointed agent (sub-para. (ii)).

(iii) that commission would be payable to Tri-Global within one month of sale of insurance (sub-para.

(iii) ) .

(iv) that agents appointed by Tri-Global would be paid commission within one month but would receive no "overriders" from CML (sub-para. (iv)).

(v) that Tri-Global would be paid 70% of the total commission earned by the managed agents and that this percentage of overrider would be reviewed periodically (sub-para. (v)).

(vi)that Tri-Global would also be paid the equivalent of a master agent's bonus (sub-para. (vi)).

(vii)that all commissions and overriders from Tri- ~lobal's agents would be "bulked" together for the purpose of qualifying for development loans (sub- para. (viii)).

(viii)that the agency development loans for Tri-Global and its directors would be deemed non-repayable after business with a premium value of ten times the amount of the loan had been written, or after ten years' service with CML by Tri-Global or its directors; and, in the interim, such loans would be

reduced proportionately (sub-para. (ix)).

(ix)that the benefits granted by CML to the directors of Tri-Global, in the form of superannuation bonuses and concessional home and motor vehicle loans, would continue (sub-paras. (xii), (xiii) and (xiv)).

(X) that CML would assist financially in the re-location of Tri-Global from Tamworth to the Gold Coast (sub- para. (xviii)).

(xi) that agents appointed and managed by Tri-Global
would be agents of CML, not Tri-Global (sub-para.

(xxi) ) .

(xii)that the agents' forfeiture rates would not be attributed to Tri-Global (sub-para. (xxii)).

(xiii)that the agreement was determinable by Cm, other than on reasonable notice, only in the event of fraud, bankruptcy or the commission of a criminal offence by Tri-Global (sub-para. (xxiii)).

(xiv) that Tri-Global execute the undated document entitled "agreement for master agent", (expressed to be effective from 27 March 1989) for the purpose only of enabling Tri-Global to be allocated an account number for the payment of commissions (sub- para. (xxiv)).

(7) Alternatively, an agreement was made that was partly oral
(as pleaded in para.6) and partly in writing (the writing

being the "agreement for master agent") save to the

terms (para.6A). extent that its terms were inconsistent with the oral

(8) There were implied as terms of the agreement the following: (a) that the agreement was terminable on reasonable notice; and (b) that each party would do all things reasonably necessary to enable the other party to enjoy the benefit of the agreement (para.8).

(9) In March 1990, LMK was appointed by Tri-Global on behalf
of CML, as "managed agent" for C m , in substitution for

Ross Insurances, Irwin Insurances and Browne & Associates

(para. 9).

(10) On 11 March 1992, CML purported to terminate the agreement pleaded in para.5 or para.6A on seven days' notice (para.10) (This is admitted by CML which claims that it had a contractual right now disputed by Tri- ~lobal so as to terminate pursuant to c1.7.1 of a written agreement (see below).)

(11) This was less than reasonable notice and thereby CML wrongfully repudiated the agreement (para.11).

B. The claim under Part V of the Trade Practices Act

(12) In the course of negotiating the agreement and with a

n e w to inducing Tri-Global to enter into it, CML made

the following representations to Messrs Ross, Irwin,

Browne and Beard (on behalf of Tri-Global) (para.14):

(i)	CML would provide benefits under a long term arrangement (sub-para. (a)).
(ii)	Tri-Global and Messrs Ross, Irwin and Browne would have the opportunity of developing a substantial business (sub-para. (b)).
(iii)	their relationship would only be terminated

upon reasonable notice (sub-para.(c)).

(iv)Messrs Ross, Irwin and Browne would have the opportunity to substantially reduce their indebtedness to CML in respect of the agency development loans (sub-para. (d)).

(v) agents appointed by Tri-Global would be agents of C m , and not of Tri-Global (sub-para. (e) ) and their forfeiture rates would not be attributed to Tri- Global (sub-para.(f)).

(vi)the agreement would be determinable by CML, other than on reasonable notice, only in the event of fraud, bankruptcy or a criminal offence (sub- Para.(g)).

(vii) Tri-Global was required to execute the "Agreement for Master Agent" for the purpose of being allocated an account number (sub-para.(h)).

(13) In reliance upon these representations, Tri-Global, inter

alia, entered into the agreement, promoted the business

refused an offer by the AMP Society to work for it of CML including liabilities in that connection and (para.15).

(14) The alleged conduct of CML was misleading in that CML represented to the applicants, without any reasonable basis, that the relationship between CML and Tri-Global was an enduring one which would not be terminated by CML without reasonable notice; whereas CML intended to terminate it on seven days' notice (para. 16). Alternatively, CML intends, unconscionably, to accelerate certain liabilities of Messrs Ross, Irwin and Browne to CML (para.17).

(15) By reason of Cm's alleged contravention of s.52, Tri- Global lost the benefit of its efforts in developing Cm's business (para.18).

(16) Further or alternatively, in breach of the agreements between Tri-Global, LMK and CML, CML failed properly to service its pollcies so as to ensure that they remained in force (para. 19) and, thereby, Tri-Global and LMK have not been paid monies due to them (para.20).

(17) It was an express term of the agreement between CML and
Trl-Global that there be no "internal twisting" (para.21)

yet CML failed to ensure this did not occur (para.22)

their efforts in developing CML's business (para.23). and, thereby, Trl-Global and LMK lost the benefit of

(b) CML1s amended defence

The relevant pleadings in the defence may be

summarised as follows:
(1) By a written agreement dated 24 March 1988, renewed and

varied in part by CML's letter dated 20 March 1989, Ross Insurances was appointed a master agent of CML

l

(2) By a written agreement dated 18 April 1988, renewed and varied in part by CML's letter dated 20 March 1989, Irwin Insurances was appointed a master agent of CML (para.l(d)).	.
!
(3) By a written ag~eement dated 29 May 1989, Browne &	I.

Associates was appointed an agent of CML (l(e)).

(4) With respect to paras.5 to 9 of the statement of claim:- l

(i) CML says that Tri-Global became a master agent of CML pursuant to (a) CML's letter dated 20 March	i'
l ' t:
I

1989; (b) the undated (i) "Agreement for Master

! ,

Agents" and (ii) "Agents Agreementn both expressed to take effect from 27 March 1989; (c) the undated "Agent's Agreement", expressed to take effect from 27 March 1990 (para.4(a) and (b)).

(ii) If the documents in para.4(b) did not constitute the master agency agreement, or part of it, then CML i

says the agreement alleged in paras. 5 and 6 of the	l
statement of claim is void by virtue of the	!;
provisions of S. lO(1) of the Insurance (Aaents and Brokers ) Act 1984 (para.4(ba)). (By those
i
provisions, insurance intermediaries other than
!
brokers are to operate under written agreements; however, CML has now indicated that it no longer presses this defence.)

(iii) CML says LMK was appointed an agent of CML under a written agreement "Agent's Agreement" undated but expressed to take effect from 26 March 1990

(iv)CML admits it made certain loans to several of the applicants in the terms of the documentation there specified (para.4(e) and (f)).

(v) CML admits that in early 1990 it agreed to provide, and subsequently did provide, an agency development loan of $225,700 to Tri-Global to enable it to fit out its Gold Coast premises (para.l(h)).

(vi)CML says it was an express term of the agency and master agency agreements that they might be terminated on seven days' notice in writing

(vii) CML says that c1.7.2 of the Tri-Global master agency agreement was a follows:

"7.2 [CML] may teninate this Agreement

by notice in writing to [Tri-Global] taking effect immediately upon the forwarding of such written notice, in the event of any of the following:

fb) the forfeiture rate for any one calendar year as at 31 December in respect of the Annual Premiums Payable on policies issued by [Cm] pursuant to proposals submitted by [Tri-Global] being in excess

of. . . [l1 .5%]. "

(para. 4 (j)) .

(viii)CML says Tri-Global and CML entered into an agency development agreement dated 5 June 1990 pursuant to which certain funds were advanced by CML to Tri- Global (para.4(k)).

(ix)CML says it was an express term of its loan agreements that if the master agency agreement were terminated or if the borrower ceased to be an insurance representative for CML, then the principal sum and other monies owing thereunder shall, at the option of CML, become immediately due (para.d(rn)).

(X) CML says that any additional loans were in its

discretion (para.4(0)).

5.    CML admits that on 11 March 1992 it terminated the agency and master agency agreements between it and Tri-Global,

LMK and the other agents managed by Tri-Global.

Otherwise, the remaining substantive allegations made by the applicants are denied or put in issue by CML (para.5

et seq.).

(c) The applicants' amended replv

In their reply, the applicants plead the following:

(1) By reason of - (i) the matters pleaded in paras.14 and 15 of their amended statement of claim and (ii) CML1s continuation of the loan arrangements and other benefits

for the applicants or, alternatively, by reason of other conduct - CML is estopped from relying on the grounds it now asserts as grounds for terminating the agreement between CML and Tri-Global.

(2) If the agreement between the parties contained c1.7.2

(see para.4 (j) of the defence), on its true construction, that provision, in its reference to forfeiture rates, is a reference to the rate of policy lapses only. Alternatively, c1.7.2 is void for uncertainty.

THE HISTORY OF THE EVENTS NOW IN OUESTION

Although there was much common ground between the parties with respect to the background facts, many of the other facts, especially the terms of discussions between the parties, were in dispute. In order to understand the factual issues whlch have arisen, it is desirable to set out, in the first instance, the parties' respective versions of the events.

THE APPLICANTS' VERSION OF EVENTS

It will be necessary to deal in turn with the witnesses called by the applicants as follows.

THE EVIDENCE IN CHIEF OF MR. ROSS

M r . Ross' version of the backaround facts

Tri-Global was purchased as a shelf company (with a different name) by Messrs Ross, Irwin and Beard in January 1989 (T.A 60 1.20). The main purpose underlying its acquisition was so that the three men could "combine [their] individual master agencies as one and it would allow [them] to start to build [the Tri-Global agency] by attaching and having agents a part of that" (T.A 62 1.5). A "master agency' was an agency that "allowed [the agent] to receive commissions and to receive over-rides" (T.A 62 1.12). Ross Insurances and Imin Insurances had been appointed master agents of CML in April 1988 (T.A 62 1.17; 1.20). Mr. Beard became a representative

of CML in the latter part of 1988 (T.A 69 1.32). Browne &

Associates were so appointed in the following year (T.A 62 1.23). The major difference, in practice, between a "master" agency and a "standard" agency is that the master agency "has the authority to appoint other agents underneath it, and then to work with those agents to produce commissions, and that master agency would then receive an over-riding bonus on the

individual master agent's production and the agents that are a

part of it" (T.A 63 1.9). "Production" means the amount of the premiums associated with proposals for insurance business

introduced by the agent (T.A 66 1.5). "An over-rider bonus	[exists] when your production for commission is paid, the
insurance company pays you an additional over-riding commission based on the productive performance of that agency" (T.A 63 1.13). An advantage for a master agent in having an association with standard agents is that the premiums "generated by [the] associated agent is bulked together with that of the Master Agent" (T.A 66 1.12). The purpose of acquiring Tri-Global early in 1989 was "to be able to generate business through having agents as a part of it whereby their over-riding commissions would be paid to Tri-Global; and, secondly, so that we could combine our individual agencies for the purpose of bulking together the production of those individual master agencies which would then have an over- riding commission paid to Tri-Global" (T.A 67 1.22).
Mr. Ross' version of his meetina with Mr. Condon in Brisbane
in October 1988
In 1988, Mr. Barry Condon was CML's Queensland Branch Manager (T.A 68 1.10). Mr. Ross had known Mr. Condon since 1978 (T.A 68 1.15). Mrs. Ross had been Mr. Condon's secretary from 1975 to 1982 (T.A 68 1.19) at which time Mr. Condon was District Sales Manager of CML based in Tamworth (T.926 1.19) In thls period, Mr. Ross was a representative of National Mutual based at Tamworth (T.A 68 1.32).
In October 1988, Mr. Ross met with Mr. Condon in Mr. Condon's office in Brisbane. Mr. Ross put to Mr. Condon some
ideas that Mr. Ross had concerning Tri-Global's future (T.A 68
1.8). Mr. Ross then explained that Tri-Global was having problems in its business "because of the [scl. CML's] systems" (T.A 71 1.26).
Mr. Ross' version of his meetina with Messrs Irwin, Beard and
Condon in Brisbane in March 1989 and the execution of the Master Aaents Aareement
On 15 February 1989, Mr. Ross sent a memorandum to Mr. Condon on the subject "New Trading Name" informing Mr. Condon that, as of that date, Ross Insurances, Irwin Insurances and A.J. Beard and Associates Pty. Ltd. would be trading under the name "Tri-Global Financial Consultants" ( E x . "A").
In March 1989, Mr. Ross arranged a further meeting with Mr. Condon (T.A 69 1.34). The meeting was held in Mr.
Condon's office (T.A 69 1.20). Mr. Ross pointed out that Tri- Global was having problems with Cm's systems (T.A 71 1.2) because it "only allowed agents to be able to split commissions on a 50/50 basis so only two names could be put on a proposal" (T.A 71 1.8) whereas Tri-Global involved the three of them (T.A 71 1.12). Mr. Ross also said that they proposed to combine their individual master agencies and then go out "into the market place to recruit other agents to become a part of that larger agency" (T.A 72 1.4). Mr. Ross said "for [them] to proceed with [a] large agency, it [was] imperative that, as the agency develops and grows, . . . to manage it
correctly . . . that the agents that would become part of this
large agency would be agents of [Cm] and have an agency agreement in their own right rather than just an associate relationship with the master agency" (T.A 72 1.11) so that "the responsibility ... for cancellations and lapses ... would not be the responsibility of Tri-Global, the master agent; it would be the responsibility of the individual agent who wrote the business" (T.A 72 1.20). Mr. Ross explained that when a policy lapses or is cancelled, commission is refunded to the insurer (T.A 73 1.6). Mr. Ross said that they would "not proceed with a large agency if the agents that are a part of it cannot have their own individual agencies with [CML]" (T.A 78 1.24). Mr. Ross referred to the possibility that the agents recruited by them might not be as experienced as they were so that the agents might not write business as good as an experienced agent (T.A 78 1.19).
Mr. Ross said they wanted to proceed on this basis (T.A 79 1.16). Mr. Condon said he did not "have any problems with that. In fact [he] like[d] that idea because it gives [CML] a bit of control because they would have their own individual agency with [CML]" (T.A 79 1.17). But Mr. Condon went on to say that "he would find it very difficult - whilst he agreed to it - . . . to achieve because, at no time, to his knowledge, had something like this ever been done before" (T.A 79 1.20).
During the meeting, Mr. Condon produced a document (T.A 79 1.31). Mr. Condon said: "I don't know how we are going to do all this, but to get the ball rolling and to get things up and running, so that you can get an account number, this needs to be signed". The document (a photocopy is Ex. C) was then signed (T.A 80 1.17) although there were blanks in it
(T.A 80 1.23). The company seal was affixed later (T.A 81
1.3).
There was then tendered, Ex. "C", a photocopy of a printed CML document entitled "Agreement for Master Agents". It is an undated document of 12 pages (together with several annexures dealing with rates of remuneration commission). A form of guarantee is also annexed, whereby an indemnity is to be provided by a third party or parties in respect of monies advanced to "the company" by CML "against prospective commissions". No names of guarantors, as contemplated, were inserted. The seal of Tri-Global Financial Services Pty. Ltd. was affixed where the guarantor was intended to sign. The signatures of Messrs Irwin and Ross appear beside the seal.
The parties to Ex."CU are CML and (in handwriting) "Tri-Global". Clause 2 deals with "Appointment". By cl. 2.1, CML "shall appoint the company as its representative to carry on the business of [CML] as contemplated by this Agreement within the territory allocated to the company from time to time by [CML's] Sales Manager for the time being of [CML] upon
the terms and conditions set out in this Agreement". By c1.2.2, the appointment shall be effective from 27 March 1989.
(It appears that this date was written in later - T.A 81 1.24, 25). Provision is made (c1.2.6, 2.7 and 2.8) for CML to know of, and to approve of, the employees of the company and of persons "otherwise engaged to assist in the carrying on of its [company's] business."

Clause 3 restricts the company in its dealings with other life insurance companies.

Clause 5 deals with the payment of commission. Reference is made (c1.5.2, c1.5.3) to the annexures mentioned above. By c1.5.3, CML may in its absolute discretion advance monies to the company, repayable on demand, against the prospective commissions credited to its account. Any such advance is to be guaranteed as previously mentioned. CML reserves the right to adjust the rate of commission in respect of any policy where, within a period of 18 months from its date of commencement, its terms are altered, amended or rewritten (c1.5.4). In the event of non-payment of any premlum in respect of a policy not then in force for a period of 12 months then, unless the policy is reinstated, the amount of prospective commission advanced shall be debited to the account (c1.5.5).

The company, its employees and all persons acting on

its behalf shall not engage in the practice of "twisting"

(c1.6.3).

"Termination" was dealt with by c1.7 as follows:

" 7.0	TERMINATION
7 . 1	Ei-ther [ C m ] or t h e Company may terminate t h i s
Agreement by g i v i n g t o t h e o t h e r seven ( 7 ) days
n o t i c e i n w r i t i n g wi thout a s s i g n i n g any reason
t h e r e f o r .

7.2 [CML] may t e r m i n a t e th is Agreement by notice i n

w r i t i n g t o the Company t a k i n g e f f ec t

i m m e d i a t e l y upon the forwarding o f such w r i t t e n

n o t i c e , i n the e v e n t o f a n y o f the f o l l o w i n g -

( a ) the net expense premium f o r a n y one

ca l endar	y e a r	i n	respect	o f	p o l i c i e s
i s s u e d	by	[ C m ]	pursuant	t o	p roposa l s

submi t t ed by the Company b e i n g less t h a n

the minimum amount s t i p u l a t e d by [ C m ] t o

e n a b l e i t s r e p r e s e n t a t i v e s t o q u a l i f y f o r

a p roduc t i on bonus;

(b) the f o r f e i t u r e r a t e f o r a n y one ca l endar

y e a r a s a t 31 December i n r e s p e c t o f the

Annual Premiums Payable on p o l i c i e s i s s u e d

by [CML] pursuant t o proposa l s submi t t ed
by the Company b e i n g i n excess o f eleven

and one h a l f pe rcen t (11 . S % ) ;

(c )	the Company o r a n y o f i t s employees or a n y person a c t i n g on i t s b e h a l f conduc t i ng
t hemse l ve s i n a manner which, i n the
o p i n i o n o f the S a l e s Manager for the time
b e i n g o f [CML], i s l ike ly t o b r i n g [ C m ]

i n t o d i s r e p u t e ;

( d )	the Company o r a n y o f i t s employees o r a n y person a c t i n g on i t s b e h a l f d o i n g a n y t h i n g i n breach o f t h i s Agreement;
( e )	the Company f a i l i n g t o obse rve a n y proper
i n s t r u c t i o n s from the d u l y a u t h o r i s e d
o f f i cer o f [ C m ] ;
( f )	the Company or a n y o f i t s employees or a n y
person a c t i n g on i t s b e h a l f d o i n g a n y t h i n g
i n breach o f a n y Agreement i n force
between the L i f e Insurance Federa t ion o f
A u s t r a l i a and i t s member off ices;
( g )	the Company o r a n y o f i t s employees o r a n y person a c t i n g on i t s b e h a l f f a i l i n g t o
observe i t s t e r r i t o r i a l l i m i t s provided by

th is Agreement;

(h )	the Company f a i l i n g , i n the o p i n i o n o f the
S a l e s Manager f o r the t i m e b e i n g o f [CML],
t o c a r r y e n e r g e t i c a l l y and on the b u s i n e s s o f [m]

d i l i g e n t l y ;

(i) the Company f a i l i n g t o observe a l l the

p r o v i s i o n s o f the Companies Code and a n y

R e g u l a t i o n s made under t h a t A c t , o r

( j ) the Company b e i n g wound u p ( e x c e p t , w i t h

[CML's]	p r i o r	w r i t t e n	approva l ,	f o r	the
purposes	o f	r e c o n s t r u c t i o n )	or	a	Manager

o r Receiver o f the Company b e i n g appo in ted

under	the	p r o v i s i o n s	o f	the	Companies
Code;

( k ) the Company f a i l i n g t o no t i f y [CML] a s t o

the t e r m i n a t i o n o f service o f a n y employee

o f the Company o r o t h e r person engaged t o

a s s i s t i n the c a r r y i n g on o f the Company's

b u s i n e s s , o r

(1) the Company f a i l i n g t o o b t a i n [CML's]

p r i o r approval t o the appointment by the

Company o f a n y new employee o r o t h e r

person engaged t o a s s i s t i n the c a r r y i n g

on o f the Company's b u s i n e s s . "

"Liability" was dealt with by c1.8 as follows:

"8.0 LIABILITY

8.1 A f a i l u r e by a n y employee o f the Company o r by

a n y person a c t i n g on b e h a l f o f the Company i n

p e r f orming o r o b s e r v i n g a n y p r o v i s i o n s o f this

Agreement b i n d i n g on the Company s h a l l be

deemed a f a i l u r e t h e r e o f by the Company. "

"Sale of Agency" was dealt with by c1.9 as follows:

"9 .0 SALE OF AGENCY

9 .1 S u b j e c t t o c l a u s e 9 . 2 the Company s h a l l , d u r i n g the

t e rm	o f	t h i s	agreement,	be	a t	liberty	t o sel l ,
t r a n s f e r	o r	o t h e r w i s e	d i s p o s e	o f	i t s	agency	and
p o r t f o l i o	o f	i n s u r e d s	t o a	proposed	a s s i g n e e	o f	the

same upon such t erms and c o n d i t i o n s a s the C o m ~ a n v -

may de termine SUBJECT a t a l l t i m e s t o th;

f o l l o w i n g -

( a ) [ C m ] approving o f the proposed a s s i g n e e

and i n t h i s regard a n y de t e rmina t i on made

by	[CML]	s h a l l	be	f i n a l	and	c o n c l u s i v e ,
and

(b)	The
proposed agency agreement a s s i g n e e w i t h [CML] e n t e r i n g in to an

i n such form

a s [CML] may require.

9.2 ~n t h e even t t h a t t h e Company wishes t o sel l ,

t r a n s f e r	o r	otherwise	d ispose	o f	the	agency
b u s i n e s s	conducted	by	i t	w i t h	[CML]	( ' t h e

b u s i n e s s ' ) ,	t h e	Company	s h a l l	f irst	o f f e r the
bus iness	for	s a l e	t o [CML]	a t a p r i c e	t o be

agreed	upon	between	the	p a r t i e s ,	and	f a i l i n g
agreement,	a t a	f a i r	va luat ion .	I n	the	even t

t h a t a t h i r d p a r t y has made a bona f i d e o f f e r

t o purchase t h e bus iness from the Company, the

Company s h a l l first o f f e r the bus iness for s a l e	t o [CML3 on terms no less favourable than those
offered by the t h i r d par ty . F a i l i n g [CML's]
acceptance o f such o f f e r w i t h i n 30 days a f t e r
the o f f e r i s made, t h e Company s h a l l be free t o
proceed w i t h the s a l e o f the b u s i n e s s t o t h a t
t h i r d party . "
The document, Ex. " C " , al though undated, was signed

b y M r . Condon on beha l f o f CML. M r . Condon's s ignature was

wi tnessed .	The	seal	o f Tri-Global	Financial	Serv ices Pty .
L t d .	( a s Tri-Global	was	t h e n named) was	a f f i x e d a t the end	o f

t h e agreement ( p . 1 2 ) . The s ignatures o f Messrs Ross, Irwin

and Beard appear bes ide the seal as d i r e c t o r s , t oge ther w i t h

t h e s ignature o f M r . Irwin as secre tary . On t h e form o f guarantee annexed, t h e company's sea l appears and bes ide it appears t h e s ignatures o f Messrs Irwin and Ross.

Senior counsel t h e n appearing f o r the app l i can t s ( a t

o ther s tages	o f t h e t r i a l , t h e appl icants were represented	b y
junior	counse l ;	on some o ther occasions, t h e appl icants were

unrepresented) t h e n tendered ( f r o m C m ' s discovered documents)

an or ig ina l "Agreement f o r Master Agents" (Ex."D"). T h i s

document, a l s o undated, was sealed b y Tri-Global Financial Serv ices Pty . L td . and t h e s ignatures o f Messrs Ross, Irwin

and Beard a l s o appear, al though the s e a l and their s ignatures

appear in a position different from their location on Ex. "C". The annexed form of guarantee was not executed. Ex. "D" is also a printed document. The name of CML is printed as a party but there are unfilled blanks, i.e. the date, the name of "the company" and the date from which the appointment was to be effective (cl. 2.2).

Senior counsel for the applicants then tendered another copy of the "Agreement for Master Agents" (Ex. "E"). This document has some of the features of Ex. "C" and some of Ex. "D". Ex. "E" 1s a photocopy. It contains the same blanks as Ex. "D" and, save that the signature of the witness to Mr. Condon's signature does not appear, the signatures and seal of the partles appear as in Ex. "C". The guarantee annexed to Ex. "E" bears the signature of Mr. Irwin.

Prior to discovery, Mr. Ross was aware of only two copies of the "Agreement for Master Agents" (T.A 91 1.27).	He
could not explain how a third copy came into existence (T.A 92 1.3).

Reverting to the meeting with Mr. Condon, on this occasion, Mr. Condon retained a copy of the agreement and handed another copy to Mr. Beard (T.A 92 1.13). Mr. Beard said to Mr. Condon:

"Barry, I hope we don't ge t t h e f l i c k b e f o r e we get

a number" (T.A 92 1.18).

M r . Condon s a i d :

"What d o y o u mean?" ( T . A 92 1 . 1 8 ) .

Mr . Beard p o i n t e d t o p . 9 o f the agreemen t b e i n g

Exhibits	" D "	and	"E"	( c1 .7	a p p e a r s	on	t h a t	p a g e )	( T . A	9 3
1 . 1 0 ) .

M r . Condon s a i d :

" A l l a n ,	y o u ' l l	only	g e t	the	f l i c k	i f y o u	commit
f r a u d ,	go	b a n k r u p t	or	d o	s o m e t h i n g	wrong,	m y boy."

( T . A 93 1 . 2 4 ) .

M r . Beard s a i d t o M r . Condon:

" I t s a y s here t h a t y o u r a g e n c y c a n be t e r m i n a t e d on

seven days ' notice." (T .A 94 1 . 3 ) .

M r . Condon s a i d :

"Once a g a i n , m y boy, you c a n only g e t t e r m i n a t e d i f

you	commit	f r a u d	or	go	b a n k r u p t	or	d o	s o m e t h i n g
wrong..	.or	commit	a	c r i m i n a l	o f f e n c e . "	(T .A	94	1 . 4 ,
. ".

Mr. Beard s a i d :

" W e l l , why a r e we s i g n i n g it? (T.A 94 1 . 1 0 ) .

M r . Condon s a i d :

" W e l l t h i s agreemen t ... d o e s n ' t h a v e therein a l l o f

the d e t a i l s we 've been t a l k i n g a b o u t , b u t i f you

d o n ' t	s i g n	i t ,	you	c a n ' t	g e t	a	number	and ,
t h e r e f o r e ,	you	c a n ' t	d o	-	write	b u s i n e s s "	(T.A	94
1 . 1 4 ) .

(Mr. Ross then said, in his evidence, that they
would not have signed the agreement on behalf of Tri-Global

unless Mr. Condon "could confirm they were the things that

[Tri-Global] would get the flick for" (T.A 94 1.30).)

Reverting to the meeting with Mt. Condon, Mr. Ross

said to Mr. Beard:

"Allan, that's exactly what Con [Steendam - CML's
New South Wales Manager who recruited hY. Ross to
CML ( T . A 95 1.2)] told me last year when I had the

same conversation with him." (T.A 94 1.35).

Mr. Ross said later in his evidence that his discussion with Mr. Steendam took place in February 1988 (T.A 101 1.15).

The documents were then signed, and towards the end of the meeting, Mr. Beard said to Mr. Condon:

"Well, if Con Steendam does not hurry up and give me my ADL [Agency Development Loan] cheque, I will go

bankrupt." (T.A 95 1.20).

Mr. Condon said:

"Well, I'll see what I can do for you on that."
(T.A 95 1.21).

In his evidence, Mt. Ross then elaborated upon his
discussion with Mr. Condon, earlier in the meeting, about

forfeiture rates of agents to be engaged by Tri-Global. Mr.

Ross said he then indicated to Mr. Condon that they -

"would not be prepared t o proceed w i t h the b i g

a g e n c y w i t h the a g e n t s w i t h their own agreemen t

u n l e s s they were f u l l y r e s p o n s i b l e for the

f o r f e i t u r e r a t e and . . . Tr i -Globa l c o u l d be seen t o be

and a l w a y s be a b l e t o be h o l i e r - t h a n - t h o u . In other

words , not a problem w i t h f o r f e i t u r e [T.A 96 1.31

. . . Tr i -Globa l would never h a v e a f o r f e i t u r e problem

b e c a u s e the a g e n t would be r e s p o n s i b l e f o r a n y

l a p s e s and c a n c e l l a t i o n s b e c a u s e they would h a v e

their own agreement w i t h [ C m ] " (T.A 96 1.9).

Mr. Ross' version of CML's letter of appointment as master

aaent dated 20 March 1989

A couple of weeks after this meeting (T.A 97 1.12), Tri-Global received a letter of appointment as master agent from CML head office dated 20 March 1989 (Ex. "F").

The letter, signed by Mr. J.R. Williamson as CML's National Sales Manager, confirmed the offer of an appointment as "Master Agent for [CML] upon the terms and conditions as set out hereunder and in the attached Agreement for Master

Agents. "

(No such agreement is attached to Ex. "F". Mr. Ross said that he could not recall whether it was originally

attached to the letter (T.A 97 1.29).)

The letter went on to state that, if accepted by Tri-Global, the appointment "will be effective from the 27 March, 1989" and then states as follows:

"1.	TITLE
You w i l l be known a s T r i g l o b a l F i n a n c i a l
S e r v i c e s P t y . L t d . , M a s t e r A g e n t s f o r [ C m ] .
2.	L IAISON
You w i l l be r e s p o n s i b l e t o the Manager for
Queensland and s h o u l d d i r e c t a l l e n q u i r i e s t o
h i m or t o s u c h other Of f icer a s d i r e c t e d by
him.
3.	REMUNERATION
( a ) Commission a s set o u t i n S c h e d u l e s A and B

o f y o u r M a s t e r A g e n t ' s Agreement .

( b ) Q u a l i t y Bonus a s set o u t i n Append ix ( i ) .

( c ) M a s t e r A g e n t ' s Bonus. T h i s b o n u s w i l l be

c a l c u l a t e d on the t o t a l N e t Annual Expense Premium produced by the approved employees o f [ T r i g l o b a l ] . D e t a i l s o f the c a l c u l a t i o n

o f t h i s b o n u s a r e set o u t i n Append ix

( i i ) .

( d )	Volume Bonus for Funds u n d e r Management a s
set o u t i n Append ix ( i i i ) .
( e )	C o r p o r a t e A g e n t s Bonus which w i l l be
c r e d i t e d q u a r t e r l y and w i l l be 4 % o f the
net amounts c r e d i t e d d u r i n g the q u a r t e r
for I t e m s ( a ) t o ( c ) above both

i n c l u s i v e . "

(The appendices mentioned are annexed to Ex. "F").

The letter then stated that items (b), (c), (d) and (e) were "ex-gratia payments and dependent on the volume and

quality of business secured and the continuation of the
Agreement. Consequently, payment of the bonus is entirely at
the Society's discretion."

The letter of appointment asked that acceptance of the appointment be indicated. Below Mr. Williamson's signature appeared the following:

" I accep t the appointment on the above terns and

cond i tions . "

Below this appeared the signature of Mr. Irwin, above the date "31/03/1989". The signatures of Messrs Ross and Beard then appeared.

Mr. Ross' version of his meetinq with Messrs Irwin, Beard
Browne and Condon in Brisbane in Mav 1989

Another meeting took place between Mr. Condon and the representatives of Tri-Global in May 1989. By this time, Mr. Browne had joined Tri-Global and he was also present at the meeting (T.A 98 1.15).

At the commencement of the meeting, Mr. Ross said to

Mr. Condon:

"Barry , . . . Kevln [Browne] wasn ' t a t [ the p r e v i o u s ]

mee t i ng , and I would j u s t l i ke t o c o n f i r m what we

[have] a l r e a d y t a l k e d about for his benefit, and

[what] you 've agreed t o , p r i o r t o moving t o . . . o t he r

s u b j e c t s " [ T . A 908 1.281 . . . I have brought w i t h me

a bus ine s s -p lan submiss ion t h a t I would l ike t o go

through w i t h you" [ T . A 98 1 .31 ) .

Before going to the "submission" (Ex. "G"), Mr. Ross

said to Mr. Condon:

"Have you yet worked o u t the mechanism [ w i t h r e s p e c t

t o the q u e s t i o n o f t h e s t a t u s o f a g e n t s r e c r u i t e d by

Tr i -Globa l]	t h a t you	a r e go ing	to	use?"	(T.A	99
1 . 4 ) .

Mr. Condon said:

~ l o y d , look, I s t i l l d o n ' t know how we a r e g o i n g t o i

d o i t , b u t t h a t ' s m y problem. I w i l l g e t around i t , i

and I h a v e yet t o work i t out w i t h J a c k [Mr.

W i l l i a m s o n ]	i n more	d e t a i l	[T.A	99	1 .101	. . .	J a c k
and I	a r e p r e t t y good	m a t e s ,	and	I ' l l	g e t	i t worked	I

o u t	w i t h h i m	e v e n t u a l l y "	[TA	99	1.151	. . .	[ I am]	I
very	c o m f o r t a b l e	w i t h	the	f a c t	t h a t	they	would	L
i.

become [ C m ] a g e n t s " (T.A 99 1 . 1 9 ) .

L .

M r . Ross sa id t o M r . Condon:

"We're very, very keen t o make s u r e t h a t they a r e

[ C m ] A g e n t s w i t h their own a g e n c y agreement . . . so

t h a t they a r e f u l l y r e s p o n s i b l e for a l l the b u s i n e s s

t h a t they write and not T r i - G l o b a l " (T.A 9 9 1 . 3 0 ) .

M r . Condon said:

" L l o y d , t h a t ' s f i n e . I ' m h a p p y w i t h t h a t , and

there's no problem	w i t h i t .	I've	j u s t	g o t	t o g e t
around	how w e ' r e	g o i n g	t o d o i t " (T.A	99	1 . 3 5 ) .

M r . Ross sa id:

" B a r r y , i t ' s very i m p o r t a n t t o u s ..., a s we

p r e v i o u s l y	d i s c u s s e d ,	t h a t	we	m a i n t a i n	and	r e t a i n
the	same	b e n e f i t s	t h a t	we	d i d and	d o a s i n d i v i d u a l

m a s t e r a g e n t s i n t h a t - t h a t the deve lopmen t l o a n s

we a l r e a d y h o l d a r e r e t a i n e d , and t h a t we c a n

q u a l i f y f o r a d d i t i o n a l deve lopmen t l o a n s , and t h a t

w i t h those deve lopmen t l o a n s t h a t we a l r e a d y h o l d

and c a n receive i n a d d i t i o n . . . t h a t thev c o u l d be - ~ 2 - -

v e s t e d o u t over a p e r i o d o f t i m e w i t h o u r a g e n c i e s

w i t h [CML]" (T .A 100 1 . 2 5 ) .

M r . Condon sa id he "was happy with that" and s a i d !.

that t h i s "would not be a problem and he agreed t o it" (T.A	I
!
l01 1.9).

M r . Ross said:

" B a r r y , i t ' s very i m p o r t a n t t h a t o u r commiss ions

from o u r m a s t e r a g e n c y and o u r o v e r - r i d e commiss ions

from o u r m a s t e r a g e n c i e s , w i t h t h a t o f the

commiss ions and o v e r - r i d e r s from the i n d i v i d u a l

a g e n c i e s w i t h C o l o n i a l Mutual t h a t would be a p a r t

and a t t a c h e d t o T r i - G l o b a l would a l s o be b u l k e d

t o g e t h e r l i ke they c u r r e n t l y were for the purpose o f

v a l i d a t i n g e x i s t i n g deve lopmen t l o a n s , q u a l i f y i n g

a d d i t i o n a l deve lopmen t l o a n s for T r i - G l o b a l , and

d i v e s t i n g t o be a p a r t o f t h a t a s w e l l , l i ke o u r

e x i s t i n g deve lopmen t l o a n ar rangemen t s w i t h o u r

e x i s t i n g m a s t e r a g e n c i e s [T.A 101 1.251 . . . Con

Steendam and I h a v e had a c o n v e r s a t i o n w i t h r e g a r d

t o deve lopmen t l o a n s and v e s t i n g and so on. D o you

u n d e r s t a n d what t h a t means?" (T.A 101 1 . 3 2 ) .

Mr. Condon said:

"I've been around for a l o n g t i m e . I am aware o f a

l o t	o f	the	d i s c u s s i o n s	t h a t you	h e l d	.	.	. w i t h Con
S teendam	i n	1988,	so	I ' m	p r e t t y	w e l l	u p	t o d a t e "

(T .A 101 1.35).

Reference was then made at the meeting to Ex. "G".

Mr. Ross drew to the attention of Mr. Condon a statement in

Ex. "G" as follows:

"Each company [a reference t o I r w i n I n s u r a n c e s ,

Beard & A s s o c i a t e s , Browne & A s s o c i a t e s and R o s s

I n s u r a n c e s , r e f e r r e d to e a r l i e r i n Ex. "G" a s the

" I n d i v i d u a l Companies i d e n t i f i e d a s r e p r e s e n t a t i v e s

( M a s t e r A g e n t s ) o f T r i - G l o b a l " ] h a s a n i n d i v i d u a l

a g e n c y agreement w i t h [ C m ] and e a c h company i s p a i d

d i r e c t	by	[ C m ]	b a s e d	on	b u s i n e s s	w r i t t e n	and
s h a r e d . "

Mr. Ross explained to Mr. Condon they intended that "agents receive their direct commissions and all the over- riders would be paid to Tri-Global on the production of those agents, including our combined master agencies" (T.A. 104 1.10).

(There i s a s t a t e m e n t i n Ex. "G" a s f o l l o w s :

"A1	l	o v e r - r i d i n g	commiss ion	g e n e r a t e d	by	f o u r	named
P t y .	L t d .	compan ie s	[sc.	the	f o u r	compan ies	j u s t

m e n t i o n e d , i . e . Irwin I n s u r a n c e s etc. ] i s p a i d e a c h

mon th i n to m a s t e r a g e n t - Tr i -Globa l . . . t o be

d i s t r i b u t e d i n f o u r e q u a l p a r t s u n l e s s d e c i d e d by

a l l f o u r d i r e c t o r s t o d o o t h e r w i s e . . . " . )

T h e f o l l o w i n g i s a l s o s t a t e d i n Ex. "G":

" A l l a g e n t s r e c r u i t e d i n QLD, NSW and V I C , f a l l

u n d e r the u m b r e l l a o f T r i - G l o b a l . . . w h i c h i s solely

c o n t r o l l e d and owned by the s a i d f o u r d i r e c t o r s [sc.

Messrs Irwin, Beard , Browne and R o s s ] . )

A g e n t s a r e p a i d c o m m i s s i o n s d i r e c t and a l l over-

r i d e s a r e p a i d t o T r i - G l o b a l and d i s t r i b u t e d a t the

d i s c r e t i o n o f a l l f o u r d i r e c t o r s . ")

R e f e r r i n g t o a l i s t i n Ex. "G" o f benef i t s and

services	t o be	prov ided	by	T r i - G l o b a l	t o i t s a g e n t s ,	M r .	Ross
s a i d :

" B a r r y , a l l o f these services t h a t a r e here l i s t e d

. . . a r e what T r i - G l o b a l w i l l be p r o v i d i n g t o i t s

a g e n t s	t h a t	a r e a g e n t s	o f	[CML]	and	w h i l s t	they're
a g e n t s	o f	[CML],	we	a l s o h a v e	t o p r o v i d e	them	w i t h
these	services	for	the r e a s o n s	t h a t	. .	.	they a r e

s t i l l r e p o r t i n g [ t o ] and b e i n g managed by

o u r s e l v e s . " (T.A 104 1.31).

M r .	Condon s a i d t h a t he	was happy w i t h t h i s ( T . A	105
M r .	Ross	then r e f e r r e d M r .	Condon t o the l a s t page

o f Ex. "G" e n t i t l e d "Agency t o Deve lop and Grow i n T h r e e

S t a g e s " ( i . e . " S t a g e 1" f rom one t o three y e a r s ; " S t a g e 2 " -

three years to five years; "Stage 3" - five years to ten

years). Below this the following was stated:

" I n the tenth y e a r sell a g e n c y for m a r k e t v a l u e t o

e . g . [CML]

e . g . 1 . ADL w i l l h a v e v e s t e d .

2 . C a p i t a l purchase p r i c e a p p r o x . 8 m i l l i o n .

3. $2 m i l l i o n i n d e x e d from 1989 e a c h .

4 . 1999 v a l u e from s a l e o f a g e n c y = $8

m i l l i o n e a c h . "

Mr. Ross said:

" W e see t h i s a s b e i n g a l o n g h a u l s t r u c t u r e and

" ( a ) That i f Tri -Global would e n t e r i n t o the s a i d

agreement and per form the agreement accord ing t o i t s t e rms CML would p rov ide benefits which

would acc rue a s a consequence o f a l o n g t e r m

arrangement between CML,	Tr i -Global and Ross ,
I rw in and Browne;

(b) That Tr i -Globa l , Ross, I rw in and Browne would

have	the	o p p o r t u n i t y o f	d e v e l o p i n g	and	c r e a t i n g
a b u s i n e s s which b u s i n e s s would	o f	management	o f	i n surance	a g e n t s

have s u b s t a n t i a l worth;

( c ) That Tr i -Globa l , Ross , I rw in and Browne cou ld

r e a s o n a b l y e x p e c t t h a t the b u s i n e s s

re1 a t i o n s h i p	between	C M . and	T r i	-G1 obal	would
endure	for	a	l o n g t e rm and	would	n o t be
t e rmina t ed	by	either	p a r t y	e x c e p t	upon

r easonab l e n o t i c e ;

( d ) That Ross, I rw in and Browne would have the

o p p o r t u n i t y ( a s a consequence o f such l o n g t erm

r e l a t i o n s h i p s ) t o s u b s t a n t i a l l y r educe their

r e s p e c t i v e i n d e b t e d n e s s t o C m i n r e s p e c t o f

the agency development l o a n s r e f e r r e d t o i n

paragraph 6 ( i x ) hereof;

( e ) That a g e n t s appo in ted and managed by Tri-Global

would be a g e n t s o f CML, and not o f Tr i -Global;

( f ) That f o r f e i t u r e r a t e s o f a g e n t s appo in ted and

managed by Tri-Global would n o t be a t t r i b u t e d

t o Tr i -Globa l ;

( g ) That t h e agreement would be de t e rminab l e by

C m , o t h e r t han on r easonab l e n o t i c e , o n l y i n

the e v e n t o f f raud , bankrup t cy , o r the

commission o f a c r im ina l o f f e n c e by Tri -Global;

( h ) That Tri-Global was r e q u i r e d t o e x e c u t e the

document e n t i t l e d 'Agreement for Master Agent'

w h i c h was undated, b u t e xpre s sed t o be

ef fect ive from 2 7 t h March 1989, t o enab l e T r i -

Global t o be a l l o c a t e d an account number f o r

the payment o f commissions and o t h e r monies by

cm. "

( T h e f u r t h e r p a r t i c u l a r s provided b y the a p p l i c a n t s

a r e ,	f o r	p re sen t	purposes ,	the	same	p a r t i c u l a r s	a s	t h o s e
provided	i n r e s p e c t	o f	the	o r a l	c o n t r a c t u a l	t e r m s	a l l e g e d	i n

para.6	o f the s ta t emen t	o f c l a i m which have	a l r e a d y been	d e a l t
w i t h . )

As has been noted, the applicants then plead (para.l4(ii)) that each of the alleged representations were made in order to induce Tri-Global to enter into the agency agreement; and that (para.15) in reliance thereon, Tri-Global acted to its detriment in several respects, including the refusal of an offer by AMP "to work for" that company on similar terms.

The applicants then allege (para.16):

"The conduct set forth in paragraph 14 hereof was misleading and deceptive within the meaning of that term as used in Section 52 of the TPA in that:

(i) CML thereby represented to the applicants or each of them that the association between CML and Tri-Global which CML intended to establish with Tri-Global was of a substantial and enduring nature which would not be terminated by CML without cause or reasonable notice whereas CKL intended to terminate the association between Tri-Global and CML on seven days' notice should it decide in its own interests that it wished to do so;

(ii)CML had no reasonable grounds for making such

representatlons. "

I t will be noted that, although a breach of s.52 is

pleaded, the relevant representation alleged is made with

respect to a future matter (i.e. that "the association ... would not be terminated ... [para.l6(i)]). It is not apparent

whether the applicants rely upon the general principles

applicable in a s.52 claim (see, e.g. Smith v Land & House

Pro~ertv Incorporation (1884) 28 Ch.D 7 at 15; R.A.I.A.

Insurance Brokers Limited v. F.A.I. General Insurance Co.

Ltd

I	.	Full Federal Court, 12 March 1993, unreported, per Beaumont and Spender JJ. at 12) or whether the applicants also seek to invoke the provisions of s.51A of the Trade Practices Act in aid of the s.52 claim. However this point need not be resolved here because, in my opinion, the applicants have not established the making of any of the representations alleged.
In Roberts v Honqkonabank of Australia Limited, 28 April 1983, unreported, Lockhart J. said (at 10-11):

" T h e e v i d e n c e o f Mr R o b e r t s a s t o what Mr Tomkins

s a i d t o h i m before he commenced h is employment w i t h

the Bank i s genera l i n n a t u r e . I am prepared t o

a c c e p t t h a t Mr Tomkins d i d i n e f f e c t p a i n t a f a i r l y

rosy p i c t u r e t o M r R o b e r t s o f what his j o b would be

i f he l e f t W a r d l e y and a c c e p t a senior a p p o i n t m e n t

w i t h the Bank. In m y o p i n i o n i t f a l l s short,

however , o f e s t a b l i s h i n g the r e p r e s e n t a t i o n s w h i c h

a r e p l e a d e d i n t h e s t a t e m e n t o f c l a i m . I am

s a t i s f i e d t h a t Mr Tomklns p r o b a b l y s a i d t o Mr

R o b e r t s t h a t i f he t o o k u p employment w i t h the Bank

the p r o s p e c t s c o n s i d e r a b l e and o f h i s s e c u r i t y and advancement were

t h a t Mr Tomklns s a i d i n e f f e c t t h a t

he would l o o k a f t e r him.

I do not a c c e p t t h a t s t a t e m e n t s o f this g e n e r a l k i n d

c o u l d be t r a n s l a t e d i n to a n i n d u c e m e n t t h a t Mr

R o b e r t s would be a b l e t o r e m a i n i n the b a n k ' s e m p l o y

for the rest o f h i s l i f e or u n t i l he r e a c h e d 60 i n

1998.      In short, I think M r Tomkins engaged i n some

d e g r e e o f p u f f i n g t o o b t a i n the services of Mr

R o b e r t s f o r the Bank (not then formed) ; b u t i n m y

o p i n i o n they d o not c o n s t i t u t e p r o m i s e s o f

s u f f i c i e n t c l a r i t y and c e r t a i n t y t o h a v e c o n t r a c t u a l

s i g n i f i c a n c e or t o c o n s t i t u t e r e p r e s e n t a t i o n s wh ich

c o u l d found m i s l e a d i n g or d e c e p t i v e c o n d u c t u n d e r

s .52 o f the Act .

S p e a k i n g g e n e r a l l y , r e p r e s e n t a tions, t o h a v e

c o n t r a c t u a l f o r c e or t o f a l l w i t h i n s .52, m u s t be c l ear and unambiguous or a t l e a s t not so vague a s t o

be i l l u s o r y ; . . . "

I would respectfully adopt this reasoning for present purposes. Although many of the matters said to be the subject of the representations now alleged may have been raised by ~ri-Global for the consideration of CML, I am not satisfied that, at their meetings, any of CML's executives made representations of the kind claimed by the applicants.

In my view, it would be expecting more than is reasonable from

a witness to recall in the necessary detail the terms of lengthy and complex negotiations which occurred in 1988 and 1989, especially in the absence of any aide-memoire created at the time. I also take into account the circumstance that Mr. Ross, in particular, has an interest in the outcome of these proceedings. In the result, having regard also to the generalised and vague way in which, understandably, much of the applicants' evidence was given, I am not satisfied that, in course of the discussions, CML made representations which were sufficiently "clear and unambiguous" so as to fall within the proscription provided in s.52. On the contrary, the

whole, is that both sides were keen to negotiate a mutually	impression I have gained from the evidence, looked at as a
satisfactory outcome but that the course or process of negotiation proved to be lengthy and difficult. There were several reasons for this. In the first place, the proposals advanced by Tri-Global were both innovative and complex. Secondly, having regard to the substantial size of the Tri- Global operation, the figures involved were significant. Moreover, both sides had had considerable experience in the industry. In these circumstances, I think it would be unlikely that any of CML's officers would be prepared to commit CML to a particular position in the course of a discussion. Rather, in my view, the context and the objective circumstances reinforce the likelihood that CML's executives would wish to "take on board" what Mr. Ross, in particular, wished to propound. That is to say, it is unlikely CML would wish to embrace instantly transactions of such novelty, complexity and importance. In short, it was probable that time was needed by CML in order to digest what Tri-Global was proposing. All these considerations point away from the likelihood that, as the applicants would have it, CML's officers were prepared, there and then, to represent that CML accepted Tri-Global's propositions.
For these reasons, I conclude that no contravention of s.52 has been made out in the manner pleaded in para.14 of the statement of clam.
It will have been noted that in para.l6(i) another representation appears to be pleaded. However, it is not necessary to pursue thls since I have already found an implied term as alleged in para.E(i) of the statement of claim.
A further contravention of Part V of the Trade Practices Act, i.e. s.52A1 is alleged in para.17 of the statement of claim as follows:

"1 7. In t h e a l t e r n a t i v e : -

( a ) CML i n t e n d s , un les s r e s t r a i n e d , t o

acce lera te repayment by t h e Ross, Irwin

and Browne o f t h e loans referred t o i n

paragraph	15 (b) ;
(b) having regard	t o the mat t e r s referred t o
i n paragraphs	14, 15 and 16 h e r e o f , the
conduct	o f CML i n acce lera t ing repayment

o f t h e s a i d l o a n s would be

unconscionable. "

In my v i e w , having regard t o t h e f ind ings a lready

made, no reasonable b a s i s f o r t h i s c la im has been

demonstrated.

Conclusions on t h e auul icants '	claimed	contravent ion o f Part V
o f t h e Trade Pract ices Act

For t h e above reasons I am o f t h e opin ion t h e

applicants have no t e s tab l i shed any contravent ion b y CML o f

any provis ion o f Part V o f the Trade Pract ices Act .

I c e r t i f y t h a t t h i s and t h e preceding one

hundred and s i x t y seven ( 1 6 7 ) pages are a

t r u e copy o f t h e Reasons f o r Judgment (No.

1 ) -e-.preliminary i s s u e s ) o f h i s

Honour	~ustrce--Beaumont.
Associate

..

IN THE FEDERAL COURT OF AUSTRALIA )

OUEENSLAND DISTRICT REGISTRY	NO. QG39 of 1992
GENERAL DIVISION

BETWEEN:	TRI-GLOBAL (AUST) PTY LTD
First applicant
L.M.K. FINANCIAL SERVICES PTY LTD
Second applicant
LLOYD REGINALD ROSS
Third applicant
KEVIN THOMAS BROWNE
Fourth applicant
MICHAEL JAMES IRWIN
Fifth applicant
SUZANNE GAI ROSS
Sixth applicant
LLOYD ROSS INSURANCES PTY LTD
Seventh applicant DIANE MAREE BROWNE Eighth applicant
KEVIN BROWNE & ASSOCIATES
PTY LTD
Ninth applicant
SUE ELIZABETH IRWIN
Tenth applicant
MICHAEL J. IRWIN INSURANCES PTY LTD
Eleventh applicant

AND	COLONIAL MUTUAL LIFE ASSURANCE SOCIETY LIMITED
Respondent

CORAM:	Beaumont J.
DATE :	18 May 1993 REASONS FOR JUDGMENT [No. 2 )

JOn t h e mat ter remainina i n t h e ~ r e l i m i n a r v i s s u e s 1

In t roduct ion

On 5 May, f o r t h e reasons given today, I ind ica ted a

f inding a s follows:

" 1 . I n m y o p i n i o n , the a p p l i c a n t s h a v e e s t a b l i s h e d

the existence o f a c o n t r a c t be tween Tr i -Global

and CML, which c o n t r a c t was t e r m i n a b l e by

either p a r t y upon r easonab l e notice."

On 1 7 May, I ind ica ted a f u r t h e r f ind ing a s follows:

" 4 . In m y o p i n i o n , a per iod o f three months' n o t i c e

was r easonab l e . S i n c e it i s common ground t h a t

CML	gave	Tr i -Global	o n l y seven	days'	n o t i c e ,	i t
mus t	f o l l o w	t h a t ,	i n t h i s r e s p e c t ,	CML	was	i n

b reach o f i t s c o n t r a c t w i t h Tr i -Globa l . "

These a r e t h e reasons f o r t h e l a s t mentioned

f ind ing .

I t i s common ground between t h e p a r t i e s , and I

accept , t h a t , f o r present purposes, t h e r e l evan t l e g a l

p r i nc ip l e s a r e explained i n t h e reasons of McHugh J .A. i n

Crawford F i t t i n u Co. v. Svdnev Valve & F i t t i n a s Ptv Ltd (1988)

1 4 NSWLR 438 a t 441-8..

McHugh J . A . t h e r e s a i d ( a t 441-2):

"The appellants submitted that the reasonableness o f a period o f notice i s not t o be confused with the reasonableness o f the duration o f an agreement i t s e l f . They argued that , when an agreement contains no express term concerning i t s duration and i s not determinable a t w i l l , there i s an implied term that it w i l l continue for a reasonable period. In such a case, the fact that one party has expended money or e f f o r t i n contemplation o f future earnings

i s a v i ta l factor i n determining whether that party

has had su f f i c i en t opportunity t o obtain h i s reward and whether the other party may reasonably terminate the agreement. B u t according t o the argument for the appellants, such a case must be distinguished from the case where the question i s whether the period or notice i s reasonable. In many cases the distinction between the two categories has no practical e f f e c t . B u t where, as i n the present case, the agreements have continued for many years and the distributors have already derived a large income from their e f f o r t s , the distinction i s crucial. "

His Honour went on t o say (at 4 4 4 ) :

". . . the reasonableness o f the period o f notice

depends upon the circumstances exist ing when the

notice i s given . . .

When a contract i s terminable on reasonable notice, the period o f notice must be s u f f i c i e n t l y long t o enable the recipient t o deploy h i s labour and equipment i n a1 terna t i ve employment, t o carry out

h i s commitments,	t o bring current negotiations t o
frui t ion and t o wind up the association i n a

businesslike manner..."

McHugh J.A. further observed ( a t 4 4 5 - 6 ) :

" I t w i l l o f ten be a common purpose o f a distributorship agreement that the relationship o f the parties w i l l continue for long enough a f t e r the giving o f a notice o f termination t o enable the distributor t o recoup any extraordinary expenditure or e f f o r t . Otherwise a distributor would have no incentive t o make or outlay additional e f f o r t or expenditure for the mutua l benef i t o f the parties. Inabi l i ty t o reap the bene f i t s o f ordinary expenditure or e f f o r t incurred during the course o f the agreement m a y be regarded as a business r i s k

which a d i s t r i b u t o r t a k e s when h e e n t e r s i n t o an

agreement	t e n i n a b l e a t a n y t i m e .	I f the	na ture	o f
the b u s i n e s s produces	a	l a p s e o f	t i m e between	e f f o r t

or expendi ture and earning , a c e r t a i n amount o f such

e f f o r t o r expendi ture w i l l go unrewarded whatever

period o f n o t i c e i s given. But ex t raord inary e f f o r t

or expendi ture by the d i s t r i b u t o r incurred w i t h the

ac tual or t a c i t a u t h o r i t y o f h i s pr inc ipal i s i n a

d i f f e r e n t category. An appropr ia te period o f n o t i c e

can	g ive	the	distributor	the	o p p o r t u n i t y t o e x p l o i t
a n y	ex t raord inary	e f f o r t	o r	expendi ture .	I n

p r i n c i p l e , t h e r e f o r e , i t i s d i f f i c u l t t o see why

ex t raord inary e f f o r t and expend i ture i s n o t r e l e v a n t

t o the reasonableness o f the n o t i c e period even

though the agreement h a s been i n e x i s t e n c e f o r more

than a reasonable period. "

H i s Honour later said (at 447-8 ) :

"The i m p l i c a t i o n o f a term t h a t a d i s t r i b u t o r s h i p or

agency should cont inue f o r a reasonable period g i v e s

e f f e c t	t o	the	reasonable	e x p e c t a t i o n s	o f	the
p a r t i e s .	The	d i s t r i b u t o r	i s	f r e q u e n t l y	ob l iged	t o

invest h i s own o r borrowed money i n t h e

es tabl i shment	o r	development	o f	the	b u s i n e s s ,	i n
purchasing	s t o c k	and	p l a n t ,	and	i n	employing

workers. H e has no hope o f recouping his i n i t i a l

expendi ture or e f f o r t i f the manufacturer can

terminate t h e agreement a t w i l l o r by a period o f

n o t i c e s u f f i c i e n t o n l y t o enable the d i s t r i b u t o r t o

dep loy h i s labour and equipment e lsewhere	.	.	.
Accordingly ,	i f a person	i n the i n i t i a l s t a g e s	o f a

b u s i n e s s arrangement expends money or e f f o r t i n

developing the b u s i n e s s , it prov ides a ground f o r

imp ly ing a	term t h a t	the b u s i n e s s	i s t o con t inue for
a reasonable period.	If,	f o r example,	i n a d d i t i o n

t o agree ing t o sell a product , a d i s t r i b u t o r

fu rn i shes add i t iona l cons idera t ion by s e t t i n g up or

deve loping a d i s t r i b u t i o n sys t em a t his own expense,

t h e r e w i l l u s u a l l y be an imp l i ed term t h a t the

d i s t r i b u t o r s h i p w i l l c o n t i n u e f o r a reasonable

period . . . There w i l l be a base for such an

i m p l i c a t i o n	even	where	the	i n i t i a l	e f f o r t	o r
expendi ture	i s o f a	k i n d	t h a t	w i l l	r e c u r	throughout

the agreement. For it i s not t o be presumed t h a t

the p a r t i e s in tended t h a t the agreement could be put

t o	an	end	b e f o r e	the	person	i n c u r r i n g	t h e
expendi ture	o r	e f f o r t	h a s	had	an	o p p o r t u n i t y	t o

recoup his i n i t i a l expend i ture or e f fo r t . I n A l l i e d

E 4 u i ~ m e n t CO	v	Weber Engineered	Products	the Court
o f Appeals	for	t h e Fourth	C i r c u i t s a i d	( a t 882):

' I t i s well set t led that , where an employed agent, i n reliance upon the agency and with the knowledge o f h i s principal, expends funds i n the interest o f the agency and o f the principal, the principal i s committed t o the agency for a reasonable period o f time, so that

the agent may thus recoup h i s expenditures. ' "

McHugh J .A . proceeded t o say t h i s ( a t 4 4 8 ) :

"However, the relevance o f expenditure o f money or e f f o r t cannot be confined t o cases where the

expenditure o f e f f o r t occurs i n the i n i t i a l stages

o f the contract. I f , during the contract, a party, acting within the scope o f the agreement, engages i n extraordinary expenditure or e f f o r t , that factor must be taken in to account i n detennining the reasonableness o f any notice given. The weight t o be given t o the factor w i l l vary from case t o case and the particular circumstances. ... On the other hand, recurrent expenditure or e f f o r t not being o f an extraordinary nature would not seem relevant t o the reasonableness o f the notice period. The

expenditure o f money or e f f o r t i s simply part	o f the
ordinary cost o f doing business.	Once the business
has existed for a reasonable period,	the inabi l i t y
t o prof i t from such work or expenditure i s part o f the business r i s k the agent or distributor takes i n entering in to an agreement which i s terminable a t any time. Further, the prospect o f obtaining prof i t s i n the future i s not a relevant factor t o be taken in to account except so far as it i s consequential upon the incurring o f extraordinary	expenditure or e f f o r t within the scope o f the
agreement .
The chief DurDose o f a notice for a reasonable period, therefore. i s t o enable the parties t o brinq t o an end i n an orderlv wav a relationship which, ex hmothesi, has existed for a reasonable ~ e r i o d so
that thev w i l l have a reasonable o ~ ~ o r t u n i t v t o
enter in to alternative arranqements and t o wind U D

-~

matters which a r i s e out of the ir relation-

Matters to be wound U D w i l l include carrvinq out exis t inq commitments. brinaina current neaotia tions

t o frui t ion, and. where aprooriate , obtainino the - -~~p

f r u i t s o f anv extraordinary expenditure o r e f f o r t carried out within the scoDe o f the aqreement. (Emphasis added)

It is common ground that, on this aspect, the applicants bear the onus of proving that the seven days' notice given by CML was less than reasonable (see, e.g. Crawford at 453). This issue is essentially a question of fact, which generally speaking, arises for present purposes within the parameters outlined by McHugh J.A. in Crawford. Direct evidence of what is "reasonable" in this connection is not to be encouraged (see Stenhouse Australia Ltd. v Philli~s

[l9741 A.C. 391 per Lord Wilberforce at 402). As Lord Wilberforce there observed (in a different, but analogous, context) :

"An opinion as to ... reasonableness ..., particularly of the time during which [the matter in question] has to run, can seldom be precise, and can only be formed on a broad and common sense view [after the Court has informed itself as fully as it can of the facts and circumstances]. "

For present purposes, the background facts are not

in dispute so far as the primary material is concerned. There

are, however, several areas of contention with respect to the	inferences which should be drawn from these primary facts. In
this respect, I allowed some further evidence, subject to its relevance being ultimately established, from Mr. Ross (in his supplementary statement, Ex. "AAX") not as evidence of the facts, but as an expert's opinion only.
In my view, it is appropriate to approach the present question upon the footing, as in Crawford, that the relationship between the parties had, by March 1992, continued for a reasonable period. Even if one takes the starting point for Tri-Global, for present purposes, as the discussion in March 1989, (that is, by ignoring the earlier dealings with Mr. Ross in 1988), in my opinion, a period of three years was a reasonable time to allow for this purpose. It is common ground that Tri-Global began earning substantial remuneration from its activities from the early stages of the relationship with Cm. Moreover, the term of the lease taken by Tri-Global for its Gold Coast premises is illuminating for present purposes. Its term was three years with an option in Tri-Global to renew for a further three years (Ex. "AAZ" pp.1, 40, 48).
Further, in my opinion, the applicants have not demonstrated that Tri-Global incurred any "extraordinary" expenditure within the meaning of the observation of McHugh
J.A., for present purposes. It is true that the lease of the
thereby incurred. The rental, together with outgoings, Gold Coast premises was entered into and liability for rent
involved an expenditure of approximately $100,000 per annum. However, this represented a charge for the use of the premises for the period and was not capital expenditure in the nature of a premium for the grant of a lease.
There were also fit-out expenses, but this was dealt with by an advance of $225,700 from CML. As has been noted, although this loan was apparently not formally documented, it is now common ground that, ex gratia, CML agreed that it would write off 20 per cent of the loan each year; so that, as at March 1992, only $146,500 was outstanding. Again, the leased premises could be used by Tri-Global for any business: their use was not confined to activities carried out by Tri-Global in association with CML.
What notice, then, was reasonable? In my view, a period of approximately three months could reasonably be expected to be required "to bring [the relationship] to an end in an orderly way" (see Crawford at 448).
In order to "have a reasonable opportunity to enter into alternative arrangements" (see Crawford at 448) some time was needed. Although Tri-Global may not have been exclusively tied to CML in any strict legal sense, the commercial reality was that it had identified itself with CML in the marketplace
forefront, it advertised that "Tri-Global ... is a master (see, e.g. the Tri-Global brochure, Ex. "AAY", where, at the
agency for the [CML] group in Australia." It was thus necessary for Tri-Global to find a new "carrier".
This process could have taken considerable time but, in my judgment, it would be reasonable to allow a period of about two months for this purpose.
A number of matters would need to be taken into account. The agency was a large one - by March 1992, Tri-Global had recruited some 65 sub-agents. Moreover, there were substantial agency development loans outstanding which needed to be taken over or otherwise dealt with. To negotiate the complexities of such arrangements would require time, both on the side of the prospective new "carrier" and on the side of Tri-Global. It would be necessary to address both the concept and the detail of any proposed arrangement. This could not usually be achieved within a short time. Further, some documentation would usually be called for and this would often require professional advice. Given the size and complexity of these prospective arrangements, it would be reasonable to expect that several months would pass before an appropriate "deal" could be put in place. (Although much relied on by CML in this context, I am not prepared to give much weight at all to the estimate of time (about one month) mentioned as a change-over date in the course of the preliminary discussions
which Tri-Global had with AMP in August 1990.)
Another consideration which should be taken into account in the present context is the time that would be needed for Tri-Global to become properly acquainted with the particular "products" or services marketed by the new "carrier" and also, to become aware of that carrier's own corporate culture. This information would be necessary in order that Tri-Global could establish a working association
with that insurer. Although in the same industry as CML, it would be reasonable to expect that, allowing for "product" differentiation, about a month would be required by Tri-Global for this purpose.
Time also should be allowed "to wind up matters which arise out of [the] relationship" (see Crawford at 448). In my view, the substantial size of Tri-Global's operations indicates that some time, being months rather than weeks, would be needed for this purpose; that is, in order to attend properly to the outstanding requirements in business in the process of being undertaken by Tri-Global as at 11 March 1992.

' It is necessary to take into account the circumstance that the

time estimated for such administrative matters must have regard to the fact that other parties, viz. the sub-agents and the prospective policy holders, were involved in the process and time should be allowed accordingly.

Looking at the matter broadly and taking into account all the foregoing considerations, but allowing that, to some extent, certain of these matters could proceed concurrently, I conclude that it is reasonable to estimate that a period of three months would have been required for Tri-Global to enter into alternative arrangements and to wind up matters arising out of the relationship in an orderly way.

the preceding t e n

t r u e copy o f

the	reaso
o f	the Hon

Bed umon t .

Date: 18 May 1993