Shield Mercantile v Citigroup

The basic issues 4The parties prepared a combined statement of the real issues in dispute. That document is lengthy, and cannot be understood without a more detailed statement of the relevant facts than I have given so far. However, the basic issues in dispute may be stated as follows: (1) Did Citigroup breach the various ASAs by paying commission at a lower than applicable rate on certain of the debts "assigned" (or referred) to Shield for recovery? (2) To the extent that there has been any underpayment, is Shield now entitled to recover the amount underpaid? (3) Did Citigroup repudiate the 2006 ASA, and if it did, did that agreement come to an end by reason of Shield's acceptance of that repudiation? (4) What is the proper quantification of Shield's loss (if any) in respect of: (a) any underpayments that may be proved and recoverable; and (b) damages for loss of the benefit of the 2006 ASA, and of the opportunity to enter into further ASAs?

The mechanics of debt recovery 5The debts in question arose principally on credit cards issued by Citigroup (which was then know as Citibank) and unsecured line of credit loans made by Citigroup. 6It is uncontentious that if a debtor fell into arrears, Citigroup would "work" the account in house for a period of about 90 days. During that time, officers of Citigroup would attempt to contact the debtor. The intention was to "rehabilitate" the account: to persuade the debtor to pay the arrears. If that happened, Citigroup would thereafter reinstate the account and resume extending credit to the debtor. 7From time to time, whilst accounts were being worked in house, mercantile agents would be instructed to locate the debtor: a process known as a "skip trace". Sometimes, if the debtor was located, the mercantile agent would be instructed to carry out a "field call". The agent would seek to meet the debtor and to persuade the debtor to bring the account into line. The mercantile agents who performed those services were paid a flat fee. Shield was not among the mercantile agents to whom accounts were referred for skip trace or field call only. 8At about 77 days past due (often referred to "DPD"), Citigroup would send the debtor a letter, being a notice under s 80 of the Consumer Credit Code. The effect of that letter was to make not just the arrears, but the whole of the amount owing on the account, due and payable. 9Nonetheless, Citibank's evidence was, if the account could be "rehabilitated" thereafter, up to the time when it was more than 180 days overdue, Citigroup would do so. That is to say, even though the s 80 notice had been sent, Citigroup would thereafter (up to 180 days overdue) accept payment of the arrears, and reinstate the account. 10The activities that I have described so far were carried out by Citigroup's "Collections" or "Loss Mitigation" Department. The debts the subject of that action were sometimes referred to as "receivables". 11A number of things happened once the debt reached 180 days past due. First, Citigroup wrote off the debt. Secondly, the account was transferred within Citigroup from the Collections Department to the Loss Recovery Department. Thirdly, if the account was then referred to a mercantile agent, it was on any view referred for collection. Shield was one of the mercantile agents to whom Citigroup's Loss Recovery Department referred accounts for collection, in the period 2003 to 2006. 12Where an account was referred for collection, the mercantile agent was remunerated on a contingent basis, by being paid a "commission" on actual recoveries. The rate of commission depended on the classification of the debt. In the jargon of the trade, referrals for collection were known as "primary", "secondary", or "tertiary" referrals. The meaning of those terms might appear to be simple. However, the precise content of each was a matter of hot dispute between the parties. 13Shield contended that a primary referral was a referral of a debt for collection where there had been no prior referral to a mercantile agent for the provision of any debt recovery services (as defined in the ASAs). Thus, Shield contended, a referral could only be a primary referral if the debt had never been referred to a mercantile agent from Citigroup's collections department, even if only for the provision of services such as a skip trace or a field call. 14Citigroup contended that a referral would be a primary referral unless there had been a prior referral, after write-off, by Citigroup's Loss Recovery Department, for the purpose of collection of the debt. Further, and consistent with that position, Citigroup said that a referral before write-off, by the Collections Department, would not amount to a prior referral so as to disqualify a subsequent referral from the Loss Recovery Department (to a mercantile agent such as Shield) from being properly classified as a primary referral. The disputes as to the proper meaning and application of the terms "secondary" and "tertiary" referrals reflected those competing positions. 15Recoveries for primary referrals attracted a lower rate of commission than recoveries for secondary or tertiary referrals. That reflected the increasing difficulty of collecting, as the account was worked and reworked. It appeared to be common ground, and in any event the evidence was, that the major impediment to collection was locating the debtor. Common sense suggests that it would become more difficult to locate the debtor as time went by, and as all known leads to establishing the location of the debtor were exhausted, fruitlessly, through prior attempts at recovery. 16The commission structures agreed between Shield and Citigroup provided, on the face of the ASAs, for Shield to be paid a commission of 25% on recoveries pursuant to primary referrals and 50% on recoveries pursuant to tertiary referrals. With one exception (the 2004 ASA) there was no provision for a commission rate on secondary referrals. The reasons why that is so, and the content of the term "tertiary referrals", were matters of dispute. 17There are two complicating factors to note. The first is that, in late July 2005, Citigroup changed its recovery processes somewhat. Up to 180 days past due, debts remained in the Collections Department, and were worked by or under the direction of that department. However, from late July 2005, when the Collections Department referred a debt to a mercantile agent, the referral was on what was known as an "assign to collect" basis. As the name suggests, such assignments were not merely for the provision of specific and limited services (such as a skip trace), but for collection purposes. Under the assign to collect process, mercantile agents were paid on the basis of recoveries (commission) rather than by flat fee for the provision of a particular service. 18There is in all this a linguistic complication. What I have called above "referral" was also known, in the jargon of the trade, as "assignment". That can be seen, for example, in the expression "assign to collect". 19However, whatever such an "assignment" was, it was not an assignment at law or in equity of the bundle of rights - the chose in action - constituting the debt. In the context of this case, the word "assign" was used (and its cognate forms were used) to denote the process whereby Citigroup sent debt files to Shield or other mercantile agents, with instructions to take some form of action on them. Whether that is only true where the file was referred to an agent to collect the debt, or whether it applies also where (for example) the referral was to conduct a skip trace, or to collect only arrears, was another matter in dispute. 20There was also a practice of assigning debts in the legal sense. Lenders such as Citigroup would from time to time sell a "portfolio" of debt to a mercantile agent. That would amount to an assignment in equity; and, if notice were given, to an assignment at law. In those circumstances, the agent would collect for its own benefit. By contrast, in the circumstances of this case, Shield and other agents collected for the benefit of Citigroup. 21Shield did have a subsidiary company (Shield Debt) which carried on the business of buying, and recovering for its own benefit on, portfolios of debt. I mention that only because there was a question, in connection with damages, as to the consequences of the fact that the consolidated financial statements for Shield included expenses relating solely to the operation of its subsidiary Shield Debt.

The witnesses in the case 22Each party called a number of witnesses. Each witness gave evidence by affidavit, and most were cross-examined extensively on their affidavits. In most cases, as one might expect, the passage of time had diminished the power and quality of recollection. 23A number of the witnesses called remain in the employ of the party by whom they were called. I do not consider that this fact had any adverse impact on their truthfulness - that is to say, I do not think that any witness in this category sought consciously to shape his or her evidence to suit what might have been perceived to be the needs of his or her employer. Equally, however, it was a feature of the evidence that each party appeared to take the view that its subjective commercial policies were reflected in the ASAs; and to my mind, this tendency did have a subconscious and unintentional impact on the evidence of some of the witnesses. 24Likewise, I think that with the passage of time and the fading of actual recollection, some of the witnesses effectively sought to reconstruct events; and that in doing so, not unnaturally, the process of reconstruction was affected by the tendency to which I have just referred. Some of the witnesses came to reconstruct events, in my view subconsciously and unintentionally, in accordance with their understanding of the policies and interests of the party by whom they were called, and to claim that reconstruction as recollection. 25In some cases, the witnesses had made what they said were contemporaneous file or diary notes. In other cases, they had refreshed their recollection from other contemporaneous sources such as emails. 26Looking at the evidence at a reasonably high degree of abstraction, I have formed the view that the surest guides to finding the facts (to the extent that they are in dispute) are contemporaneous records, where they are available; and the probabilities as, objectively, they appear from the whole of the evidence. Having said that, there were very few direct challenges to credibility. Indeed, some of the witnesses were not required for cross-examination. 27One curious feature of the cross-examination of (in particular) Shield's witnesses was that in at least two cases, with which I shall deal in due course, there were direct and sustained credibility attacks. Those attacks extended to what were, or were said to be, contemporaneous file or diary notes made and kept by those witnesses. In each case, however, the zeal of the attack seemed to be somewhat misplaced. In each case, the relevant witnesses for Citigroup agreed, piece by piece, with the substantial accuracy of the greater part of the impugned notes. 28The first witness called for Shield was its founder and managing director, Mr Desmond Joseph Shields. He gave evidence at a reasonably high level of generality. That reflected in part his relative lack of involvement in the day to day operations of the company at the relevant times, and in part the passage of time since November 2006, when the relevant events occurred. 29I formed the view that Mr Shields was a witness who sought to tell the truth to the best of his ability, and who did not seek knowingly to mislead the court. To the extent that there are difficulties in his evidence (and there are few), I ascribe them to the factors just mentioned. 30I accept that Mr Shields, through his "ownership" of Shield, has an indirect financial interest in the outcome of the proceedings. Except to the limited extent indicated at [24], I do not think that this interest has had any impact on the reliability of Mr Shields' testimony. 31The next witness called for Shield was its client liaison manager, Mr Ian David Bolger. Mr Bolger was more directly involved in some of the relevant matters; or to put it another way, was not completely removed from the relevant action. With that exception, the comments that I have just made in relation to Mr Shield apply equally to Mr Bolger. I add that Mr Bolger was the author of a number of contemporaneous file notes. I accept that, in those files notes, he sought to make an accurate record of what he considered to be the relevant part of the events to which they referred. 32There was some relatively minor conflict between the evidence of Mr Shields and that of Mr Bolger, as to the date of a particular conversation. I do not think that anything turns on this. Whatever the date may have been, I accept Mr Bolger's note of the conversation (made at Mr Shield's direction) as substantially accurate so far as it goes. 33The next witness called by Shield was Ms Deborah Lynette Roddom. Ms Roddom is now no longer employed by Shield. At the relevant time, however, she was its director of operations. 34Ms Roddom was involved in a number of the key conversations in late October and early November 2006, which arose out of the discovery of what Shield claimed were misclassified assignments. In particular, Ms Roddom was involved in a telephone conference with representatives of Citigroup, in which, according to Shield, Citigroup repudiated the then current (2006) ASA. 35Ms Roddom made what she said was a contemporaneous handwritten note of that conversation, and a little later prepared a typed, and somewhat more expansive, file note. The veracity of, in particular, the handwritten file note was subjected to a sustained and aggressive challenge. 36In substance, Mr A A Henskens of Senior Counsel (who appeared with Mr A R Zahra of counsel for Citigroup) suggested, by reference to the form and content of the handwritten file note, that it was not, and could not have been, made (as Ms Roddom said it was) during the course of the telephone conference. Ms Roddom strenuously denied that suggestion. 37A finding that the file note in question was not made in the course of the conversation would, necessarily, involve the conclusion that Ms Roddom had lied deliberately on this topic. I am not prepared to find that she did. Ms Roddom impressed me as a witness who was concerned to tell the truth to the best of her ability. She was, it must be said, extremely defensive during (in particular) this passage of her cross-examination. But that, perhaps, is hardly surprising, having regard to the questions that were put and their necessary corollary. 38I do accept that there are aspects of the handwritten file note which raise doubts about its contemporaneity. For example, as Mr Henskens noted, it fluctuated between what appeared to be direct reporting of passages of discussion, and summaries or impressions of other passages. To some extent, I think, this is understandable, having regard to what was on any view the repetitive nature of the discussions in question. 39Again, the document does appear to be remarkably neat for one produced in the course of what must have been a heated discussion, in circumstances where at least one of the participants (Mr Vicente of Citigroup, to whom I refer below) undoubtedly spoke vehemently and (if his performance in the witness box is any guide) rapidly. 40Again, I note, a person from Shield who was present with Ms Roddom for part of the conversation (Mr Skelton) made a note, which appears in the notebook immediately before Ms Roddom's file note, suggesting to her that she should make a record of what was being discussed. That might not be significant of itself. But that written direction appears at the foot of a particular page; and higher up on the same page are references to what must have been aspects of the discussion. The handwriting of those references has not been identified. It certainly does not appear to be the same as Ms Roddom's handwriting. 41Mr Henskens wished to administer a dictation test to Ms Roddom in the witness box. I rejected that proposal. It seemed to me that it would be entirely unhelpful. When Ms Roddom made (or said she made) the file note in dispute, she was sitting in her own office. She was in familiar surroundings, speaking to people whom for the most part she knew (and had dealt with on many occasions), and dealing with a familiar subject matter. None of those factors could have applied to the exercise that Mr Henskens sought to undertake. In my view, both individually and together, those factors would have rendered the exercise useless in practical terms. Accordingly, I invoked s 135 of the Evidence Act (NSW) 1995 and rejected this line of cross-examination. 42The force of Mr Henskens' criticisms of the file note must be acknowledged. However, as I have said, I do not regard Ms Roddom as a liar (let alone a person prepared to lie, deliberately and on oath). Thus, I accept her evidence that she made the file note contemporaneously with - that is to say, in the course of - the telephone conference to which it related. I accept, also, that she sought to make an accurate record of the conversation to the extent that she thought it necessary to do so. I am comforted in this view of the evidence by the circumstance that Ms Jones of Citigroup, who was a party to the conversation, was cross-examined at length on, and accepted the substantial accuracy of much of, the typed file note. So, too, was Mr Vicente. I will deal with Ms Jones and her role below, as I have said I will with Mr Vicente. 43The striking feature of this aspect of Ms Jones' cross-examination is that in many cases she agreed that words to the effect of those set out in the typed file note were in fact said during the telephone conference. That applies, in particular, to the contentious parts of the conference. Again, to the extent that Ms Jones did not accept the accuracy of the file note, she nonetheless agreed as to some of the underlying facts. 44Likewise, Mr Vicente accepted the substance of, or did not deny, at least part of the typed file note. 45There are two final points to make. The first is that, to the extent there were denials that the file note was an accurate record, in many cases there is no dispute as to the underlying facts. Thus, it is not improbable that words to the effect of those recorded would have been said. On the contrary, in my view, having regard to the purpose and content of the conversation, it is likely that they were said. Secondly, to the extent that there are disputes that remain unresolved (for example, as to whether Mr Vicente said "stop, I am pulling rank now"), those disputes seem to be entirely incidental, and not to require resolution. 46I accept Ms Roddom's file notes as substantially accurate, at least in relation to the principal points of the conversation which they record. 47The next witness called by Shield was Mr Colin Douglas Skelton. At the time, he was Shield's marketing manager. He has since retired. Mr Skelton's recollection in the witness box was sketchy. That, no doubt, reflects both the passage of time and the fact of his retirement. Whilst I have no doubt that Mr Skelton sought to tell the truth, the disparity between his affidavit and his oral evidence leads me to the view that his testimony lacks persuasive force. 48The next witness called by Shield was Mr David Peter Wadick. He is Shield's national collections manager. His evidence did not go to any of the events in dispute in (or before) October/November 2006. It was concerned, rather, to provide a factual foundation for the quantification of an aspect of the damages claimed by Shield. There was no challenge to his credibility - indeed, his cross-examination was brief and, so far as I could see, entirely pointless - and I accept him as a witness of truth. 49The next witness called for Shield was Mr Scott Michael Colomb. Mr Colomb had been employed by Shield from about October 1994. At the times relevant to these proceedings, he was a director of operations. He became Shield's managing director, and held that position until he left its employ in October 2009. He is now employed as a bank manager. 50There was a sustained attack on Mr Colomb's credibility. 51In my view, there is substance to some of the challenges. I refer, by way of example only, to what I say at [112] to [123] below. Thus, whilst I do not find that Mr Colomb sought to give knowingly false evidence, I do think that his evidence should be scrutinised with extreme care, and that, in general, it is preferable to have regard to contemporaneous documents and the probabilities, objectively ascertained, in considering the events to which his evidence is relevant. 52In general, I am not prepared to accept as reliable Mr Colomb's evidence on matters in dispute, unless it is appropriately corroborated or is consistent with the probabilities, objectively ascertained. I have taken into account both the manner in which Mr Colomb gave evidence and specific problems with it, to some of which I refer later, in forming this view. 53Having said that, it is a feature of Mr Colomb's evidence (or more accurately, of what he said were contemporaneous file or diary notes) that witnesses called for Citigroup, when cross-examined, accepted the substantial accuracy of important aspects of those notes. 54Mr Henskens drew attention to aspects of some notes which Mr Colomb said he had made which, Mr Henskens submitted, were unsatisfactory. For example, in two cases, it appeared that the notes had been misdated and that the date had been corrected. Whilst I accept that this does raise a doubt as to either the accuracy of the file notes or the reliability of Mr Colomb as a note-taker, I note that aspects of what was recorded (or purportedly recorded) are either non-contentious or are supported by other evidence. 55In the result, I see no point in burdening the reader with an exhaustive analysis of the criticisms made of Mr Colomb's evidence. My approach to the assessment of his evidence is that set out at [51], [52] above. 56Shield relied on other witnesses of fact. Those witnesses gave evidence by affidavit. They were not required for cross-examination. It follows that I accept their evidence, so far as it goes. 57Shield also called an expert accountant, Mr Benjamin James Jennings. I accept that Mr Jennings was aware of, and sought to perform to the best of his ability, his duties to the Court. The same comments apply to his counterpart called by Citigroup, Mr Joseph Allan Box. To the extent that there remained differences in the evidence of those experts after they had conferred and produced two joint reports, those differences fall to be resolved by considering the inherent logic of what each says, not by reference to any question of credibility in the narrow sense. 58The first witness called by Citigroup was Ms Melissa Jones. She worked for Citigroup between May 2005 and March 2007. She held the position of Manager - Agency Management until her superior, Mr Shinghal, moved from Citigroup's Sydney office to another posting at the end of October or early November 2006. From then until March 2007, Ms Jones acted as head of recoveries. 59Ms Jones left Citigroup for a mercantile agency, known as Collection House Limited, in April 2007. She had worked for Collection House between 1997 and 2005. Collection House had had a commercial relationship with Citigroup at some times over the period 2003 to 2006 - it was one of the mercantile agents to whom, from time to time, Citigroup would assign recovery work. However, Ms Jones said (and I accept), there is now no commercial relationship between the two companies; and there has not been since Ms Jones returned to the employ of Collection House in April 2007. 60In the witness box, Ms Jones demonstrated very little actual recollection of the relevant events (including those covered in some detail in her affidavits). As I have observed already, this was not uncommon; it may be said equally of (for example) Mr Shields and Mr Skelton. 61It seemed to me that much of what Ms Jones said in her affidavits was based on reconstruction, from contemporaneous documents and her understanding of Citigroup's relevant policies and procedures at the time, rather than on any actual recollection. Thus, I think, it is necessary to scrutinise her evidence with some care. 62Having said that, I do not think that Ms Jones sought in any way to mislead the Court, or to give evidence that was knowingly false. On the contrary, I thought that, to the extent that her recollection allowed, she gave honest and reliable evidence. It may be noted that in many cases, when Ms Jones was taken through the detail of file diary notes prepared by employees of Shield, she accepted the substantial truth of substantial parts of what was recorded in those notes. 63However, my overall impression of Ms Jones' evidence - based, specifically, on her lack of recollection of relevant events when cross-examined - leads me to conclude that what she says must be assessed carefully against contemporaneous documents and the probabilities, objectively ascertained. 64There is one particular contemporaneous document created by Ms Jones that was the subject of some debate. That document is an email that Ms Jones prepared and sent to her superior, Mr Vicente, on 10 November 2006. That email was sent two days after the conversations of 8 November 2006, in and as a result of which (it is now common ground) the 2006 ASA was effectively terminated. The fact of termination was confirmed by a letter from Ms Jones to Ms Roddom and Mr Colomb of Shield on 10 November 2006, in which she said that as a result of those discussions "Citigroup believe the relationship with Shield Mercantile to have been terminated as of the 8th November 2006". 65In my view, there is no doubt that Ms Jones prepared the email in question in an attempt to report the relevant facts (as she then perceived them) to Mr Vicente, and to explain to him what had happened, and why. 66Mr Henskens submitted that the email should be regarded as an objective and relatively contemporaneous account of events, made at a time when Ms Jones might be thought to have had a good recollection of them. Thus, he submitted, it should be treated in effect as some form of file or diary note (indeed, he frequently referred to it by the latter phrase during his submissions). 67Mr M H Darke of counsel, who appeared with Ms T R Gordon of counsel for Shield, put to Ms Jones that the email was "a slightly sanitised version of events for Mr Vicente's consumption". Ms Jones did not agree (T490.12-.14). 68In assessing the factual accuracy of what is recorded in the email, one must bear in mind that, at the time, Shield was Citigroup's most successful debt collector. Thus, the loss to Citigroup of the benefit of Shield's services must have been substantial, as on any view it was (given the speed with which events developed) surprising. The evidence is clear that Citigroup had to scramble to appoint another mercantile agent to fill the role hitherto filled by Shield. 69In those circumstances, I think it is inherently likely that Ms Jones would have sought to put a positive "spin" on her account of events in the email. Thus, I think, one needs to take care in using it as an objective contemporaneous document on whose accuracy and reliability reliance can be placed. Having said that, it is again the case that many of the events recorded in the email are (apart from any "spin") hardly in dispute. Indeed, there is one aspect of the email on which Mr Darke relied to controvert an aspect of Mr Shinghal's evidence. 70There were occasional passages during Ms Jones' lengthy cross-examination where I had some concerns at what she had said. I gained the impression, both from what she said and from the manner of saying it, that Ms Jones was allowing her evidence to be influenced by her understanding of Citigroup's policies and procedures at the time. But, having reconsidered those aspects (and others) of Ms Jones' evidence, my overall assessment is that set out in [62], [63]. In those circumstances, I will not elaborate on the passages of evidence to which I have referred. 71The next witness called by Citigroup was Mr Peter Manuel Vicente. Mr Vicente was during 2006 (and later) the director of credit operations for Citigroup. He has now moved to another office in the Citigroup empire. 72Mr Vicente was several degrees removed from the day to day dealings between Shield and Citigroup. His only direct involvement in matters at issue in these proceedings came in late October or early November 2006, when Ms Jones brought to his attention the dispute that had arisen between Shield and Citigroup over commissions. 73Thereafter, Mr Vicente's direct involvement was limited to the telephone conference of 8 November 2006 involving Ms Roddom and, later, Mr Colomb from Shield (Mr Skelton was also present and in Ms Roddom's office for part of that conversation) and Ms Jones of Citigroup. Mr Vicente had a later conversation with Mr Colomb, in the course of which Mr Colomb said in effect (the precise words do not matter) that Shield regarded the relationship as at an end. 74Mr Vicente gave evidence at a significant level of generality. I formed the impression that his recollection was heavily influenced by his perception of what Citigroup's policies and procedures at the time required. I might add that this perception also seemed to me to underlie the approach that Mr Vicente took to dealing with the dispute, during the telephone conference of 8 November 2006. 75As will be clear already, there are differences as to what was and was not said during that telephone conference. However, the thrust of the discussion is reasonably clear, as is the thrust of the subsequent and short discussion between Messrs Colomb and Vicente. 76I do not think that Mr Vicente had any real present recollection of the events. Much of his evidence seemed to me to be reconstruction based on his understanding of Citigroup's policies and procedures. 77Nonetheless, there was no direct attack on Mr Vicente's credibility. Nor was there any dispute of substance as to the events of which he gave evidence. Finally, much of what he said appears to me to be consistent with contemporaneous documents and with the probabilities, viewed objectively. In those circumstances, it is unnecessary to subject Mr Vicente's evidence to detailed analysis. 78I should add however that my impression of Mr Vicente, during his cross-examination, was entirely consistent with the picture that emerges from the evidence (including that of Ms Jones) of the way he conducted himself during the telephone conference on 8 November 2006. I have no doubt that Mr Vicente behaved and spoke in a manner that was self-assured, confident perhaps to a fault, and that brooked no opposition. I have no doubt that, during the telephone conference, Mr Vicente put Citigroup's position, based on his understanding of its policies and procedures, forcefully and repeatedly. 79The next witness called by Citigroup was Mr Manu Shinghal. Mr Shinghal was, from May 2005 to October 2006, the head of Loss Recoveries. In that position, he was Ms Jones' immediate superior. As I have said, Mr Shinghal moved to another position within the Citigroup empire at the end of October 2006. 80It was clear, during Mr Shinghal's cross-examination, that he had no real recollection of the relevant events. I have great difficulty in understanding how he could have been as positive as he was in his affidavit affirmed 7 June 2012, compared to his uncertainty in the witness box some five months later. 81Mr Shinghal was forced to accept that there were passages in his affidavit which were incorrect, or which overstated the relevant facts. I suspect that this may have reflected the fact that Mr Shinghal's evidence was really reconstruction based on his understanding of what was required by Citigroup's policies and procedures at the time. 82In general, to the extent that there is a conflict between the evidence of Mr Shinghal and the evidence of witnesses called by Shield, I prefer the evidence of the witnesses called by Shield. 83For example: there is a question as to whether Mr Shield had a conversation with Mr Shinghal concerning the dispute. Mr Shield said that there was such a conversation. Mr Shinghal said that there was not, and thus disputed the particular conversation to which Mr Shields had deposed. However, in Ms Jones' email of 10 November 2006 to Mr Vicente, she recorded among other things that "...Des Shield [sic] phoned and spoke with Manu Shinghal...". It is clear that Ms Jones must have based this on something said to her by Mr Shinghal, probably before he left the Sydney office of Citigroup at the end of October 2006. This undermines the reliability of Mr Shinghal's denial, and disposes me to accept Mr Shields' evidence on the point. 84The next witness called by Citigroup was Ms Jennifer June Dunk. She was at the relevant time an agency liaison officer within the Agency Management Department of Citigroup's Debt Recovery unit. In that position, she reported to Ms Jones. 85By far the greater part of Ms Dunk's evidence was devoted to proving the records in respect of, and analysing, the various debt recovery files sent by Citigroup to Shield in respect of which there was a dispute as to commission. That evidence was essentially non-contentious. 86There were occasions, during Ms Dunk's cross-examination, where I thought that her evidence was heavily influenced by her perception of what might be consistent with Citigroup's policies and procedures, or Citigroup's interest more generally. 87There were some conflicts between the evidence of Ms Dunk and the evidence of Shield's witnesses, as to conversations and the like. In general, where there are such conflicts, I prefer the evidence given by Shields' witnesses (for example, Mr Bolger). 88Citigroup relied on the evidence of other witnesses, who gave their evidence by affidavit. Those witnesses were not required for cross-examination. In the circumstances, I accept the evidence of those witnesses so far as it goes.

Factual background 89I propose to set out, as briefly as I can, and (with a few exceptions) in a relatively non-contentious way, the essential factual background to the disputes. That will enable the combined statement of issues to be understood, and will provide the framework for their resolution. 90The first ASA made between Shield and Citigroup was dated 8 April 2002. It was expressed to the operative until 8 April 2003. Under that agreement, Shield was entitled to be paid commission on recoveries pursuant to primary assignments at the rate of 25%. The agreement noted, further, that if Citigroup gave secondary assignments to Shield, the commission rate would be negotiated. 91Before the 2002 ASA was made, Citigroup had referred accounts to Shield for collection on a trial basis. It appears that the trial was successful. 92The 2003 ASA was dated 8 April 2003. It made the same provisions, as to remuneration (including rates of commission), as the 2002 ASA had done. 93The 2004 ASA is dated 8 April 2004. The provisions as to commission changed somewhat. Item 2 of appendix B, which dealt with "fees", stated that fees would be payable as follows: (1) at 25% on primary assignments; (2) at 35% on secondary assignments; and (3) at 50% on tertiary assignments. 94The 2004 ASA marks the first time that a rate was stipulated for secondary assignments; and the first time that tertiary assignments were mentioned. 95Shield executed the 2004 ASA on 29 April 2004. Those who signed it for Shield were Messrs Shields and Colomb. 96According to Mr Colomb, he received a draft of the 2004 ASA in late March 2004. Mr Colomb said that the draft provided for commissions at 25%, 35% and 50% on primary, secondary and tertiary assignments respectively. He said that he discussed the draft with Mr Dayeian of Citigroup. 97Mr Colomb said, and in the circumstances I accept, that the conversation was to the following effect: Colomb: Shield's rates are 25% and 50%. You have a rate here of 35%. But those aren't our rates. Dayeian: we won't send you any secondary files. We'll send those to others because we can get a cheaper rate and then we'll send you the tertiary files. Colomb: OK, but if it's been to any other agent it's 50%. Dayeian: I understand that is Shield's rate. 98Mr Dayeian was a senior Agency Recovery Officer of Citigroup. He reported to Ms Jones and, as I understand it, was one of those to whom Ms Dunk provided support services. Mr Dayeian was not called to give evidence; it seemed that he is no longer in Citigroup's employ. 99Ms Roddom gave evidence, which I accept, that on about 4 May 2004, she met with Mr Dayeian at Shield's premises. They discussed a number of matters. One was the authority of Shield to reach binding agreements with debtors who offered a "full and final settlement". Ms Roddom sought authority for Shield to enter into agreements, for settlements no less than 75% of the amount owing, without needing (as had been the case) to refer each settlement to Citigroup for approval. Mr Dayeian agreed with this. 100Ms Roddom and Mr Dayeian also discussed instalment repayment arrangements (that is to say, arrangements by which a debtor would pay off the principal amount of the debt by instalments over a period of time). Mr Dayeian said that Shield could enter into such agreements as long as they provided for the whole of the debt to be repaid. Because those agreements were made only after the debt had been written off, interest no longer accrued on the account and thus even small repayments, regularly made, would eventually discharge the principal of the debt. 101Ms Roddom said that she then reviewed the 2004 ASA with Mr Dayeian, going through it page by page. She said (and again, as with all this part of her evidence, I accept) that when they came to appendix B, and the specification of commission rates, she said words to the effect of: You understand that the primary rate of 25% is [for] work that's come straight from Citigroup to Shield Mercantile and never been outsourced. And the secondary rate of 50% are [sic] for files that Citigroup has outsourced to a previous agent, they've done work on it and been unable to resolve it and it's come to Shield. 102Ms Roddom said that Mr Dayeian responded that he understood; and that she said she would confirm their discussion in writing. 103On that same day, Ms Roddom did so. She sent an email to Mr Dayeian. Omitting formal parts, it stated: As discussed could you please confirm the points below: (1) Shield Mercantile Pty Ltd settlement criteria 75% of principal of debt if below this criteria [sic] Citigroup to be informed for approval - Citigroup will advise any change in criteria. (2) Shield Mercantile Pty Ltd can accept payment arrangements without referal [sic] to Citibank. (3) Shield Mercantile Pty Ltd rates (as previous discussions held): 25% primary - have not been outsourced to a previous agent 50% - files which have been previously with another agent. 104 Mr Dayeian emailed back the next day stating, among other things, "Confirmed". 105Shield contended that the conversation amounted to a variation of the 2004 ASA. Citigroup, whilst accepting that the conversation had taken place (and, of course, accepting that the email exchange had occurred), did not accept that it was intended thereby to effect, or that there had been effected, a variation of the 2004 ASA. 106The 2005 ASA was dated 8 April 2005. In relation to commissions, item 2 of appendix B stated: (1) "Primary Assignment 25%"; (2) "Secondary Assignment N/A"; and (3) "Tertiary Assignment 50%". 107Shield submitted that this formulation (which was repeated in the 2006 ASA) reflected the agreement struck between Ms Roddom and Mr Dayeian, that all work other than primary assignments referred to Shield would attract a contingent commission of 50%. Citigroup submitted that the expression "N/A" denoted, in each case, an understanding that Citigroup would send to Shield only primary assignments and tertiary assignments; and that it would not send secondary assignments. 108Citigroup submitted, in relation to the conversation between Mr Colomb and Mr Dayeian shortly before the 2004 ASA was signed, that the proper conclusion to draw was that Citigroup and Shield had agreed that Citigroup would only send primary and tertiary assignments to Shield. Mr Henskens submitted that the subsequent discussion and email exchange between Ms Roddom and Mr Dayeian should be understood in that context. 109In late July 2005 (during the term of the 2005 ASA), Citigroup's referral practices, in relation to debts that were less than 180 days past due (i.e., debts that had not been written off), changed. Citigroup stopped using agents for skip trace or field visit purposes, and instead (I stress, before write-off) referred the debt files to agents on the "assign to collect" basis. 110Citigroup said that although the full amount of the debt had been made due and payable (because a notice under s 80 of the Consumer Credit Code, having that effect, had been generated automatically at 77 days past due and sent to the debtor), the mercantile agents were seeking only to collect arrears, and thus to "rehabilitate" the account. 111Nonetheless, Citigroup's own documents show that agents to whom work was referred, from the Collections Department before write-off on an "assign to collect" basis, could, with the authority of Citigroup, settle the entire debt. More importantly, those documents showed that those agents were paid contingently, on a commission basis, for recoveries. That stands in marked contrast to the previous practice of paying a fixed fee for a particular service such as a skip trace. 112At about the same time (that is, late July / early August 2005) Citigroup considered what it should do with files that had been referred to and recalled from two other agents, known as Creditcorp and Beukhan and Pokhrell (referred to in the evidence and elsewhere, and here for convenience, as "B&P"). 113Creditcorp and B&P had entered into payment arrangements with a number of debtors. The preferred method for giving effect to payment arrangements was for debtors to execute a direct debit authority, which the agent would lodge with the debtor's bank. The agreed instalment payments would then be deducted from the debtor's bank account and remitted to the agent's bank account. The agent would remit those receipts to Citigroup in accordance with the contract between them, and be paid its commission. 114Citigroup did not have the ability to put in place substitute direct debit facilities. Thus, according to Ms Jones (in her affidavit), she discussed the Creditcorp and B&P files with Mr Colomb and proposed to him that, once recalled from the earlier agent, they would be referred to Shield as primary assignments at a commission rate of 25%. She said that Mr Colomb accepted that position. 115Mr Colomb denied that there was any such agreement. Ms Jones, although she gave evidence of it in her affidavit, was unable to recall the details in cross-examination. Nonetheless, the making of the agreement is supported by contemporaneous documents. In my view, it was made. 116First, there is a "site visit report" prepared by Ms Dunk after she and Ms Jones went to Shield's premises on 5 August 2005. By then, according to an email Ms Jones sent to Messrs Shinghal and Dayeian on 29 July 2005, she had already discussed with Mr Colomb the prospect of referring the Creditcorp and B&P files to Shield, at a commission rate of 25%. 117Ms Jones read the site visit report at the time, and signed it. That report stated, among other things that the relationships between Citigroup and the other two agents were discussed, and Shield was told that in each case the relationship was being terminated. The report then continued (on this topic): Shield were concerned that they did not receive a Primary allocation for the month of August. It was discussed that Credit Corp and B&P inventory has [sic] been assigned to them in August 2005 as tertiary. It was also pointed out that Shield receive all of the accounts that were on arrangements from both companies. Shield advised that all of these accounts would be contacted and advised that Shield would be resuming collections and new paying details would be conveyed. Confirmed with Shield that commission rate for these accounts would be 25%. 118Five days later, on 10 August 2005, Ms Dunk created a new "queue" in Citigroup's computer system entitled "Shield Special". (Referrals by Citigroup were allocated into "queues" depending on the agent to whom the referral was to be made and the nature of the work being referred, among other things.) 119Later that same day, and at Ms Jones' direction, Mr Dayeian sent an email to Messrs Colomb and Bolger. Omitting formal parts, that email stated, relevantly: Attached are the accounts you spoke to Melissa about where we recalled from Creditcorp and Beukhan that were paying arrangements. As per your agreement this will be treated as 25% assignment. Please confirm when these files have been loaded. 120I do not know if a reply email is in evidence. However, there is no doubt that Mr Dayeian's email was sent and received: the files that were attached to it or sent with it were uploaded to Shield's computer system. 121On the basis of that contemporaneous evidence, I find that there was a conversation between Ms Jones and Mr Colomb as stated in the site visit report; that an agreement was reached (confirmed by the email of 10 August 2005) that accounts that had been sent to Creditcorp or B&P and recalled would be reassigned to Shield as primary assignments; and that Shield would be entitled to commission at the rate of 25% only on collections made in respect of those files. Although Mr Darke submitted to the contrary, his submission (if I may say so) lacked his customary polite but insistent firmness. 122I do not accept that Ms Dunk prepared, or that Ms Jones signed, a knowingly false site visit report (which must be the corollary of accepting Mr Colomb's denial of the relevant conversation). Nor do I accept that, if the conversation had not occurred substantially as recorded in the site visit report, Mr Colomb at least would have failed to reply to the email of 10 August 2005, denying the making of the agreement alleged in it. 123In this context, it may be noted that subsequent emails and other documents were sent by Citigroup to Shield referring to "Special Accounts" or "Shield Specials" and the like. Mr Colomb never questioned any of those documents; nor did any other employee of Shield to whom they were sent or copied. 124I do not accept Mr Colomb's denial of the making of the agreement. His willingness to deny it, in the face of the contemporaneous evidence of the contrary, is one of the matters that I have taken into account in forming the view recorded earlier as to his credibility. 125The 2006 ASA was dated 8 April 2006. Although it was essentially similar to the 2005 ASA, there was one change, perhaps of significance, to appendix B (which dealt with payment arrangements). I will return to that in discussing the questions of construction that were argued. 126At the time the 2006 ASA was made, one of the mercantile agents to whom Citigroup had referred work was Brodie Services Pty Ltd (usually known, and referred to in these reasons, as "Brodies"). That relationship was terminated, in two stages. First, on 17 May 2006, the agreement between Brodies and Citigroup's Debt Recovery unit (i.e., the unit dealing with debts after write-off) was terminated. Secondly, on 14 July 2006, the agreement between Citigroup's "Loss Mitigation / Collections" unit and Brodies was terminated. 127Ms Jones said that, after the agreement between Debt Recovery and Brodies had been terminated in May 2006, she asked Mr Colomb whether Shield would take over the subject files as primary assignments at 25%, and that Mr Colomb agreed. 128Thereafter, files recalled from Brodies were sent to Shield on this asserted basis. They were referred to as "Brodies Specials". 129Mr Colomb denied the making of the agreement. He said, in an email of 15 November 2006 to Ms Jones, that Shield would not have made such an agreement: At no time in its 20 year history have or would Shield Mercantile accepted [sic] secondary placement files at a reduced rate. This has been discussed with all of our clients including Citigroups' Adam, Jennifer, Manu and yourself. These files outsourced in May should have been at the rate of 50%. 130That reason is specious. Shield had agreed to just such an arrangement a little more than a year ago: in relation to the files recalled from Creditcorp and B&P and referred to Shield as "Shield Specials". Even if one were to accept that Mr Colomb could not now recall the various emails to which he was taken in cross-examination, as to the making of that 2005 agreement, it is beyond belief that he would not have recalled it back in 2006, when he was turning his mind to the very question of commission rates. 131I find that the agreement asserted by Citigroup in relation to the "Brodies Specials" files was made. I do not accept Mr Colomb's denial of the making of such an agreement. 132I add, in relation to both agreements, that there was every reason for Shield to make them. The hard work, of locating the debtor, had been done in each case; and the task of persuading the debtor to agree to a payment arrangement had also been done. According to Mr Shield, most of the work involved in collections activity relates to locating the debtor, and in about 75% of cases, the debtor is never located. Further, Mr Shields said, about half of those who are located enter into an agreement to pay a lump sum to finalise their obligations; and about half enter into a payment arrangement to pay off the debt by instalments. (This is an over-simple but sufficient summary of this aspect of Mr Shield's evidence, which on this point I accept.) 133Thus, the re-assignment of files to Shield from an agent who had established a payment arrangement with the debtor would have two benefits for Shield. First, the labour-intensive work of tracking down the debtor would be minimised; and the waste of that work (in respect of those debtors who were not located) would also be minimised, if not entirely avoided. Secondly, and assuming that the debtor was prepared to continue the payment arrangement, but with Shield rather than the previous agent, there was a sure source of commission income. The value of that income would depend on the debtor's willingness and ability to keep on paying; but this is the case with any instalment arrangement. 134So analysed, the Shield Specials and Brodies Specials offered Shield the opportunity to collect commissions, on an ongoing basis, on most if not all of the files that were to be reassigned to it from the previous agent. In those circumstances, it was clearly advantageous to Shield to take the files and receive its commission. The hard work had been done by the previous agent, and the previous agent had suffered the burden of wasted costs. It is in my view inherently likely that such business would be profitable for an agency in Shield's position, even at a commission rate of 25% rather than 50%. 135Thus, in my view, both the contemporaneous records and the objective probabilities support the conclusion that the Brodies Specials agreement was made as Ms Jones said had happened. 136Mr Bolger's evidence was that in late October 2006 (he put the date at 23 October 2006), he discovered that a file referred by Citigroup to Shield had been, in his view, incorrectly classified. The file in question (which has not been identified) had been classified as a primary assignment, but when Mr Bolger looked at the file, he discovered that it had been the subject of an earlier assignment for collection. Mr Bolger said that he raised this with Mr Colomb. Both Mr Bolger and Mr Colomb said that they then discussed the matter with Ms Dunk. 137There was a series of meetings and discussions after that "discovery", culminating in the telephone discussions of 8 November 2006 to which I have referred already. 138I do not propose to summarise those events at this point. The parties made detailed analyses of the relevant conversations, in support of their respective positions on repudiation. It will be necessary to look at the facts in detail, to resolve the question of repudiation.

The process of assignment of files 139Officers of Citigroup were responsible for deciding the allocation of debtor files to mercantile agents on Citigroup's panel. For at least some of the relevant time, Ms Dunk was responsible for making (or making recommendations as to) allocations. 140Once the allocation decision was made (and I shall confine the discussion to the position as between Citigroup and Shield), Citigroup would send an email to Shield indicating that it had sent a batch of debtor files to Shield. In the earlier part of the relationship, those files were provided by password-protected floppy disc or CD. The disc or CD was usually marked as "primary" or "tertiary", according to Citigroup's view of its contents. 141When the disc or CD was received, an employee of Shield opened it (using the password that had been provided) and uploaded the files to Shield's computer system. The files consisted of two parts. The first was an Excel spreadsheet setting out details such as the debtor's name, contact details and the like; and information as to the debt. The second part of the file was another Excel spreadsheet (or other such spreadsheets) setting out the notes made by any person who had previously worked on the file. Those notes would include all notes made by Citigroup personnel and all notes made by agents to whom the file had been assigned previously. 142Shield was required to upload files to its system within 24 hours. Mostly, it did so. 143This system changed in about January 2005. The files were sent to Shield as attachments to the email from Citigroup. The files were not password-protected, but were encrypted using proprietary software which was installed both on Citigroup's computer system and on a particular computer in use at Shield's premises. 144Once the files were received and decrypted, they were uploaded to Shield's computer system as before. Again, that was supposed to occur within 24 hours; and again, mostly, it did. 145When the files were uploaded, the classification (as primary or tertiary) was entered. That was done based on information supplied by Citigroup: either by email, or by the writing on the floppy disc or CD, or by reference to the title of the spreadsheet containing the files. Once the appropriate code (according to Citigroup's instructions) had been entered, the file was administered accordingly. Among other things, this meant that where recoveries were effected, commission was charged at the rate appropriate to the description of the file, on Shield's system, as primary or tertiary. 146After all this had happened, the files were distributed to Shield's employees to be worked. 147Some were worked from the Sydney office (which was at Parramatta). Others were allocated to, and worked from, Shield's regional offices (I think, in each of the mainland states of Australia). 148The notes on each debtor file contained detailed information about all prior attempts to contact the debtor, and the results of those attempts. Further, they contained details of all prior assignments. If those prior assignments had borne fruit, the notes would record the receipt of repayments by Citigroup from the prior agent. 149Mr Shields (and other witnesses) accepted that for a Shield employee to perform thoroughly his or her primary responsibility of attempting to locate the debtor, it was necessary for that employee to read the notes. That is because the notes contained details of all previous known contacts: place of work, place of residence, telephone numbers, details of neighbours and workmates, and the like. In addition, the process of seeking to locate the debtor included making searches of a number of publicly available databases (the electoral roll, the electronic White Pages, and others). 150It has not been suggested that Citigroup ever sought to edit the file notes, so as to disguise or obscure the fact that a file had been the subject of a previous referral to another agent. On the contrary, to the extent that I was taken to the detail of the files, even a moderately careful reading of the file notes discloses, where it was the case, that a file had been the subject of a previous referral. Mr Colomb agreed that this was so, in the case of the Brodies Specials files (see, generally, T 336-337).

The combined statement of issues 151At this point, it is convenient to set out the combined statement of issues: Contract claim 1. [Plaintiff issue] What is the true construction of the terms "primary assignment", "secondary assignment" and "tertiary assignment" insofar as they appear in each of the Agency Services Agreements? 2. [Plaintiff issue] Did the parties amend the 2004 Agreement so as to provide that the defendant would pay the plaintiff commission of 50% on amounts collected by the plaintiff on any debts that had previously been referred to another agent and, if so, when did that amendment take effect? 3. [Defendant issue] What is the true construction of the 'Assignment' of a 'Debt' for 'Services' under each of the Agency Services Agreements? 4. [Defendant issue] Was there an amendment to the 2004 Agreement such as to change that construction for that agreement? 5. Was it an implied term of the 2003, 2005 and / or 2006 Agency Services Agreements that the defendant would pay the plaintiff a reasonable remuneration for services it provided in connection with any assignments for which a specific commission rate had not otherwise been fixed by the agreement or is such a term inconsistent with the express provisions of the agreements? 6. [Defendant issue] Did the parties enter into a 'special' agreements in relation to the assignment of debts that had been previously assigned to Credit Corp Collections Pty Ltd and Beukhen & Pokhrell Pty Ltd following the termination of agreements with those other mercantile agents, as pleaded in paragraph 64 of the Amended Commercial List Response (ACLR). 7. [Defendant issue] Did the parties enter into a 'special' agreements in relation to the assignment of debts that had been previously assigned to Brodie Services Pty Ltd following the termination of the agreement with Brodie Services, as pleaded in paragraph 65 of the ACLR. 8. [Plaintiff issue] In respect of each of the 383 debts the subject of the claim, was the referral of that debt to the Plaintiff: a. in respect of the 2003, 2004, 2005 or 2006 Agency Services Agreement, a "primary assignment", "secondary assignment" or "tertiary assignment"; or b. in respect of the 2004 Agency Services Agreement, if amended as the Plaintiff contends, a "primary assignment" or a debt which had previously been referred to another agent? 9. [Defendant issue] In respect of each of the 383 debts the subject of the claim, had there been a prior Assignment of Services with respect to the same Debt? 10. [Plaintiff issue] In respect of each of the 2003 to 2005 Agency Services Agreements, did the Defendant breach the agreement by failing to pay the Plaintiff the rate of commission it claims? 11. [Plaintiff issue] In respect of the 2006 Agency Services Agreement: a. was it an implied term of that agreement that the defendant would exercise any discretion conferred on it by cl 1.2 of Appendix B reasonably and in good faith; b. did the defendant breach the agreement by failing to pay the plaintiff the rate of commission it claims, even where the plaintiff had not invoiced the defendant for commission at that rate in accordance with cl 1.2 of Appendix B; c. if so, did the defendant's breaches of the agreement entitle the plaintiff to terminate it; d. in any event, did the defendant by its conduct repudiate the agreement? 12. [Defendant issue] In respect of each of the 2003 to 2006 Agreements, if there was a prior Assignment of Services with respect to the same Debt, did failing to pay for those services at the rate of commission claimed by the plaintiff constitute a breach of the agreement when no invoice was issued under the agreement for the higher commission? 13. [Defendant issue] Alternatively to 12, in respect of the 2006 Agreement, did the failure to invoice for Services at a higher rate of commission: (a) within 3 months of the Services; or (b) at all prevent the claim or, if not, entitle the defendant to exercise a discretion not to pay? 14. [Defendant issue] If the defendant was entitled to exercise that discretion, was there an implied term requiring it to do so in good faith or reasonably? 15. [Defendant issue] If so, has the defendant exercised that discretion in good faith or reasonably? 16. Alternatively, in circumstances where all invoices issued under the 2003 to 2006 Agency Services Agreements have been paid, are the contracts fully executed disentitling the Plaintiff to claim further remuneration? 17. [Defendant issue] Did the defendant's conduct evince an intention to no longer be bound by the agreement thereby entitling the plaintiff to terminate? 18. If the plaintiff was entitled to terminate the 2006 Agency Services Agreement, or the defendant by its conduct repudiated that agreement, can the plaintiff claim for loss of future profits: a. at all; b. for more than 1 month; c. to the end of the term of the agreement; d. beyond the term of the agreement? 19. If the defendant is liable to the plaintiff, what is the quantum of the plaintiff's loss and damage? Quantum meruit 20. Is the defendant under a quasi-contractual obligation to pay the plaintiff a reasonable remuneration for services the plaintiff provided in connection with any assignments for which a specific commission rate had not been fixed by the 2003, 2005 or 2006 Agreements? 21. If so, what is the quantum of the plaintiff's entitlement? Misleading and deceptive conduct 22. Did the defendant make the alleged Primary Assignment Representations as defined in paragraph 19 of the Second Further Amended Commercial List Statement? 23. If so, did the plaintiff rely on such representations? 24. If so, did the defendant thereby contravene s 52 of the Trade Practices Act 1974 (Cth) (TPA) and / or s 42 of the Fair Trading Act 1987 (NSW)? 25. If so, what is the quantum of the loss and damage the plaintiff thereby suffered? Unconscionable conduct 26. Did the defendant contravene s 51AC(1) of the TPA by requiring the Plaintiff to return all the debt files which the Defendant had referred to it and in relation to which the Plaintiff had established ongoing repayment arrangements in circumstances where, inter alia, the Defendant had represented to the Plaintiff or induced in the Plaintiff a belief that this would not occur? 27. If so, what is the quantum of the loss and damage the plaintiff thereby suffered? Miscellaneous defences 28. [Plaintiff issue] In the events which have happened, do any of: a. clauses 2(e); b. Appendix B, Item 1, clauses 1.5(d) and 1.5(e), of the 2006 Agreement exclude the Defendant's liability to the plaintiff 29. [Defendant issue] In the events which have happened, is reliance in these proceedings on any of: a. clauses 2(e); b. Appendix B, Item 1, clause 1.2; c. Appendix B, Item 1, clauses 1.5(d) and 1.5(e), of the 2006 Agreement exclude the defendant's liability to the plaintiff by reason of some unconscionable conduct by the defendant in contravention of s. 51AC(1) of the TPA. 30. Is the plaintiff, by reason of: a. the conduct pleaded in para 62 of the ACLR; b. the conduct pleaded in relation to the alleged 2005 Special Referral Agreement in para 64 of the ACLR; or the conduct pleaded in relation to the alleged 2006 Brodies Debts Agreement in para 65 of the ACLR, estopped from making any further claim for payment of commission in relation to the services it provided pursuant to the 2003, 2004, 2005 and 2006 Agreements, the 2005 Special Referral Agreement, or the alleged 2006 Brodies Debts Agreement? 152I propose to deal with those issues in groups.

Relevant terms of the ASAs 153Because the construction issues focus on the 2006 ASA, and because that document, in most respects, does not differ materially from the earlier ASAs, I will set out the relevant provisions, on which the parties' analyses focused, from the 2006 ASA. 154The recitals contained a definition of "Debts" (recital A), a definition of "Services" (recital B) and a recital of Citigroup's wish to procure such Services from "Agency" (recital C). I set out those recitals: A. Citigroup has client accounts arising from its business of lending money under various types of finance arrangements (including contracts of loan, hire and lease) where amounts due and owing thereon are unpaid ("Debts"). B. Agency engages in the business of performing debt recovery and mercantile agency services ("Services"), as set forth in Appendix A which is attached hereto and made a part hereof, and is willing to provide these Services to Citigroup under the terms and conditions hereinafter set forth. C. Citigroup wishes to procure such Services from Agency, for good and valuable consideration, as is more fully described in Appendix B attached hereto and made a part hereof. 155Clause 1 dealt with the scope of the services and of the appointment. Since Citigroup's submissions emphasised subclause (c), I set it out: (c) Agency shall conduct such debt recovery services as Citigroup shall from time to time request and, for the purposes of carrying out its functions pursuant to this Agreement, is hereby appointed Citigroup's agent to collect such of the Debts as Citigroup may refer to Agency for collection from time to time. 156Clause 2(b) gave Citigroup the right to terminate for breach, breach of warranty or insolvency. Further, cl 2(c) gave Citigroup the "right to terminate this Agreement: without cause upon thirty (30) days advance written notice to Agency". 157Clause 2(d) dealt with Citigroup's obligation to pay "compensation due, if any, as of the date of termination", with allowances to be made for offsetting costs. 158Clause 2(e) dealt with the consequences of termination. I set it out: (e) Termination of this Agreement shall immediately cancel any instructions already given and not carried out but no termination of this Agreement shall in any way prejudice or affect the obligations of either party in respect of acts or events prior to such termination. Nothwithstanding any other clause of this Agreement, immediately upon termination, Agency shall return to Citigroup all documents, files and records in its possession relating to any Debts and shall within (14) fourteen working days thereafter prepare and forward to Citigroup a detailed statement relating to all monies held by it for and on behalf of Citigroup. The statement shall also include details of any fees or other sums allegedly owed to it by Citigroup, a short summary of any legal or recovery action taken by it in respect to each of the Debts referred to Agency by Citigroup and any such other information in respect of the Debts as Citigroup may reasonably require. 159By clause 2(f), Shield was required, on termination, in effect to facilitate the handover or transfer of the files that it held. I set it out: Upon notice to Agency of expiration or termination of this Agreement and continuing through to the effective date of expiration or termination, Agency will; (i) provide to Citigroup reasonable assistance requested by Citigroup to allow the use of the Services without interruption or adverse effect and to facilitate the orderly transfer of the subject matter of this Agreement as desired by Citigroup; (ii) If requested by Citigroup, Agency will reasonably cooperate with a third party supplier in connection with the preparation and implementation of a transition plan by such third party or - Citigroup upon the termination or expiration of this Agreement; (iii) At Citigroup's option and expense, shall permit Citigroup to evaluate Agency's performance under this Agreement and Agency shall cooperate in Citigroup's evaluation. 160Clause 3 dealt with terms of payment. Reference was made in particular to paras (a), (b) and (d). I set them out: (a) Citigroup agrees to compensate Agency for Services provided pursuant to this Agreement as set forth in Appendix B, which is attached hereto and made a part thereof. (b) Invoices shall be submitted by Agency on a monthly basis. All invoices shall be due and payable by Citigroup in its ordinary course. There will be no late payment service charge of any kind. Citigroup may, upon notice to Agency, withhold payment for Services that fail to meet the minimum performance standards set forth herein and in Appendix A attached hereto and/or for any disputed invoiced items or any other related matters. Such non-payment shall not constitute a default or breach of this Agreement. In the event of any dispute between Citigroup and Agency with respect to performance standards, invoiced items or other related matters, Citigroup shall pay the undisputed portion of the invoice according to its terms and notify Agency promptly of the dispute. The parties shall use their best efforts to resolve the dispute within thirty (30) days. In the event the parties are unable to resolve a dispute within thirty (30) days, the parties shall comply with the provisions set forth in clause 18 hereof. Any disputed portion of an invoice that is resolved in favour of Agency shall be due and payable within forty-five (45) days after resolution of the dispute. ... (d) All invoices shall be in the form set out in Appendix A and contain such information as may be notified by Citigroup to Agency to writing. 161Clause 7 was a non-waiver clause: no failure or delay by either party in the exercise of a right should be taken to impair its ability thereafter to exercise that right, or otherwise to affect its rights and remedies. 162Clause 32 was an "entire agreement" clause. It included a provision that the agreement: ... may not be altered, amended or modified except in a writing incorporated herein, and signed by the parties. 163Clause 34 dealt with amendment. I set it out: MODIFICATION, AMENDMENT, SUPPLEMENT No modification, amendment, supplement to or waiver of this Agreement or any of its provisions shall be binding upon the parties hereto unless made in writing and duly signed by the party against whom enforcement thereof is sought. 164Clause 35 also dealt with waiver. There is no need to set it out. 165Appendix A set out, in Item 1, what were described as "Agency Duties". Clause 1.1 of appendix A reinforced cl 1(c) of the conditions of contract: 1.1 Agency shall perform debt recovery services as described and instructed by Citigroup from time to time. Without limiting the generality of the services or duties which Citigroup may require to be performed, Citigroup may refer Debts to agency with instructions to: .... 166There followed a list of services including skip traces, field calls, repossessions, and other matters. 167Appendix B dealt with remuneration. The parties relied on cls 1.1, 1.4 and 1.5 of item 1 of appendix B. I set out those clauses: 1.1 Citigroup shall pay to Agency for services rendered, such fees (inclusive of disbursements) as agreed between the parties in writing from time to time. Fees may vary depending on the source of the instruction, the type of finance agreement involved and the amount of the debt. 1.4 Subject to this paragraph 1.3, at the time of each periodic report being submitted to Citigroup, Agency shall also submit an itemised invoice detailing amounts due by Citigroup to Agency. The invoice shall be paid within 30 days of receipt provided that where Citigroup believes that an amount invoiced may not be payable at that time, Citigroup shall: (a) pay the invoiced amount less the amount which it believes is not payable at that time; and (b) advise Agency of its reason for not paying this amount, whereupon the parties shall mutually resolve the issue. 1.5 Agency shall not be entitled to any fee in respect of any monies received from a debtor or any person in respect of a Debt unless the cheque or other type of remittance is honoured on presentation. (a) Where an instruction in respect of a Debt is withdrawn by Citigroup, Agency shall be entitled to all reasonable disbursements incurred in providing services in respect of that Debt where it can be demonstrated that there was a reasonable expectation that the debt would be paid in full with 60 days of the instruction being withdrawn. (b) Where it is shown that there is a reasonable expectation of recovering part of the debt within this time, Agency shall be entitled to a percentage of all reasonable disbursements incurred equal to the percentage that the expected amount recoverable bears to the total debt. (c) The opinion of the Citigroup manager responsible for providing the instructions which were withdrawn shall be conclusive in determining the expectation of the recovery of the debt and the reasonableness of the disbursements. (d) Reimbursement will not be available where the instruction is withdrawn as a result of this agreement being terminated by Agency or Citigroup. (e) Other than the reimbursement provided for under this paragraph 1.4, Agency shall not be entitled to any other payment (including loss of profits) as a result of an instruction being withdrawn. 168Clause 1.2 was unique to the 2006 ASA. Clause 1.4 had appeared in all prior versions, although I think that, in each, it had been numbered 1.3. Likewise, cl 1.5 had appeared in all prior ASAs, although numbered 1.4. Issues 1 and 3: assignment 169Each of these issues approaches, although in different language, the two key questions of construction. The first question is: what is an assignment, for the purposes of the ASAs? The second is: what is the proper meaning of the expressions "primary assignment", "secondary assignment" and "tertiary assignment" where they appear in Item 2 of appendix B to one or other of the ASAs? 170The first, and obvious, point is that whatever "assignment" may mean, it does not mean the assignment of a debt at law or in equity. It was common ground that, under the ASAs, Citigroup remained the legal owner of the chose in action represented by each debt that was "assigned" (or that was the subject of each debt file, or account, that was "assigned"). 171The submissions for each party focused on the terms "Debts", "Services" and "Assignment". It was common ground that the first two expressions were defined by, respectively, recital A and recital B. In the case of recital B, the definition refers the reader to appendix A, which sets out in more detail what it is that is comprised within the concept of "debt recovery and mercantile agency services". Clause 1.1 of appendix A makes it clear that what is meant is "debt recovery services" which are the subject of instructions from Citigroup from time to time. The following subparagraphs then identify particular kinds of instructions, and thus particular kinds of debt recovery services. 172I do not propose to set out the detailed submissions of counsel. They are recorded in written submissions (both those provided before the hearing commenced, and those provided prior to final addresses). They were elaborated orally (both in opening and, again, in final addresses). 173It is clear, as Mr Henskens submitted, that "debt recovery services" are services in respect of "Debts". It is convenient to use the contractual expression "Services" to refer to such services. 174The purpose of each ASA was to provide a contractual basis under which Citigroup could refer debts, or debt files, or debtors' accounts, to Shield for the purpose of Shield's providing Services. 175The examples given in item 1.1 of appendix A, of "debt recovery services", include services that, whilst they might be preliminary steps in the attempted collection of a debt, do not of themselves amount to the recovery, or attempted recovery of the debt. For example, para (a) refers to skip traces; and para (d) refers to the processes of obtaining details of the debtors or guarantors and their property. By contrast, para (b) (field call - attending the debtor and demanding payment) and para (e) (processing "Recovery Proceedings") clearly relate to recovery, or attempted recovery. And so do most of the services described in para 1.2, which authorises the taking of "such action as may be necessary to recover each Debt including" locating the debtor; making demand; negotiating and receiving payment; obtaining judgment; and enforcing any judgment obtained. 176It follows, both from the structure and language of cl 1.1 of appendix A and from cl 1.2, that each of the tasks described is an aspect of "debt recovery services". I do not accept that debt recovery services exclude matters such as skip traces. To do so would be inconsistent with the definition of "Services" in recital B, as amplified by reference to appendix A. Clause 1.2 makes it clear that each of the specified actions is included within the phrase "such action as may be necessary to recover each Debt". 177The ASAs do not use the language of "assignment" to describe the process by which instructions to act on particular debt recoveries are given by Citigroup to Shield. So far as I can tell, the only place in the ASAs where the word "assignment" appears is item 2 of appendix B, where the commission rates are set out. Nor, for that matter, do the ASAs use the language of "referral". Recital C invokes the concept of procurement of Services. Clause 1(c) is based on the concept of "request": Shield is required to "conduct such debt recovery services as Citigroup shall... request". Further, and for the purpose of carrying out its functions pursuant to the ASA (and, I add, in seeking to fulfil any "request" made by Citigroup), Shield is appointed Citigroup's agent to collect the debt. 178Mr Henskens relied on the language of cl 1(c) to found a submission that it was inherent in the concept of "assignment" that it be a referral for the purposes of collection of a debt. Thus, he submitted, a referral merely to carry out a skip trace could not be characterised as an "assignment". 179Mr Henskens noted, further, that (at least before late July 2005, when Citigroup moved to the assign to collect system for referrals from its Collections Department to agencies), specific services such as skip traces were remunerated by fixed fees, whereas collections were remunerated by commissions on the amounts actually collected. Mr Henskens submitted that this supported his submission that collection of a debt was an integral part of the concept of assignment. 180The second point cannot be good, at least from late July 2005. Thus, it cannot be good in relation to the 2006 ASA. When Citigroup moved to the assign to collect system, it ceased the practice of instructing agents to conduct only skip traces. Instead, where agents were instructed by Citigroup's Collections Department, they were instructed to collect either the arrears or the full amount of the debt. There was a dispute as to which; that dispute need not be resolved. 181Nor do I think that the first limb of the submission is sound. As I have noted already, the expression "debt recovery services" includes "any or all" of the specific Services listed in appendix A. It is clear, from the language of cls 1.1 and 1.2 of appendix A, that all those Services, including skip traces, were regarded as an aspect of the debt recovery process, and hence as debt recovery services. 182Returning to item 2 of appendix B: its function was to lay down the basis on which Shield would be remunerated for the Services that it provided in respect of Debts referred to it. 183Appendix B is specifically referred to in cl 3(a). By that clause, Citigroup was bound to "compensate" (an inept word, but clearly equivalent to "remunerate") Shield "for Services provided pursuant to this Agreement as set forth in Appendix B." Appendix B thus described the Services for which Shield was to be compensated, and the manner in which that compensation should be calculated. It seems to me to follow, inevitably, that those Services were the execution of instructions in relation to each "assignment"; and that the basis of compensation would vary according to the classification of the assignment. 184In short, on a proper construction of the 2006 ASA as a whole, I conclude that an "assignment" is the referral of a "Debt" by Citigroup to Shield for Shield to provide "Services", being debt recovery services in accordance with appendix A: that is, any or all of the Services there described. 185Before Citigroup moved to the assign to collect system in late July 2005, there were many occasions when Debts were referred to agents only for the purpose of those agents' conducting skip traces. It is correct to say, as Mr Henskens submitted, that those agents were remunerated by way of flat fee for their efforts. But that does not seem to me to have any relevance to the question of construction. 186A referral to conduct a skip trace was a referral to perform a particular aspect of the Services listed in appendix A. To put it another way, it amounted to a request by Citigroup of the agent to perform a particular Service: and, thus, was a request within cl 1(c). True it is that this particular Service was remunerated by flat fee rather than by a contingent percentage commission. That does not alter the fact that the particular Service is an aspect of debt recovery services, consistent with the language of cls 1.1 and 1.2 of appendix A. 187It follows, in my view, that when Citigroup referred a Debt to an agent only for the purpose of conducting a skip trace, that was, nonetheless, an "assignment" of the debt for the purposes of the applicable ASA, assuming it to have been on the same terms as those in evidence. This is a safe assumption to make, in circumstances where the agreements proved were accepted to be in Citigroup's standard form, and where Citigroup did not prove any different form of ASA used for the purpose of instructing the performance only of skip traces. 188Mr Henskens submitted that there was a qualitative difference between a Debt before write-off, and a Debt after write-off. He submitted that, before write-off, only arrears were owing, and only arrears were pursued. By contrast, he submitted, after write-off the whole amount was owing and the whole amount was pursued. 189I do not accept that submission. The expression "Debt" is a label for the chose in action represented by the debtor's obligations under a credit contract. That chose in action - the bundle of contractual obligations - remains the same. The contract between Citigroup and the debtor is not affected by Citigroup's internal, extra-contractual, administrative or accounting procedures. 190In any event, the submission is wrong as a matter of fact. Citigroup's practice was to make demand on debtors at about 77 days past due, for the purposes of s 80 of Consumer Credit Code. The effect of that demand was to make the whole debt, and not just the arrears, due and payable. If Citigroup thereafter sought only repayment of the arrears, with a view to rehabilitating the account, that is not a matter which affects either the legal nature of the chose in action or the terms of the ASAs between Citigroup and Shield, insofar as those ASAs related to Debts and the provision of Services in respect of those Debts. 191Once it is accepted that the word "assignment" is used as some sort of shorthand, to refer to the process by which Citigroup referred Debts to Shield (or another agent) for the provision of Services, the meaning of "primary assignment", "secondary assignment" and "tertiary assignment" becomes clear. In my view, each of those ordinal descriptors should be given its ordinary English meaning, although with a conventional extension in the case of the third. 192Thus, the expression "primary assignment" denotes a first referral of a Debt for the provision of Services. The expression "secondary assignment" denotes the second referral of a debt for that purpose. The expression "tertiary assignment" conventionally denotes the third or subsequent referral of a debt for the provision of those Services. As a matter of English usage, "tertiary" would refer to third only assignments. It did however seem to be common ground that, whatever might be the nature of the preceding assignments, a "tertiary assignment" was a third or subsequent assignment. 193Again, I do not think that there is any basis for restricting the terms, as Mr Henskens submitted, to first, second, or third and subsequent assignments only after write-off. That is inconsistent with the definition of Debt, which comprehends "amounts due and owing... [that] are unpaid" under various types of finance arrangements. The word "unpaid" comprehends all amounts due and owing but unpaid. In circumstances where Citigroup, as a matter of practice, engaged mercantile agents to provide Services in respect of Debts so defined, both before and after write-off, the introduction of some limitation based not on the wording of the agreement but on the internal practices of Citigroup cannot be justified. 194Mr Henskens elicited admissions from Mr Shields (and others) that he was (and they were) aware that the Debts referred by Citigroup to Shield, both in the trial period and thereafter, were debts that had been written off. I do not think that anything turns on this: particularly bearing in mind the "entire agreement" provisions of cl 32 of the 2006 ASA (there were equivalent provisions in each of the earlier ASAs). 195Mr Darke submitted that, for the purposes of the 2005 and 2006 ASAs, the expression "primary assignment" meant debts that had not been the subject of any prior referral for the provision of Services, and that "tertiary assignments" meant the referral of a debt that had been the subject of one or more previous referral(s) for the provision of Services. In substance, this submission collapsed the distinction between secondary and tertiary assignments; and required reading the expression "tertiary assignment" as denoting assignment other than primary. 196Mr Darke based that submission on what he characterised as the variation to the 2004 ASA that had occurred in May 2004. 197Even if the 2004 ASA had been varied in the manner for which Shield contended - and this is the subject of issue 2 - it does not mean that the effect was to give the expression "tertiary assignment" a meaning other than its conventional meaning. Assuming for the sake of argument that the 2004 agreement had been varied as Shield contended, the obvious construction of the 2005 and 2006 ASAs is that the parties did not think it was necessary to provide any statement of the remuneration payable in relation to secondary assignments, because they did not contemplate that Citigroup would send secondary assignments to Shield. 198It seems to me if the terms of the 2005 and 2006 ASAs are unambiguous, then evidence of the conversations and emails in 2004, relating only to the 2004 ASA, cannot be used as an aid to the construction of the 2005 and 2006 ASAs. In my view, the expression "tertiary assignment" is unambiguous (with the conventional extension to which I have referred). 199Thus, I conclude that the operative expressions "primary assignment" and "tertiary assignment" should be given the meanings, set out at [192] above. 200In my view, this construction makes sound commercial sense, having regard to the commercial purposes sought to be achieved by the differing rates of commission on recoveries. It was common ground that (as one might expect) recovery became more difficult as the debt became older, in circumstances where previous attempts at locating the debtor and recovering the debt had proved fruitless. That is why the 2004 ASA (as drafted) provided for stepped increases in the rates of commission payable, from primary to secondary to tertiary assignments. For the same reason, the 2005 and 2006 ASAs provided for commission on tertiary assignments to be payable at double the rate applicable to primary assignments. 201In those circumstances, one would expect the concept of "primary assignment" to relate only to files that had been worked by Citigroup internally, and that had not been the subject of referral to an external agency. As Mr Shields' evidence established (and as the parties must be taken to have known), the hardest task in any debt recovery process was locating the debtor. Once the debtor was located, according to Mr Shields, some recovery was usually to be expected. 202Thus, files that had been the subject of a prior referral for Services (even if limited to conducting a skip trace) were likely to prove more difficult to work successfully. To put it the other way round: files that had not been the subject of a prior referral for Services were more likely to yield recoveries than files that had been the subject of a previous, unsuccessful, referral. And as the number of previous referrals increased, so, too, one might think, the difficulty of recovery would increase. 203A construction of "assignment" that includes any referral for the provision of a Service, even if only for the provision of a skip trace, is consistent with the commercial purpose underlying the remuneration scales, properly understood. 204Thus, in my view, the construction for which Shield contends should be preferred to the construction for which Citigroup contends. The latter submission effectively equates the difficulty of working a file that has not been the subject of a previous referral to the difficulty of working a file where previous attempts have been made, unsuccessfully, to locate the debtor. That equation ignores commercial reality. I do not think it likely that parties in the position of Shield and Citigroup, with the knowledge and experience that each of them possessed at the start of their contractual relationship, should be taken to have intended to contract on a basis that is inconsistent with - indeed, defies - commercial reality.

Issue 5: implied term as to reasonable remuneration 205On the view to which I have come of the proper construction of the 2006 ASA, there was an express term for Shield's remuneration in respect of primary and tertiary assignments, and an indication of an intention that Citigroup would not give secondary assignments to Shield. The same may be said of the 2005 ASA. 206The 2004 ASA did make provision for remuneration for secondary assignments. If (as I conclude at [290] below is the position) that agreement was varied in the manner for which Shield contends, then the variation has effect. If it was not, the (unvaried) express contractual stipulation has effect. 207The 2003 ASA made no express provision for remuneration for secondary assignments (it was to be negotiated, if Citigroup should give Shield secondary assignments). 208It is clear that neither party expected that Shield would provide its services gratuitously. Thus, to the extent that Citigroup may have sent Shield what were on the proper construction of the ASA in force at the time secondary assignments, the position, except for the 2004 ASA, is that: (1) there was no express provision as to remuneration; but (2) nor was there an expectation that the services would be provided gratuitously. 209The effect of cl 1 of the 2006 ASA (and of equivalent provisions in the earlier ASAs) was that: (1) Citigroup was not bound to refer Debts to Shield for the provision of Services; but (2) if and to the extent that Citigroup did refer Debts for the provision of such Services, Shield was bound to provide them. 210On the view to which I have come, item 2 of appendix B in the 2005 and 2006 ASAs, where it uses the expression "N/A" in relation to secondary assignments, records the parties' mutual intention or expectation was that Citigroup would not give secondary assignments to Shield. 211It does not follow that Citigroup would never give secondary assignments to Shield. Thus, if Citigroup (whether deliberately or by mistake) did give secondary assignments to Shield (or, adapting the language of cl 1, did request Shield to provide Services in respect of Debts where another agent had earlier been requested to provide Services), Shield was required, by cl 1(c) of the 2006 ASA, to provide those Services. 212The structure of each of the ASAs is that Shield agreed to provide Services, on request, to Citigroup. In each case, those Services were to be provided for reward. It would be an extraordinary construction of the ASAs that, in respect of a particular class of Services, Shield was required to provide them on request, but with no hope of reward. That consequence can be averted by the implication of a term for reasonable remuneration to the extent that remuneration for the particular Services was not expressly covered by the applicable ASA. 213The real dispute was whether the implied term for which Shield contended would be inconsistent with an express term of the ASAs. 214As to all but the 2004 ASA, there could be no inconsistency. Those agreements did not provide for remuneration in respect of secondary assignments. True it is that they contemplated (or assumed) that there would be no secondary assignments. But that is not to say that, if secondary assignments were given and accepted, Shield should not be entitled to remuneration. The implication of a term for reasonable remuneration in those circumstances is not inconsistent with the express provisions for remuneration in the cases of primary and tertiary assignments. 215As to the 2004 agreement: either as it stood or as it was varied (depending on the answer to issue 2), it provided for remuneration in respect of secondary assignments. There is thus neither need nor room for implication of a term. 216It follows, in my view, that there should be implied, into all ASAs save that for 2004, a term that Shield would be paid a reasonable remuneration if and to the extent that Citigroup did send it secondary referrals. It is not necessary to go in detail to the factors that have been enunciated as governing the implication of terms (see, by way of example only, BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266; Byrne v Australian Airline Limited (1995) 185 CLR 410). 217Since the position is governed, in all cases, either by the implication of a term or by an express term, there is no need to consider the question of quantum meruit outside the implication of a term for reasonable remuneration. 218That leaves the question: what is (or was) a reasonable rate of for secondary referrals? To my mind, the answer comes from what the parties negotiated when they actually turned their minds to the question. For the purposes of the 2004 ASA, they negotiated a rate of 50% for recoveries on all assignments other than primary assignments. That follows from my findings at [101] to [104] above and my conclusion, in relation to issues 2 and 4, at [290] below. 219Thus, I conclude, the parties having valued Shield's services in that way, the court should adopt that as the safest guide to implication of a rate where it is necessary to do so.

Issues 11(a), 14: good faith and discretion 220Mr Henskens submitted that the suggested implied term, in relation to the discretion given by cl 1.2 of appendix B to the 2006 ASA, would operate as "a limitation on the discretion". He submitted that the limitation sought could have been expressed in the contract, but was not. Thus, he submitted, there was no ground for its implication. Further, he submitted, the term was not required to give business efficacy to the contract. 221It may be said, equally, that if the parties had meant to stipulate for Citigroup's discretion to be untrammelled in its exercise by any concept of good faith or fair dealing, they could have said so. To my mind, the starting point, in a commercial contract, is that if the parties intend that a particular power or discretion should be so untrammelled, one would expect them to say so in express terms. 222As to business efficacy: implication of a term of reasonableness, as a qualification of an otherwise apparently untrammelled discretion, would have efficacy. It would prevent the party in whom the discretion is reposed from preventing, on arbitrary and irrational grounds, the other from receiving its sole contractual reward. 223That analysis suggests that the implication for which Shield contends should be made. But I think there are other reasons supporting the implication. 224It may be accepted that the requirement to invoice within three months of rendering of Services was of importance to Citigroup. Citigroup was entitled to know what it was being charged, and for what services the charges were being made. Clause 1.4 of appendix B of the 2006 ASA contemplated (as did the equivalent clauses - numbered 1.3 - in the earlier ASAs) that there might be disputes as to charges made by Shield. The three month limitation (if I can call it that) imposed by cl 1.2 was clearly intended to ensure that Citigroup had an opportunity of disputing any charges while the relevant events were still fresh in the minds of the relevant personnel. 225Thus, if the term of good faith for which Shield contends were to be implied, one factor to be balanced in considering the exercise of the discretion would be whether Citigroup had been prejudiced, in terms of its ability to dispute the charges, by delay. But that does not bear on the question of implication of a requirement for exercise in good faith. 226It was clearly conceivable that Shield might fail to invoice, or might invoice incorrectly, by reason of some mistake on Citigroup's part. Indeed, in this case, that is the position for which Shield contends. 227If the discretion given by cl 2 were untrammelled by any considerations of good faith, it would be open to Citigroup, notwithstanding that its acts or defaults were the effective cause of the non-compliance with cl 1.2, to exercise its discretion adversely to Shield by declining to pay proper charges, in respect of which otherwise there could be no dispute, for services that had been requested and rendered. 228To my mind, the court should be slow to conclude, in the context of a commercial contract, that one party might deprive the other of a (indeed, its sole) benefit under the contract by reason of non-compliance with a condition of entitlement, notwithstanding that the non-compliance arose only from the acts or defaults of the party in whom the discretion is vested. 229It follows, in my view, that the term for which Shield contends should be implied. I conclude that the discretion conferred by cl 1.2 of appendix B to the 2006 ASA is qualified by the implied requirement that, if the discretion arises for exercise, it must be exercised reasonably and in good faith having regard to all relevant circumstances.

Issues 11b, 12, 13: failure to invoice 230These issues require consideration of the operation or effect of cl 1.3 of appendix B to each of the 2003 to 2005 ASAs; of cl 1.4 (the equivalent of cl 1.3) of appendix B to the 2006 ASA; and, in addition, the effect of cl 1.2 of appendix B to the 2006 ASA. 231Shield contends that cl 1.3 (or cl 1.4, in the case of the 2006 ASA) is a mechanical provision, not a condition of entitlement. Thus, Mr Darke submitted, a failure to invoice in accordance with cl 1.3 (or cl 1.4) could amount at most to a breach of contract for which Citigroup was entitled to recover such damages as it might be able to prove. 232Citigroup contended that the relevant clause had to be read in the context of cl 3(a) of each of the ASAs, under which its obligation was to compensate Shield for Services "as set forth in Appendix B". Thus, Mr Henskens submitted, the obligation to invoice was a condition precedent to the accrual of any obligation on his client to pay for Services. 233It is not uncommon for contracts (particularly, but not exclusively, in the building, construction and infrastructure fields) to provide that it is a condition of entitlement to be paid that invoices, or progress claims, be rendered in accordance with stipulations set out in the contract. Depending on their precise terms, such clauses may be construed as making submission of an invoice, or payment claim, in accordance with the stipulated requirements, a condition of any entitlement to be paid. Of course, this would be subject to any inconsistent statutory command. 234The language of cl 1.3 does not on its face suggest that compliance with its requirements is a precondition to the accrual of an obligation to pay, or an entitlement to be paid, in respect of Services. 235I accept, as I have indicated already in connection with cl 1.2 of appendix B to the 2006 ASA, that there may be good reasons why someone who is obliged to pay for services rendered should wish to have the service provider submit invoices for those services promptly. One obvious reason, to which cl 1.4 (in the case of that agreement; cl 1.3 in the others) speaks, is to enable disputes to be identified, isolated and dealt with. But it does not follow that non-compliance with stipulations as to time and manner of invoices negates the obligation to pay, or the entitlement to be paid. In my view, clear words would be required to achieve that effect. 236Perhaps Citigroup realised this, and as a result inserted cl 1.2 into appendix B of the 2006 ASA. The clear intent of cl 1.2 - that invoices rendered more than 3 months after the date of rendering Services were only payable at Citigroup's discretion - casts some light on the meaning and effect of cl 1.4. It is unlikely that the parties would have agreed to cl 1.2 if cl 1.4 did the work that Mr Henskens submits it does. That may be an imperfect argument, because the topic of waiver was covered twice in the 2006 ASA (cls 7 and 35). Although the wording is different, the effect seems to me to be exactly the same. The same duplication appears in the 2004 and 2005 ASAs (cls 8 and 41(b) in each case). 237In any event, whatever may be the significance of cl 1.2 of appendix B to the 2006 ASA for the construction of cl 1.4 of the same appendix, it does not cast any light on the proper construction of cl 1.3 of appendix B to the earlier agreements. 238It is sufficient to say that one would need clear words to deprive a party to a commercial agreement such as the ASAs of its sole reward under those agreements. In my view, the language of cl 1.3 of appendix B to the earlier ASAs (cl 1.4 of appendix B to the 2006 ASA) does not go far enough. Thus, I accept the submission that it is procedural only. A failure by Shield to comply with the terms of that provision does not excuse Citigroup from its contractual obligation to pay Shield remuneration calculated in accordance with appendix B. 239If follows that Shield's entitlement to be paid, and Citigroup's obligation to pay, were not conditional on the issuing of an invoice. An invoice is a request (or demand) for payment of money that is already due and owing, not a step in the process whereby that money becomes due and owing. 240I should note that in this context, Mr Darke relied on the proposition that, where one party to a contract prevented that performance of another's obligation, or made it clear that performance of that obligation would not be accepted, then the other party was discharged from its obligation to tender performance of that obligation. 241The principle is not in doubt. See, for example, Peter Turnball and Co Pty Limited v Mundus Trading Co (Australasia) Pty Limited (1954) 90 CLR 235; Foran v Wight (1989) 168 CLR 385; World Best Holdings Ltd v Sarker [2010] NSWCA 24. 242In this case, application of the principle depends on a finding that the 2006 ASA was terminated by acceptance of Citigroup's breach and repudiation. If that finding were made then, at least in relation to Services that had been rendered less than three months prior to termination, it could well be said that it was the termination, flowing from Citigroup's breach or repudiation, that prevented performance of the clause 1.2 obligation to render invoices within three months. 243In this sense, application of the principle is effectively coextensive with a decision on the question of termination for breach and repudiation. And in respect of Services rendered more than three months before termination, the principle seems to have no application in any event. 244That leaves for consideration the effect of cl 1.2 of appendix B to the 2006 agreement. It follows from the terms of cl 1.2 that Citigroup is not obliged to pay if an invoice for Services is rendered more than three months after those Services have been provided. It follows, further, that the discretion conferred by the clause is enlivened in those circumstances. Issue 16: are the contracts fully executed? 245I do not understand this issue. Mr Henskens submitted that the contracts were fully executed, and thus that Citigroup could have no further liability under them. Mr Henskens did not submit that this was a case of accord and satisfaction, or account stated. 246The question, of whether the contracts have been fully executed, turns on a resolution of the question of what are the appropriate commission rates in respect of Services provided by Shield to Citigroup from time to time. If Shield has been paid all that is owing in respect of any particular referral then, to that extent, the contract may be said to be fully executed. But if Shield has been underpaid, then the ASA under which the referral was made cannot be said to have been fully executed, because, by hypothesis, one of Citigroup's obligations under that contract - the obligation to pay commission at the applicable rate - has not been performed in full.

Issues 28 and 29: miscellaneous contractual defences 247The contractual provisions relied upon in support of these defences are cl 2(e) of the ASAs, cl 1.5(d) of appendix B and cl 1.5(e) of appendix B of the 2006 ASA (or cls 1.4(d), (e) respectively of appendix B of the earlier ASAs). 248The relevant effect of cl 2(e) is that termination of the ASA operates to cancel immediately any instructions already given by Citigroup to Shield and not carried out. (I pause to note the use of yet another expression - "instructions" - to denote the request for services contemplated by cl 1(c) and, in my view, covered by the expression "assignment" in item 2 of appendix B.) 249Mr Darke submitted that cl 2(e) was irrelevant where, before termination, Shield had set up payment arrangements, because in those cases, he submitted, the "instructions" had been "carried out" in full. 250I do not accept that submission. As I have indicated parenthetically, the word "instructions" denotes requests made by Citigroup pursuant to cl 1(c) for the provision of Services. In Shield's case, by reference to the definition of Services in recital B, as expanded by cls 1.1 and 1.2 of appendix A, those Services include negotiating and receiving payment from debtors. In the case of payment arrangements, there were several steps: (1) first, Shield had to locate the debtor; (2) secondly, Shield had to negotiate a payment arrangement with the debtor; (3) thirdly, once the payment arrangement had been negotiated, Shield had to put in place such administrative arrangements (for example, a direct debit authority) as might facilitate performance of the arrangement; and (4) fourthly, as and when payments were received, Shield was bound to pay them into its trust account and account to Citigroup for them, and to report to Citigroup in respect of them, in accordance with items 3 and 4 of appendix A. 251The instructions necessarily comprehended the execution, where required, of all those steps in accordance with the applicable provisions of appendix A. It follows that carrying out those instructions required more than simply negotiating and putting in place the payment arrangements. It required also (as Shield's evidence made clear) the continued management or monitoring of those payment arrangements, and the ongoing performance of Shield's obligations in relation to banking, accounting and reporting. 252I conclude that, on its proper construction, cl 2(e) of the 2006 ASA meant that on termination of that ASA, the instructions to Shield were terminated, including (as to payment arrangements put in place before termination) the instructions to receive, process and pass on, in accordance with appendix A, payments under those arrangements. 253I add, although the point was not debated in submissions, that it seems to me to be a necessary corollary that the agency constituted by cl 1(c) also terminates, at least prospectively, from the date of termination. 254Clause 1.5 of appendix B is curiously drafted. The chapeau appears to have little to do with the five sub-paragraphs that follow. 255The chapeau specifies that fees are only payable when the debtor's remittance is honoured. Clearly enough, that simply regulates the right to remuneration to accommodate what might be thought to be a reasonable precaution on Citigroup's part. 256By contrast, paras (a) to (e) deal with the situation where an instruction in respect of a Debt is withdrawn. Paragraphs (a) to (c) stipulate the circumstances in which and the extent to which Shield was entitled to be reimbursed for disbursements incurred by it, in respect of the provision of Services for a Debt referred to it, where its instructions have been withdrawn. Paragraph (d) makes it clear that there is to be no reimbursement (I interpolate, for disbursements) where the instruction is withdrawn because the agreement has been terminated. Paragraph (e) makes it clear that the rights given by the preceding paragraphs constitutes Shield's only entitlements to receive payments on withdrawal of instructions. If instructions are withdrawn, Shield is "not entitled to any other payment (including loss of profits)...". 257It seems, from the drafting of para (e), that it and the four preceding paragraphs were intended to form part of a freestanding clause of item 1 of appendix B, and were not intended to be read in conjunction with the chapeau under cover of which they are to be found. 258Paragraph (d) seems to equate termination, or more accurately the consequences of termination as spelled out in cl 2(e) of the ASA (cancellation of instructions given but not carried out), to, or to regard cancellation as a form of, withdrawal of instructions. That is not an unusual or strained construction. 259Paragraph (e) operates to close off, or complete the entire delimitation of, the circumstances in which Shield is entitled to payment upon withdrawal of instructions. It makes clear, as I have suggested already, that Shield's sole rights in those circumstances are the rights specified in, and limited or qualified by, the four preceding paragraphs. 260However, there is nothing in para (e), read on its own or in conjunction with any or all of the preceding paragraphs (including para (d)), that requires the conclusions that: (1) entitlements (to payment) that have accrued before termination are lost, or negated, or discharged, upon and by virtue of withdrawal of instructions; or (2) that Citigroup is absolved from any responsibility to pay damages either in respect of a breach of contract prior to termination (and consequent withdrawal of instructions) or constituted by or arising out of termination of the contract. 261In this case, Shield's contractual claims fall into two categories. The first category is alleged underpayments during the subsistence of one or other of the ASAs. The second categories is damages for breach (including repudiation) of the 2006 ASA. Neither of those claims can be described as being one caused by, or arising out of, the withdrawal of all Shield's instructions by reason of cancellation of instructions under cl 2(e). 262Thus, I conclude, neither para (d) nor para (e) of cl 1.5 of appendix A to the 2006 ASA bars Shield's contractual claims for damages in these proceedings. Nor do those two paragraphs, read in conjunction with the three other paragraphs appearing under cl 1.5, have that effect. 263So far, I have dealt only with the effect of the clauses in question (cl 2(e) and cls 1.5(d), (e) of appendix B) on Shield's contractual claims. That is the issue posed by Shield (issue 28). 264The issue posed by Citigroup (issue 29) goes further. It inquires whether Citigroup's reliance on any or all of those clauses amounts to unconscionable conduct in contravention of s 51AC(1) of the (former) Trade Practices Act 1974 (Cth). 265Reliance on those clauses should not be so characterised. On their proper construction and for the reasons just given, those clauses do not operate to exclude or bar any relevant liability. Thus, reliance on them cannot be unconscionable. 266It may be that issue 29 (which is obscurely drafted) is intended to raise the availability of the relevant clauses as an answer to any claim for damages for unconscionable conduct. In my view, the clauses do not so operate. The "event" by which those damages are said to be sustained would be the alleged unconscionable conduct. That conduct may involve, or relate to, the termination of the 2006 ASA and the consequent cancellation of (and hence withdrawal of) instructions. But it does not follow that the damages claimed are damages caused by, or arising out of, the termination of instructions.

Issues 2 and 4: amendment of the 2004 ASA 267I have set out the facts to which the parties referred in relation to this issue, at [95] to [104] above. 268Shield contends that, in the circumstances that I have described in those paragraphs, the parties evinced and gave effect to an intention to amend the 2004 ASA, which agreement had been made less than a month before the exchange of emails referred to at [103], [104] above. Citigroup contends to the contrary. Mr Henskens submitted that there was no intention to amend but that, rather, what the parties did was record an agreement or understanding that Citigroup would not refer secondary assignments to Shield. 269The 2004 ASA contained an "entire agreement" clause, cl 39. It contained also a modification provision, cl 41(a), which was in the same terms as cl 34 of the 2006 ASA, set out at [163] above. 270It follows from the entire agreement clause that the discussions between Mr Colomb and Mr Dayeian in late March 2004, before the 2004 ASA was signed, have been subsumed into the written agreement that was signed. There has been no application made to rectify the 2004 ASA. 271Of course, what those discussions do indicate is that Citigroup did not propose to send secondary assignments to Shield, because it was not prepared to pay Shield's rate. 272The discussions between Ms Roddom and Mr Dayeian referred to at [99] to [102] above could not, of themselves, have given rise to a variation of the 2004 ASA. That follows from cl 41(a). 273However, Shield relies on the email exchange between Ms Roddom and Mr Dayeian on 4/5 May 2004 (see at [103], [104] above). Mr Darke submitted that the email exchange constituted writing, for the purposes of cl 41(a); and that Mr Dayeian's return email satisfied the requirement that any variation be "duly signed" by Citigroup. It concluded: Thanks, Adam 274In my view, the formal requirements of cl 41(a) were satisfied by that email exchange: in particular, by Mr Dayeian's acceptance and "signature" in the manner just indicated. 275Mr Henskens submitted that there was no intention to vary shown in the email exchange, viewed in the context of the conversations both immediately and more remotely preceding it. 276He submitted, further, that there was no consideration given to support any variation that could be spelled out of the email exchange. 277I do not regard the discussions between Messrs Colomb and Dayeian as providing any assistance in the resolution of these issues. To my mind, they do no more than express the subjective intentions of each party, before the parties fixed and documented their relationship (for the contract year then about to start) in the 2004 ASA. What is at issue is whether the 2004 ASA was varied. That requires consideration of the circumstances alleged to give rise to a variation. 278Further, and because the variation relied upon is (of necessity) one said to be in writing, the immediately preceding discussions between Ms Roddom and Mr Dayeian are not legitimate aids to construction. I accept of course that Ms Roddom's email referred to "as discussed" and to "as previous discussions held". However, what is relevant for the disposition of these issues is the content of the email, not the content of the discussions from which the email may have sprung. 279It is clear that Ms Roddom wanted to document three things, each of which involved some variation to the terms of the 2004 ASA: (1) first, she wanted acknowledgment of Shield's authority to negotiate lump sum settlements down to 75% of the principal owing; (2) secondly, she wanted confirmation of Shield's authority to enter into payment arrangements (i.e., payment by instalments); and (3) thirdly, she wanted confirmation of the rates that would be paid to Shield in respect of work assigned to it: 25% (of recoveries) for primary assignments and 50% for all others. 280Mr Dayeian was asked to confirm those "points". He did so. 281There is no doubt that the first two items required variation to the 2004 ASA. Clause 2.4 of appendix A to that agreement stated as follows: 2.4 If following the making of a demand for payment of a Debt by Agency, a debtor: (a) offers to pay an amount less than the amount of the Debt in full satisfaction of that Debt; or (b) offers to pay the amount due by instalments, then Agency (unless otherwise instructed by Citibank) must not accept the offer but should promptly refer it to Citibank for direction. 282Thus, the parties must have intended the email exchange to operate as a variation of the 2004 ASA in respect of lump sum settlements and payment arrangements. That deals with one of Mr Henskens' submissions, which was to the effect that one would not lightly impute to the parties an intention to vary the agreement within a month of its being made. Likewise, the conclusion that the parties intended to vary the 2004 ASA in at least two respects deals with the submission that the email exchange was not to be treated as having contractual effect. 283If the email exchange was intended to operate as a variation of the 2004 ASA in respect of two of the three points covered by it (as I think it was), why then was it not intended to operate as a variation in respect of the third point? Were the parties setting out in a form of writing their agreement to vary the 2004 ASA in two respects, but not in the third respect that they recorded? The language of the email, seeking confirmation of each of the three points, is inconsistent with the suggestion that two were, but one was not, intended to have contractual effect. 284In my view, subject to the question of consideration, the email exchange must be regarded as effecting variations to the 2004 ASA in respect of each of the three subjects with which it dealt. 285The submission as to want of consideration came rather late in the piece. However, it must be dealt with. In my view, one can find consideration either by analysing what moved from each party or by looking at the benefits that each would derive. 286The consideration moving from Citigroup was its promise to pay commission on assignments other than primary assignments at the rate of 50%. In practical terms, this amounted to a promise to pay commission on secondary assignments at that rate rather than at the rate of 35% stated in the 2004 ASA. 287The consideration moving from Shield was its promise to undertake and finalise, within the limits of the authority conferred, negotiations to enter into lump sum or instalment arrangements with debtor. 288In a practical sense, there was real benefit to each party. Within the limits of the authority granted by the exchange of emails, Shield was free to negotiate lump sum and instalment payment arrangements. It was spared the need to seek authority for each and every compromise. And equally, as long as Shield stayed within those limits, Citibank was spared the time and trouble of responding to numerous requests for authority to settle either at less than the principal amount of the debt or through an instalment payment arrangement. 289In my view, the saving of administrative time, to both parties, represents a significant practical or commercial benefit. 290Thus, I conclude, the 2004 ASA was varied, among other things, by obliging Citigroup to pay, and entitling Shield to receive, commission at the rate of 50% of recoveries on all assignments other than primary assignments.

Issues 6 and 7: the "Specials" agreements 291For the reasons given at [112] to [124] above, I conclude that the "Shield Specials" agreement was made, in respect of Debts that had been previously assigned to Creditcorp and B&P. 292For the reasons given at [126] to [131] above, I conclude that the "Brodie's Specials" agreement was made, in respect of Debts that had previously been assigned to Brodies.

Issues 8 and 9: the correct classification of the Debts the subject of Shield's claim 293For the reasons that I have given at [169] to [204], I conclude, for the purposes of the 2003, 2005 and 2006 ASAs, that: (1) the referral of a Debt to Shield was a primary assignment only if that Debt had not been referred to another mercantile agent, whether before or after write-off, for the provision of any of the Services defined in recital B of appendix A to that ASA; (2) the referral of a Debt to Shield was a secondary assignment if there had only been one such prior referral to another mercantile agent for the provision of any of such Services; and (3) the referral of a Debt to Shield was a tertiary assignment if there had been two or more such prior referrals of that Debt to another mercantile agent for the provision of any of such Services. 294As to the 2004 ASA: (1) the referral of a Debt to Shield was a primary assignment if there had been no prior referral of that Debt to another mercantile agent for the provision of any of such Services; and (2) in respect of debts that had been the subject of one or more previous referrals to a mercantile agent for the provision of such Services, it is unnecessary to classify the assignment to Shield as secondary or tertiary because, by reason of the variation to the 2004 ASA, Shield was entitled to be remunerated at the rate of 50% on all collections actually effected in respect of each such Debt. 295However, where a Debt referred to Shield was the subject of the "Shield Specials" agreement made relating to debts previously assigned to Creditcorp or B&P, or the subject of the "Brodies Specials" agreement made in respect of debts the subject of a previous assignment to Brodies, Shield was only entitled to commission on collections at the rate of 25%, regardless of the proper classification of the assignment to Shield (as secondary or tertiary).

Issues 10: breach by underpayment of commission 296Shield's claim, as opened, related to some 383 Debts. By the time the hearing finished, the claim had become limited to some 380 Debts. 297I do not propose at this point to go through the individual debt files (or the summaries of them) one by one. The parties can do that, and work out for themselves the consequences of my reasons, guided by what I say at [365] to [381] below. 298It is enough to note that, for the 2003, 2005 and 2006 agreements, Citigroup was obliged to pay commission to Shield at the rate of 25% for primary assignments and 50% for tertiary assignments. The rate of payment for secondary assignments (if there were any) depends on determination of a reasonable rate for the services, which I have dealt with under issue 5. As I have concluded at [218] above, that rate is 50%. 299However, after the "Shield Specials" agreement was made, Citigroup was only obliged to pay commission at the rate of 25% in respect of any referrals that are properly to be classified as subject to that agreement. 300Likewise, after the "Brodies Specials" agreement was made, Citigroup was only liable to pay commission at the rate of 25% in respect of any referrals that are properly to be classified as subject to that agreement. 301Under the 2004 ASA as varied, Citigroup was liable to pay commission at the rate of 50% in respect of any referral to Shield where the subject Debt had been the subject of a prior referral to a mercantile agent for the provision of any of the debt recovery services defined in recital B of that ASA, amplified by appendix A to that ASA.

Issue 15: good faith exercise of discretion 302No invoice given by Shield to Citigroup pursuant to any ASA remains unpaid. Shield has not given Citigroup any invoice for what Shield claims are the underpaid commissions in respect of referrals under any ASA. 303In those circumstances, the occasion for Citigroup to exercise its discretion under cl 1.2 of appendix B to the 2006 ASA has not arisen. 304Thus, this issue does not require consideration. Nor could it be determined, in the absence of material facts. 305I should however note that Mr Henskens submitted that if the question of exercise of the discretion were to arise, it was clear how Citigroup would exercise it: namely, to decide to pay no commissions more than those that it had paid. That submission presumably reflected both Citigroup's view that the ASAs required no more; and, in any event, what were said to be (and what were stated to representatives of Shield to be) Citigroup's invariable policies and procedures. 306The difficulty with this submission is that, if the discretion did arise for exercise, the hypothetical situation enlivening it would be that Citigroup had underpaid on the proper construction of the relevant ASA. Thus, the first rationale would be irrelevant. And the second rationale, which would insist on the primacy of Citigroup's policies and procedures over its obligations under the ASAs, could be thought to be lacking in good faith. 307Mr Darke submitted that Citigroup had caused the problem by wrongly classifying as primary assignments which were secondary or tertiary (depending on one's view of the construction of the relevant parts of the ASAs). Thus, he submitted, since it was Citigroup's own wrongdoing that led to the failure to invoice within three months, a good faith exercise of the discretion (assuming it to be enlivened) would require Citigroup to accept the invoices on their merits and assess them accordingly. 308As I have indicated, it is inappropriate to express a concluded view on these contentions.

Issues 11c, d, 17: repudiation of the 2006 ASA 309The principal conversations, on which attention focused in the course of submissions, were those that occurred on 8 November 2006. However, those conversations cannot be taken in isolation. It is necessary to have regard to the whole sequence of discussions between representatives of Shield and representatives of Citigroup from late October 2006 when, according to Shield, the wrongful classification of files and consequent undercharging were discovered. 310I referred at [136] above to Mr Bolger's evidence of discovery of what he regarded as an incorrectly classified file. 311According to Mr Bolger and Mr Colomb, they discussed the problem with Ms Dunk. It is common ground that Mr Bolger queried the classification of the file because, according to the notes, it had been sent to other agents (he said, Collection House and Brodies) before it had been sent to Shield. Ms Dunk maintained that the file had been correctly classified as a primary assignment. Mr Bolger maintained that it had been incorrectly classified. 312Mr Bolger said that he had a second discussion with Ms Dunk that same day, in the course of which he asked whether the other agents had been collecting the full balance of the account, or arrears, and Ms Dunk replied "both". Ms Dunk denied that there was a conversation to that effect. Mr Bolger said that he made a file note of these conversations with Ms Dunk. He produced that file note. It confirms, in particular, that the second conversation (it is common ground that there was some second conversation) was in substantially the terms that Mr Bolger set out. 313Consistent with what I have said at [31] above, I accept that Mr Bolger's file note is in substance an accurate record of the substance of the relevant conversations. Thus, to the extent that his evidence of the conversations differs from that of Ms Dunk, I prefer his. I find that the conversations set out in the file note occurred, substantially reflected in the terms to which Mr Bolger deposed. 314It is common ground that, on about 24 October 2006, Mr Bolger spoke to Ms Dunk about the problem, and that Ms Dunk said that she would ask Ms Jones to call Mr Colomb. Ms Jones did so immediately after Ms Dunk hung up (they sat next to each other in Citigroup's offices). 315There was some conflict, on the affidavits, between Mr Colomb's account of his conversation with Ms Jones on 24 October 2006, and the account of that conversation given by Ms Jones. Ms Jones' account was supported, to an extent, by Ms Dunk, who was able to hear what Ms Jones said. 316However, Mr Colomb made a diary note of the conversation. In cross-examination, Ms Jones accepted the substantial accuracy of all but one paragraph, which (she said) "doesn't ring any bells". 317Since Ms Jones' lack of recollection of the part which didn't "ring any bells" was not supported by Ms Dunk, I proceed on the basis that the note is a substantially accurate record, or perhaps summary, of what was said in the conversation. The note reads as follows: # Received call from Jennifer Dunk confirming who would be available for BISO. Advised Ian, Jo, Col & Mark she then questioned why we thought accounts should be 50% when 25% has always been that way, Explained because outsourced to other agent. # Received call from Melissa Jones stating that the practice of the Collection unit outsourcing had been going on far at least 18 mths and that it was standard pratice for them to collect arrears or attempt to settle. #Explained to Melissa Jones that our contract clearly states that any file outsourced to another agency attracts 50% commission according to Melissa Jones these files are still primary in their system. #Shield Mercantile have always done work at 50% and originally only did tertiary then was given primary at 25% very clearly stated. This has been changed & we have not been advised. #Melissa has indicated she only wants one primary agent doing work this includes the ones Collection House have worked as she does not have the budget to pay any more, if we choose not to do this she will need to look at getting another agent to do it. That it would be robbery for us to charge 50% on files where the type of work Collection House has been done on these. #that with the amount of work we get and the future work we would be likely to get in the future we should just wear this. #she liked the model of 1 primary agent & would not split the Collection House work or pay 50% on it so we either accept it or she goes will go to another agent. 318It was only the penultimate paragraph which caused Ms Jones any doubt. I am inclined to accept that paragraph, in part because I see no reason to doubt the substantial accuracy of Mr Colombs' file note, in part because Ms Jones did not deny it in cross-examination, and in part because what is there attributed to her is consistent with Citigroup's approach to the problem of alleged underpayments. 319Mr Colomb said that he had a further conversation with Ms Jones on 25 October 2006. According to him, Ms Jones "was more conciliatory". Again according to Mr Colomb, Ms Jones agreed to send to Shield only files that had not been worked by anyone other than Citigroup itself; other files would be sent to other agents. 320Ms Jones denied aspects of this conversation. However, I formed the view that her denial was based more on her understanding (at the time her affidavit was sworn) of Citigroup's procedures at the relevant time, than on actual recollection. The substance of Mr Colomb's account was supported by a file note. Again, I accept that his file note is a substantially accurate record of the relevant conversation. 321There was a further conversation between Mr Colomb and Ms Jones on 27 October 2006. Mr Colomb asked for information to enable Shield to quantify the undercharging. Ms Jones accepted that there was such a request. However, there is some dispute as to what followed. Again, I accept Mr Colomb's file note as substantially accurate. I note that, in cross-examination, Ms Jones appeared to accept the substance of that file note. Thus, I find that, in that conversation: (1) Ms Jones said that Citigroup would proceed to allocate the files on the basis that had been discussed on 25 October 2006; but that (2) whatever undercharging Shield might establish would not be paid, whether it was less than $100,000.00 (as she believed) or as high as $1 million. 322In relation to the second point, again I am comforted in accepting it because it does reflect the attitude taken by Citigroup at this time. Likewise, the concluding words in Mr Colomb's file notes are consistent with Citigroup's approach. Those words are: The decision would then be up to us if we wished to continue the relationship. 323It appears that Ms Roddom had become involved in the issue - at least, on Shield's side - in late October 2006. She spoke to Mr Colomb, who said that he was going to speak to Ms Jones. Ms Roddom agreed to wait until this had happened. 324It is I think common ground that all of Ms Roddom's relevant discussions with representatives of Citigroup, on the related topics of alleged misclassification and consequent undercharging, occurred on 8 November 2006. 325It is also common ground that, on the morning of 8 November 2006, Ms Roddom and Mr Skelton met Ms Jones at a coffee shop near Citigroup's offices (the coffee shop meeting). 326Reviewing the differing accounts of that meeting given by Ms Roddom and Ms Jones, I prefer, and in substance accept, the evidence given by Ms Roddom. I do that for a number of reasons. The first is my general assessment of Ms Roddom as a reliable witness (see at [37] above). Secondly, when Ms Roddom was cross-examined in relation to the coffee shop meeting, she adhered to the substance of the evidence given by her in her affidavit. Thirdly, and by contrast, Ms Jones had given in her affidavit an account substantially different to Ms Roddom's of relevant parts of the conversation. But, when cross-examined on that evidence, her recollection fell far short of what had been said in the affidavit. 327Here, as elsewhere, I have come to the conclusion that Ms Jones' evidence, which was not supported by any contemporaneous record, was based not so much on any recollection of the relevant events but, rather, on reconstruction informed by her understanding of what Citigroup's policies and procedures at the time would have required. 328I note that, in his affidavit, Mr Skelton gave evidence corroborative of Ms Roddom's account of the coffee shop meeting. However, in cross-examination, Mr Skelton was unable to recall the detail or substance of that meeting. In those circumstances, I do not place any weight on the corroboration contained in his affidavit. 329Based on my preference for this aspect of Ms Roddom's evidence over the opposing evidence of Ms Jones, I make the following findings about the coffee shop meeting: (1) Ms Roddom said words to the effect that Ms Jones was aware of the undercharging; the amount involved could be up to $100,000.00; and the issue could be resolved if Shield were to invoice Citigroup "an extra $20,000.00 a month for the next six months"; (2) Ms Jones said that no such invoice would be paid; and that if one were submitted in in the future "and if [Mr Vicente is] not around it might get passed but I doubt it"; (3) there was discussion as to whether Shield should have known, through reading the relevant file notes, that other agents had been instructed earlier on the particular files; (4) Ms Roddom reiterated that Citibank should pay what she regarded as the undercharged commission owing; (5) Ms Jones asked what Shield would do if Citigroup did not pay; and (6) Ms Jones stated that Citigroup would not pay. 330Although what I have just set out is based on Ms Roddom's account of the conversation in her affidavit, much of it finds support either in Ms Jones' affidavit or Ms Jones' cross-examination on the topic of the meeting. 331Ms Roddom said that, when she returned to Shield's offices, she spoke to Mr Colomb. Thereafter, she said, she had a brief telephone conversation with Ms Jones. In the course of that conversation, according to Ms Roddom, she said that: A solution is needed in relation to this dispute before we can process any future work, but we will continue to action all current portfolios that Citigroup has referred to Shield. 332Ms Jones did not in her affidavit deny that there was such a conversation. 333The next event of 8 November 2006 was the telephone conversation between Ms Roddom and, later, Mr Colomb on behalf of Shield and Ms Jones and Mr Vicente on behalf of Citigroup. 334Mr Skelton was present with Ms Roddom for part of that conversation, but could not recollect any of what was said. 335For the reasons that I have given at [36] to [46] above, I accept the substantial accuracy of Ms Roddom's file notes (handwritten and typed) of the conversation. Accordingly, I accept the substantial accuracy of her evidence, based as it is on those file notes; and I accept it in preference to the evidence of Ms Jones or Mr Vicente to the extent that there is any diversion of substance between their respective accounts of the conversation. In doing that, I take into account (without going into further detail) the matters referred to at [43] and [44] above. 336In those circumstances, the simplest way to make findings as to what was said in the telephone conversation is to set out in full Ms Roddom's typed file note, including its various abbreviations, misspellings and the like: Deborah Roddom - recvd call from Meliisa Jones introduced Peter Vincente On speaker phone. (Col Skelton present in Deb's Office). P.V - introduced himself and where he was from and then asked the question was is Shield Mercantile problem, why are you ceasing action on work. D.R - Explained the circumstances to hand on a portfolio of files sent to Shield Mercantile which had been outsourced previously and then onforwarded to Shield Mercantile as 25% rate which we believe and that this was also agreed with parties of Citigroup - all we are requesting is to have this matter resolve to both our mutual satisfaction. Melissa and myself have agreed on a way this could be handled and resolved very quickly. P.V - Interjected and stated Deborah let me do some debunking of the myths you are giving me: Global policy and procedures within CBG have not changed - 1st referral on-shore assign 25% - files may go to on-shore for trace only reasons then after 30 days returned to CBG to be worked again internally then assigned on-shore to 1st referral agent at 25% Deborah do you understand - D.R - YES: went to explain that his own CBG people had also agreed that there was about a 15% of files which came to Shield affected outside of your guidelines for 25% referral, What Shield are asking for is to identify these and send an invoice and CBG would try to assist and with this identification. P.V - Stop there, there is nothing to identify - D. R - that is not the case as we have explained. P.V - are you calling me a liar D.R - No I never stated that P.V - then you are stating Iam lying to you D.R - no - you are twisting the conversation - Melissa can you please explain to Peter PV - keep repeating over/over Citigroup's global policy and do you understand. DR - yes - that is not the issue at hand. PV - repeated global policy once again. DR - I understand this - but we have files that came to Shield Mercantile as primary 25% and that Citigroup staff have identified this. PV - then placed call on hold M.J - came on line advised PV all her issue was to identify the accounts in question. PV - placed call on hold once again. PV came on phone - advised MJ whom she dealt with said all discussions re this matter where between Scott Colomb and herself, he requested to speak to Scott Colomb. (conference call set up between Citigroup, Shield NSW & Shield VIC) IN CONFERENCE - PV-MJ- DR-SC-CS PV - asked Scott the issue he then went into Citigroups global policies and procedures His policy 90-180 pre woff 15% (sjip trace only) Skip trace - w/off 180-270 1st referral agency 2nd referral agency 50% Discussed again Citigroup model and how it works SC - agreed that he understood Citigroups model then went to explain Shield Mercantile Model which has been in place since inception and that Citigroup knew this > PV - said Citigroup had a model and that is it. Stated the debate over fees is all clear in their model. Skip - 180 what they do prior is their issue. 270 day files sent to outsource 25% what do Shield Mercantile expect to extra dollar's because Citigroup did a datawash or accessed up-date info - no response from Scott. PV - kept asking the question, do you want our 1st replacement work? SC - stated going forwarded this is not the issue - we have a matter which needs to be resolved mutually by both parties. PV - LOOK - stop I am pulling rank now. If you believe we have underpaid Shield Mercantile. This could get messy. No where in the contract (which I have read on the train from Wahronga) does it state what we have to pay you and I am not interested in Shield Mercantile Model. Once again no where in the contract does it state what Citigroup pays Shield Mercantile PV - than again asked - do you want our work - our model is 90-180 days 25% 270 50% SC - once again this not the issue as discussed with Melissa and Manu. PV - cut Scott off - not interested I make the decisions - sign off- not them, they don't have this authority. What you are challenging are the tools Citigroup use. SC - tried to re-address the issue at hand PV - cut Scott off I do not believe the undercharging and go forward on his Citigroup model. Do you know the revenue from Citigroup to Shield Mercantile in the region of 2 million$ SC - advised this is not the issue, we are trying to resolve. PV - I do not believe this issue, he then asked what are you going to do. SC - replied cease recovery action on new files until a mutual resolution can be achieved, and continue on the relationship. PV - so you are holding the relationship at GUNPOINT SC - No Peter, I did not say that - repeated we want to come to a mutual resolution to this undercharge matter. PV - I do not consider Shield Mercantile was undercharged. SC - stated our model primary - 1st placement from Citigroup direct to agent 25% PV - that might be your model but it is not and never has been Citigroup model and it has never been in place before Melissa Jones or myself came to Citigroup. SC - How do we get this issue resolved. PV - I do not believe or consider any undercharging - what do you want to do SC - what do you wish us to do PV - What do you mean by ceasing action on files - he then asked Melissa to set up a meeting to-morrow 9/11/06 with the Corporate lawyer Colin McCann to look at stoppage clause. What is Shield Mercantile's answer to this - are you going to persue this - when can I have an answer. SC - Peter I need to ponder this and call you back, PV - when to-day, to-night SC - Said possible to-morrow Call terminated - no result. 337In case it is not clear from what I have said already, I find that this file note is a substantially accurate record of the conversation. In making that finding, I take into account (without going into detail) significant concessions made by Ms Jones and Mr Vicente either as to its accuracy or as to the accuracy of the factual issues that underlie various statements said to have been made by Mr Vicente. I take into account also that (as appears from the file note and as appeared from Ms Roddom's oral evidence) Mr Vicente appears to have spoken in a dominating (if not domineering) way, and to have sought to cut off all discussion on any topic that was inconsistent with his view of the parties' rights and obligations. That is of some relevance, because the impression that I formed, observing Mr Vicente in the witness box, is that he is a strong and forthright character, and someone who does not readily brook any opposition to his view of what is correct. Thus, I find it inherently likely that he would have spoken in the manner attributed to him in the file note. 338Mr Colomb made a diary note of so much of the conversation as had involved him (and of a subsequent conversation with Mr Vicente the same evening). That note appears on his diary for the date 8 November 2006. However, it is dated in hand "8/10/06" with the figure "10" being overwritten with the figure "11". That circumstance was said to detract from the authenticity of the diary note. The question need not be resolved, in view of my acceptance of the authenticity and accuracy of Ms Roddom's file note. 339I do however note that according to Mr Colomb's affidavit, he said, in the course of the conversation, that he had "spoken to Manu [Shinghal], Melissa [Jones] and Jennifer [Dunk] who have all confirmed that undercharging occurred". 340Mr Colomb gave no evidence in his affidavit of any such prior discussions with Mr Shinghal or Ms Dunk to that effect. He produced no notes of any such discussions. Nor did his diary note of the conversation of 8 November 2006 refer to prior conversations, of the kind alleged, with Mr Shinghal or Ms Dunk. Finally, in cross-examination, Mr Colomb accepted that there had been no such discussions. That aspect of his evidence does not inspire me with any degree of confidence in the accuracy of Mr Colomb's account, as set out in his affidavit. Nor does it inspire me with any degree of confidence in the reliability of Mr Colomb as a witness. 341After the conference call, Mr Colomb discussed the issues with Mr Shields. Thereafter, at Mr Shields' direction, Mr Colomb telephoned Mr Vicente once more and said words to the following effect: You have broken the rules of the relationship and our trust and we'll be stopping work until this matter is resolved. 342According to Mr Colomb's diary note, he said words to the effect: None of us wants to end in dispute and... it will be best if the two organisations relationship ended before that. 343According to Mr Vicente, Mr Colomb said that Shield would "stop work until this matter is resolved", to which Mr Vicente replied "so the relationship is over". 344There is a dispute between Mr Vicente and Mr Colomb as to whether (as Mr Vicente said) there was a later discussion, in which Mr Vicente enquired if Mr Shields were aware of what had happened, and Mr Colomb confirmed that he was. To the extent that it is relevant, I accept this aspect of Mr Vicente's evidence in preference to Mr Colomb's. 345Further, I accept the substantial accuracy of Mr Vicente's account of what was, on his evidence, the first (and on Mr Colomb's evidence, the only) telephone discussion between them following the conference call. I do so because on 10 November 2006 Ms Jones wrote to Shield in the following terms (omitting formal parts): We refer to our recent discussion on the 8th November 2006 As a result of the above-mentioned discussion, Citigroup believe the relationship with Shield Mercantile to have been terminated as of the 8th November 2006. We appreciate the assistance you have been thus far and acknowledge your commitment to ensuring that the transition of this process remains as seamless as possible. Should you have any queries please do not hesitate to contact us.

Termination and repudiation: the relevant principles 346The principles in relation to repudiation are not in doubt. A party to a contract will repudiate it where it evinces an intention no longer to be bound by the contract, or where it makes it clear that it will perform the contract only in a manner substantially inconsistent with its obligations (properly construed, if this is in issue) and in no other way. It is unnecessary to illuminate that statement by the citation of authority. The parties' submissions 347Mr Darke submitted that the provisions of the 2006 ASA as to remuneration (cl 3(a)), supplemented by any implied promise to pay a reasonable remuneration, was an essential term of the agreement, any breach of which gave Shield the right to terminate the agreement. Alternatively, he submitted, if it were to be regarded as a non-essential term, Citigroup's breaches were such as to justify termination. He relied on the decision in Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115 at [47] - [48], [54] - [55]. 348Mr Henskens did not appear to dispute that the applicable legal principles were as stated by Mr Darke. Mr Henskens was concerned to submit, rather, that there was no breach however the provisions alleged to have been breached might be classified. 349Mr Henskens submitted that at most, Citigroup's conduct, assuming that the 2006 ASA were to be construed as Shield submitted it should be, reflected no more than a "mere honest misapprehension" or "a view honestly held and consistent with [Citigroup's] policy documents and invariable way of assigning debts to Mercantile agents" (closing written submissions, [94]). Analysis and decision: failure to pay as required 350In my view, Mr Darke's primary submission is correct. Clause 3(a) (including in this, without further reference, any implied promise as to reasonable remuneration), read in conjunction with item 2 of appendix B, constituted the only real or significant benefit that the 2006 ASA conferred on Shield. It was, as Mr Darke submitted, "the sole reward for the debt services Shield was bound to provide under that agreement" (closing written submissions, [62]). In those circumstances, it is easy to infer, and I do, that Shield would not have entered into the 2006 ASA (or, for that matter, the prior ASAs) unless it had been assured of strict and literal performance of the payment obligations contained in it. 351Equally, it is open to infer, and I do, that Citigroup must have been aware of this. Why else would a mercantile agent take on the time - consuming and labour - intensive work of debt collection, unless assured of payment in full of the contractual reward? The force of that rhetorical question is amplified by the consideration (which again reflects something that Citigroup must have known) that approximately 75% of debt files referred yield no result, so that the costs involved in conducting the debt recollection business must be recovered, together with some allowance for profit, from the other 25%. If 100% of cost recovery, and 100% of profits, come from only 25% of the work undertaken, the importance of full payment, in accordance with the relevant contract, for that successful work is clear. 352On that analysis, any breach of the term as to remuneration would entitle Shield to terminate the 2006 ASA. For the reasons that I give at [365] to [381] below, in discussing the detail of the 380 files in question, there were breaches of that obligation; and to the extent that it matters, those breaches went far further than Citigroup was prepared to concede. 353If, contrary to my view, the matter is regarded as one of serious breach of a non-essential (or "intermediate") term, it is necessary to enquire whether the breaches went to the root of the contract because they deprived Shield of a substantial part of its contractual reward. Again for the reasons that I give in analysing the 380 files below, the breaches were sufficiently widespread and serious to justify termination on this ground. Analysis and decision: repudiation other than by failure to pay 354I accept that Citigroup's view of its obligations was honestly held by its relevant personnel (in particular, by Mr Vicente). However, in my view, Mr Vicente's conduct (including what he said during the conference call on 8 November 2006, as understood in the light of what had passed between, in particular, Ms Jones, Mr Colomb and Ms Roddom in early conversations) amounted to more than a mere honest insistence on a wrong interpretation of the ASAs. In my mind, the proper conclusion to be drawn from what Mr Vicente said is that Citigroup was not prepared to assign work to Shield unless Shield accepted Citigroup's view of the remuneration payable; and that this was so whether or not that view were in accordance with the 2006 ASA. 355In DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423, Stephen, Mason and Jacobs JJ accepted that the intention to repudiate a contract could not be attributed to a party which, although asserting a wrong view of the contract because it believed that view to be correct, was nonetheless willing to perform the contract according to its terms, whatever they might be. As their Honours said at 432, such a party "may be willing to recognise his heresy once the true doctrine is enunciated or he may be willing to accept an authoritative exposition of the correct interpretation". 356In my view, there is nothing in Mr Vicente's words and deeds, or more generally in the words and deeds of Citigroup's relevant employees, to indicate that they were willing to listen to any view other than their own as to what the ASAs provided. It is in my view clear, from what Mr Vicente said during the conference call of 8 November 2006, that Citigroup would only assign work to Shield if Shield accepted Citigroup's classification of the work assigned, and hence of the remuneration payable. 357That does not resolve this aspect of the question of repudiation. Citigroup was not bound to refer any work to Shield. Thus, a refusal to assign work could not amount to a repudiation. It must follow that a refusal to assign work except on terms inconsistent with the contract could not amount to a repudiation. 358There is, however, more. Mr Vicente's refusal related not only to future work, but also for payment for past work. It is clear that Mr Vicente's view, in relation to past work as well as possible future work, was that Citigroup was not prepared to pay for services rendered except according to its understanding of the classification of the files (regardless of the proper construction of the ASA) and its understanding of the commission payable (again, regardless of the proper construction of the ASA). There is no indication that Mr Vicente was in any way willing to have the true doctrine enunciated to him, or to accept an authoritative expedition of the correct interpretation. 359But even that does not exhaust the topic. The situation, in relation to ASAs where work had been performed, was that both parties were insisting on an erroneous view of their respective rights and obligations. Shield's position, from which, it is clear, it was not prepared to budge, was that it was entitled to commission at the rate of 50% on any assignment that was not a primary assignment, as it understood that term (and as, in my view, it should be construed). That position was clearly wrong, if only for the reasons that I have indicated already: (1) Shield had no express contractual entitlement to be paid at the rate of 50% on collections for secondary assignments under any of the ASAs but that for 2004; (2) Shield was entitled to be paid only at the rate of 25% on collections on Shield Specials, regardless of their classification; and (3) Likewise, Shield was entitled only to be paid at the rate of 25% on collections on Brodies Specials, regardless of their true classification. 360Citigroup's position was justified (in whole or in part) at least as to the second and third of those classes of files. As I shall show, in looking in more detail at the disputed files, it was correct also in some other cases. 361Equally, however, there were cases where Citigroup's position was wrong. Nor were those cases isolated or random. 362In those circumstances, the observations of Harman LJ in Sweet and Maxwell Ltd v Universal News Services Ltd [1964] 2 QB 699 at 729 are apposite. His Lordship observed, in that case, that: ... repudiation really is not in the picture here at all, because if the defendants were not wholly justified in the attitude they took up, the plaintiffs were not wholly justified in their attitude either, and they could only treat the defendants' refusal to comply with their demands as repudiation if their demands were wholly right. 363His Lordship's words, which were cited with approval by Samuels JA in Trawl Industries of Australia Pty Ltd v Effem Foods Pty Ltd (1992) 27 NSWLR 326 at 358, describe precisely this aspect of the situation with which I am concerned. 364Thus, I conclude, Citigroup did not repudiate the 2006 ASA otherwise than by what I have found were either its breaches of an essential term, or its serious breaches of a non-essential term in relation to payment. In the latter case, those breaches are to be considered in the light of Citigroup's persistent refusal to accept what in my view was the correct position. Analysis of the contracts in question 365Mr Henskens provided a detailed analysis of the disputed debt files. That analysis divided them, in accordance with Ms Dunk's evidence, into numerous different categories. It is only proper that I record my gratitude to Mr Henskens, Mr Zahra, and those who instructed them for their work in making comprehensible a mass of material that was otherwise extremely difficult to understand. 366The first category was described as category A. It comprised (on Ms Dunk's evidence) some 31 files. According to Ms Dunk, whose evidence on this point I accept, none of those files had been assigned or outsourced, before or after write-off, to a mercantile agent for the provision of any Services. I think, but it does not matter, that most of these files were removed from Shield's claim as it was finally put. 367It follows that there can have been no breach in respect of those files. Nor can Citigroup's stated position - that commission was payable only at the rate of 25% on collections - be incorrect, let alone evidence of a repudiatory intent. 368Category B(i) comprised files that were divided into two unnumbered sub-categories. One sub-category comprised files allocated only for a fixed fee skip trace before Citigroup moved to its "assigned to collect" policy in late July 2005. The other related to files assigned for collection, before write-off, after that policy was put in place. 369For the reasons that I have given, files in each sub-category were referred for the provision of "Services", and hence those prior referrals are to be taken into account in considering whether the subsequent assignment of those files to Shield was a secondary or tertiary assignment, as I have construed those expressions. 370It follows, in turn, that Citigroup's stated position in relation to files in each sub-category of category B(i) was a breach of contract, and could be taken to be a repudiation of its contractual obligations in respect of those files. 371There are some 57 files in the first subcategory of category B(i), and some 156 files in the second subcategory. 372Category B(ii) relates to files outsourced by Citigroup to a mercantile agent for the agent to undertake legal recovery work. It is said that the assignments were "on an agreed fee basis". I am prepared to accept that this was so. Ms Dunk was not challenged on this aspect of her evidence. 373Nonetheless, for the reasons that I have given, that amounts to a referral for the provision of a Service. There are eleven files in this category. 374Category B(iii) relates to one file only: a file that had been assigned to Creditcorp in July 2003 on a flat fee basis. There is no evidence of the nature of the assignment (so Ms Dunk says, and I accept). Nonetheless, it is open to infer that the assignment was one for the provision of some "Service". Why else would a lender refer a debt file to a mercantile agent? 375Category C constitutes the Shield Specials. There are two files in that category. For the reasons that I have given, Citigroup was correct in relation to these two files and there can be no breach. 376Category D relates to the Brodies Specials. There are some 78 files in this category. Again for the reasons that I have given, Citigroup was correct in relation to these files and there can be no breach. 377Category E concerns some five files that had been twice assigned to Shield. The first assignment was classified by Citigroup as a primary assignment. The second assignment was classified by Citigroup as a tertiary assignment. Both classifications were correct. (Presumably, there had been an intervening secondary assignment to another agent.) 378Nonetheless, despite being aware of the classification, Shield only charged, in respect of the tertiary assignment, commission at the rate of 25% on recoveries. That commission has been paid. 379In circumstances where Citigroup has paid all that Shield demanded, I do not think that there can be any question of breach, far less of repudiation. 380Category F comprises some 19 files. Citigroup concedes that they were wrongly assigned as primary assignments when in fact they were either secondary or tertiary assignments. 381In summary, then, there was, on Citigroup's part: (1) no breach in respect of the files in categories A, C, D and E; and (2) breach in respect of some 243 files in the remaining categories.

Conclusion on termination and repudiation 382I conclude that Shield was entitled to terminate the 2006 ASA for Citigroup's breaches of an essential term, or alternatively for Citigroup's serious breaches of a non-essential term. However, were it necessary to do so, I would conclude that Citigroup did not otherwise repudiate the 2006 ASA or its obligations thereunder.

Issue 30: estoppel 383Having come to that conclusion, it is convenient to turn to Citigroup's estoppel defence. 384The estoppel alleged is based on Shield's conduct in accepting, working on and charging for as primary assignments referrals of Debts when it was plain, from the history notes that were given to Shield and that Shield either reviewed or should have reviewed, that the assignments had been wrongly classified as primary. 385Mr Henskens submitted that a representation could be spelled out from this conduct, and that Citigroup relied on that representation. He submitted that Citigroup would suffer detriment if Shield were now allowed to withdraw from the position that, allegedly, it had represented. That detriment would arise, Mr Henskens submitted, because the evidence showed that Citigroup would never have referred secondary assignments to Shield if it knew that Shield was going to charge commission of 50% on recoveries. 386There are two answers to this submission. The first is that no one called by Citigroup gave any evidence of an understanding that Shield was representing that it was happy to take secondary assignments and work the files on the basis that it would charge only 25% (or less than 50%) on collections. Thus, there is no evidence that anyone from Citigroup relied on the representations said to be spelled out from conduct, in referring to Shield, for the provision of recovery services, debts that had been the subject of one such prior referral. 387The second answer is that, because Citigroup had agreed to vary the 2004 ASA in the manner indicated in answer to issues 2 and 4, the evidence does not establish the proposition (to quote from Mr Henskens' written submissions) "that Citigroup would never have sent secondary accounts to Shield at a commission rate of 50%".

Issues 22 to 25: misleading or deceptive conduct 388It is convenient to deal with these issues before turning to questions relating to damages (and limits on recovery of damages). 389The case for misleading or deceptive conduct was put in the alternative, or further alterative, to Shield's cases based on the contracts and on quantum meruit. I think Mr Darke accepted, and in any event in my view it is correct, that to the extent that Shield is entitled to succeed on one or other of those aspects of its case, its case based on misleading or deceptive conduct adds nothing. 390Equally, in my view, to the extent that Shield's case fails for the reasons that I have given, the case on misleading or deceptive conduct adds nothing. 391Since the case, as to misleading or deceptive conduct, does not depend on any contentious facts, it is unnecessary to deal in detail with the submissions. 392In essence, the case was that when Citigroup referred files to Shield and classified them as primary, it made a representation, as to their correct classification, on which Shield relied and acted. 393The findings that I have made at [139] to [150] above as to the mechanics of assignment of files support the proposition that Citigroup did represent the classification of the files, and that Shield acted on that classification by entering the files accordingly into its computer system. 394There are however two points of caution, which would require consideration if this aspect of Shield's case required decision. 395The first is that, as was common ground, the data that were transferred to Shield included complete notes of actions taken on the file hitherto. It was necessary for Shield's employees to read those notes. Any perusal that was less than completely cursory would have indicated (where it was the case) that the file had been the subject of a previous referral. 396Thus, there is in my mind a real question as to whether (should it require to be decided) Shield's reliance on the representations made by Citigroup, as to classification, was reasonable. 397Secondly, and as I have pointed out in dealing with the analysis of the disputed files, there were some 5 files (category E) where Citigroup did not misrepresent the proper classification, but where, nonetheless, Shield (presumably) made a mistake in entering the data on its computer system, and accordingly undercharged. It cannot be said that, in those five cases, there was any misleading or deceptive conduct on Citigroup's part. 398I do not propose to deal in any further detail with the parties' abbreviated submissions on this topic.

Issues 26 and 27: unconscionable conduct 399Shield abandoned this claim, relatively late in the day. Accordingly, these issues do not require consideration.

Outline of the claim for damages 400There are three basic components to Shield's claim for damages: (1) first, alleged underpaid commissions; (2) secondly, damages for loss of the benefit of the 2006 ASA; and (3) thirdly, damages for loss of the opportunity to enter into further ASAs in subsequent years. 401The first component - claim for underpaid commissions - falls to be determined by reference to the conclusions that I have expressed. 402The second component - damages for loss of the benefit of the 2006 ASA - requires, on Shield's analysis, consideration of "the counterfactual": "what would have happened had Citigroup performed the 2006 [ASA] in accordance with its terms" (written closing submissions, [81]). 403The loss of profits have been analysed by reference to three profit streams: (1) stream 1 represents the profits that Shield would have earned had it retained the repayment arrangements that were in place when the 2006 ASA came to an end; (2) stream 2 represents the profits that Shield would have earned from further assignments under the 2006 ASA up to its conclusion in April 2007; and (3) stream 3 represents profits that Shield would have earned from assignments under further ASAs, assuming that (as had occurred in the past) the relationship was renewed from year to year on substantially the same terms. 404Both the underpayments of commissions and the various streams of income have been analysed by the parties' respective experts, Mr Jennings (called by Shield) and Mr Box (called by Citigroup). I have commented briefly on those experts at [57]. I add to what I there said, that they conferred and worked diligently to reduce the issues in dispute between them, and produced joint reports reflecting their labours. The result is that the real disputes have been isolated and identified in a way that facilitates the task of resolution. It is appropriate that I record that, in my view, they performed their duties to the court in an exemplary fashion.

Citigroup's general defences 405Various specific contractual defences have been dealt with already, in considering issues 11 to 13, 28 and 29. 406Citigroup relied also on more general defences: (1) there should be no allowance for lost profit, because it was entitled at any time to terminate all existing referrals, take back the files, and thus discharge any liability to pay ongoing commissions for repayments under arrangements put in place by Shield; further, it was under no obligation to refer any further work to Shield; (2) alternatively, any claim for loss should be limited to a period of 30 days, being the period of notice that it was required to give to terminate the 2006 ASA without cause; or (3) in the further alternative, there should be no allowance for loss of profits beyond the expiry of the 2006 ASA, in April 2007. Issue 18 407In essence, those defences are the ones raised by issue 18; and they involve consideration of what Mr Darke called the "counterfactual". 408I accept Mr Darke's submission that the question of damages should be analysed on the basis that the parties would perform the agreement that they had made. But I do not think that this deals with the problems that issue 18 is intended to raise. 409It is clear beyond doubt that Citigroup's policy, as understood by (among others) Mr Vicente, Mr Shinghal and Ms Jones, included the following elements: (1) it would not pay commissions on what it required as secondary assignments at a rate higher than 35%; (2) it would not pay commission at the rate of 50% on assignments made before write-off, even under the assign to collect policy; and (3) it would not refer debt files for collection, on the basis that it would be obliged to pay commission at the rate applicable to secondary or tertiary assignments, where the only previous Services rendered had been limited to skip traces or field calls prior to write-off. 410It follows, in my view, that it was unlikely that Citigroup would have assigned files to Shield, so as to incur a liability to pay commissions on recoveries at the rates applicable to secondary and, in particular, tertiary assignments, unless the proper classifications under the relevant ASA coincided with the way in which Citigroup classified them having regard to its own internal policies and procedures. 411In other words, I do not think that Citigroup would have assigned files to Shield unless, both on a proper construction of the relevant ASA and by reference to Citigroup's own policies and procedures, those assignments were properly to be characterised as primary or tertiary. 412I have concluded that in the case of the 2004 ASA, the parties did agree (through the mechanism of variation) that Shield was to be recompensed for all assignments other than primary assignments at the rate of 50% on collections. But it does not follow that Citigroup, had it appreciated that this was the effect of the variation, would have assigned secondary files to Shield. The evidence of Citigroup's representatives, again including Mr Vicente, Mr Shinghal and Ms Jones, was clear on this point. There were other agents prepared to accept secondary assignments at rates significantly lower than 50%. 413Even accepting, as the evidence suggests, that Shield was Citigroup's most effective debt collector, it does not follow that the rate of recoveries by Shield, on assignments that in Citigroup's eyes were to be classified as secondary, was so significantly higher than the rates of recoveries of other debt collectors that, in economic terms, the higher commission charge would have been worthwhile from Citigroup's perspective. The evidence does not permit any conclusion to be drawn on this particular point. 414In my view, it is more likely than not that, if Citigroup had been apprised of, and prepared to accept, the proper construction to be given to the expressions "secondary assignment" and "tertiary assignment", its reaction would have been that, at most, it would send to Shield only work which, according to Citigroup's policies and procedures as well as the terms of the ASAs, properly construed, was primary or tertiary. 415Thus, it is more likely than not that, among other things, Citigroup would not have sent to Shield, as tertiary assignments, any files that had not reached the stage of write-off; nor any files where the previous Services rendered were of the nature of skip traces or field calls only. 416Assuming, as Mr Darke submitted I should, that Citigroup was prepared to honour its obligations under the 2006 ASA, it could, nonetheless, accommodate that position very simply with its own policies and procedures by limiting referrals to Shield in the manner just described. And in my view, that is what is likely to have happened but for the termination of the 2006 ASA, once Mr Vicente's interest had been engaged. If anything is clear in this case, it is that Mr Vicente would have used whatever means were available to him to ensure that Citigroup's relationship with a mercantile agent was conducted in accordance with Citigroup's policies and procedures. 417Mr Darke relied on what he said was the file-splitting solution: an agreement said to have been reached, in late October or early November 2006, that Citigroup would send to Shield only primary and tertiary assignments. 418Mr Henskens put a number of submissions on this issue. First, he said, it was not pleaded, not opened and not put to the relevant witnesses. 419As to the first complaint (failure to plead): the facts said to give rise to the file splitting solution could not be regarded as material facts necessary to be pleaded, even if this were an action tried on pleadings properly so called (and it is not). 420As to the second complaint (failure to open): I am not quite sure why this submission (even if correct) would disentitle Mr Darke from relying on the file splitting solution. But in any event, Mr Darke did refer in opening to some of the documentary evidence that supported his primary submission, that the file splitting solution had been reached. 421As to the third complaint (failure to put the matter to the relevant witnesses): Mr Darke did in fact put the matter to Ms Jones. Specifically, he asked her (T461.36 and following) whether she had agreed with Mr Colomb that Citigroup would split its recovery files; her answer was that she did not recall. That might have been thought sufficient to raise the matter; but in any event, Mr Darke went further and put to Ms Jones an email from Ms Dunk to a Ms Escobar of Citigroup dealing with the solution. That email said that Ms Dunk had established two queues, one for files that had not been previously assigned and another for files that had. Ms Jones, accepting that the email read thus, said that it did not refresh her recollection. 422In those circumstances, it seems to me, Mr Darke put all that was necessary to be put. It was suggested that Mr Darke should have gone further, and put that the file splitting solution was practicable. I do not think that this is so, having regard to what was put to Ms Jones and her answers. Further, I accept Mr Darke's submission that the email in question, showing that Ms Dunk had split the files, showed also that the solution was practicable. Certainly, Ms Jones questioned whether it was. But Ms Dunk, within whose operational responsibilities it fell, seems from her email to have had no such concerns. 423I am not sure whether it was part of Mr Henskens' third complaint that the matter had not been put to Mr Vicente. But if it were, I think the answer is that file splitting was a detailed operational matter that did not require Mr Vicente's approval. In any event, Mr Vicente was asked whether he would have been satisfied if the relationship between Citigroup and Shield could have continued, but without disturbance from disputed commission claims. I think it is correct to understand from what Mr Vincent said that he would have been satisfied with this (T582.21-.T582.33): Q. If Shield had dropped its claim for compensation and Ms Jones had agreed with Shield to send it only files that both Shield and Citigroup considered to be primary assignments, so that there was no risk of any future dispute, you would have been satisfied with that situation, correct? A. I would have been satisfied if the relationship kept going and we didn't have this issue, right? Q. The issue being Shield's demand for additional payments? A. Correct. Q. In relation to the files in question? A. Correct. 424Next, Mr Henskens submitted that the split on which Mr Darke relied (about 85%/15%, in which 15% represented the disputed files and 85% represented files that on any view were primary assignments) was not proved even by "one scintilla" of evidence. 425Mr Darke relied on a conversation that Mr Shield said he had with Mr Shinghal on about 25 October 2006. According to Mr Shield, Mr Shinghal said, in the course of that conversation, that he thought the problem affected only "about 10% of Shield's debt" (i.e., as I understand it, about 10% of the total files referred to Shield). 426For the reasons that I have given at [82], [83] above, I accept this aspect of Mr Shield's evidence. In doing so, I take into account that when Mr Shinghal was cross-examined on the matter, his evidence went no further than saying he could not recall the relevant conversation, and that "I'm not sure whether it is factually correct or not" (T608.21). 427The 85%/15% split is crucial to this aspect of Shield's case. Such other evidence as there is shows that it is likely to be a conservative estimate (as indeed does the estimate attributed to Mr Shinghal). Between April and November 2006, only about 4% of the referrals to Shield had been the subject of a prior referral to another agent. If this 7 month period should be taken to be more generally representative of the overall split, it would demonstrate that in fact the file splitting solution would have deprived Shield of less work, and therefore permitted it to earn more revenue, than would be the case on the assumed 85%/15% split. 428In my view, the file splitting arrangement was made. I reach that view for several reasons. First, I accept this aspect of Mr Colomb's evidence, based as it is on a file note which I see no reason to disbelieve. Secondly, Citigroup's own documents show that Ms Dunk actually instituted a mechanism for splitting files: the two queues to which I referred earlier. 429Finally, such an arrangement would have been a logical solution to the position in which the parties found themselves. Leaving aside for a moment the Shield Specials and Brodies Specials, Shield was entitled to commission at the rate of 50% on all assignments other than primary assignments. Citigroup was not prepared to pay commission at the rate of 50% on secondary assignments. Nonetheless, Shield was Citigroup's most effective debt collector. Equally, Citigroup was Shield's largest source of work. Thus, it is in my view inherently likely that an arrangement was made to split files in the manner suggested. 430However, that does not answer the problem arising from the underlying difference as to what should be regarded as primary, secondary and in particular tertiary assignments. It means, at most, that Citigroup would not have sent to Shield, as tertiary assignments, any assignments that were not, on Citigroup's policies and procedures (and regardless of the proper construction of the 2006 ASA) to be regarded as tertiary assignments. I repeat that Citigroup was in a position to achieve this result, because it was not bound to send any work to Shield. 431Nor do I think it likely that Citigroup would have renewed the 2006 ASA (or, more accurately, entered into a further ASA after the expiry of the 2006 ASA) except on terms that the remuneration provisions reflected its own policies and procedures. If (in the counterfactual world) the 2006 ASA had been performed, in the manner that I have outlined, until its expiry, it is in my view more likely than not that Mr Vincente would have insisted that the position be clarified in any subsequent ASA, and that his insistence would have been given effect. If Shield were not prepared to accept a renewal on Mr Vicente's terms, the likelihood is that there would have been no renewal.

Issue 19 - quantification of loss 432There is no conceptual problem with quantification of underpaid commissions. The result depends on an application of my findings. Since the parties', and the experts', careful tabulations were prepared in advance of those findings, and require some analysis to adjust to my findings, the appropriate course is to leave that aspect of the claim for damages to the parties to be agreed. 433The claim for loss of the benefit of the 2006 ASA, and loss of the opportunity to negotiate a further ASA, is more problematic. First, it suffers from the difficulty to which I have referred. I do not think that Citigroup would have sent to Shield, under the 2006 ASA, as a tertiary assignment, any assignment that Citigroup, following its own policies and procedures, did not regard as tertiary. Secondly, I do not think that Citigroup would have entered into any further ASA except on the basis that the remuneration conditions reflected its policies and procedures in this regard. 434There was however a further, and fundamental, problem with Shield's claim for damages. The parties, and the experts, have proceeded on the basis that what is to be measured is loss of the profits that would be derived from the various income streams. Clearly enough, that involves not only estimating the quantum of the income streams, but also the expenses. 435In relation to expenses, the experts have proceeded on the assumption that Citigroup's work represented about 12½% of all Shield's work over the relevant years. Shield relies on the evidence of Mr Shields to make good this assumption. However, Mr Shields' evidence is based not on a review of Shields' business and Citigroup's contribution to it, over the years that their relationship was in place but, rather, on a "snapshot" at a particular point of time. That snapshot was based on a computer generated report of the files on which Shield was working as at 7 November 2006. 436Mr Shields said, however, that historically Citigroup provided about 20% to 25% of Shields' work. Indeed, that was the assumption that Mr Jennings, Shields' expert, was originally asked to make. 437To my mind, in considering this particular issue, it is appropriate to look at the relationship overall (making necessary adjustments to reflect changes from time to time) and not at the situation on a particular day. 438That approach is supported, in my view, by the evidence of Mr Wadick. His evidence showed that: (1) from 8 April 2005 to 7 April 2006 (i.e., during the currency of the 2005 ASA), Citigroup provided a little under 28% of Shield's work overall; and (2) thereafter, from 8 April to 31 October 2006 (i.e., during the first six months of the term of the 2006 ASA), Citigroup provided over 62% of Shield's work in total. 439Mr Wadick's figures are derived from a comparison of the number of files referred by Citigroup to Shield and all files referred to Shield by all its customers. Shield's revenue figures support the proposition that Citigroup provided much more than 12%, or 12½%, of Shield's work. In September and October 2006 (again, during the currency of the 2006 ASA), commissions from Citigroup constituted about 45% of Shield's total revenue. 440I am satisfied that, in carrying out the calculation of lost profit, it is not appropriate to proceed on the instructed assumption - that Citigroup provided only 12½% of Shield's work overall (excluding, if it is not otherwise clear, work undertaken by Shield Debt in its own right). To my mind, the evidence justifies the proposition that the contribution should be assessed at at least 25%, consistent with Mr Shield's estimate based on the whole length of the business relationship between the two companies. 441The experts agreed that if the loss of profit calculation is performed on the basis that Citigroup contributed 25% of Shield's work overall, and not the instructed 12½%, then there is no positive value to be attributed to the hypothetical lost profit stream. It is unnecessary to go into the reasons for this agreed outcome, other than to note that, mathematically, it is sound. 442The result is that Shield has not proved its claim for loss of profit. 443There are other difficulties in this aspect of Shield's case. For example, there is a dispute between the experts as to whether, in relation to stream 1 losses, the appropriate expense ratio is 77% (as Mr Box contended) or 24.6% (as Mr Jennings contended). 444The experts agreed that 77% is the appropriate blended rate for streams 1, 2 and 3. 445I prefer Mr Box's evidence on this point. I take into account that Mr Jennings has changed his opinion on this issue. In particular, in an early report, Mr Jennings attributed a cost ratio of 71.79% to stream 1 income: a rate far closer to the (agreed) blended rate of 77% than Mr Jennings' derived rate, for stream 1 only, of 34.63%. Mr Jennings has given no satisfactory explanation of the change in his position. That supports what I regard in any event as the inherent logic of the position taken by Mr Box. 446Mr Darke submitted that there were layers of conservatism built into the way that the experts had approached the assessment of damages. Thus, as I understand it, he submitted that the impact of the percentage of Shield's overall work constituted by referrals by Citigroup would be minimised. 447I accept that, where there were alternative approaches open (either as to raw data, or as to methodology), the experts in general chose the more conservative approach. It does not follow that, as a result, the failure of Shield to prove the 12½% assumption can be set to one side; nor can the impact of what, in my view, is (closer to) the correct figure: namely, 25%. 448Mr Darke submitted, further (and perhaps in the alternative), that it would be possible for the court to make an analysis of trading figures for prior years, so as to derive a costs percentage different to that (of 77%) emerging from the expert evidence for streams 2 and 3. If that were done, Mr Darke submitted, then the experts could apply it in their model and derive a lost profits figure accordingly. 449It is convenient to set out from the transcript (T838.3-37) Mr Darke's summary of his client's position on this issue: DARKE: Yes. And the reason to take your Honour to those figures is to face up to them and tell your Honour what my submission is in the light of that evidence, and I'm think what should I say? HIS HONOUR: You could say you are very grateful to Citigroup for terminating the contract, if that is what it did. DARKE: In a sense that points out the absurdity of the position one reaches, if one plugs those figures into the damages model that the experts have used, because one does produce losses rather than profits. HIS HONOUR: Yes, except the possibility is that the other work was more profitable and was subsidising the Citigroup work. DARKE: There is no direct evidence of that, obviously. And as I submitted before, there is perhaps some reason to think that the Citigroup work was likely to be at least as profitable, if not more profitable, because there is some evidence that the files referred to Shield were more rich in debt than those of other clients. And one looks at the results for the 2005 and 2006 financial years, which are set out in Mr Box's report at paragraph 134 and one sees a modestly profitable operation. So what I submit to your Honour is that, rather than put those figures into the damages model, the more reasonable approach to assessing damages is if one moves away from the 12.5% figure, to use the figures taken from the actual 2005 and 2006 financial year results in the way that I indicated prior to the adjournment. And, as I say, that is to be done, it is just a matter of arithmetic for the experts to recalculate. I say, in addition to that, that one should make an allowance for the conservative aspects of the experts' model which we pointed to in paragraphs 100 to 103 of our written submissions, and that that would justify your Honour in applying a slightly more generous costs percentage than the average costs percentage for the 2005, 2006 financial years that one draws from paragraph 134 of Mr Box. That is the extent of the submissions that I put on that point. 450The starting point is the proposition that it would be absurd if Shield were making losses on the work sent to it. But there is evidence, in Shield's monthly budget reports, to suggest that this is what was happening. 451The budget reports were extracted from Shield's accounting system. They showed, among other things, commissions received by Shield from various sources, the expenses incurred by Shield in earning those commissions, and the result and profit and loss figure. The budget reports compared actual performance for the month to budgeted performance for the month, and displayed the variance. 452The budget reports show, among other things, the following: (1) as at April 2006 (the month when the 2006 ASA commenced), Shield's cash losses (i.e., revenues compared to expenses) exceeded $311,000.00: a variation of almost $1 million from the budgeted profit figure, to that month, of about $687,500.00; (2) for every month thereafter for which figures are available, Shield made a cash loss; and (3) the accrued cash loss as at 5 November 2006 was almost $343,500.00 (presumably, the accumulation of losses had restarted from 1 July 2006): a variance of about $1.26 million from the budgeted profit figure of a little under $917,000.00. 453I accept that the budget reports are management figures which summarise raw data, and are not to be equated to audited accounts. But, nonetheless, they cannot be disregarded. They show that, at least on a cash basis, Shield's operations had been unprofitable at the time the 2006 ASA commenced, and that they remained unprofitable thereafter. 454Thus, I do not think that it is absurd, to plug into the damages model used by the experts, a relevant input that produces losses. There is a sound basis for thinking that Shield was making losses, at least on a cash basis, on its monthly operations. 455To put it another way: the very fact that Shield was making cash losses suggests that the relevant input should be the higher one dictated by historical experience rather than the lower one that Mr Jennings was instructed to assume (and that Mr Box accepted as an instruction, and that neither Mr Jennings nor Mr Box verified). 456Further, I think, those budget figures show that there is no rational basis on which the court could accede to Mr Darke's submission that some different costs figure, taken from earlier financial years, should be substituted for the figure of 77% derived by the experts for streams 2 and 3. First, if the budget reports are to be accepted as at least substantially accurate, there is a sound basis for thinking that the use of earlier experience might be misleading, because the ratio of costs to income appears to have increased from those earlier years. 457Secondly, the figure of 77% arrived at by the experts (and I will not continue to repeat "in relation to streams 2 and 3") was not an instructed figure on the basis of which they operated. It was a figure calculated by them as the blended cost rate that, in their view, was appropriate for the assessment of loss of profit on the basis that Citigroup contributed 12.5% of Shield's work overall. 458There is no rational basis on which the court could depart from the agreed position of the experts and, by reference either to some higher proportionate figure or to some other historical experience, substitute its own view of what an appropriate cost ratio might be. 459Thirdly, and more fundamentally, it is for Shield to prove its case on damages. If it has not proved an essential element of the computation of damages then, unless the evidence permits the court to find, on the balance of probabilities, that there are damages over and above the obvious (underpayment of commissions) it is not for the court to select some arbitrary figure. Then must be a rational basis, founded in the evidence, for doing so. And this is not a case where the means of exact proof lie only (or at all) with the wrongdoer. 460In circumstances where there is a basis in the evidence (from Shield's own accounting records) for thinking that Shield might have been operating at a unprofitably, it is not self-evident that the termination of the 2006 ASA must have caused some loss. 461Fourthly, and perhaps as a restatement of the previous point, Shield has simply sought to estimate the loss of profit consequent upon loss of the income streams in question. But, as Mr Henskens submitted, this is a "hypothetical loss", because it does not seek to compare the position that would have existed in the counterfactual world on which Mr Darke relied to the position that actually obtained following termination of the 2006 ASA. And if it is correct to think that Shield was making a loss on referrals to it, a reduction in the number of referrals may well have led to a reduction in the overall loss. 462Finally, and as to the submission based on inherent conservatism in the expert's model, there is no basis in the evidence for assessing the economic impact of that conservatism and contrasting it with the economic impact of the likely correct proportionate figure. 463Thus, even if one were to accept that the experts' model is inherently conservative, it does not follow that this would offset completely the effect of proceeding on the basis that Citigroup contributed 25%, rather than 12½%, of Shield's work overall. 464For those reasons, I conclude that Shield has not proved any loss of profit in respect of income streams that might have flowed under the 2006 ASA from November 2006 on, or under any further ASA entered into after the expiry of the 2006 ASA. For the reasons that I have sought to indicate, based on Shield's monthly budget reports, that conclusion does not seem to me to be so inherently absurd or counter-intuitive as to warrant either rejection or further and deeper analysis.

Issues 20 and 21: quantum meruit 465For the reason given at [217] above, the quantum meruit issues do not require decision.

Summary of conclusions 466Shield has been underpaid on some but all of the 380 disputed debt files. The detail is set out in my analysis at [365] to [381] above. 467Citigroup's contractual defences fail, as does its estoppel defence. Accordingly, Citigroup is liable to Shield for the amount of the underpayments. That is a matter for the parties to calculate having regard to my findings. 468Further, and for the reasons given at [309] to [364], Citigroup repudiated the 2006 ASA, and Shield accepted that repudiation as bringing the 2006 ASA to an end. Alternatively, Citigroup breached that ASA in a manner sufficiently series to justify Shield's acting as it did and treating the agreement as at an end. 469However, Citigroup did not otherwise repudiate the 2006 ASA. 470Although Shield is entitled to damages for repudiation, it has not proved any loss (apart from underpaid commissions), for the reasons given at [433] to [464] above. The parties are to bring in an agreed calculation of underpayments and interest. 471In those circumstances, there will no doubt be a dispute as to costs. I propose to stand the matter over to a date to be fixed by arrangement with the parties, for argument on the question of costs. Any evidence in relation to the question of costs should be served no later than seven days prior to that date. No less than two days prior to that date, the parties should exchange and deliver to my Associate an outline of their competing submissions on costs. At the same time, they should provide to my Associate a folder or folders containing all the affidavits intended to be relied upon on the question of costs.

Orders 472I stand the matter over to a date to be fixed for the making of final orders and for argument on the question of costs. 473I give directions in accordance with [470], [471] above.

Amendments 08 March 2013 - corrected paragraph numbering Amended paragraphs: 10 - 473 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 08 March 2013