Coggin v Telstar Finance Company

Coggin v Telstar Finance Company - [2006] FCA 191 - FCA 2006 case summary — Zoe

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The Easy Drink business - Mr Coggin becomes involved 13 Mr Coggin says that in the course of recovering the Lady Christina Mr Nagy and Mr Pavia told him about the Easy Drink business and that they were interested in it. They said that they had trialled sales and "had already sold 20,000 to 30,000 of them in Victoria". Mr Nagy said he wanted to buy the rights to sell the lids in Victoria. These rights were on offer until a certain date. He then intended to break up the Victorian franchise into territories and sell them off, retaining some for himself. He said that he needed Mr Coggin's help to get the money. He said there was a set price but that he had to bargain the price down. 14 Mr Coggin was grateful to Mr Nagy for helping him to retrieve the Lady Christina so was prepared to help. Mr Nagy asked Mr Coggin if he could offer the vessel as collateral for a loan to buy the Easy Drink rights. He suggested that he would be able to sell the territories for at least $200,000. He showed Mr Coggin some projections for Easy Drink showing a gross profit for a year of $248,200. He also showed Mr Coggin a draft contract between Easy Drink and Mr Nagy for the purchase of the Victorian rights for $60,000. It provided for settlement in full on 15 December 1999 and bears the signature of Mr Delanoir, but is otherwise unsigned. 15 Mr Coggin believed the proposition was reasonable and told Mr Nagy that he was prepared to help. He told Mr Nagy that he would put up the vessel as collateral as long as he ensured that the money was repaid and that he would get the vessel back rapidly. Mr Coggin told Mr Nagy however that he wanted the transaction to be in his name, or alternatively in his daughter's name, until such time as he got the vessel back. 16 Mr Nagy and Mr Pavia moved Mr Coggin to a motel and looked after him. They later took him to an apartment of Mr Pavia's in Brisbane. Mr Coggin continued to have constant pain and inflammation with the spider bite. He felt "dull-minded" and not "with it" at all. About this time Mr Delanoir came to the apartment and met Mr Coggin. 17 Mr Coggin helped Mr Nagy by providing his financial details for the application to Mr Napier for assistance in the purchase. Mr Coggin was later told by Mr Nagy that this application was unsuccessful. 18 Mr Coggin's version has his involvement with Easy Drink not commencing until after Mr Nagy arrived in Brisbane to recover the Lady Christina. On Mr Nagy's version, this happened earlier, while he was still in Victoria, and Mr Nagy told Mr Pavia by phone from Melbourne that Mr Coggin was willing to provide security. Perhaps in the final analysis the question is not critical, although I am inclined to prefer Mr Coggin's version. He had been living in Brisbane for some time and it seems unlikely that the initial discussions between he and Mr Nagy took place over the telephone. Certainly Mr Nagy does not suggest this. 19 One feature of Mr Nagy's version is that he has Mr Coggin "propos(ing)" that he and Mr Nagy becoming joint owners of the Victorian distributorship. Mr Coggin is the initiator. Mr Nagy says that "David Coggin was keen to pursue the Easy Drink franchise with me for Victoria and to this end I travelled to Redcliffe Queensland where he had information that his boat was being moored". The role of Mr Pavia is downplayed. His earlier involvement in the trial marketing in New South Wales is ignored. Yet as will be seen, what was presented to Telstar was essentially a joint proposal from Nagy and Pavia.

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Finance from Telstar - approach to Seamac 20 Mrs Christine McIlwee of Bundaberg is a director of Seamac Insurance Brokers Pty Ltd (Seamac). She says that on about 23 December 1999 Mr Lindsay Gray of Telstar telephoned her to discuss insurance of the vessel Lady Christina. He said the owner Mr Coggin had taken the vessel back from Mr Banner-Smith due to non-payment of lease payments. Mr Gray said that Telstar was going to loan Mr Coggin $65,000 for a business venture for a Mr Joe Nagy, who was the son-in-law of Mr Coggin, for a term of three to six months and the vessel was to be collateral. It was to be moored at the back of a private dwelling in West (sic) End until satisfaction of the loan. Mr Coggin would have no access to the vessel or interest in the maintenance of her. 21 Mr Gray told Mrs McIlwee that he had already spoken to Michaele of Sunderland Marine who had told him that that firm would automatically cancel the policy because of the change of management and that it was very unlikely that Sunderland would be interested in insuring it under the new arrangement. Michaele had referred Mr Gray to Seamac, who were the current brokers. 22 Mrs McIlwee told Mr Gray that this was an unusual arrangement and she doubted if any insurer would be interested but she would try to obtain alternative cover. She rang Michaele who confirmed that Sunderland Marine would not insure. Club Marine and HIH also declined. Mrs McIlwee telephoned Mr Gray back and told him that she could not arrange insurance due to the nature of the arrangement. He asked whether it would be easier if the vessel was "bought" by Telstar. He conveyed to Mrs McIlwee the idea that the "sale" would be for the sole purpose of obtaining insurance. Mrs McIlwee said that it would have been easier but now, knowing the circumstances, she would have to disclose them to any prospective insurer. Mr Gray also suggested that, if Telstar were to buy the vessel, while the directors were Mr and Mrs Cunningham he did not want to involve them and that he (Gray) would sign the paperwork as he was a signatory for the company. 23 The "sale" price was suggested to be $65,000, which was the amount of the loan only, but Mrs McIlwee knew through her involvement in the marine industry that this would not represent the market value of the vessel. She knew of a client who would have been interested in purchasing the vessel for a higher price. There had been a survey valuation in September of $210,000 and she understood the vessel had undergone a major work program. In her statement which was received in evidence Mrs McIlwee said: "I wanted no part of this as I was uncomfortable with the murky nature of the transaction. I suggested that Gray contact other insurance brokers." 24 Mrs McIlwee phoned Mr Coggin. She told him she believed Telstar may be making decisions with his son-in-law about the vessel that he was unaware of and that if he had to sell, a potential buyer, Seth Parker, would be interested at a better price than $65,000. She says that Mr Coggin was "aghast", he had no intention of selling the vessel to them and it was only to be used as collateral for a loan for his son-in-law. 25 Mr Gray flatly denies these conversations with Mrs McIlwee. He says he was out of Australia on holiday and only arrived back at work on 24 December 1999 at about 10 am. Mr Cunningham denies that he spoke to Mrs McIlwee at this time or that he asked anyone at Telstar to speak to her or anyone else at Seamac. I am, however, quite satisfied that the conversations took place in the way Mrs McIlwee says. Mr Gray produced no corroborating detail by way of passport entries or travel documents. Mrs McIlwee was an independent and convincing witness. Her evidence is solidly corroborated by telephone accounts, a contemporaneous handwritten note and a fax she sent to Sunderland Marine on 31 January 2000 referring in detail to the conversations with Mr Gray.

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24 December 1999 - Mr Coggin's account 26 On the morning of 24 December 1999 Mr Pavia and Mr Nagy left the apartment and then returned telling Mr Coggin they had made an arrangement to get the finance and he had to go into an office to sign the papers. When Mr Coggin asked them to clarify what he had to do they said that they had made arrangements, that the papers were being set up and he had to go and sign them. They said that he owed money for the mooring of the vessel and that he needed to do something to resolve this. They took Mr Coggin to the office of Telstar. As Mr Coggin now knows, Telstar is the financial arm of an organisation called Dine-Rite which sells cookware to housewives. 27 Initially Mr Coggin sat in the reception area with his affected leg propped on a stool. Mr Nagy and Mr Pavia went into the office. At one stage Mr Delanoir came into the building and said hello to Mr Coggin. 28 In the meantime Messrs Cunningham, Nagy and Pavia had reached an agreement; see [37] below. 29 After a while Messrs Nagy, Pavia and Delanoir came out to the waiting room. They introduced Mr Coggin to Mr Cunningham who in turn said that Mr Gray would do the paperwork. Messrs Nagy, Delanoir, Cunningham and Pavia said that they were going to the pub for lunch while Gray did the paperwork. Mr Coggin went into the office with Mr Gray. While they were there Mr Cunningham phoned Mr Gray a number of times enquiring as to progress. 30 First Mr Gray produced a document which was in these terms: "CONTRACT OF SALES BETWEEN: David Coggin PO Box 5, Mt Waverley, Vic 3149 AND: Telstar Finance Company "Q" P/L Po Box 8051 BURANDA QLD 4102 I hereby agree to sell (transfer ownership) of the Lady Christina (as per schedule attached) for the sum of $35,000.00, being full and final settlement of this vessel. Principle Principle PAUL CUNNINGHAM TELSTAR FINANCE COMPANY "Q" P/L David Coggin" 31 At first Mr Coggin refused to sign this document. He said that the vessel was just to be collateral. Mr Gray then produced a second document which was in these terms: "RIGHT TO RECOVER CONTRACT BETWEEN: David Coggin Po Box 5, Mt Waverley, Vic 3149 AND: Telstar Finance Company "Q" P/L Po Box 8051 BURANDA QLD 4102 David has the right to promote the sale of Lady Christina (as per schedule attached) the loan amount will be paid to Telstar Finance Company "Q" P/L together with a 10% per month compounding interest, at which stage the security (ownership transfer) will be passed on to David Coggin. Principle Principle TELSTAR FINANCE David Coggin" 32 Mr Coggin was very confused with the paperwork, the rush, the pain in his leg, and his medication. As it was Christmas Eve, there was a lot of concern about the banks closing. His understanding was that the money to be secured was $65,000, but that it was to be paid in two payments, initially $35,000, with a further $30,000 to be advanced by Telstar, "if we needed it", after a month. On the understanding that the boat was being put up as collateral, he signed the two documents. Mr Cunningham's signature was not on them at the time. Mr Coggin went with Mr Gray to a government department to check the title details and then returned to Telstar's office. 33 Mr Gray contacted Mr Nagy and Mr Pavia and arranged to meet them at a branch of the National Australia Bank. Mr Gray drove Mr Coggin to the bank and there met Messrs Nagy, Pavia and Delanoir. They went into the Manager's office and received a Telstar cheque for $30,000 payable to Mr Coggin which he endorsed to the credit of Mr Delanoir. It appears that $5,000 in cash was paid to Mr Nagy and Mr Pavia. 34 Mr Pavia and Mr Coggin then went to Mr Cunningham's house, dropping Mr Nagy off along the way. Mr Coggin showed Mr Cunningham how to moor the boat, how to start the motor to pump out the bilge regularly and showed him what general maintenance was needed.

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24 December 1999 - Messrs Cunningham, Nagy and Pavia' account 35 Mr Cunningham says that on the morning of 24 December 1999 at his office Mr Nagy said to him that he and David Coggin wanted to go into business and buy the distributorship for Easy Drink in Victoria and that Mr Coggin had a boat which was unencumbered and worth more than $200,000 which he would put up. (It will be recalled that, on Mr Nagy's version, this matter was "flagged" with Mr Cunningham much earlier, some two to three days prior to the recovery of the Lady Christina - see [8] above.) Mr Cunningham responded that that he was not interested. Mr Nagy persisted. Mr Cunningham said that he didn't know anything about boats and it was outside his usual finance operations. (Although at least Mr Cunningham owned a mooring.) Mr Nagy continued to try and convince Mr Cunningham that the Easy Drink distributorship was a good business opportunity, but Mr Cunningham was not convinced and eventually Mr Nagy left his office. 36 After the Nagy meeting, Mr Pavia came to Mr Cunningham's office. Mr Pavia pleaded to Mr Cunningham to "give him (Pavia) a break". He assured Mr Cunningham that he "was prepared to go to Melbourne to make it work". Mr Cunningham says that after some considerable time he was "persuaded by Wally Pavia to enter into the transaction". 37 The agreement between Messrs Cunningham and Pavia was recorded in note form written by Mr Cunningham as follows (underlining in original, identification of parties added in square brackets): Wally [Pavia] - Paul [Cunningham]/Lindsay [Gray]

Joes Father Boat - $35,000 Michael [Delanoir] sell EASI Drink Victoria to Telstar - Telstar sell right to EASI Drink for a royalty of 2.5 cents per cap and 10% of price of regions sold by Joe Nagy/Wally Pavia to J & S (really Joe & Wally) Stock to go directly to Victoria in contract purchase

S/D Then All stock will be held by Telstar purchased at 24.5 cents per lid in advance with minimum order of $10,000 Wally & Joe to find pay Telstar 30000 cash for payment to Michael prior to the 28 Jan or the boat is sold by PC [Cunningham] to meet that commitment with Joe & Wally still to repay Telstar for that 30,000 Boat can be repaid repurchased from Telstar at any time by 24/1/2000 for 38500 & cost insurance $400 skipper 42350 by 24/2/2000 plus Ins & skipper 46585 & Ins cost by 23/2[sic]/2000 providing 30000 has been paid to Telstar to cover payment to Michael @ Easi Drink ($30,000 due on the 28/1/2000). [Signatures] If I cant get insurance & something happin [sic] I have no further obligation." There was evidence that, for reasons which were never really explained, "J & S" is a reference to Joe Nagy and Wally Pavia. 38 The foregoing discussions between Messrs Cunningham, Nagy and Pavia occurred before those between Messrs Coggin and Gray at which the former signed the two agreements already referred to ([30] and [31] above). 39 Mr Cunningham says that Mr Coggin came into the boardroom and he (Cunningham) went through with Mr Coggin in detail the agreement recorded in the note. According to Mr Cunningham, Mr Coggin said he was happy with the arrangement but he wanted the distributorship to be in his name only, and not to include Mr Nagy. Mr Cunningham says he was happy to comply with this because he knew Mr Nagy would be working in the business in any event. While I find Mr Coggin did at some stage request the business to be in his name, primarily for the protection of his daughter, I do not accept his assent to the transaction was obtained in the way Mr Cunningham says.

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Agreement of 9 February 2000 46 Mr Coggin heard nothing for a while. Then in about early February he approached Ms Carole Hildebrand, a solicitor who knew both Mr Nagy and himself. He asked her to find out what was going on. She prepared a letter for him to deliver to Mr Nagy asking for resolution of the matter. He also contacted Mr Gray who sent down a full copy of the agreement of 10 January. When he originally had been asked to sign it Mr Nagy only had the second page of the agreement, which contained the signature. Seeing the whole agreement alerted Mr Coggin to the fact that Telstar was nominated as the seller of the distributorship to him, a fact which worried him. 47 Shortly afterwards Mr Nagy contacted him and said that Mr Cunningham would be in Melbourne on 9 February. On that day Mr Nagy collected Mr Coggin and took him to meet Mr Cunningham at a hotel in South Yarra. Eventually Mr Cunningham proposed an arrangement which set out the following agreement which was signed by Mr Cunningham and Mr Coggin and witnessed by Mr Nagy: "AGREEMENT BETWEEN PAUL CUNNINGHAM AND DAVID COGGIN DATED 9/2/2000 1. Paul Cunningham will assign via Telstar the Easy Drink rights to David Coggin 2. Paul Cunningham will sell the boat and whatever monies over & above the following. If the boat is sold & settled by the 20/2/2000. Whatever is recovered after $79,650 & Brokerage fee will be given to David Coggin. 3. Paul Cunningham will give to Joe Nagy the names of interested parties ‑ 4. Paul Cunningham will send the 60,000 lids to Dave Coggin. 5. Please send goods by K & S Freighters C.O.D." 48 Mr Cunningham said that he had already advertised the Victorian distributorship for sale in the various newspapers as the second payment had not been made and there were people interested. 49 Mr Coggin was desperate to redeem the Lady Christina. They discussed the possibility that Nagy could sell the business for in excess of $80,000 and Mr Coggin would then be able to payout the entire loan and reclaim the vessel.

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Telstar's conduct 59 A convenient starting point is the submission of counsel for the respondents that Mr Nagy and Mr Pavia were the agents of Mr Coggin in this transaction and were not the agents of Telstar or Mr Cunningham. Nothing could be further from the truth. The reality is that Mr Nagy and Mr Pavia were old comrades in arms from their door to door cookware selling days. And they were sufficiently familiar with Mr Cunningham to wake him up in the early hours of the morning, moor the Lady Christina at his private mooring (no doubt by prior arrangement), and borrow $400 from him to pay the skipper. Messrs Nagy, Pavia and Cunningham at all times worked together in pursuit of their own interests, and against the interests of Mr Coggin. This is most strikingly demonstrated by their exclusion of Mr Coggin from the meeting on 24 December 1999 at which they made the agreement recorded in Mr Cunningham's note ([37] above). They saw the only role of Mr Coggin as being "Joe's Father" who was to provide a boat as collateral for their venture. This is consistent with what Mr Gray told Mrs McIlwee, that Telstar was to make a loan Mr Coggin "for a business venture for Joe Nagy who is the son-in-law of Mr Coggin". 60 Mr Cunningham was the director of a finance company which usually did not lend on secured transactions, let alone maritime ones. Nor, as far as the evidence reveals, did this Brisbane finance company engage in wholesaling of goods in other States. As the respondents' counsel submitted, "this type of transaction was not common for Telstar". 61 The respondents saw the opportunity presented by the serendipitous combination of Messrs Nagy and Pavia's business plans and the availability of Mr Coggin's vessel as too good to miss. I am not at all persuaded that Mr Cunningham was a reluctant participant who succumbed only after persistent supplication by Mr Pavia on the morning of 24 December. The previous day Mr Cunningham had been trying, through Mr Gray, to arrange insurance - an indication that Telstar was already committed to the project. Also on Mr Pavia's version, Mr Cunningham agreed to the idea, without any persuasion, a week before Christmas Eve. 62 The driving forces in the whole project for the acquisition of the Victorian Easy Drink franchise were Mr Nagy and Mr Pavia but Mr Cunningham was a willing participant. 63 Like the certain man who went down from Jerusalem to Jericho (Luke 10.25-30), Mr Coggin fell among men who were, if not thieves in the legal sense, totally opportunistic in the advantage they took of him. To their knowledge, Mr Coggin not only happened to be the owner of an asset which could provide collateral to get finance which seemed otherwise unobtainable, he had filial motives for assisting his daughter and her family. 64 Mr Coggin was suffering from the ill effects of the spider bite and this affected his capacity to make rational business judgments. However this was a relatively minor feature in the circumstances. It would be simplistic to regard this case as one which merely adds spider bites to the classic equitable disability categories of drunkenness, illiteracy etc. 65 What is more significant is the overwhelming weighting of the transaction against any rational assessment of what was in Mr Coggin's interests. He provided a vessel which, as far as the respondents knew, had a value in excess of $200,000 as security for a loan of $65,000. Yet he was charged a truly extortionate rate of interest of 10 per cent per month. 66 Consistent with their opportunistic approach, the respondents took for themselves secret profits in the form of 3 cents per lid, a right to Red Rooster sales and ten per cent on the sale of sub-franchises, all in connection with a business which seems far removed from that of a Brisbane finance company. 67 The respondents changed the transaction from mortgage to sale to meet the insurance difficulty they encountered after Mr Gray spoke to Mrs McIlwee. Mr Coggin, although outnumbered and without any independent legal or business advice (a circumstance of which the respondents were well aware), was sufficiently aware to what was going on to protest at the first agreement Mr Gray proffered to him on 24 December. Hence the second agreement. This was in fact no better than a sale with an option to repurchase, a transaction still quite inadequate from Mr Coggin's point of view since it put the onus on him to repurchase and did not impose any obligation on Telstar, if it resold, to account for any balance. (Whether the second agreement of 24 December 1999 or the agreement of 9 February 2000 was in truth an option to re-purchase is not clear. However, the case put to this Court by the respondents throughout the hearing was that there was a sale to Telstar by Mr Coggin and he only had an option to repurchase.) 68 The fact that there were two agreements signed by Mr Coggin on 24 December is strongly corroborative of Mr Coggin's version that all the time he wanted to create a mortgage or charge, not an outright sale. He did the best he could, albeit ineffectively, to achieve this. It also rebuts the version of a number of the respondents' witnesses to the effect that on the 24th Mr Coggin had everything fully explained to him and went along without demur. 69 A particularly telling piece of evidence is that provided by Mr Cunningham, quoted at [51] above. This was in his own statement, not extracted under cross-examination. As already noted, on the respondents' case what happened was a straight sale, with at best an option for Mr Coggin to repurchase. There has been no suggestion that he exercised any such option. Accordingly, on the case it presented to this Court, Telstar had no obligation at all to account for anything. I suspect that Mr Cunningham could not quite bring himself to acknowledge the full implications of the conduct he was trying to defend. 70 I find that the conduct of Telstar was unconscionable within the meaning of s 51AC.

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Liability of Mr Cunningham 71 Mr Cunningham was personally involved at all stages of Telstar's conduct. He was directly and knowingly concerned in the company's contravention: s 75B(1)(c). 72 It is not necessary for Mr Coggin to show that, at the time, Mr Cunningham personally characterised or recognised the facts constituting the contravention as unconscionable. 73 Rural Press Ltd v Australian Competition and Consumer Commission (2003) 216 CLR 53 was a s 46 case where, amongst other issues, individuals were sought to be made liable as persons involved in the contraventions. It was argued that the individuals did not know that their principal's conduct was engaged in for the purpose, or had the likely effect, of substantially lessening competition in the market as defined. Gummow, Hayne and Heydon JJ at [48] firmly rejected this argument, saying: "It is wholly unrealistic to seek to characterise knowledge of circumstances in that way. Only a handful of lawyers think or speak in that fashion, and then only at a late stage of analysis of any particular problem. In order to know the essential facts, and thus satisfy s 75B(1) of the Act and like provisions, it is not necessary to know that those facts are capable of characterisation in the language of the statute." Their Honours did not specifically refer to the leading case on accessorial liability under the Act, Yorke v Lucas (1985) 158 CLR 661, although it was cited in argument (at 58). However, Yorke v Lucas, in applying criminal law principles to accessorial liability under the Act, proceeded on the basis that to form the requisite intent for aiding and abetting a crime, the defendant "must have knowledge of the essential matters which go to make up the offence whether or not he knows that those matters amount to a crime" (at 667). Since, as already noted, the assessment of conduct as unconscionable or not under s 51AC may involve the consideration and weighting of 13 statutory criteria, and an infinite number of other criteria which appear relevant to the judge, it would be quite unworkable to suppose that there could be no finding of accessorial liability unless the individual, at the time of the contravention, considered the same factors, and gave them the same weight, as did the judge at the subsequent trial. Apart from anything else, the morally obtuse would have an undeserved advantage.

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Relief 74 The Lady Christina has been sold by Telstar to innocent third parties. The appropriate relief is the recovery of the amount of loss or damage: s 82(1). 75 The principal element is the value of the vessel as at the end of 1999, this being the time Mr Coggin lost control of her. There is no doubt that there was sufficient causal relationship between the unconscionable conduct and the loss in the "common law practical or common-law sense": Wardley v Western Australia (1992) 175 CLR 514 at 525. 76 I do not think Telstar should be given credit for the monies it advanced. It has not filed a cross-claim. Telstar, through Mr Cunningham, was intimately involved in the way Mr Coggin was drawn into the whole transaction, including the Easy Drink dealership acquisition. Telstar's conduct was seriously unconscionable. It would not be fair to allow it to unpick the transaction and reconstruct something acceptable. Mr Coggin should be put back in the position he was before he encountered the respondents. 77 A claim was also made for loss of rental. This is not so clear, since the availability of solvent lessees at the time is problematic. A better measure is to allow interest on the value of the vessel to date. Counsel agreed that an appropriate rate was ten per cent per annum (not per month). 78 As to the value of the vessel, Mr John Carlson, an experienced marine surveyor, gave evidence for Mr Coggin to support his valuation of $210,000 as at 30 September 1999. Mr Carlson accepted that this was for insurance purposes, which effectively means replacement value so that, in his words "if there is a problem with the vessel, the owner is not put at a disadvantage". 79 On the other hand, a valuation for finance purposes, which contemplates the possibility of a fire sale environment, would be unfair to Mr Coggin. Rather I think the proper measure is market value or current price: Spencer v The Commonwealth (1907) 5 CLR 418 at 431. 80 On behalf of the respondents Mr Nicholas Lockyer, another experienced marine surveyor, valued the vessel on a fair market value, as is where is basis, as at 24 December 1999 at $82,000. Mr Lockyer gave his opinion for the purposes of this case and had not inspected the vessel. His report includes two earlier valuations , both for insurance purposes: · 11 December 1997, C B Tanner, $106,000 · 23 April 1998, R W Beale, $135,000 81 I accept Mr Lockyer's definition of fair market value for these purposes, namely, the price achievable between a willing vendor and a willing purchaser where the vessel has been professionally presented and marketed by brokers in the local domestic market, taking into account recent prices obtained for similar vessels within that market. 82 That being so, I think the best evidence of value was the price in fact achieved, namely $95,000. Despite counsel's criticism, I conclude that Telstar took reasonable steps to sell the vessel by placing her with a number of brokers. There is nothing to suggest that the sale which in fact took place was other than at arms' length. The sale was effected after some negotiation and an increase of the buyers' offer. 83 There should be a deduction for repairs carried out on Telstar's instructions amounting to $1589.05, but not for a further sum of $500 which seems to have been a gratuity to Mr Cunningham's secretary. 84 In January 2001 solicitors on behalf of a company called Forgacs Engineering Pty Ltd wrote to Telstar's solicitors alleging that the vessel had been mortgaged to Forgacs in 1998 and that $14,698.39 was owing under the mortgage. Telstar's solicitors replied saying that it were unaware of the debt and that the vessel had been represented by Mr Coggin to be unencumbered. It does not appear that Forgacs pursued the matter any further against Telstar or Mr Coggin. This matter need not be considered further.

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Judgment (23 paragraphs)

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