Tropicus Orchids Flowers & Foliage Pty Ltd v Territory Insurance Office [1998] NTSC 73; 148 FLR 441; 10 ANZ Ins Cas 61-412

Tropicus Orchids Flowers & Foliage Pty Ltd v Territory Insurance Office [1998] NTSC 73; 148 FLR 441; 10 ANZ Ins Cas 61-412 - NTSC 1998 case summary — Zoe

[26]

According to Mr Hearne, in early 1993 he had mentioned to his then solicitor, Mr Neil Philip and Mr Philip's partner, Mr Nick Mitaros, that having sent some samples of flowers to Japan, he had received indications from two Japanese firms that they would be interested in importing a large number of flowers from the plaintiff if they were of the same quality as the sample. Mr Hearne told Messrs. Philip and Mitaros that he did not have the resources to expand the plaintiff's business to meet the potential of this market and that he was looking for a joint venturer or equity partner. Messrs. Philip and Mitaros indicated their personal interest and later introduced to Mr Hearne Mr Mitaros' uncle, a Mr Peter Kailis, who was also interested. A meeting of the interested parties was held on 26 May 1993, the minutes of which were tendered as Ext. P21. The minutes record a proposed "joint venture," the capital partners of which were to be Tropicus Holdings Pty Ltd (60%), Kailis Consolidated Pty Ltd (20%) and Messrs Philip and Mr Mitaros (20%). Mr Hearne said in evidence that the shareholding was to be held by the plaintiff and not by Tropicus Holdings Pty Ltd. According to the minutes, the basis of the arrangement was that a new company, Hearne's Floraculture Pty Ltd, would be formed with a fully paid up share capital of 1,000 $1 shares to be issued in the above proportions to the proposed shareholders. Various loans would be made by the shareholders to the company. Tropicus Holdings Pty Ltd would sell certain orchid plants, a shade house, benches, and ancillary equipment to Hearne's Floraculture, and a sublease of portion of Tropicus Holdings' land (as well as certain adjoining land to be acquired) would be granted to Hearne's Floraculture. The minutes also envisaged the employment of an administrative general manager. Certain budgets (including a sales and profit and loss budget (Ext. P22)) were approved. The joint venture was to commence on 1 October 1993. It would appear that Hearne's Floraculture Pty Ltd would not be purchasing the whole of the plaintiff's operations, and that certain parts of Tropicus Holdings' land upon which there was a second shade house, as well as a laboratory, were to be excluded. The minutes did not detail, except in a broad-brush way, the precise arrangements needed to be made between the parties for the "joint venture" to become reality. Nevertheless, Hearne's Floraculture Pty Ltd became incorporated sometime later in 1993, a bank account was established and some monies were deposited therein to build a shade house and attend to other minor works. Apart from employing a Mr Lugg, to whom I will refer later, the "joint venture" did not otherwise proceed, for reasons which will become obvious shortly.

[38]

At no stage was it pointed out by Mr Barr that the amendments, if allowed, raised a condition precedent to the defendant's liability which cast the onus of proof upon the plaintiff, a matter neither I nor Mr Riley Q.C. appreciated: see Kodak (Australasia) Pty Ltd v Retail Traders Mutual Indemnity Insurance Association [1942] NSWStRp 19; (1942) 42 SR NSW 231 at 234, 236 et seq., per Jordan CJ; Toikan International Insurance Broking Pty Ltd v Plasteel Windows Australia Pty Ltd and Another: Plasteel Windows Australia Pty Ltd and Another v Sun Alliance Insurance Ltd and Another (1988) 15 NSWLR 641 at 648; Verna Trading Pty. Ltd. v New India Insurance Co. Ltd. [1991] 1VR 129 at 148, per Kaye J; Body Corporate Strata Plan No. 4303 v Albion Insurance Company Ltd. [1982] VicRp 70; (1982) VR 699, per Kaye J. Not being aware that the provisions of the policy being relied upon as having been allegedly breached were of a kind the performance of which by the plaintiff were conditions precedent to the defendant's liability, and that the burden of proof of compliance with those conditions rested with the plaintiff, I considered that there would be no injustice to the plaintiff (perhaps save as to costs) to permit the defendant to amend at such a late stage in the trial (see Tr. pps 975-976). Subsequently, when in final submissions, the true effect of the amendments became apparent to me and to Mr Riley Q.C., I heard further submissions on whether the amendments should be allowed to stand, or whether the trial should be adjourned to enable the plaintiff to call further evidence. Ultimately the parties reached agreement that amendments would be permitted to stand, that the legal onus of proof of non-compliance with the conditions etc would rest upon the defendant, and that the evidence upon which the defendant sought to rely and which had previously been admitted only for other purposes could be used for this purpose as well: see Tr. p 1105. As the approach to be adopted is by consent of the parties as the result of an agreement reached between them in the circumstances briefly outlined above, I will approach the resolution of the new issues raised by the Fifth Amended Defence accordingly.

[113]

The plaintiff's case is that the "trend in the Business" would be affected by the 5:12:18 formula, which is not fully reflected in the sales income for 1992-93, because production in subsequent years would be affected by the aging of the plants, and by new plants coming into production. Mr Cowling's figures attempt to take this factor into account. Mr Cowling found some support for his calculations which took this factor into account by comparing the actual income earned from dendrobium sales in April, May and June 1992 with the corresponding months in 1993: compare the resultant calculation in Exts. P61 and P62 with Ext. P63. One difficulty I have with this approach is the proposed sale of part of the plaintiff's stock to Hearne's Floraculture Pty Ltd in the latter part of 1993. On the evidence before me, I have to consider the possibility that, but for the Damage, the plaintiff would have sold 37,000 orchid plants and other equipment for $299,600.00 (say $300,000.00) on or about 1 October 1993, and possibly a further 65,000 plants for $182,000.00 in the event that negotiations to acquire the additional land contemplated in Ext. P21 were successful. If the first sale of 37,000 plants was affected, this would not only be a "variable" in actual contemplation as at the time of the Damage, but the reduction in the plaintiff's stock would affect Mr Cowling's "trend" calculations. I note that there is no evidence as to the split up between the price to be paid for the plants, and the rest of the assets to be sold. The subsequent sale of 65,000 plants for $182,000.00 suggests a price a little under $3.00 per plant, which suggests that the 37,000 plants might have been worth $111,000.00, with the balance of the equipment worth approximately $189,000.00. This equipment is not shown as an asset of the plaintiff, but as an asset of Tropicus Holdings (see Ext. P10). According to Holding's balance sheet as at 30/6/93, the total value of its non-current assets was $382,930.00 of which $232,268.00 represented land, buildings and improvements. There were also other assets (office equipment $174.00; motor vehicles $2,175.00) which were not to be sold. At best, the depreciated value of Holding's non-current assets is $92,828.00 plus $55,485.00, which equals $148,313.00, and which suggests that the 37,000 plants were to be sold for a price something in the order of about $4.00 per plant, or say, $152,000.00. No figures were presented to me by the parties to show how this would have affected the calculation of "Standard Income"; nor do I know whether the contemplated sale should be treated as income or the sale of a capital asset.

[116]

If one puts to one side the impact of the proposed sale, there are difficulties in accepting the raw figures prepared by Mr Cowling based on expected dendrobium production as being a real possibility. These figures assume 100% probability that every plant will produce the predicted number of stems; that every flower produced will be sold, i.e. that the market could absorb the whole of the plaintiff's proposed expanded production; no wastage of any kind, whether due to marketing problems or other factors; and that the plaintiff had the capital available and the business expertise to expand the business to that extent. I accept that the evidence indicates significant marketing opportunities for the plaintiff, particularly in dendrobium sales, in Australia. As to the plaintiff's capacity to expand, I am satisfied that the plaintiff's financial position as at the time of the loss was "tight", as Mr Hearne himself conceded. It was having difficulty servicing its existing loans. One of the reasons why Mr Hearne contemplated the joint venture in the first place was that he felt that he needed an injection of capital to expand. The history of the plaintiff's relations with its bankers as revealed in Exts. D12, D20 and D23 suggests that it is very unlikely that the plaintiff could have obtained further borrowings from its existing bankers. I accept the general thrust of Mr Riley Q.C.'s submission that the plaintiff already had most of the infrastructure needed to expand in that it had not one shade house (as Mr Nourse apparently thought) but two, and an "iglo" in addition to the shade house built by the joint venture, and that the plaintiff already had access to immature plants in its phytotron, pots, charcoal, peat moss, polystyrene and fertiliser etc; and that it had some capacity to borrow funds from other sources, eg. from the sale or licensing of technology owned by Mr Hearne, all of which (and I have not mentioned everything relied upon by Mr Riley Q.C. in detail) suggests that the plaintiff had some capacity to expand its Business contrary to the opinion of Mr Nourse (see Ext. D22). However, in general terms, expansion of the plaintiff's business would still have required an injection of capital to meet additional running costs (see Mr Nourse's report, Ext. D22, p 23 under the hearing "Working Capital Requirements") and the plaintiff's capacity to borrow funds depended on its capacity to repay, which in turn would, generally speaking, depend on the plaintiff's ability to demonstrate that capacity. Unless a lender was driven by considerations foreign to ordinary lending policies in the market place, capacity to repay further loans is difficult to demonstrate if the existing borrowings are not being adequately serviced, and the plaintiff's history with its bankers exhibited difficulty in this area.

[150]

The purpose of an average provision is to require the insured to bear a rateable proportion of a partial loss if there is under insurance: Mann, Annotated Insurance Contracts Act, 2nd Edn., Law Book Company Information Services, p112. In the light of that purpose, is there any ambiguity in the averaging provision to the Department Clause? The clause begins "if the sum insured for any item". In this case there are several "items" for which there is a sum insured. Taken literally, this would refer to the sum insured for Insured Gross Income if one is dealing with the indemnity for Insured Gross Income, or the sum insured for claims preparation if one is dealing with claims preparation etc. This is less beneficial than what would be the case if there was only one insured and the Department Clause did not apply, as in those circumstances there would be no averaging on items other than Insured Gross Income. Of course, there is nothing particularly surprising about an averaging provision applying to more than one item of indemnity. Whilst it might appear to be odd that the policy would apply averaging to another item of indemnity, such as for claims preparation, the general intent of the Department Clause seems to be to allow the insured to recover loss of Insured Gross Income from a separate identifiable department, where other departments have suffered no loss, by looking at that department separately. If each department of the Business had suffered a loss, it could be suggested that one would anticipate the probability that greater professional fees might be incurred in claims preparation than if only one department suffered the loss. However, the averaging provision is expressed to be an exception to the amount payable only in respect of the indemnity for Insured Gross Income, in that the words of the exception follow immediately after reference to "the provisions of Clauses (a) and (b) of Item 1". Neither party sought to urge upon me that the effect of the averaging provision in the Department Clause went further than to affect the indemnity for Insured Gross Income. Taking the words in the context of the clause and of the policy as a whole, and bearing in mind that the indemnity for claims preparation is of a wholly different kind to the indemnity for loss of Insured Gross Income, I consider that there is an ambiguity in what is meant. Another possibility is that the draftsman of the clause intended to cover the situation if the policy had included separate sums insured for each department. Further, if applied literally to any item other than the Insured Gross Income, it could have the effect of proportionally reducing Insured Gross Income, even if the sum insured for Insured Gross Income was adequate. If one takes professional fees for preparation costs as an example, one would normally expect that the sum insured for that item to be small compared with the sum insured for Insured Gross Income. If applied literally, the insurer would be able to use the lowest sum insured of any item of indemnity as the base figure, which would obviously significantly affect the extent of the proportional reduction to other items. This does not seem reasonable, and therefore it should be construed, if some other construction is open, so as to avoid this consequence: c.f. Lewis Construction (Engineering) Pty. Ltd. v Southern Electric Authority of Queensland (1976) 50 ALJR 769 at 775. The other possibility is that "any item" should read "the said item", and applying Fitzgerald v Masters, supra, I consider that this is the preferable construction.

[160]

If this is so, in cases where the possibilities are more favourable than probabilities, Standard Income would be a higher figure than Annual Income. In cases where the possibilities are largely negative, Annual Income might exceed Standard Income. The larger Annual Income becomes, the more likely it is that D will be greater than the sum insured. This does not produce an entirely logical result given that it is the difference between Insured Gross Income and Standard Income in para 1(a) of the calculation which is arrived at before the averaging provision is applied. Thus, in a case where Standard Income is larger than Annual Income, the difference between Insured Gross Income and Standard Income is more than the difference between Insured Gross Income and Annual Income. This has two effects: (1) the original calculation required by Clause 1(a) is inflated thereby increasing the amount of the loss; (2) the averaging provision is also affected as D will be smaller than it otherwise would be, with the consequence that the proportional reduction will be less. A similar problem would appear to arise if the period of indemnity was less than twelve months, and the effect of the damage was felt during a period of high income for the business. The definition of Standard Income requires the Insured Gross Income in the relevant corresponding period of the previous year to be considered, whereas the definition of Annual Income requires the whole of the previous year to be considered. So far as the first part of the calculation is concerned the insured's loss is calculated beneficially in that Standard Income is calculated by reference to a period of high turnover, thus producing a larger difference (or loss) than would be the case than if, say, an average over the whole year was considered. The definition of Annual Income does not require this, with the apparent result that the calculation of the trend etc to produce "the same result ... had the Damage not occurred" would appear to result in a smaller figure.

[172]

Mr Riley Q.C. submitted that I should apply the contra proferentum rule and construe the provisions in a way most favourable to the plaintiff. In this case, I do not consider that the contra proferentum rule applies in favour of the plaintiff. First, it is a rule of last resort, and I do not have to resort to it to resolve the question of construction: see The Western Australian Bank v The Royal Insurance Co. [1908] HCA 11; (1908) 5 CLR 533; M.G.I.C.A. Ltd v United City Merchants (Australia) Ltd (1986) 4 A.N.Z. Ins. Cas. 60-729. Secondly, I do not consider that the policy was proferred by the defendant. The history of the drafting of the policy was given by Mr Taylor. He explained that because North Australian Insurance Brokers (NAB) which wrote a lot of business with the defendant, became unhappy with the wording of the "commercial package product" which the defendant normally issued, the amount of business it wrote with the defendant fell into decline. The defendant's commercial underwriting manager at the time, Mr Glen Moore, spoke to Mr Taylor and asked what the defendant needed to do to write more business with NAB. Mr Taylor said the defendant needed to fix up its policy wording. Mr Moore indicated that this would take a long time to achieve, and suggested that NAB draft the wording and send it to him for editing. Mr Moore drafted the wording using as precedents other commercial packages in use, as well as the defendant's own wording, and submitted it to the defendant. Subsequently Mr Moore set the draft back with about 50 or 60 changes to it, and indicated that this was the wording the defendant wanted, unless NAB could point to mistakes, or had a particular piece of business which was attractive but required some specific changes to the wording. Mr Taylor then recorded these changes onto the draft in NAB's word processor, and ran off a limited number of copies to be used until the defendant had "keyed in" the policy wording into its word processor. He said that the policy in this case came from NAB's word processor, which I note is consistent with the front cover which says that it is "specifically designed for the clients of North Australian Insurance Brokers." At no stage was NAB authorised to accept risks on behalf of the defendant. It is common ground that NAB was the plaintiff's agent in this transaction and not the defendant's.

[223]

The first difficulty that I have is that the defendant asserts that Ext. D15 was not provided to it by the plaintiff, yet it was the defendant who produced this document at the trial. There is no evidence as to who provided the document to the defendant, or how, where or when the defendant obtained it. The document could have come only from three sources: (1) the plaintiff; (2) Rose and Associates or (3) the National Bank. As to Rose and Associates, the evidence of Mr Rose was that he was instructed by Mr Hearne in 1994 to provide the defendant's loss adjusters, Robins, with whatever information they required. He said that he and one of his staff, a Miss Brown, met a gentleman from Robins in January 1994. Mr Hearne had placed no restrictions on what might or might not be provided, and he left Miss Brown with Robins' representative after a short while. He said that the projections Exts. D4 and D11 were available and would have been provided if asked for, but he could not say if they were requested or not. Copies of some documents were later provided by letter (see Ext. D16) but the projections are not therein listed. It is not possible to conclude whether Robins asked for this type of document or they were provided with this document. The next possibility is the National Bank. There is evidence that on 21 January 1994 the plaintiff authorised the Bank to provide information to the defendant's loss adjusters (see Ext. P27), but the authority does not include the provision of copies of documents. Nevertheless it is possible that the Bank did provide that Ext. D15. Finally there is the possibility that the plaintiff provided it, either through Mr Hearne or by Mr Lugg. Neither could remember providing it. Given the amount of information provided, and the fact that it was Mr Lugg who handled the Business interruption claim, it is not surprising that Mr Hearne could not enlighten the Court. Mr Lugg, said that he could not recall providing Ext. D15, and, because projections were superseded by actual figures, he did not consider projections to be relevant, although he was aware that projections had been prepared by Rose and Associates. He considered the projections prepared for the joint venture might be relevant, and these were provided, as at that time he saw the future of the plaintiff tied up with the joint venture. He said that had he been specifically asked for this type of document, he would have provided it. He said he provided the joint venture's budget because it was made shortly before the loss, related to the 1993-94 year, and his understanding was that the joint venture would effectively take over the whole of the plaintiff's trading activities (this was not to be the case apparently, but is accurate so far as dendrobium production is concerned, and the plaintiff had on legal advice initially limited its claim to dendrobium production losses). I think it very unlikely that the plaintiff provided Ext. D4. There was no evidence from the defendant as to how or when it came to obtain the document. I am therefore unable to find that the document was never provided by the plaintiff either directly or indirectly.

[284]

Has there been a departure from earlier principle, so that the insured can recover general damages for late payment even though there has been no repudiation of the contract, and no acceptance of that repudiation by the insured? If so, what is the basis of that departure? In the CIC Insurance case, for example, there was a finding that the contract had been repudiated and that the repudiation had been accepted: see p 75, 568; yet the judgment for the amount of the money due on the policy was set aside because under the policy, the insured was not entitled to payment until the insured had incurred the costs of reinstatement, that provision had not been waived, and therefore the insurer was entitled to rely upon that provision in the contract! See p 75, 568. The judgment of Kirby P on this point appears to be based on the proposition, (contrary to his later finding) that there was no repudiation by the insurer (see p 75, 565). When the question of general damages was discussed by Kirby P., it was predicated upon a finding by Cole J that the insurer had breached the contract, by not paying within a reasonable time (p 75, 565). Priestly JA held that the insurer had breached the contract by indicating a refusal to pay the costs of reinstatement when they occurred in the future, i.e. he treated the insurer as being in anticipatory breach (p 75, 571). Yet there are authorities which suggest that there can be no damages for anticipatory breach unless the party not in breach terminates the contract, although those authorities have been criticised: see Cheshire and Fifoot's Law of Contract, Seventh Australian Edn., p 774. Powell JA, although of the view that the insurer had repudiated the contract and that this repudiation had been accepted by the insured, felt that the appeal could not be determined on this basis because of the way the appeal had been conducted. Consequently, he held that the only damages for breach of contract which the insured could recover was limited to interest (p 75, 598).

[291]

The conclusions that I have reached are that firstly, where, as here, a contract does not stipulate a time for performance by the insurer, the insurer must perform its obligations under the contract within a reasonable time. This obligation is an implied term of the contract. This is the general rule in contract law, (Laurinda Pty Limited and Others v Capalaba Park Shopping Centre Pty Limited [1989] HCA 23; (1988-89) 166 CLR 623; Reid v Moreland Timber Company Proprietary Limited and Others [1946] HCA 48; (1946-47) 73 CLR 1 at 13) and it applies to insurance contracts unless there are indications to the contrary in the policy. The failure to pay within time may amount to a fundamental breach entitling the insured to repudiate the policy if the insurer evinces an intention not to be bound by the policy or an intention to carry out the contract only if and when it suits the insurer: Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd, supra. In any event, if the insurer fails to pay within a reasonable time, the insurer is in breach and the insured may sue for the indemnity under the policy, and for damages for breach of contract. In order to sue for damages, it is not essential that the insurer has repudiated the contract (Luna Park (N.S.W.) Limited v Tramways Advertising Proprietory Limited [1938] HCA 66; (1938-39) 61 CLR 286 at 300) but usually the measure of the loss will be the amount of the indemnity due under the policy: Russell Young Abalone Pty Ltd v Traders Prudent Insurance Co. Ltd supra. Nevertheless, regardless of whether or not the action is for the monies due under the policy or for damages for breach, where the policy is still on foot the insured may also claim damages for the loss of use of the money in accordance with the rule in Hadley v Baxendale: Hungerfords v Walker, supra. The losses thus caused are recoverable either because the loss is necessarily within the contemplation of the parties and therefore reasonably foreseeable within the first limb of the rule in Hadley v Baxendale, or may fall within the second limb of the rule if the loss arises from special circumstances of which the defendant had actual knowledge: Hungerfords v Walker, supra, at 142, 149. Usually this loss will be properly quantified by reference to compound interest at commercial rates, depending upon for what the plaintiff intended to use the money. However, as the cases to which Kirby P referred in the CIC case, supra, at 75,765-66 show, the loss may fall to be assessed in accordance with other factors if the losses fall within the second limb of the rule in Hadley v Baxendale.

[308]

Mr Lugg's memory on this issue was not very good, but he thought that these definitions were needed because "there was some grey areas or confusion in terms of some of the definitions as to the way things should be incorporated in terms of income and also for the way that co-insurance should be applied." (sic) (Tr. p 386). Mr Cowling said that he was initially instructed to prepare the claim on the basis of what the parties understood the intent was, which was based on the gross profit and not Insured Gross Income. No definitions were ever forthcoming from the defendant as foreshadowed. Some further documentation was also required from the plaintiff at the meeting of 25/3/94 which Mr Lugg said he obtained (one of the items requested was "93/94 Budget/Sales Projections Prior to Poisoning" which I have already discussed). The first report which was provided to the parties and prepared by Mr Cowling, Ext. P15, is dated 14 April 1994 and was prepared on the basis of gross profit, and was, as it says, a "preliminary report" based on the difference between "Insured Gross Income" and "Estimated/Actual Gross Income", taking into account averaging. It is clear that at about this time, Mr Flanigan ceased to handle the claim on behalf of Robins and was replaced by a Mr Hallsten from Robins' Adelaide office. During the latter part of April, Mr Lugg said that there were a number of discussions with the assessors concerning the approach to be taken to the claim and that he could get no clear guidance as to what was required. Mr Lugg's frustrations were very evident when he gave his evidence recalling this period, and is demonstrated in Exts. P47 and P49. It is apparent to me that the source of the problem lay in the obscurity of the definitions in the policy and in its provisions. The fact is that neither party understood the provisions, and the plaintiff through Mr Lugg wanted to know what the insurer thought they meant because without this knowledge it was impossible to know what information was needed to support the claim. The only indication given by the defendant apart from asking for specific documents from time to time, was that the claim had to be assessed strictly in accordance with the policy's terms. Accordingly the plaintiff was forced to do its best and engaged Mr Cowling to prepare a fresh claim, which was presented on 17 May 1994 (Ext. P16). The amount claimed was $358,652.00, slightly lower than the original estimate in Ext. P15, but to be fair, it appears that Mr Cowling did not attempt to come to grips with "annual income" or "Standard Income" other than to assume that these definitions meant "estimated/actual gross income". The major difference between the two claims is that in Ext. P16, Insured Gross Income was not based on gross profit, but on the estimated gross income from loss of dendrobium production and on the assumptions mentioned earlier. The defendant's response was an offer of $92,339.00, less the $20,000.00 already paid on 8 June 1994, accompanied by the threat that:

[317]

By 1 October 1994, the joint venture was already over. Mr Lugg had left the plaintiff's employ mid August 1994. At the time the parties entered into the policy, the defendant did not know of the plaintiff's plans to enter into the joint venture. I do not consider that it is appropriate to assess the damages by reference to any loss of business opportunity connected with the joint venture, save to say that, having regard to the fact that Hearne Floraculture Pty Ltd had spent about $110,000.00 on a shade house erected on Tropicus Holding's property, as Mr Hearne indicated to the National Bank on 20 July 1994 (Ext. D23), it is likely that this sum at least would have been expended on acquiring that asset. However, this was a business interruption policy. I think the defendant must have been aware that the plaintiff probably had borrowed capital with its bankers. Hardly any business these days operates without borrowed funds from a bank. The defendant must have known that delay in the payment of money would affect the amount of interest it would have to pay to its bankers. I consider also that the National Bank would probably have demanded that at least part of the plaintiff's debt to it be retired. The major problem so far as the bank was concerned was the interest only loan of some $210,000.00 but the total borrowings of the group were $550,000.00. Despite Mr Hearne's optimism I consider that the bank's position is clear from Ext. D23; it expected its indebtedness to be reduced from the payout which the plaintiff received. Whilst there is no evidence as to how much the bank would have required the obvious target is the amount of $210,000.00, which was a short-term interest only loan, and I consider that it is probably that this debt would have been retired. This leaves a balance of $98,000.00 approximately of which I expect the plaintiff would have used $90,000.00 as operating capital to assist the plaintiff to re-establish its business, because not all of the $98,000 would have been available for that purpose given that monies were owed to other creditors such as Mr Cowling for his fees, Gittus and Willis, and even the former accountants, Rose and Associates. I consider it likely that the plaintiff would have used this capital to reduce its overdraft, but leaving the facility in place so that it could reborrow the money when needed.

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (322 paragraphs)

Parties

Legislation Cited (2)

Cases Cited (5)