Stick-on Signs Pty Ltd v Sign Gear Pty Ltd [2002] VSC 320

Supreme Court of Victoria|2002-08-12|Before: OSBORN J

Goods sold and delivered - Contract - Repudiation - Uncorroborated evidence of agreement with deceased person - Goods Act 1958, s.15(1).

In 1992 the parties entered into a business relationship as a result of oral arrangements concluded between the late Mr George Lowin ("Mr Lowin") on behalf of Stick On and Mr Russell Kennedy ("Mr Kennedy") on behalf of Sign Gear. It was agreed that Stick On would finance the importing of vinyl film. The goods would be warehoused in Stick On's Dandenong premises and Mr Kennedy would look after both the warehousing of the stock and the dispatch of orders from the Dandenong warehouse to various customers of Stick On. Sign Gear would also purchase stock from Stick On effectively using Stick On's stock as its own. Sign Gear would sell stock to its retail customers and Kennedy and his staff would then take the required stock from the Stick On warehouse. A handwritten record of the purchases by Sign Gear would be made and a regular set of delivery dockets would be completed by reference to the purchase lists and supplied to Stick On.

Mr. Lowin died on 24 March 1998 as the result of injuries received in a motor car accident. Subsequent to his death the parties' terms of trade were reduced to an agreement in writing dated 14 September 1998.

By writ issued on 28 November 2000 the plaintiff sues for $307,174.15 for goods sold and delivered, and invoiced in and between November 1999 and April 2000, pursuant to the agreement. This amount has been adjusted during the course of the hearing of the case to $299,119.85 as a result of objections taken by the defendant to parts of the claim and concessions made by the plaintiff.

(a) the sum of $1,000,000 for the alleged breach of the original arrangement entered into in 1992 (which claim is alternatively expressed in contract, as a claim for misleading and deceptive conduct, a quantum meruit claim, a claim for unconscionable conduct, or as arising from an estoppel);

(b) for commission allegedly due pursuant to the 1998 agreement; and

(c) for damages as the result of the alleged failure to supply goods in accordance with the 1998 agreement.

B. The Claim for Goods Sold and Delivered

The claim arises from a large number of individual sales invoiced between 1 November 1999 and 19 June 2000. The claim is particularised in five pages annexed to the Statement of Claim.

In the first instance the defendant contends that the plaintiff has failed to prove its case, because it is said there is no evidence that the defendant has failed to pay the sum claimed. In particular it is said there is no evidence of a ledger or other running account kept in the ordinary course of the plaintiff's business, which constitutes prima facie evidence of non-payment. I reject the submission that there is no evidence of non-payment. Mr Weiszberger says in his witness statement, that he is the General Manager of Stick On and that since March 1998 he has worked on a full time basis as manager. He gave evidence as to the business systems of Stick On during the relevant periods and produced documentary evidence of the sales. In his supplementary witness statement he identified the last payment made by Sign Gear and the invoices in respect of which such payment was made. He said further:

"Apart from part payment of the amount due on invoice No. 41235, Stick On has not received payment for any of the invoices set out in the annexure to the Statement of Claim, in respect of which there remains due and owing the total sum of $307,174.15."

Counsel for the defendant did not object to this evidence or cross-examine directly with respect to it. No evidence was adduced to contradict this statement as to non-payment.

In my view the above statement does constitute evidence that the debt in issue has not been paid.

The defendant also took issue with the actual sale and delivery of certain of the goods falling into a series of categories which were particularised at my direction following the commencement of the hearing.

The first category was that of invoices in respect of which it was said the plaintiff had already allocated moneys paid by the defendant. It was agreed in the course of the hearing that this category should be quantified and conceded in the sum of $6,179.95.

The second category was that of goods allegedly not proven to be supplied. This category was said to include as a first sub-category goods comprised in two different invoices both bearing No. 70053 and issued on 1 April 2000. I am satisfied that both invoices were produced in the ordinary course of the plaintiff's business, and that the reason for two invoices bearing the same number is, as Mr Weiszberger explained in evidence, due to an error made in the course of changing from the use of one computer program to another. The underlying system of accounts which led to the production of the invoices was described by Mr Weiszberger in his witness statement as follows:

"26. In approximately November or early December 1998, Stick On employed Charles Fallace ("Charlie") as a storeman at the Dandenong warehouse. Amongst other things, from that time, Charlie began to assist Kennedy in placing orders for Stick On with its overseas suppliers. They prepared the orders and faxed them through to me for final approval. I would often trim back the orders because I thought they were too large, and sometimes I considered the volume of certain colours to be excessive. 27. From the time that Charlie commenced his employment with Stick On, the system of Kennedy and his staff writing up invoices on behalf of Stick On changed. Over a relatively short period of time, Kennedy began to produce photocopies of his internal purchase lists. He would give those photocopies to Charlie, and Charlie would write up the 'delivery dockets' using invoice forms and forward them to the Caulfield office of Stick On, where computer generated invoices including prices were prepared. In due course Kennedy adopted the practice of delivering photocopies of his internal purchase lists to Charlie as the exclusive means of dealing between himself and Stick On in relation to stock purchased by Kennedy."

I accept the evidence of Mr Weiszberger as to the underlying system utilised by the plaintiff and in particular I accept that in the ordinary course of events invoices were only raised where purchase lists were supplied by the defendant. I further accept the evidence of Mr Weiszberger as to why there are two invoices No. 70053. I also note that his evidence as to these invoices was corroborated by the production of originals on subpoena by the defendant. Furthermore, there were no records of the defendant produced to dispute the plaintiff's case as to the delivery of the goods in issue. Two persons identified as responsible for the books of account of the defendant during the relevant period were not called to give evidence (namely Mrs Andrea Kennedy and Ms Carolyn Dietrich). All of these matters support the view that the plaintiff's prima facie case should be accepted. Accordingly I find the claim with respect to the goods in both invoices No. 70053 to be proved.

The next sub-category in issue comprises the goods referred to in invoices 70062 dated 3 April 2000 through to 70069 dated 12 April 2000. It was said in respect of these that no invoices were received. Copies of these invoices were, however, produced on subpoena from the defendant's records (Exhibit X) albeit photocopies rather than originals. These in turn had been marked up by Carolyn Dietrich and Mrs Kennedy with annotations. The production of the copy documents was at odds with the terms of the defendant's third affidavit of documents and does not reflect well on the credibility of this portion of the defence, which is based on an allegation that no invoices were received. Furthermore, counsel for the defendant accepted in opening that there was delivery documentation (as distinct from invoices) in existence with respect to these goods. The cheques paid by the defendant in payment of the plaintiff's running account in early 2000 are annotated with invoice references on the reverse side, which demonstrate that in respect of those cheques, the defendant was able to allocate payment to and track the plaintiff's invoices. They further demonstrate substantial delay in payment of the plaintiff's account. Cheques in January were paid for invoices dating from May the previous year. In my view the plaintiff's records do establish that the goods in issue in this sub-category were sold and delivered to the defendant. The query raised with respect to invoices is not credible having regard to the following matters:

(a) the admission as to delivery documentation;

(b) the production of the copy invoices on subpoena;

(c) the failure to adduce evidence from the defendant's bookkeepers, who dealt with the relevant documentation on its behalf and have been shown to have been capable of making a detailed response to the plaintiff's documentation up until the date of the last payment; and

(d) the obvious inducement to the defendant to obfuscate the state of its account and delay payment.

The third category of "goods not supplied" is of goods invoiced as a result of a stocktake undertaken following the cessation of trading between the plaintiff and the defendant. This category of claims arises because of a course of dealing described in the agreed statement of facts as follows:

"7. From about March or April 1999, when Kennedy or James or another of Sign Gear's staff would come into the Stick On warehouse to take stock for Sign Gear's own customers, they took stock in one of two ways:- (a) where Sign Gear required a whole roll of material they would take the whole roll; (b) where Sign Gear required less than a whole roll of material, Kennedy, James or another of Sign Gear's employees would come into the Stick On warehouse and take the whole roll of material into Sign Gear's adjoining premises where Kennedy had an appropriate cutting machine; (c) Kennedy, James or another of Sign Gear's employees would cut the required amount from the designated roll; (d) the roll would be returned to Stick On's warehouse, and the amount of material taken from it and/or the words Sign Gear or "SGM" (Sign Gear Melbourne) would be written on the box in which the roll was kept."

Mr Weiszberger said in his witness statement that the stocktake came about in the following circumstances:

"34. From shortly after the time Stick On moved into the Marni Street warehouse until 19 April 2000, I permitted Kennedy to have keys to the Stick On warehouse, and he was able to come and go as he pleased. 35. Kennedy or his staff would come into the Marni Street warehouse and select and pack stock as needed by Sign Gear. This was done in one of two ways: (d) Where Sign Gear required a whole roll of material, they would take the whole roll. This was the predominant practice. (e) There were occasions when Sign Gear required less than a whole roll of certain material. In such cases, Kennedy or his employees would come into the factory and take the whole roll of material into Kennedy's factory where Kennedy had the appropriate cutting machine and cut the required amount from the designated roll. The roll was then returned to Stick On's warehouse and the amount of material taken from it was written on the box in which the roll was kept by Kennedy's employees. A box would hold a roll of a designated number of metres of material, and when Kennedy or his staff took material from such a roll, they would write the number of metres on the box that they had taken with a minus sign in front of the box, thereby indicating that they had taken so many metres from that roll. 36. When Stick On's relationship with Sign Gear came to an end in April 2000, I took each roll on which Kennedy or his employees had written Sign Gear or 'SGM' (Sign Gear Melbourne) and put it in a measuring roller and measured the number of metres left in each roll. Each roll of vinyl has a standard length of 45.7 metres, which is 50 yards. By deducting the number of metres left from the original 45.7 metres of each roll, I was able to determine precisely how much material Sign Gear had taken from these rolls. I then caused handwritten invoices to be prepared and dispatched from Stick On to Sign Gear in respect of this material. All of these invoices are dated 19 June 2000. Stick On had not previously raised invoices to Sign Gear in respect of any of this material, and Sign Gear has not paid Stick On for any of this material."

Mr Weiszberger was cross-examined with respect to the system in relation to purchase by Sign Gear of part rolls only.

"The way in which you set out the system working in paragraph 22 I suggest is not totally accurate and I suggest that the arrangements that occurred between the companies was that for most of the stock that Sign Gear took from Stick On that it took the complete roll, if you follow, that is the whole roll because in a product that was a popular style, one that was sold fairly frequently the whole roll would be booked up? --- In the cheap products and the popular products there was a full roll taken from --- It wasn't always the case that the roll would be taken from Stick On premises to Sign Gear, part of it removed and then taken back, in the majority of cases a whole roll was taken back? --- Yes, only the cheap products that the whole roll was taken. The cheap products? --- That is correct, and the popular colours. And I suggest that it was only in relation to the products that you would regard as slow moving products whereby a roll was taken or a length was taken off it and then the roll was returned? --- That's correct, yes. On those occasions when that happens the system was that the Sign Gear personnel would mark off on the box containing the roll the length of metres that had been removed? --- That's partially correct. Partially correct, what's incorrect about? --- At the time when I was there, there were quite a few rolls open --- Just repeat that? --- At the time when I was there, there were quite a few rolls open. A few rolls --- Rolls open? --- Open, they were out of the boxes and there was no marking on them." (tp.71)

In further answers to cross-examination he made clear that the only rolls in respect of which a stocktake was undertaken were those within marked boxes. He further made clear that the stocktake was made with respect to three categories of boxes. The first category comprised boxes marked Sign Gear with a measurement on the box of the quantity of material removed. The second category comprised boxes marked Sign Gear but with no measurement. The third category comprised boxes sealed with Sign Gear tape (tp.75).

It was suggested in cross-examination of Mr Weiszberger that Mr Fallace, an employee of the plaintiff had from time to time used Sign Gear tape not only to mark Sign Gear boxes but for other purposes.

The transcript also records the following evidence given by Mr Weiszberger in cross-examination at page 77:

"Mr Connor: When you did the stocktake was there any rolls that had a certain length on that you were able to say yes, what's left is the balance of what's been taken off as marked on the box? --- Yes. What percentage of rolls did that occur? Was it half? --- If it was marked, it was 90 percent of the time it was accurate. And it was only in 10 percent of the time that the information on the box didn't equate with what was on the roll? --- That's correct."

Mr Fallace was ultimately called on behalf of the defendant and gave the following evidence (which was not challenged by cross-examination):

"And what is in the photographs?---They are part rolls of vinyl. If you would have a look at the court book at p.708, please. You will see there on the top photograph there's the end of one of these rolls or cartons with the rolls inside?---Yes. And you can see there if you turn the actual photograph upside down, if you want to just reverse the folder, you see there in the middle of the left-hand side of what is now the bottom photograph a stylised sign saying Sign Gear and then 'Phone 97065244'?---Yes. Are you able to tell His Honour what that is, do you recognise that?---Yes, I do. Can you say what it is?---that was packaging tape which I received from Sign Gear as a system that I probably introduced to keep, just to keep a record of what they were physically taking and what they weren't, what rolls they were taking off and what they weren't. How was that system implemented?---Well, at the start there was really no - there wasn't really a system there and every time I invoiced or wrote out a delivery docket to head office there was always an argument as to what they'd actually taken and what they didn't take so I suggested to Abe that we either keep a record whether it's by physically writing on the box or using packaging tape which had the Sign Gear logo on it. As part of your duties as an employee of Stick On Signs, did you have to fill orders for Stick On Signs' customers, not Sign Gear but other customers, that involved the sale of part rolls?---Yes. How did you go about that?---Again, the orders came to me and I verified them, if there was something that was odd, usually they were the the cast films, they were usually sold by half rolls but every now and then I would get a part roll, it may have been metreage and I simply wound it off, it was packed and expedited. Was the length that had been taken recorded on the carton somewhere?----No. It wasn't?---No. Did you have any conversation with the person that has been referred to in this court as 'Abe' but in actual fact his name is Avraham Weiszberger, Mr Weiszberger, in relation to the matter that you see in those photographs?---Yes, what I would usually do if it was a part roll, naturally I would take the part roll first and wind off whatever the other customer required and then I would either contact Sign Gear to see if they would take the balance. That was something that came from Abe, he's got to take the balance."

In my view the evidence of Mr Fallace directly supports the plaintiff's case to a substantial degree and his evidence materially complements that given by Mr Weiszberger. I also note that no evidence was called on behalf of the defendant seeking to quantify the volume of part rolls purchased by it although it was implicitly accepted in its case that the plaintiff did have a claim for at least some part roll material.

Mr. Connor submitted I could not be certain that goods had not been removed for customers other than Sign Gear after boxes were initially opened, partial extraction of rolls had occurred, and the boxes had then been marked with a reference to Sign Gear or sealed with Sign Gear tape.

As I understand the evidence Mr Weiszberger has billed the defendant for the actual amount measured as removed from the boxes. Despite the clear intent to accurately mark what was removed on boxes used by Sign Gear or alternatively to seal them in accordance with the practice referred to by Mr Fallace, it is apparent that there is a real possibility that the stocktake overestimates the amount of stock removed by Sign Gear.

Having regard to the evidence as a whole (including in particular the evidence of Mr Fallace as to the systems used to identify part rolls in respect of which it was intended to ultimately invoice the defendant) I am, however, satisfied that at least 50 percent of the goods identified by the stocktake were on the balance of probabilities supplied to the defendant. This figure is a conservative figure and I suspect that in fact a substantially greater quantity of goods was supplied to the defendant. Nevertheless I have accepted that the stocktake figure should be discounted by 50 percent because:

(a) the agreed statement of facts does not fully describe the practices adopted with respect to the purchase of part rolls by Sign Gear;

(b) the dimensions of vinyl removed which were marked on boxes in conjunction with purchases by Sign Gear have been shown to not be entirely accurate (and the reason for this inaccuracy has not been positively established);

(c) it is possible some goods were removed for customers other than Sign Gear from those boxes marked with dimensions in 10 percent of cases;

(d) it is likewise possible that some goods were removed for customers other than Sign Gear from boxes marked for Sign Gear but not marked with a dimension at all;

(e) it is also possible some goods were removed for customers other than Sign Gear from boxes sealed as Sign Gear boxes;

(f) nevertheless the evidence of Mr Weiszberger and Mr Fallace satisfies me that the probability is that there was no removal of goods for the benefit of third parties from the majority of the boxes which were the subject of the stocktake;

(g) even where such goods may have been removed I am satisfied that in all cases there was an initial removal for the benefit of Sign Gear; and

(h) having regard to the above matters I am satisfied that at least 50 percent of the goods identified by the stocktake were on the balance of probabilities supplied to the defendant.

I therefore accept that the invoices raised on behalf of the plaintiff as a consequence of the stocktake properly evidence a claim for goods sold and delivered to the extent of 50 percent of the sum claimed namely $17,161.97.

The last sub-category of the claim for goods sold and delivered which was in issue, was a dispute as to detailed pricing. This was resolved by agreement, by splitting the difference between the parties. Accordingly the claim was reduced by $1,738.35. In addition, the claim was reduced by $136 with respect to an invoice properly directed to "Sign Gear Queensland" a different corporate entity from the defendant. (See paragraph 4.)

Having regard to the above matters I find the claim proved in the sum of $281,957.88 being the claim reduced by the sum of $25,216.27.

The Amended Defence and Further Amended Counterclaim allege that the plaintiff and defendant entered into an oral agreement in or about 1992, whereby the plaintiff would import vinyl products from a major supplier in the United States of America based on orders placed with it by the defendant and others, and the plaintiff would sell those products ordered by the defendant to the defendant at wholesale prices. It is alleged the following were terms of the 1992 agreement:

(a) the plaintiff would import vinyl products in amounts, styles and ranges ordered by the defendant;

(b) the plaintiff would supply such vinyl products to the defendant and to others at wholesale prices;

(c) the defendant would sell at retail such imported products;

(d) the plaintiff would be entitled to the first $1,000,000 in profits from the importation of such products;

(e) the plaintiff would pay the defendant the sum of $1,000,000 at the expiration of 10 years or after the plaintiff had made $1,000,000 in profits whichever event first occurred;

(f) the defendant would not be paid any moneys for its services to the plaintiff in assisting with the importation and delivery of such products until the plaintiff had first made $1,000,000 in profits or for 10 years whichever first occurred;

(g) the defendant was to provide the plaintiff with:

(i) duly completed invoices specifying the quantity, style or type of stock, but not the price, for all products bought by the defendant;

(ii) staff to duly pack or fill orders from stock in the plaintiff's factory;

(iii) staff to arrange for the delivery of the stock to the customer;

(iv) staff to attend to the unloading and unpacking of containers of imported product; and

(v) staff to assist with the plaintiff's stocktake.

It is apparent that the arrangement entered into between Stick On and Sign Gear in 1992 was somewhat unusual. In particular Sign Gear in effect agreed to operate the warehouse side of Stick On's business. I accept that there were some discussions between Mr Lowin and Mr Kennedy as to the future provision of benefit to Mr Kennedy in addition to the profits he might reasonably expect to make from his own business as a result of its enhancement through the proposed course of dealings. In my view the likelihood of such discussions is corroborated by the following matters:

(a) The more than usually close nature of the commercial arrangements entered into;

(b) The likely desire of Mr Lowin to encourage Mr Kennedy to use his best endeavours in what was in a broad sense a "joint venture";

(c) The ultimate acceptance by Mr Lowin's widow of some obligation to Mr Kennedy following her husband's death, and the payment to Mr Kennedy and his wife of the sum of $108,000 on 14 September 1998 (the day on which revised terms of trading were embodied in a written agreement between Stick On and Sign Gear). This payment of $108,000 was expressed by solicitors' covering letter to be made "in accordance with the wishes of the late George Lowin."

I am not, however, satisfied that the discussions between Mr Lowin and Mr Kennedy in 1992 resulted in an arrangement or representations having the certainty or character for which the defendant contends. There are three aspects of the arrangements which are particularly problematic:

(a) The proposition that the plaintiff agreed to pay the defendant $1,000,000 after 10 years whether or not the plaintiff itself made a profit;

(b) The question whether the parties intended to create a legally enforceable agreement between the plaintiff and defendant companies; and

(c) The question whether terms certain were mutually agreed between Mr Lowin and Mr Kennedy.

The first aspect speaks for itself; it is highly unlikely Mr Kennedy was guaranteed $1,000,000. In addition I note that Mr Kennedy's own formulation of the 10 year requirement varied in his oral evidence. Thus at one point he said Mr Lowin told him:

"You are going to have to wait at least 10 years." (tp.327)

The second and third areas of problem identified by me above go to the crystallisation of arrangements between Mr Lowin and Mr Kennedy and the question of whether such arrangements were personal.

At p.271 of the transcript Mr Kennedy describes the arrangement in issue as follows:

"He said he was willing to put up the finance for the vinyl business so I said: 'Fine, that was fine'. Then we came to an arrangement between each other and the terms of that he said: 'I can see this business will be a very good business and at the end of the day the first million dollars that I make from the business shall be mine.' And I said: 'Yes, that's fine.' He said: 'And the second million that I make from the business shall be yours because if one of us is going to be a millionaire out of this both of us will be. You are putting in all the work, I am putting in the finance and we will do it together.' So I said: 'Fine'. That was the basis of our conversation. There was a lot more went on than just that."

Mr Kennedy was cross-examined about this passage of evidence and the certainty of the terms of the agreement alleged.

"Mr Kennedy, before the interruption you gave an answer which I just want to check what the answer was, which was that you and George had agreed on a period of approximately 10 years. Is that your evidence? --- We had pretty well signed the 10 years in concrete but we hadn't set it in gold. You had to know George. Are you saying that George never said it clearly to you? --- Yes, and he agreed to it but whether he would still back it at the end of the 10 years was the question. So that it was a tentative agreement. Is that what you are saying to his Honour? --- He agreed to the 10 years and we both decided on that together and that was the way we operated." (tp.327)

In my view the tenor of Mr Kennedy's evidence and the variations which have occurred in the formulation of the alleged arrangement betray the fact that the understanding which Mr Kennedy had with Mr Lowin was a loose one which not only was never reduced to writing, but never achieved a mutual understanding on terms of certainty.

The commercial arrangement entered into between Mr Kennedy and Mr Lowin was of mutual benefit to both the plaintiff and the defendant. It cannot be inferred that a condition of the type asserted by the defendant requiring payment of an additional bonus was necessary to make the arrangement equitable. Insofar as the defendant was concerned:

(a) Mr Kennedy said in evidence that it was a dream of his to import vinyl products into Australia. The arrangement was the vehicle for the realisation of this dream.

(b) Sign Gear was able to have imported at the cost of Stick On the range of products which Sign Gear desired for the benefit of its business.

(c) Stick On carried the risks associated with the import process. These included risks associated with international sea carriage, currency fluctuations and the like.

(d) Stick On warehoused the stock imported and Sign Gear was effectively able to use Stick On's warehouse as its own.

(e) Stick On provided Sign Gear with certainty not only as to supply but also as to ongoing reasonable levels of mark-up on imported goods.

(f) Stick On provided Sign Gear with terms of credit which effectively enabled Sign Gear to finance the ongoing conduct of its business. Sign Gear was able to agree to on-sell goods before it had in fact purchased such goods from Stick On.

Conversely, Sign Gear managed the initial ordering of goods from suppliers, the warehousing of those goods and the sale of products to other distributors by Stick On. As time progressed Stick On assumed some of these functions. Nevertheless Sign Gear continued to manage the warehouse up until the death of Mr Lowin.

When asked in evidence what were the terms on which Mr Lowin said he would put in the money, Mr Kennedy said:

"He would put in the money for the business as long as the business remained Stick On, as its ownership value was always Stick On and that I was willing to do the work as in packing orders, look after the stock and do all that type of thing. I said I was willing to do that as long as there was a reward for me because that is a lot of work for me to do and my staff. I've got to get staff to pack orders and do all these things. So that was agreed between us that we would do that. When I actually put in the first order with George I thought he was a bit sort of half hearted at first, but then when I put the order with him and he rings me up and says: 'No, that's all done, organised, and we are on our way.' And that was the start of quite a good relationship up until he died. And we were bringing in roughly a container every six to eight weeks of material. Each container could bring in a value of between US$60,000 up to US$200,000 would be a container ... Well, basically once the first container of material landed, it was head down and bum up basically. Time to do the work and time to get into it. I'd say to George, 'If you could handle the freight side of it, that will reduce it for me a little bit.' I originally contacted all the freight forwarders and the one we come up with the most competitive was Transcontainer; that's who we started to use, which they were actually at the time, Gluck Freight, and they were bought out and transferred to Transcontainer. So he decided that he would do that side of it. I said then could he handle part of the sale side, because there's a lot of work in the packing and the inventory and to make sure that the goods are going out to the customer on time, because in the sign industry, basically everybody wants everything yesterday, that's just the way the industry is."

Insofar as Mr Lowin may have made representations to Mr Kennedy in 1992 as to further reward to Mr Kennedy apart from the benefit of the proposed trading arrangement, it is impossible to conclude precisely what the terms of such representations were or that they were in any way dishonest, misleading or deceptive. It is apparent rather that the parties entered into a mutually beneficial working relationship, the details of which were not entirely fixed, but were amplified and altered as time went by.

The course of events after Mr Lowin's death is also not corroborative of the claim by the defendant for $1,000,000.

(a) There is no record of any assertion in writing of a claim of this nature until an affidavit sworn by Mr Kennedy seeking to set aside a statutory demand in June 2000.

(b) Mr Kennedy asserts that he orally advised Mrs Lowin and Mr Weiszberger of his entitlement to $1,000,000 at a dinner at Kimberley Gardens following an overseas trip. This trip occurred after the death of Mr Lowin and was financed by the defendant. Mrs Lowin and Mr Weiszberger deny that a claim was made for $1,000,000 at this dinner. Mr Kennedy says that his wife Andrea was also present at the dinner but she was not called to give evidence to corroborate his version of the conversation.

(c) Following the dinner it is clear that negotiations took place with respect to paying out Mr and Mrs Kennedy's home mortgage. These negotiations tend to corroborate the evidence of Mrs Lowin and Mr Weiszberger, that what was asserted by Mr Kennedy at the dinner was an understanding that Mr Lowin would pay out the mortgage. Put another way, the negotiations in no way corroborate a claim for $1,000,000.

(d) The terms on which Stick On and Sign Gear agreed to trade which were reduced to writing and signed in September 2000 make no reference to a further bonus payment.

(e) It is now contended by the defendant that the $108,000 paid to Mr and Mrs Kennedy is irrelevant to the debt in the sum of $1,000,000 payable under the agreement between the two companies. In cross-examination, however, Mr. Kennedy gave the following evidence:

"I suggest to you that you agreed to accept $108,000 to pay off your house mortgage, as payment for what in your mind you were owed by George, Mr Kennedy? --- I sort of really basically thought it's probably the best offer I'm ever going to get really, if I'm lucky, even though it's worth a hell of a lot more than that, what can I do - they're all going to tell me to shove off. And that's what you agreed to take? --- George was - I wish George was here, I really do. And that's what you agreed to take, Mr Kennedy? --- I accepted that as by the wishes of the late George Lowin, it was accepted." (tp.337)

(f) The terms in which the claim for $1,000,000 have been expressed vary in the series of pleadings in this Court, the affidavit sworn by Mr Kennedy in order to set aside statutory demands in June 2000, and Mr Kennedy's oral evidence.

There is a body of case law which holds that the Court must exercise caution in circumstances where an interested party such as Mr Kennedy asserts an oral promise by a deceased person.

It is clear that a court may accept uncorroborated evidence of an interested party as to conversations or arrangements with a deceased person[1], however the attitude a court should take to such evidence is explained in Plunkett v Bull[2]. In that case Isaacs J stated (pp.548-9):

"undoubtedly it is established that in cases of this sort the court scrutinizes very carefully a claim against the estate of a deceased person. It is not that the court looks on the plaintiff's case with suspicion and as prima facie fraudulent, but it scrutinizes the evidence very carefully to see whether it is true or untrue."

This principle is applicable even where, as here, the claim is not made against the estate of the deceased - the important point being that the deceased is no longer able to confirm or deny any claim made against his or her (prior) interests. As Hansen J stated in Richardson v Armistead[3]:

"in such circumstances the self interest of a claimant to give evidence favourable to his or her case is obvious ... in such a case much caution is exercised before the evidence of the claimant is accepted."

One factor which is important in the court's scrutiny of such evidence is whether the claimant has brought forward all available evidence.[4] A summary of these principles was given by McClelland CJ in Eq in Eyota Pty Ltd v Hanave Pty Ltd [5] as follows:

"in a claim based on communications with a deceased person, the court will treat uncorroborated evidence of such communications with considerable caution, and will regard as of particular significance any failure of the claimant to bring forward corroborative evidence which was, or ought to have been available."

In this case there is no contemporaneous corroboration of the conversation or conversations between Mr Lowin and Mr Kennedy regarding the alleged agreement to pay $1,000,000. In addition Mrs Kennedy was not called to rebut the plaintiff's case that the defendant's claim is a recent invention.

In the present circumstances I am not satisfied of the arrangement asserted by Mr Kennedy, nor am I satisfied that representations were made in the terms alleged so as to give rise to the possibility of the alternative claims made on the basis of allegations of misrepresentation, misleading and deceptive conduct, unconscionable conduct, and estoppel.

Furthermore, no claim was established by way of quantum meruit with respect to the services rendered by Sign Gear to Stick On pursuant to the 1992 arrangement. The loss, if any, which might be said to flow from any representation or request made by Mr Lowin was simply not established or quantified. The evidence does not establish that the arrangement between the parties resulted in unjust enrichment of the plaintiff as a result of the defendant's services (Pavey & Matthews v Paul[6]; Brenner v First Artists Management Pty Ltd[7]).

For the above reasons the defendant's counterclaim with respect to the 1992 arrangements fails.

The defendant also counterclaims for commission pursuant to clause 4 of the 1998 agreement which provides:

"4. Sign Gear hereby agrees to promote and sell to distributors on behalf of Stick On vinyl products imported by Stick On including but not limited to the GFVP and in return for such service Stick On hereby agrees to pay to Sign Gear a commission in respect of those sales of vinyl products equivalent to 20% of the nett trading profit before tax and before payment of salaries to its directors achieved by Stick On."

The defendant contends that this clause of the agreement entitles it to commission:

(a) on all sales made to Sign Gear by Stick On during the currency of the agreement; and

(b) on all sales made by Stick On to third parties during the currency of the agreement.

I do not accept that the condition applies to sales made by Stick On to Sign Gear. It is expressed quite clearly to apply to a particular class of sales namely those where Sign Gear "promote(s) and sell(s) to distributors on behalf of Stick On."

I also do not accept that the relevant condition applies to all sales made by Stick On to third parties. The words clearly refer to sales effected by Sign Gear on behalf of Stick On. The agreement does not relate to sales in which Sign Gear did not act as agent. No such sales were identified in evidence before me. I further observe that the terms of the agreement as a whole support the above construction which arises from the plain meaning of clause 4 of the agreement. In this regard I refer particularly to clauses 1, 5 and 7 of the agreement.

Clause 1 gives Stick On the exclusive right to sell to "wholesale distributors" vinyl product imported from an American manufacturer General Formulation. This is the vinyl product referred to as "GFVP" in clause 4 of the agreement. Sign Gear is given the right to sell GFVP to its "retail customers only". In my opinion clause 4 is informed by the distinction contemplated in clause 1. Clause 4 is concerned with sales by Sign Gear on behalf of Stick On to distributors. Such sales could occur within the framework contemplated by clause 1 and might also occur with respect to product other than GFVP. Conversely, there would be no commission payable where Sign Gear sold GFVP to Sign Gear's retail customers, or where Stick On itself sold to other distributors without the agency of Sign Gear.

Clauses 5 and 8 of the agreement restrict the entitlement of both Sign Gear and Mrs Andrea Kennedy to import product into Australia. This further confirms the hierarchy in which it is contemplated Stick On will be the importer and Sign Gear will be a distributor. It is consistent with this scheme that Sign Gear may also sell to other distributors on behalf of Stick On as contemplated by clause 4 of the agreement, but the core role of each is at a different level of the retail hierarchy.

Clause 4 of the agreement is thus concerned with a particular and discrete category of transactions not established in evidence before me.

The counterclaim also alleges that the defendant has suffered trading losses as a result of the plaintiff's failure to supply vinyl products in accordance with the 1998 agreement after March 2000. These damages are not particularised in the counterclaim and they were never satisfactorily established or quantified in evidence. The evidence is that after Stick On refused supply to Sign Gear, Sign Gear in fact continued to obtain very substantial quantities of product from Stick On by using Sign Gear Queensland (an entity associated with Kennedy's brother-in-law) as an intermediary (tp.351 ff). The loss asserted to have accrued from a partial disruption of supply pending establishment of new import arrangements, was never established or quantified in any satisfactory way.

It is apparent that in March 2000 Mrs Lowin and Mr Weiszberger regarded the failure to pay for goods supplied pursuant to the 1998 agreement in accordance with the terms of that agreement as amounting to a repudiation of the 1998 agreement. The 1998 agreement expressly envisaged that Sign Gear would continue to do the work for Stick On which it previously had. This work included the listing and notification of purchases after removal of goods from Stick On's warehouse by Sign Gear. The relationship was an unusual one from its inception in 1992. It was properly described as one of trust (as senior counsel for the plaintiff put to Mr Kennedy). It can thus be understood that those associated with the plaintiff might subjectively regard non-payment for goods as destroying the mutual trust fundamental to the arrangements between the parties and defeating the commercial purpose of the contract.

Nevertheless the 1998 agreement provided as follows with respect payment of Sign Gear's account:

"Stick On and Sign Gear hereby agree that Sign Gear is to pay its account with Stick On on a 90 to 120 day basis from 1 May 1999 failing which Sign Gear is to pay interest on a daily basis at the reference rate as quoted in the Australian Financial Review each Monday."

Unless a contrary intention appears stipulations as to the time of payment in contracts for the sale of goods are not of the essence of the contract: Goods Act 1958, s.15(1). This rule which is derived from the common law also applies to analogous contracts (see Decro-Wall International SA v Practitioners in Marketing Ltd[8]; Roadshow Entertainment Pty Ltd v (ACN 053 006 269) Pty Ltd[9]).

The provision of extended credit was an accepted element of the longstanding arrangements between the parties. Given the terms of the agreement the question whether the plaintiff was objectively entitled to regard delay beyond 120 days as amounting to a repudiation of the 1998 agreement is not without difficulty. The extent of the breach in issue is not clear on the evidence. In my opinion it is not as easy as those associated with the plaintiff may have assumed, to conclude that the breach by the defendant of the terms of the 1998 agreement as to payment necessarily frustrated the commercial purpose of that agreement (cf Hong Kong Shipping Co. Ltd v Kawasaki Kisen Kisha Ltd[10]; Amann Aviation Pty Ltd v Commonwealth of Australia[11]; Commonwealth of Australia v Amann Aviation Pty Ltd[12]). Because of my conclusions with respect to proof of damage, however, it is unnecessary for me to finally resolve this issue.

For the above reasons there will be judgment for the plaintiff upon the claim in the sum of $281,957.88

I will hear counsel as to the question of interest.

I will hear counsel as to the question of costs.

[1] Tone v Brolly [1891] VicLawRp 100; (1891) 17 VLR 467, 470; Re Garnett; Gandy v Macaulay (1885) 31 Ch D 1, 9 and 16; Re Hodgson; Beckett v Ramsdale (1885) 31 Ch D 177, 183

[4] For example, Plunkett v Bull [1915] HCA 14; (1915) 19 CLR 544, 549; The Perpetual Executors and Trustees Association of Australia Limited v Wright [1917] HCA 27; (1917) 23 CLR 185, 195

At a glance

Court

Decision date

Before

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Judgment (103 paragraphs)

Parties

Cases Cited (6)