Breen v Lambert & Anor [1990] QSC 263

IN THE SUPREME COURT OF QUEENSLAND No. 4547 of 1988 Before Mr Justice Byrne BETWEEN: KEVIN PATRICK BREEN Plaintiff AND: ARNOLD LAMBERT AND RICHARD K.C. WAN Defendants JUDGMENT - BYRNE J. Delivered the 9th day of August, 1990 CATCHWORDS: Contract - Sale of Shares - whether concluded agreement - whether, if so, contract induced by misrepresentations. Counsel: Solicitors: Miss S.M. Kiefel Q.C. with her D.J.S. Jackson for plaintiff Mr C.J.L. Brabazon Q.C. with him T.J.O. North for defendants Chambers McNab Tully and Wilson for plaintiff Flower and Hart for defendants Hearing dates: 12th, 13th, 14th, 15th, 18th, 19th, 20th, 21st, 22nd and 23rd June, 1990. -- 1 of 39 -- IN THE SUPREME COURT OF QUEENSLAND No. 4547 of 1988 BETWEEN: KEVIN PATRICK BREEN Plaintiff AND: ARNOLD LAMBERT AND RICHARD K.C. WAN Defendants JUDGMENT - BYRNE J. Delivered the 9th day of August, 1990 The plaintiff seeks specific performance and damages for delayed performance of a contract for the sale by him to the defendants of shares in Hayville Pty Ltd. The company conducts a Brisbane inner-city restaurant, "Whittaker's Restaurant", from rented premises in Queen Street. The defendants (i) deny having concluded a contract .to buy the shares; (ii) alternatively, contend that any such contract was induced by innocent misrepresentations and has since been rescinded; and (iii) as to the damages claimed for delayed performance, point to an 18 month interval between commencement of proceedings and trial during which the restaurant has continued to sustain substantial losses as a basis for denying the additional damages. By the end of the trial, it was no longer suggested that specific performance should be refused if an enforceable contract to purchase the shares is established. And, although allegations of a failure to mitigate assumed some significance in the defendants' pleadings and during the evidence, in address it was not suggested that the vendor was reasonably required to elect to determine the contract for the purchasers' continuing refusal to perform ( cf. The Solholt [1983] 1 Ll.Rep. 605, 608-9). Mr Brabazon Q.C. did not -- 2 of 39 -- 2 suggest that matters of mitigation or causation were relevant to anything other than the pace of the litigation: something not distinctly pleaded but which the plaintiff was content to meet: cf. Banque Commerciale S.A. and Akhil Holdings Ltd (1990) 64 A.L.J.R. 244, 248. Whittaker's Restaurant opened in February 1988. Mr Breen and Mr Whittaker were Hayville's only shareholders. Breen was to fund the venture. Whittaker was to manage it. The restaurant was not a success. Expectations that trading would be helped by the exposition on the south bank of the Brisbane River proved unduly optimistic. After Expo 88 began, weekly restaurant takings fell from a turnover which had peaked at $27,000 in the fifth week to about $14,000. Receipts remained at that level for months. By September, 1988 weekly takings rose to about $16,000. This still meant unprofitability. Hayville began with $350,000. out the restaurant. $300,000 $300,000 was expended to fit had been borrowed through commercial bills. An overdraft facility was arranged with Westpac. Breen and his wife provided personal guarantees of Hayville's obligations to the bank. Westpac also took a bill of sale over fittings and equipment used by Hayville in the business. The bill of sale, an "all moneys" charge, secures repayment of the debts. Breen and his wife also guaranteed Hayville's performance of the lease of the restaurant premises. Breen separately guaranteed obligations under chattel leases with Standard Chartered Finance Limited (computer equipment) and Westpac (other plant and equipment). So Breen' s personal exposure was considerable. -- 3 of 39 -- 3 Breen began to doubt Whittaker's management skills soon after the restaurant opened. In May he discussed with Whittaker a "replacement partner". Nothing eventuated in the weeks that followed. Prompted by concerns about lack of information, in August Breen asked his accountant, Mr. Watts, to prepare accounts. On 12th September 1988 Watts handed Breen and Whittaker a balance sheet and profit and loss account for the period ended 29th August. These "management financial accounts" were not audited and were incomplete. For example, nothing was allocated for depreciation. Watts did not then have the necessary information. (A depreciation schedule, Ex. 33, was given by Watts to Breen some weeks after Breen received the accounts). Breen realised that Watts's accounts showed major trading losses and liabilities. The six month trading loss .was $210,000. Creditors were owed more than $230,000. His disappointment led to negotiations with Whittaker that day. Breen's main concern was to end Whittaker's involvement. Breen suggested Whittaker look for a buyer of the restau.rant. Negotiations continued for a few weeks. In mid-October, Breen and Whittaker signed a contract (Ex. 3) contemplating a sale by Hayville of the business and its assets. It required Whittaker to execute a transfer of his shares to Breen. The transfer was to be held in escrow by Breen's solicitors on terms that, if such a sale "does not occur or is not completed" by 12th November, Breen acquired Whittaker's shares. Afterwards, Whittaker attempted to sell the business. He talked with Mr. Duncombe, a property developer, who expressed interest. Duncombe dined at the restaurant with his accountant, -- 4 of 39 -- 4 the defendant Richard ~an. Whittaker told Duncombe and Wan of the accumulated losses. The losses, which Whittaker put at at least $200,000, were an attraction. Duncombe raised with Wan the prospect of taking advantage of them for income tax purposes. Wan' s investigations extended beyond losses. By 28th October he had other knowledge; for on that day Wan noted information mentioning a break-even point. The note refers to other facts Wan had before Lambert's first encounter with the business on 9th November. Before the 9th, Whittaker had decided that the sale envisaged by his contract with Breen would not materialise. On the 6th he told Breen he would be leaving and that his shares "would be transferring on Saturday". Breen set about preparing to assume control. He contacted the lessor's representative to re-negotiate the lease. He arranged with Mr Gino Merlo, once a restaurateur in Brisbane, to manage after Whittaker left - an arrangement intercepted by proposals from the defendants. Richard Wan qualified as a chartered accountant in 1973. In that year he became a partner in a Brisbane accountancy firm. At first invol vency was his special interest. For about the last 15 years he has practised on his own account. Arnold Lambert is a successful property developer. He has other business experience having previously conducted a computer business. Lambert has been Wan' s client for many years. Wan prepares Lambert's income tax returns. He has also advised Lambert about investments and tax. business. Wan was Both Lambert and Wan are experienced in to play an important role in their -- 5 of 39 -- 5 negotiations for their acquisition of Hayville. He was Lambert' s accountant and advisor and personally interested. His own financial interest did not depress Wan's critical faculties or diminish the scepticism with which, as a wise accountant, he assessed things said to him by Breen and Whittaker. In the three weeks after 9th November Wan conducted investigations into Hayville. He was concerned not to accept assertions about the restaurant without examining their accuracy. Kevin Breen retired four years ago from a furniture business. He is a careful person with a generally reliable recollection. Although experienced in business, by temperament Breen is not so robust as Lambert or Wan. He was discomforted by aspects of the negotiations, greatly relieved at the sale to Wan and Lambert he believed he made in mid-November, and troubled by their withdrawal less than two weeks later. In a few respects, his evidence was mistaken. The mentioned shortly. They are not important. errors will be Subject to those points, his evidence is much to be preferred to that of Wan and Lambert. Both defendants testified with an evident appreciation of self-interest. Keith Whittaker's recollection is not good, but he tried honestly to recall conversations which have had no importance for him for 18 months. Lambert' s interest in the restaurant was excited by the losses. On 9th November, at lunch in the restaurant, Wan introduced Lambert to Whittaker as someone interested in discussing the business. Attention soon turned to its fortunes. Whittaker told them that "now, after Expo, it's travelling okay". Expo 88 had finished 10 days earlier. Whittaker was optimistic -- 6 of 39 -- 6 about Christmas trade. This forecast, as he acknowledged, contrasted with earlier achievements. Whittaker said "Expo had really given the restaurant a caning". He spoke of attempts to improve things by recently introducing cost-cutting measures. Whittaker candidly described his deteriorating relationship with Breen. He complained that Breen had not provided adequate funds for promotion. He mentioned their changed arrangements, saying he must leave in three days if he could not find a buyer. Wan asked about Hayville's share structure. Whittaker said he did not know the details but that he held a 50% share. His plight and the urgency of the situation were disclosed. More than his future as manager was at stake, he said, specifically mentioning that he would lose his shares in Hayville unless he found a buyer quickly. A need for further capital to build up wine stocks and to advertise the restaurant was discussed. Whittaker's optimism for the restaurant's future without Breen must have been infectious. Interested, but appreciating that matters could not progress without Breen, Lambert asked Whittaker to arrange a meeting with Breen. Lambert and Wan were at the restaurant next morning. Breen was not able to be there until the afternoon. When he arrived, discussions between Whittaker, Lambert and Wan were advanced to the stage that, if matters were concluded with Breen, Whittaker would continue as manager. Lambert, Wan and Whittaker had discussed a new capital structure, with Whittaker taking 45% of the voting shares. Their conversation delved further into Hayville. -- 7 of 39 -- 7 Whittaker had spoken generally of losses and profitability on the 9th. Discussion on the 9th or before Breen arrived on the 10th turned to detail and the company's records. Whittaker gave Lambert and Wan the lease of the premises, the cash book, Watts's 29th August balance sheet and profit and loss statement and some documents supporting those accounts. They were shown weekly takings sheets setting out trading towards the end of Expo 88 and since. These disclosed current income at about $16,000 per week. At that, Whittaker said, the restaurant was "breaking-even": an indefinite expression. As Wan said in evidence, the words can mean "different things in different businesses". Unimpressed with the generality, Wan asked for the figures. Whittaker described his costs of sales as a proportion of receipts. He pointed to computer print-outs of expenses. Outgoings shown in Watts's profit and loss statement were also discussed .. So were Hayville' s debtors and creditors. Whittaker pointed to the balance sheet which put creditors at $232,000. (The day before, in discussion with Lambert and Wan without reference to the balance sheet, he assessed creditors at $200,000.) A creditors' list as at 29th August prepared by Watts (Ex. 46) was tabled and discussed. The size of the debts gave rise to talk about the creditors' attitude. None, Whittaker said, "had threatened to foreclose", and some had agreed on payment by instalments. Lambert and Wan probably sensed that pressure from creditors and Whittaker's predicament might be to their advantage. They asked about debts owed to Hayville. Whittaker mentioned a figure of $34,000. Assets were discussed. Lambert, Wan and Whittaker touched on the possibility of selling them to a financier. -- 8 of 39 -- 8 $300,000, Whittaker explained, was spent in establishing and fitting out the restaurant. Perhaps some figures were bandied about between Lambert and Wan as to what the assets might fetch if sold to a financier. Much was discussed among Lambert, Wan and Whittaker before Breen met them at 2.30 p.m. Wan and Lambert were examining books and records when Breen arrived. They introduced themselves. Lambert expressed interest in buying the restaurant. He spoke of the attraction of its losses. Wan said that Whittaker had given every assistance, including putting the office and the secretary (Miss Smiley) at their disposal to answer questions and inviting them to contact Watts for any clarification of his accounts. Lambert told Breen that he and Wan had looked at the records and that Wan had previously seen some records for another client (presumably a reference·· to Duncombe) . Lambert and Wan told Breen they knew of his agreement with Whittaker and that Whittaker was to leave on Saturday when his shares were to be transferred to Breen. Breen was informed they did not want to lose Whittaker and had "offered him 45 per cent of the restaurant to stay". Whittaker, it was said, agreed to remain as manager for five years and not to sell his new shares in that period. Breen expressed reservations about Whittaker. He told Wan and Lambert he did not think Whittaker was a good manager but that he was an excellent host. Lambert and Wan had their own view. They were impressed by Whittaker. Breen was told that Whittaker had agreed to transfer a key-man insurance policy procured when he operated the nearby Milano Restaurant and of Wan' s prospective interest: 10% of Hayville's shares to attend to the company's books and set-up -- 9 of 39 -- 9 financial controls. Lambert and Wan were trying to satisfy Breen that their interest was genuine. The discussions with Breen that day lasted three hours. During them Breen explained in detail Hayville' s financial arrangements, including its chattel leases, securities and guarantees. Breen mentioned ( i) the Westpac bill of sale; (ii) difficulties with the lease of the premises; (iii) that Westpac was also the mortgagee of his Gold Coast home; and ( iv) his concern to be relieved of all his and his wife's liabilities. The negotiations then turned to price. Lambert asked Breen "how much do you want for the restaurant?" Breen responded by speaking out loud, calculating his liabilities. $300,000 was, he said, owed to Westpac on "bank bills". The overdraft with Westpac stood at $85,000. "There are leasings of about $70,000, and there are outstandings of about $250,000 ... All up, I think that comes to about $700,000". Before Lambert replied, Breen spoke about stock and debtors. He told Lambert and Wan that the stock was worth about $20,000 and that debtors owed $20,000. Lambert asked whether, if he introduced funds to release Breen's securities and guarantees, assumed responsibility for paying creditors and acquired all Hayville's shares, Breen would contribute $150,000 towards the losses. Breen, referring to his arrangements with Merlo, said he had the right man in place and was in a position to assume management on Monday. He said also that he could discharge existing liabilities to creditors. He added: "however, I know nothing about restaurants and I would prefer not to have a restaurant" and made a "counter-offer to you which is fair and -- 10 of 39 -- 10 unconditional. If you attempt to haggle, I will just get up and walk out. I will contribute $75,000 towards outstandings by way of cancelling a debt for $10,000 that the restaurant owes me and as well I will give you my cheque for $65,000" ($10,000 was owed by Hayville to Breen). offer" and they shook hands. Lambert responded: "I accept your Wan and Breen also shook hands. A completion date was 8th December because, as he discussed. Breen suggested mentioned, that was when the commercial bills matured. Lambert said $50-60,000 was available "in cash right now" and that he had subdivided 200 acres at Samford with settlements due shortly. He told Breen that "my finances will be through in two weeks or three weeks at the outside", adding that he had good relations with his bank and, if there were delays in completion of his sales, "I will have no trouble iri getting temporary finance". Lambert asked whether his proposal was suitable. Breen replied: "Arnold, provided that everything is cut and dried and finalised before the bank bills are due to roll, that's acceptable to me". They shook hands again and it was agreed that Breen's solicitor, Mr Punch, would draw up a formal contract. Breen then took three business cards from his wallet. One was his solicitor's; another was watts's; the third was his banker's. He gave the cards to Lambert, saying he would contact those men the next day to let them know that Lambert and Wan had bought the restaurant and to give whatever assistance was required. There was then mention of a "cut-off point" - a date by reference to which the accounts were to be prepared for income tax and other purposes. The exercise was unnecessary in a share sale transaction. However, Breen did not -- 11 of 39 -- 11 appreciate the ramifications of structuring the arrangement as a share transfer rather than an assets sale. He expressed a concern that Wan and Watts should agree on accounts to a "cut-off point" to ensure that Hayville attended to returns required by government instrumentalities. Breen is, as Mr Brabazon aptly suggested, precise. He is also concerned to conduct his business affairs with propriety. Wan agreed to discuss the matter with Watts. Wan prepared a note: Ex. 4. Whittaker, Breen, Wan and Lambert signed it. In terms, the note contemplates a formal agreement "to be drawn up and executed in a fortnight's time ... " recording the share sale. Some definite commitment from Breen was essential to the purchasers' plans to keep Whittaker as manager; and they knew that unless Breen could be prevailed upon to accept their proposals, Whittaker would be gone within two days. After the note was signed, Breen told Lambert and Wan of his difficulties with the lease. He offered to assist in future negotiations to resolve problems about rent, payment of outgoings demanded and the duration of the lease. Exhibit 57 contains a list of the seven contentious i terns mentioned on the 10th. Lambert said he would arrange for his solicitors, Messrs Flower and Hart, to take up the points with the lessor's solicitors. At this meeting Breen, as I have said, estimated the creditors - what he called "outstandings" - at $250,000. He was not asked about the $200,000 figure Whittaker spoke about the day before. The omission is explained by the Watts balance sheet. It disclosed outstanding credi tars at more than $230,000. -- 12 of 39 -- 12 Wan and Lambert saw that balance sheet before Breen arrived. Nor was Breen asked about Whittaker's $34,000 estimate of collectible debts. However, Breen told Lambert and Wan that the debts were about $20,000. Breen did not suggest a current value of tangible assets. He had said that initial fit-out and establishment costs approximated $300,000. And he discussed the cornrni tments of Hayville and its guarantors to existing financiers. Breen talked about chattel leasing with Lambert and Wan on the 10th. It was in the context of their hoping for financial assistance through a sale and lease back of restaurant property. Breen said he had taken a different approach, at the outset deciding to reject Whittaker's idea "to lease everything", preferring fixed interest bills. Breen also told Lambert and Wan how a greater than expected fit-ouf cost led to taking some things on chattel lease. Yet Breen did not offer any opinion about the price a financier might pay for the assets. Lambert's proposal Hayville's issued capital. its sole shareholder in had been for the purchase of all Lambert knew that Breen was to become two days. The negotiations that afternoon appear to have proceeded on a common assumption that Lambert could only be sure of achieving his objective if Breen were obliged to sell all the shares, including those registered in Whittaker's name. Breen's note to his solicitor the next day (Ex. 57) refers to his having agreed "in essence ... to transfer my shares (including Keith's)". The negotiations on the 10th apparently involved Whittaker, Breen, Lambert and Wan agreeing that all the shares would be purchased from Breen. One other aspect of the meeting on the 10th may be mentioned now. Breen -- 13 of 39 -- 13 appreciated that the implementation of the deal depended on the lessor's consent to a release of the guarantees. No difficulty was anticipated in this or in the discharge of his other liabilities. Lambert was held out as a successful developer. Within a day or so, confident that Lambert and Wan would complete the share acquisition, Breen told Merlo that their arrangement for Merlo to start on Monday as the new manager would not proceed. By the Monday he had contacted his banker, solicitor and accountant, as he had told Lambert and Wan he would. Wan and Lambert were busy too. On Friday the 11th, Wan telephoned Watts asking for Hayville's Memorandum and Articles of Association. Then he set about further examining the records. Whittaker stayed on as manager. In the next week, Lambert and Wan were often at the restaurant, carrying out investigations into records and speaking to staff. Breen next saw Wan on Monday, the 14th. He came to the restaurant with more detail about his points for the lessor. Wan said he had spent the weekend working on the books and that Lambert "wanted things completed as quickly as possible". Wan handed Breen a pro-forma share sale agreement to show to Punch to ascertain if the document was a satisfactory form of contract: Ex. 5. This was in response to Breen's saying that Punch had thought their agreement was complicated and would take time to document. A few weeks earlier, Hayville employed Miss Smiley as bookkeeper and office secretary. The accounting system was adequate but was not properly maintained. When Miss Smiley started the state of the records was, as Whittaker said, "a -- 14 of 39 -- 14 mess". Miss Smiley improved matters. Even so, when Lambert and Wan began their investigations, the financial information remained incomplete or not readily accessible. This posed difficulties for Wan. Although access to the books was liberal - as Miss Smiley said, "everything was at their disposal" - Wan encountered problems in establishing the financial details precisely. Miss Smiley was co-operative. She produced useful information for Wan and Lambert. On or shortly after Monday the 14th Wan received a debtors' trial balance (Ex. 69). This revealed who the debtors were and the age of their debts. The debts exceeded $34,000 - the amount Whittaker mentioned. Having seen the list, Wan must have realised that Breen's estimate of $20,000 as the value of the debts was nearer the mark. The state of creditors was examined. Before Friday the 18th, Miss Smiley gave Lambert a reworked creditors' trial balance (Ex. 42) showing Hayville's debts as much more than $200,000. This result was consistent with Breen' s estimate that the "outstandings" were about $250,000. In the week following the meeting, Lambert and Wan acquired information from documents and by questioning staff. Miss Smiley had been told by Whittaker that there was "nothing to hide" and that Lambert and Wan were permitted to examine anything. Their enquiries were probing. Both men were appraised in that week of the substance of the assets and liabilities. They learned about arrangements with suppliers. They became acquainted with confidential information, including cash supplements to selected employees and Whittaker. During that week, probably to explain -- 15 of 39 -- 15 their freedom, Lambert and Wan told Miss Smiley that "they were purchasing the restaurant from Mr Breen". On the 16th, Wan telephoned Watts and asked for the balance sheet. Whittaker had shown him the document on the 10th but Wan apparently left without a copy. Watts agreed to give Wan the balance sheet, adding that the accounts were for the use of Breen and Whittaker "to give them an indication of the state of the company and for no other purpose". Wan understood the caveat. Wan said he was using Watts's accounts as a starting point to establish Hayville's current financial position. He also told Watts that Miss Smiley had been instructed by him to prepare an up to date creditors' list, he thought the cash book was current and that he proposed to contact Watts again when he had sufficient records to produce accounts to a selected settlem.ent .. date. Wan did not ask Watts for a depreciation schedule. At some stage, perhaps not until days later, Wan asked Whittaker for a depreciation schedule. Whittaker said he did not have one and suggested Wan ask Watts. Wan did not do so and did not ever receive the schedule. I cannot accept Wan' s evidence that little "verification work" - to use Wan's expression - was carried out in the week before the 18th November meeting or that Wan expected that Watts would prepare further accounts. Before the 18th both Lambert and Wan saw most of the company's records, including cash books, invoices, daily takings sheets, weekly reconciliations, stock sheets and papers relating to assets. Wan had also made calculations relating to sales and costs: see Ex. 98. His -- 16 of 39 -- 16 investigations were not finished by the 18th but they had been searching. On Thursday the 17th Whittaker told Breen that Wan and Lambert were ready to complete. This was of concern to Breen. Punch had not prepared any formal contract and Wan and Watts had not agreed on a set of accounts. Breen decided to prepare his own form of agreement anticipating that Wan and Lambert, anxious to finalise the transaction, would sign it next day. He arrived at the restaurant at 9.00 a.m. on the 18th. Lambert and Wan were already there. As Breen arrived he met Mr Cameron, the lessor's representative. Lambert asked Breen to point out his arguments concerning the lease to Cameron. That took two hours. Cameron indicated he would seek instructions from his principals in New Zealand and left the table. When he arrived that morning, Breen was not aware that Lambert had called the meeting to finalise negotiations on the lease. Because of what Whittaker had said, Breen expected much more. Breen also expected Watts to attend. That was their arrangement. Watts, however, had decided to remain in his office because Wan had told him that the meeting related to the lease, not completion of the sale. Watts forgot to tell Breen he would not be coming. It was apparent to Breen that Lambert was keen to resolve matters with the lessor. Disappointed if not exasperated by the attention accorded the lease, after Cameron left, Breen said that Whit taker had told him that Lambert and Wan were ready to "complete". He said he had spoken to Watts twice the day before and that watts had assured 'him that he had attempted to co-operate but had not been able to meet Wan. This meant that -- 17 of 39 -- 17 no agreed accounts were prepared to a cut-off point. Wan replied that he was a chartered accountant and "perfectly capable of writing up the books on my own". While Cameron was away the discussion turned to other matters including unpaid accounts: beverage suppliers, group tax, $1,000 stamp duty on the lease and $8,000 owed to Watts's firm for the August accounts. Breen wanted to make sure that Wan's exercise in updating the creditors' list was complete. Only two matters troubled Lambert: the stamp duty and the accountants' fees. With nothing except Wan's and Lambert's satisfaction with new leasing terms standing in the way of finalising the share sale, it was at first agreed that the $9,000 would be paid by $3,000 contributions from Breen, Whittaker and Lambert. That decided, Breen produced his draft, hand-written contract. He invited Lambert and Wan to read through it and to sign the document. Lambert replied that when Cameron had a satisfactory answer, then "I will sign it". So they waited. In the conversations before Cameron responded with the lessor's attitude, Lambert said that Whittaker was being sent on a week's holiday and that he and Wan wanted a private talk with him. Breen left at about 12.30, returning an hour later. Whittaker met Breen as he arrived, telling him Lambert and Wan wished to see him. Breen went to their table. He was asked to contribute $150,000 towards the losses. He refused, saying he had agreed to pay $65,000. Lambert and Wan acquiesced. "It was worth a try" , Breen was told. He was then asked to wait while they saw Whittaker. Shortly afterwards Whittaker announced that he would pay $50,000 towards "outstandings". Then Lambert and Wan joined Whittaker and Breen. They went to lunch together -- 18 of 39 -- 18 at the restaurant to await the lessor's response. Cameron telephoned with it later on, and there was discussion about it. Breen continued to negotiate with Cameron for better terms. Wan also spoke to Cameron outside Breen's hearing. satisfactory conclusion with Cameron. Wan reached a Not long after Wan returned to the table, Lambert turned to Breen and said "Kevin, now we will sign your agreement". The document was then signed by the four of them: Ex. 7. It recites that an "agreement" was "reached this day" between the parties to this litigation and Whittaker, that both Whittaker and Breen are shareholders, the amounts borrowed from financiers and continues: "Breen has agreed to transfer his shares to Lambert and Wan together with a payment of $75,000 in favour of Hayville Pty Ltd. This payment is reduced to $65,000 in satisfaction of a $10,000 loan owed to Breen by Hayville Pty Ltd ... in return Lambert and Wan: ( 1 ) will obtain release of Breen' s securities to Westpac for advances to Hayville Pty Ltd. ( 2) will obtain release of Breen' s guarantee for leasings for Hayville Pty Ltd. (3) will obtain release of the Breens' guarantees for the lease of the premises from the landlord ... (4) guarantee to release Breen from any creditors' claims against Hayville Pty Ltd. Such creditorsare to indicate restaurant out fittings, food and beverage supplies, unpaid tax deductions, stamp duty, liquor licence fees, solicitors and accounting fees, insurance, rent and outgoingsand any other outstandings owed by Hayville Pty Ltd at 18th November, 1988. Breen acknowledges that he has no furtherclaim on the restaurant stock or on any unpaid diners' accounts owed to Whittaker's Restaurant." -- 19 of 39 -- 19 Lambert asked to make an addition to the document after it had been signed. Breen agreed. These are the words added: "Breen and Whittaker further agree that they will indemnify and keep indemnified Lambert and Wan against any claims that may arise that are currently known or arise that have not formed part of the records, documents and verbal advices at this date of transfer." The reason for the addition was obvious. There was no need for Wan or Lambert to prejudice the harmony of the moment by saying, for example, that Wan wanted to verify profitability or assets. Nothing like that was said to Breen. The addendum, however, was asked for because Wan had not completed his investigations. Before signing, Lambert did not say that the document would be executed if creditors were about $ 2 0 0, 0 0 0, there were $300,000 worth of assets available to be leased or the recoverable debts were $34,000. By this time Wan and Lambert already knew from a consideration of Watts's accounts (Ex. 6), Miss Smiley's debtors and creditors trial balances (Exs. 69, 42), the things Breen had said and their own investigations that the creditors were owed much more than $200,000 and the value of the debts was about $20,000. In short, none of the things attributed to Lambert in para. 1 (n) of the further amended defence was said. Before the meeting adjourned, Breen wrote out his cheque for $65,000, dating it 21st November. He gave it to Wan or Lambert. immediately There was also discussion of Wan and Lambert becoming directors in substitution for Breen. Breen agreed to resign. Lambert promised that his finances would be arranged before the Westpac bills matured. (Again -- 20 of 39 -- 20 8th December was mistakenly identified as the relevant date: Ex . 6 0 , p . 3 . ) The defendants deny that their execution of the document constituted a concluded contract. One contention is that the parties did not intend to be bound before signing a formal contract prepared by Punch: cf. Concorde Enterprises Ltd v. Anthony Motors (Hutt) Ltd [1981] 2 N.Z.L.R. 385; Commercial Bank of Australia Ltd v. G.H. Dean & Co Pty Ltd and Dean [1983] 2 Qd.R. 204, 208-10; South Coast Oils (Old & N.S.W.) Pty Ltd v. Look Enterprises Pty Ltd [1988] 1 Qd.R. 680. But the conduct of the parties, both before and after they executed the document, shows they intended to become contractually bound upon the signing of Breen'~ document. Lambert and Wan knew Breen was insisting on their signatures for the very purpose of making an agreement intended to be then and there binding. They knew, because Breen had told them, that he came to the meeting intending to "complete". They knew that Breen intended to perform a major part of his obligations that day: viz. pay his $65,000. It is because they realised the document was to bind them to its terms that the addendum was sought. It was designed to protect the purchasers against the prospect that future investigations into a business they were finally committed to acquiring might show a discrepency between what they had been told and the true facts. The next day Lambert and Wan convened a directors meeting. The minutes (Ex. 66) show Lambert as the Chairman and Whittaker and Wan attending. A transfer of shares was resolved: from Whittaker to Fasuma Pty Ltd, as trustee for the Lambert family -- 21 of 39 -- 21 trust. New share allotments were made to give effect to the arrangements between Whittaker, Wan and Lambert. The directors resolved to grant a mortgage debenture to Fasuma to secure a $50,000 advance by it. A bank account was to be opened with National Australia Bank; and other business was discussed. The minutes are consistent with Breen' s having no interest in Hayville. Whittaker left to go on holidays after the directors' meeting. ,Breen had nothing to do with this decision. The idea may have been Whittaker's but it was Lambert who, for Hayville, agreed. Whittaker did not return until a week later. In the meantime, Lambert was in control. On Monday the 21st, Lambert opened the new bank account. The deposit of Breen's $65,000 cheque was the first transaction. Lambert began paying creditors selected by him. He was also in contact with many creditors by phone. He often said he was a "partner" in the restaurant. Some creditors were informed of his plans to inject additional capital. Of course, Lambert and Wan already knew of creditors asking for payments (cf. Exs. 55, 56). Whittaker had mentioned this aspect before Breen was introduced. Nevertheless Lambert was surprised by the reaction from some creditors who, no doubt hoping that new management meant improved chances for early collection of their debts, pressed Lambert for quick payment. On the 21st Breen's solicitors wrote to Wan seeking confirmation of Breen's instructions about the contract: Ex. 12. The letter asked for a "faxed reply ... at the earliest possible moment because Mr Breen wishes to confirm all the above with Westpac ... ''. There was no reply from Wan. He was busy with -- 22 of 39 -- 22 the records. That day Lambert signed a return to the NCSC Wan prepared recording Breen' s resignation as a director and the appointment of Lambert and Wan as directors with effect 18th November. Wan despatched it on the 22nd: Ex. 15. On the 22nd Wan also wrote to Lambert's bank outlining the assistance sought for their "proposed takeover" of Hayville. The letter said in part: "We will urgently telephone or forward to you detailed list of Plant & Equipment and Furniture & Fittings which is shown on the Balance Sheet of the Company at a cost of approximately $260,000, which we are assured by the existing Directors of the Company are capable to be leased to the sum of $250,000. We further advise that we are at this stage as discussed with yourself, checking the total amount outstanding with the total creditors and also will be doing a complete appraisal of the internal control systems of the Company. Your advice as a matter of urgency as to whether you are prepared to make the above advance would be greatly appreciated." Wan was in touch with Cameron. Cameron wanted $50,000 towards arrears of rent and a list of Lambert' s assets and liabilities. Hayville paid the $50,000. Lambert provided the information. transactions. Lambert advised his solicitors of the On 23rd November those solicitors prepared a charge to secure to Fasuma repayment one year hence of $50,000 advanced to Hayville: Exs. 18, 19. Lambert caused Hayville to execute the security. Wan and Lambert saw the bank manager on the 22nd. No clear picture emerges of the bank's reaction to Wan' s proposal. encouraging. The branch manager appears not to have been Lambert nevertheless continued to operate the restaurant, paying creditors and superintending the business. -- 23 of 39 -- 23 In Whittaker's absence, Lambert began to worry about Whittaker. The prime concern was his lack of financial control. Investigations into the records, particularly invoices to identify the "detailed list " the bank required and from suppliers, were still hampered by hard to find papers. Yet by Friday the 25th there was no sign of a decision not to complete. On that day Wan spoke to Watts. Watts telephoned to ask if he could assist. Wan told Watts that his help was not required and that "things were proceeding." Saturday was the turning point. Whittaker came back and met with Lambert and Wan. The meeting was not amicable. ·Testy exchanges with Whittaker prompted by Lambert's treatment of a staff member troubled Lambert who was already concerned about Whittaker's management abilities. The purchasers may also have become pessimistic about the bank's financing the acquisition on the terms Wan proposed. In any event, his dealings with Whittaker on the 26th convinced Lambert, as he was to tell Breen three days later, that Whittaker would be "hard to control". After seeing Whittaker, Lambert wanted a meeting with Breen to extricate himself and Wan from the purchase. To prepare for it, both worked on the records the next day. The point of the exercise was to find some arguable basis to support their decision not to proceed. The decision was not prompted by a belief that the purchase had been induced by any false statement. But they knew Breen well enough to appreciate that he would reject an attempt to resile founded on disputes with Whittaker or problems with Lambert' s bank. Breen had warned about -- 24 of 39 -- 24 Whit taker as a manager. And Lambert had assured Breen his finances would be available. On the 26th or 27th, Lambert asked Wan to speak to Breen. He had not done so when Breen telephoned Wan on the 28th. Breen called to remind Wan that the bills matured on 7th December and said the purchasers' funds must be available by the 6th. Wan said he had been trying to contact Breen. Lambert, he suggested, had said there were delays with the land settlements. This was not true but it was the pretext Wan used to arrange to go to Breen's home the next morning. A meeting was set for 10.30 a.m. on the 29th. Breen was with a solicitor, Mr Atthow. Atthow remained for part of the meeting. Lambert told Breen that, as a result of a recent discussion with Whittaker, they had decided they could not work with him. Wan spoke, developing a different theme. Wan had brought company records and working papers created on the 27th and 28th. He justified their decision not to proceed by deficiencies in the accounts and financial control. He complained about Watts's profit and loss statement, pointing out that there was no entry for depreciation. (Wan had known that since the 10th). The records, Wan argued, were in a difficult state. And he said there were differences between what had been told to them and what the records disclosed. Wan offered to show his working papers and the records to Breen. This was painful news to Breen. He could not bring himself to hear of it. In a week's time the bills matured; and his arrangements since the 18th assumed that at last he was free of Whittaker's Restaurant. He refused to look at the papers or to -- 25 of 39 -- 25 accept their resignations as directors. "You have bought the restaurant", he insisted. He was asked to go to the restaurant next morning to take it back. Lambert and Wan said they would only be responsible for it until then. He did attend. Again Wan offered reasons to support concerns about the purchase. Breen refused to accept them. He has continued the restaurant. Substantial losses have been incurred during the progress of the litigation. This brings me to those, all relatively minor, respects in which Breen' s evidence is not accepted. The depreciation schedule (Ex. 33) was not available by 10th November. Breen did not agree on 10th November to resign as a director. He agreed to do so on the 18th; and probably it was not until the 18th that Wan told him that he and Lambert would take the restaurant over "at once". On these two points, Breen has attributed to the discussions on the 10th things not said until the 18th. Next, Breen has not completely recalled the extent to which Wan argued his case on the 29th and 30th. Wan had more to say than Breen recalls. Nevertheless, my conclusions largely reflect Breen's evidence. Breen, however, was not present for the most part when Whittaker spoke to Lambert and Wan on the 9th and 10th. As to those conversations, with one exception, my findings depend on Whittaker's testimony. The exception is that Whittaker initially put creditors at $200,000. A note by Wan (Ex. 94) mentions that estimate. The body of the note at least (unlike Wan' s note of the meeting on the 29th Ex. 101), contains no indication of subsequent alteration. I accept the note as recording Whittaker's first estimate, before he discussed Watts' s -- 26 of 39 -- 26 balance sheet. Watts did make a note (Ex. 85) of a conversation with Breen on the 11th. The note records Breen describing the liability on the bills at $350,000 and putting the amount Hayville owed its creditors at $200,000. Watts seemed not quite so careful as Breen. Probably watts mistakenly wrote down those figures despite Breen' s having said that the bills stood at $300,000 and creditors at $250,000. At the risk of expressing too pointedly my adverse impression of the defendants' reliability, it should be mentioned that their evidence was especially unconvincing (i) concerning the events of the 18th; and (ii) in assertions that moneys invested in Hayville after the 18th were but a sign of good faith, subject to reimbursement should the purchase not be completed and that Lambert and Wan, as new directors, were only in a "custodian type role" in Whittaker's absence on holiday. The parties to this litigation made a contract on 18th November. It is evidenced by Ex. 7. Its execution was not attended by mention of some more formal record of the bargain. Breen may have said that he had prepared the draft because Punch had not yet drawn up a document to give effect to the 10th "agreement in principle", as Breen had described that arrangement to Punch. contract. But nothing was said on the 18th about a formal Perhaps the parties were anticipating Punch would prepare a document to reflect the contract concluded by the signatures to Breen's draft. Breen thought Punch still had work to do ( see Ex. 60, Breen' s note to Punch asking for a "share transfer agreement" to be sent to Lambert and Wan for immediate return after signing). Presumably Breen remained anxious that -- 27 of 39 -- 27 Watts and Wan should agree on accounts drawn to the cut-off point, now accepted as 18th November. But it was apparent to Wan and Lambert that Breen was not willing to delay conclusion of their negotiations while Wan and Watts discussed the accounts. Determined to extract a more definite commitment than the understanding reached on the 10th, Breen was not to be deterred from pressing for an end to the negotiations just because his solicitor and accountant had not finished the paper work. Breen's strong desire to make the contract that day was obvious. Nor was the 18th November agreement subject to further discussions with Whittaker. The document (Ex. 7) does not suggest that the obligations Lambert and Wan assumed were conditional upon future negotiations with Whittaker. Before Breen' s draft contract was executed, Wan and Lambert had finished their discussions with Whittaker. The arrangement with him was by then "struck" (Whittaker's word). Whittaker's new shareholding and managerial role had been provisionally agreed on the 10th before Breen met Lambert or Wan. On the 18th, Lambert, Wan and Whittaker, in discussions to which Breen was not invited, accepted that Whittaker would contribute $50,000 to the losses. The contract signed on the 18th was not dependent, expressly or impliedly, on further talks with Whittaker: cf. the defendants' solicitors' letters of 5th December, 1988 to Whittaker and to Breen's solicitors (Exs. 24, 26) which, although containing unspecified allegations of misrepresentations by Breen - not, it may be noted in passing, by Whittaker - do not suggest that a contract was not entered into on the 18th. Matters had also been resolved with Cameron -- 28 of 39 -- 28 before the document was signed. There was nothing yet to be agreed with either Whittaker or the lessor when the share sale contract was made. The 18th November agreement was for the sale of all Hayville's issued capital by Breen. The day after the document was signed, Lambert, Wan and Breen, treating themselves as Hayville' s only directors, resolved to accept a transfer of Whittaker's shares to Fasuma: see Ex. 66. Breen did not attend the meeting. It is possible Whittaker's shares were dealt with in that way for convenience, avoiding prior registration of a transfer to Breen of Whittaker's shares. The mechanics of conveying title to Lambert and Wan were not discussed with Breen. In the circumstances, the parties should be taken to have agreed that ~reen would transfer title to all Hayville's issued shares. Th1s is the obligation ultimately pleaded by Breen. The terms of the contract are set out in Breen's document. The only omission is the completion date. This was to be when the $300,000 bills fell due. Because of what Breen had said, at first that date was assumed to be 8th December. Nothing turns on that misapprehension. contract for the sale Breen has proved that an enforceable of the shares was concluded on 18th November having as its terms those pleaded. The agreement was intended to be immediately binding. It was not conditional. It was not dependent on a more formal record of the bargain or on further discussions by the purchasers with Whittaker or anyone else. The contract continues on foot and is susceptible of specific performance unless the defendants have rescinded it.· The misrepresentations asserted are: -- 29 of 39 -- Representor Whittaker on the 9th By Whittaker, in Breen' s presence, on 10th November B r e e n , i n Whittaker's presence, on the 10th 16th November, 1988 by Breen' s causing Watts to deliver his accounts forthe period ended 29 August, 1988 29 Representation The company was then trading in a "break-even" position $200,000 was then owed to creditors Collectible debts were worth $34,000 Instalment termshad been agreed with a number of creditors and none had "threatened to foreclose" The company owned assets worth $300,000" The company owned $300,000 worth of assets capable of being leased The security for the $300,000 commercial bills was a mortgage over Breen's home Those "management financial accounts" were a true and accurate record of the company's financial state Complaint The company was notthen trading in a "break-even" position The company had substantially more than $200, 000 worth of creditors Collectible debts were worth less than $34,000 (more like $17,000 $19,000) A number of creditors were pressing for immediate payment "Leasable assets" were worth substantially less than $300,000 andwere subject to a bill of sale dated 23rd March, 1988 over the company's assets The leasable assets were worth substantially less than $300,000 andwere subject to the bill of sale Repayment was secured by the bill of sale The operating lossof the company as at 29th August,1988 was $256,941, not the $210,841 mentioned -- 30 of 39 -- 30 Before Breen met Lambert and Wan, Whittaker had used the expression "break-even". What was said must be taken in context. Whittaker was speaking of recent trading. He made no secret of previous losses. He told Lambert and Wan that reduced expenditure through his cost-cutting initiatives and recently increased income had brought the business to the stage where it was "travelling okay", and at or near "break-even point". The generality was useful only to the extent Whittaker explained what he meant. Merely to know that takings approximated expenditure, if that is what Whittaker had in mind, was no more than a starting point. So Wan pressed for detail about income and expenditure. He began those investigations with Whittaker on the 9th and pursued them at the restaurant between the meetings on the 10th and 18th. Before the 18th, Wan's enquiries, although not as complete as he wished largely because of Hayville' s disorganised records, led him to the view that the restaurant needed to take more than $16,000 to avoid an operating loss when depreciation and the full range of expenses were taken into account. However, Wan and Lambert were optimists. They had confidence in Whittaker. They had plans to inject the funds Whittaker wanted for advertising. They had also heard from Breen that Merlo was willing to manage the restaurant had Breen assumed control; and Breen told them of other rosy forecasts. Miss Smiley also thought the business had bright prospects. Before the 18th she told Lambert that, with hard work and proper promotion, there was every chance the restaurant would "turn a profit". -- 31 of 39 -- 31 In mid-November Whittaker considered that the restaurant was at or near "break-even point" in the sense he intended the term, i.e. that moneys payable matched expenditure incurred in recent trading. The falsity is said to be that the business was not at "break-even point". I am not persuaded that Whittaker did not entertain the opinion he expressed. Nor does the evidence establish, if the conclusion is important ( cf. James v. ANZ Banking Group Ltd (1986) 64 A.L.R. 347), that there was no basis for that view. Moreover, by the 18th Lambert and Wan had a sufficient knowledge of the trading position that Whittaker's "break-even point" reference was no longer, if, which I doubt, it had once been, material. It was not an inducement in concluding the contract: cf. Gould v. Vaggelas (1985) 157 C.L.R. 215, 236; Leighton Properties Pty Limited v. Hurley [1984] 2 Qd.R. 534. The allegation that Breen mentioned $250,000 as the amount a financier might pay to buy Hayville's assets is not made out. Whittaker discussed with Lambert and Wan, in Breen's absence, that the assets might be sold to reduce the demand on the purchasers' own funds. What Whittaker may have said is not germane to the defendants' case as pleaded. However, although he said that $300,000 had been spent in establishment costs, Whittaker did not put a value on the assets or suggest they might fetch $250,000. Breen told Lambert and Wan of Hayville' s commitments and its guarantors. Breen did not value the assets or suggest they were unencumbered. On the contrary, he told Wan and Lambert of the Westpac bill of sale and the two chatt~l leases. Nor did Breen discuss the amount a financier might pay -- 32 of 39 -- 32 to buy the assets for lease-back. By his 22nd November letter to Lambert's bank (Ex. 17), Wan said the directors had mentioned $250,000. They had not done so. Probably Wan wrote those words to make his proposal more attractive. Before the 18th Breen and Lambert knew of the bill of sale. Their business experience would have led them to suppose that the charge extended to all available assets. In discussing securities, Breen also said that his house mortgage secured the Westpac debt. Westpac was the mortgagee. Presumably the mortgage was an "all moneys" security. If so, because of Breen' s guarantees of Hayville' s debt, the house mortgage was· some security for the company's obligations. Although Breen was not present, Whittaker did tell Lambert and Wan on the 1 0 th that "no creditors had threatened to foreclose". If by that he meant that none had then foreshadowed an intention to execute on a judgment debt, what he said was correct. Whittaker mentioned that some creditors had agreed on payment by instalments . That too was true. Whit taker used words indicating that the creditors were "under control". This was not to imply that the creditors were not anxious. No doubt they were; and Lambert and Wan were alert to the potential risk posed by the creditors. Creditors were encouraged by Lambert' s involvement and his assurances about further capital. In the week commencing 21st November when he made contact with them, several pressed Lambert for payment. This experience, however, is a far cry from establishing that what Whittaker had said involved a misrepresentation. What Whittaker said (or, if it -- 33 of 39 -- 33 matters, what he left unsaid) did not misrepresent the relations with or the attitude of the creditors. Whittaker's initial reference, in Breen's absence, to creditors at $200,000 assumed no significance in the purchasers' decision to contract. Lambert and Wan knew before the 18th that the amount owed to creditors was more than $250,000. (See also Exs. 44, 100). $34,000 was Whittaker's estimate, again in Breen's absence, of the collectible debts. It was not Breen's estimate. He told Lambert and Wan that the debts were about $20,000. Before the 18th Wan, who shared the information with Lambert, also considered Miss Smiley's debtors balance: Ex. 69. This showed debts exceeding $36,000. Of course, the extent to which they were collectible was a matter of opinion involving prediction. Exhibit 69, which Wan and Lambert had before the 18th, made it clear that Breen's estimate of $20,000 was nearer the mark. The defendants have not established - indeed they did not attempt to show - that Whittaker believed that the amount likely to be recovered was not about $34,000: cf. Global Sportsman Pty Ltd v. Mirror Newspapers Ltd (1984) 2 F.C.R. 82, 88. Relevantly, nothing more has been shown than that the amount likely to be paid by debtors accorded with the view Breen expressed on the 10th. Accordingly, Whittaker's figure was not a misrepresentation. Nor did it induce the contract. Lambert and Wan were not influenced to purchase by Whittaker's early reference to $34,000. Then there are the Watts accounts (Ex. 6). These reveal an operating loss of $210,841 as at 29th August. The profit and -- 34 of 39 -- 34 loss account understated the losses incurred to 29th August. Depreciation should have featured as an expense item at about $30,000. Workers' compensation premiums and other expenses should also have been included if the accounts were to be a true reflex of the company's financial state: for example, formation expenses ($2,175), lease payments for a computer ($281) and some other outgoings identified in Mr Calabro's report (Ex. 75). The complaint about the Watts accounts is not genuine either. On the 1 0th Wan knew that they were ( i) specially prepared as a management information service; (ii) not audited; and (iii) incomplete. He realised straight away that depreciation had not been allowed for. A quick calculation would have disclosed that depreciation for six months on assets costing more than $250,000 would be considerable. Probably by the 10th, certainly by the 16th, Wan knew of the disclaimer attached to the accounts. The 16th was also when Watts and Wan had the conversation mentioned earlier. Plainly, Wan did not attend on the 18th believing that Watts' s accounts were a "true and accurate record of the financial state of the company as at 29th August, 1988". Lambert did not embark on that meeting with such a state of mind either. (It was not suggested that a distinction should be made for any purpose between Wan's knowledge on the 18th and Lambert's. No doubt that is because they freely exchanged information acquired both before and after the 18th). The contract has not been rescinded. Additional damages are claimed for delayed performance. Since the defendants repudiated in late November, 1988, Breen has -- 35 of 39 -- 35 incurred expense in maintaining the restaurant while the litigation was pursued: cf. Golden Bread Company Lirni ted v. Hemmings [1922] 1 Ch. 162; Kingshelf No. 53 Pty Ltd v. Nighthawk Pty Ltd 24th May, 1985 Thomas J. No. 42 of 1984. The damages claimed are substantial. They consist of ( i) the i terns described in Ex. 76 as funds lent to Hayville by Breen ($687,611.21); and (ii) the difference between the overdraft balance as at 7th December, 1988 and 5th June, 1990: $48,000. In aggregate this is $735,611.21. Interest is not claimed. Ultimately, Mr Brabazon Q.C. relied on just one point to support a submission that the additional damages should be less than $735,611.21. The award, it was submitted, should be discounted for slow prosecution of litigation: cf. Malhotra v. Choudhury [1980] Ch. 52. The only evidence in support of the submission is Ex. 103 - a chronology of the steps taken and some correspondence. The action commenced on 7th December, 1988. An application for summary judgment was made. It was refused on 27th February, 1989 when directions were given. The timetable for interlocutory steps was not complied with. by Breen's then solicitors In particular, there were delays (Punch's firm) in completing discovery. The order contemplated inspection following an exchange of affidavits of documents by mid-April, 1989. Breen's affidavit was not served until 28th August. Breen' s former solicitors were also late in delivering the reply and answer. The correspondence which forms part of Ex. 103 offers as an explanation for the delay in discovery that there were "many thousands of documents" to be considered. The delay was not -- 36 of 39 -- 36 exclusively the plaintiff's. The defendants delayed in relation to discovery and in signing a certificate of readiness. The chronology speaks of ari "application to have matters set down on call-over list and dispense with certificate" on 6th December, 1989. It mentions that interrogatories were delivered by the defendants three days before Christmas. The fresh certificate of readiness was tendered on 17th January this year. returned five days later. It was Having regard to the complexity of the litigation, such delay in the prosecution of the litigation as there has been should not result in a reduction of the damages. The losses for which compensation is claimed were all caused by the defendants' refusal to perform the contract. Accordingly, IT IS THIS day adjudged and declared that the agreement pleaded in paragraph 5 of the Amended Statement of Claim between the Plaintiff as vendor and the Defendants as purchasers ought to be specifically performed and carried into execution. AND IT IS FURTHER DECLARED that the Plaintiff is entitled to be discharged and exonerated from all liabilities under the guarantees referred to in paragraph 4 of the Further Amended Statement of Claim and to have the Defendants procure the release of those guarantees as follows: (a) release of guarantee by Kevin Patrick Breen given to City Arcade (Brisbane) Pty Ltd pursuant to a written contract made between, inter alia, those parties dated 16th February 1988 in respect of the obligations of Hayville Pty Ltd as lessee of certain premises; -- 37 of 39 -- 37 (b) release of the guarantee of Kevin Patrick Breen given to Westpac Banking Corporation pursuant to a written contract between, inter alia, those parties dated 3rd November 1987 in respect of the indebtedness of Hayville Pty Ltd, such release being limited in amount to the sum of EIGHTY THOUSAND AND THIRTY EIGHT DOLLARS AND TWENTY SIX CENTS ($80,038.26); (c) release of the guarantee of Kevin Patrick Breen given to A.G.C. Finance Limited pursuant to a written contract between, inter alia, those parties dated 12th July 1988 in respect of a lease by Hayville Pty Ltd of certain chattels; (d) release of the guarantee of Kevin Patrick Breen given to Standard Chartered Finance Limited pursuant to a written contract between, inter alia, those parties dated 25th February, 1988 in respect of the lease by Hayville Pty Ltd of certain chattels. AND IT APPEARING that the Plaintiff has prepared and obtained the execution of transfers of the shares comprised in the said agreement (as an escrow to be delivered to the Defendants upon performance of their obligations under the agreement). AND IT APPEARING that the Plaintiff has paid to Hayville Pty Ltd the sum of SIXTY FIVE THOUSAND DOLLARS ($65,000). AND IT APPEARING that the Plaintiff has released Hayville Pty Ltd from its indebtedness to the Plaintiff as at 7th December 1988 to the extent of $10,000. -- 38 of 39 -- 38 IT IS THIS DAY FURTHER ORDERED that the Defendants procure or obtain the release of the said guarantees and produce the said releases to the Plaintiff's solicitors. AND IT IS THIS DAY FURTHER ORDERED that upon production of the said releases to the Plaintiff's solicitors the Plaintiff deliver to the Defendants the said share transfers duly executed together with the certificates in respect of such shares. AND IT IS THIS DAY ADJUDGED that the Plaintiff do recover the sum of $735,611.21 damages against the Defendants. AND IT IS THIS DAY FURTHER ORDERED that any party be at liberty to apply as it, he or she may be advised and Order that leave be reserved to all parties to move for the making of such further Orders as for the purpose of specifically performing the said agreement as circumstances may require. AND IT IS FURTHER ORDERED that the Defendants; counterclaim be dismissed. AND IT IS FURTHER ORDERED that the Defendants pay the Plaintiff's costs of the action, including reserved costs, to be taxed. -- 39 of 39 --