McFarlane v Pead & Booth [2002] ACTSC 31 (18 April 2002)

Last Updated: 18 April 2002

KATHLEEN McFARLANE v GARY and JILL PEAD, IAN and NOLA BOOTH [2002] ACTSC 31 (18 April 2002)

CATCHWORDS

APPEAL from Magistrates Court - relevant principles.

ASSIGNMENT OF DEBT - whether writing sufficient to constitute immediate assignment by writing - whether notice to debtor in writing - whether assignment ineffective at law but nonetheless effective in equity - whether claim based on equitable assignment maintainable in proceedings to which person with legal entitlement not a party.

CONTRACT - whether former sub-agent liable to pay for stock supplied for sale when sub-agency sold - whether implied term in sub-agency agreement providing for former sub-agent to be released from liability and debt to be assumed by purchasee of sub-agency - whether stock left on shelves effectively "returned" to newsagent.

Conveyancing Act 1919 (NSW), s 12

Law of Property (Miscellaneous Provisions) Act 1958, s 3

Australian Capital Territory (Self Government) Act (1998) (Cth), s 48A

Supreme Court Act 1933, s 15

William Brandt's Sons Co v Dunlop Rubber Co Ltd [1905] AC 454

Norman v Federal Commissioner of Taxation [1963] HCA 21; (1963) 109 CLR 9

Performing Right Society Ltd v London Theatre of Varieties Ltd [1997] UKHL 17; [1924] AC 1

Gosden v Dixon (1992) 107 ALR 329

BP Refinery (Westernport) Pty Ltd v Shire of Hastings [1977] HCA 40; (1977) 16 ALR 363

Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596

Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 404

Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41

Hawkins v Clayton [1988] HCA 15; (1988) 164 CLR 539

APPEAL FROM THE MAGISTRATES COURT

No. SCA 55 of 2001

Judge: Crispin J

Supreme Court of the ACT

Date: 18 April 2002

IN THE SUPREME COURT OF THE )

) No. SCA 55 of 2001

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: KATHLEEN McFARLANE

Appellant

AND: GARY PEAD

JILL PEAD

First respondents

AND: IAN BOOTH

NOLA BOOTH

Second respondents

ORDER

Judge: Crispin J

Date: 18 April 2002

Place: Canberra

THE COURT ORDERS THAT:

1. the appeal be upheld;

2. the orders of the Magistrate be set aside;

3. in lieu thereof there be judgment for the appellant in the sum of $10,374.96.

1. This is an appeal against a decision of a Magistrate dismissing an action for the recovery of moneys allegedly owed by the first respondents to the appellant.

2. The second respondents had previously owned the Kaleen Newsagency and, by a written agreement dated 27 January 1993, had entered into a sub-agency agreement with the first respondents pursuant to which the first respondents agreed to sell stock on their behalf and to pay to them amounts equal to the maximum resale price less a stipulated commission and any necessary adjustments for publications returned unsold.

3. The second respondents sold the newsagency to the appellant with effect from 29 July 1996. It was common ground that at that time the first respondents owed the second respondents some money for publications supplied under the sub-agency agreement but there was apparently an unresolved dispute as to the amount of the debt. The appellant claimed that the relevant chose in action had been validly assigned to her upon the sale of the newsagency. The amount claimed in respect of what was described by the Magistrate as the first debt was $7,323.36.

4. The Magistrate rejected the claim based on the alleged assignment of this debt, finding that the correspondence upon which the appellant had relied did not provide any evidence of such an assignment. Her Worship held that the debt had still been owed to the second respondents until 18 February 1997 when they were declared bankrupt, and that it had thereupon vested upon the Official Trustee in Bankruptcy.

5. Following the purchase of the Kaleen Newsagency the appellant entered into a sub-agency agreement with the first respondents, which the Magistrate found was generally in accordance with the terms of the written agreement between her predecessors and the first respondents. The appellant closed down the business that the second respondents had operated at the Kaleen Newsagency. However, she also owned the Giralang Newsagency and supplied the stock to the first respondents from that newsagency.

6. A dispute subsequently developed over the quantity and nature of the stock supplied, and this dispute was raised in the proceedings before the Magistrate by means of a cross-claim. The cross-claim was dismissed and there has been no appeal from that decision. However, whether justified or not, the first respondents clearly nurtured some sense of grievance against the appellant and when they negotiated an agreement to sell the sub-agency business they did not inform her of the sale.

7. The agreement for sale of that business to Robert, Amabile and Concetta Simoncini ("the Simoncinis") was executed on 14 August 1997 and the sale was completed on 31 August 1997.

8. The appellant first became aware of the sale on 2 September 1997 by which time the Simoncinis had already taken possession of the shop. Mrs Pead had apparently prepared an inventory of stock as at 31 August 1997 and she delivered this together with a cheque which she said was payment for magazines that had been sold.

9. Mrs Pead maintained that she and her husband had not needed to give any notice because the sub-agency agreement had provided for their appointment as sub-agent to be automatically cancelled upon the sale. She claimed to have made a telephone call to the appellant's husband at about 4.00 pm on 2 September and asked him to do a stock take. She said that he had told her that he would do so only if the magazines were taken to the Giralang Newsagency that day. She refused to do so. Mr Pead also gave evidence that the appellant's husband had come to the shop and demanded that the stock be taken to the Giralang Newsagency. He said that he had also refused. He explained that "the magazines were not ours to take out of a shop that now belonged to the Simoncinis".

10. The Magistrate found that the stock that had remained on the shelves remained the property of the appellant and that she could have either removed it or immediately appointed the Simoncinis as sub-agents in place of the first respondents. Hence the claim for what was described as the second debt also failed.

11. The appellant appeals from both these decisions.

The first debt

12. Mr McKeown, who appeared for the appellant, submitted that the correspondence between the second respondents and the appellant provided compelling evidence of an assignment of the first debt. A letter dated 15 September 1996 from the second respondents was in the following terms:

8 Monson Place

McKellar ACT 2617

15 September 1996

Giralang Newsagency

Shop 2, Canopus Cr

Giralang ACT 2617

Attention: Mr D Macfarlane

Dear David,

Further to our discussions last Tuesday, it appears a sensible solution to include the unpaid stock at News & Greetings with the remaining shop stock.

Additionally, I have been able to return to the suppliers for credit, the majority of the shop stock, leaving only a small amount of confectionary, stationary, and greeting cards.

The situation with stock for transfer to Giralang Newsagency is now: -

Item	Cost
Shop Stock	$1,357.45
N & G weekly a/c
10/7 to 16/7/96	$1,004.63
17/7 to 28/7/96	$1,425.99
N & G Monthly a/c
June/July 96 (2 months)	$6,109.03
TOTAL	$9,897.10

I am pleased to advise that the bank has accepted your offer of $5000.00 for this stock. Documentation detailing the stock items and associated values is available for your perusal. Documentation relating to the News & Greetings debt should be available shortly.

Yours sincerely

Ian & Nola Booth

13. The first respondents had traded under the name of "News and Greetings" and it is clear that the references to "N & G" refer to the business which they conducted. The Magistrate expressed the opinion that this document was not an assignment of the defendant's alleged debt. She said that taken at its highest, the document merely evidenced some action to be taken in the future and said that it had not been addressed to the "plaintiff owner of the Kaleen newsagency" but to her husband at the Giralang Newsagency.

14. Mr Hassall, who appeared for the first respondents, submitted that these findings had clearly been correct. He maintained that the document related to stock and not to the assignment of debt. The only issue then outstanding under the contract for sale of the business had been the value of stock, and the letter should be construed in that light. Furthermore, a subsequent letter acknowledging the receipt of the sum of $5,000 referred to that sum as "being payment for the stock".

15. Whilst these points do provide some support for the findings, it is necessary to consider the contents of the letter as a whole. It may be noted that the suggested "solution" was to include "the unpaid stock at News & Greetings with the remaining shop stock". The amounts referred to in the schedule corresponded precisely to the amounts which the records of the second respondents suggested were owed by the first respondents for stock. That stock had, of course, been supplied for the express purpose of sale to customers of the sub-newsagency and much would presumably have been sold. It could not be reasonably supposed that the second respondents had been purporting to sell to the appellant newspapers and magazines that had once been stock but had subsequently been sold. Nor could it reasonably be supposed that the appellant would have agreed to purchase stock from the second respondents that they no longer owned. At least in relation to those items the only property that the second respondents would have been capable of conveying to the appellant was their entitlement to be paid by the first respondents. It was no doubt for that reason that they offered to provide details of the outstanding debts.

16. The reference to "unpaid stock" rather than outstanding debts in the first paragraph of the letter may have reflected the fact that the second respondents retained ownership of stock until sale and that the first respondents were entitled to obtain a credit for any stock returned. In my opinion, what was being included in the sale was all of the second respondents' rights in respect of the stock that had been supplied: the right to any stock that might be returned and the right to be paid for the balance.

17. The document did not merely provide evidence of something to be done in the future. It stated specifically that the bank had accepted the appellant's offer. It was not clear from the evidence adduced at trial what role the unknown bank may have played in this transaction. However, a letter from the Insolvency and Trustee Service Australia (`ITSA'), which was admitted by leave at the hearing of the appeal, made it plain that the "book debts" of the business had been subject to a charge in favour of the Commonwealth Bank of Australia. Hence, it seems likely that the bank's permission had been required for the sale. In any event, that statement, together with evidence that the sum of $5,000 was duly paid, strongly suggests that the letter gave rise to a binding agreement between the second respondents and the appellant. That impression is confirmed by the fact that both of the second respondents signed the letter.

18. It was also incorrect to suggest that the letter from the second respondents had been addressed not to the appellant but to her husband. It had actually been addressed to the Giralang Newsagency, and that business was owned by the appellant. The letter also related to an outstanding issue under a contract to which the appellant, but not her husband, had been a party. The very fact that it was marked "Attention: D MacFarlane" indicated that he was not the addressee but the person expected to handle the matter on the addressee's behalf. In fact, as he explained in his evidence, Mr McFarlane merely assisted his wife in the operation of her business.

19. I am satisfied that this letter and a subsequent letter confirming receipt of the sum of $5,000 provided clear evidence of a variation of the earlier contract between the appellant and the second respondents to provide for the assignment of the second respondents' right to any stock that might be returned and of their entitlement to any money due from the first respondents for the balance of the stock supplied.

20. Mr Hassall submitted that even an agreement of that nature would not have been sufficient to have validly assigned the legal right to the debt. He submitted that such a transaction would not have satisfied the requirements of s 12 of the Conveyancing Act 1919 (NSW) the provisions of which were applicable to transactions occurring in this Territory by virtue of s 3 of the Law of Property (Miscellaneous Provisions) Act 1958. Section 12 is in the following terms:

Any absolute assignment by writing under the hand of the assignor (not purporting to be by way of charge only) of any debt or other legal chose in action, of which express notice in writing has been given to the debtor, trustee, or other person from whom the assignor would have been entitled to receive or claim such debt or chose in action, shall be, and be deemed to have been effectual in law (subject to all equities which would have been entitled to priority over the right of the assignee if this Act had not passed) to pass and transfer the legal right to such debt or chose in action from the date of such notice, and all legal and other remedies for the same, and the power to give a good discharge for the same without the concurrence of the assignor: Provided always that if the debtor, trustee, or other person liable in respect of such debt or chose in action has had notice that such assignment is disputed by the assignor or anyone claiming under the assignor, or of any other opposing or conflicting claims to such debt or chose in action, the debtor, trustee or other person liable shall be entitled, if he or she thinks fit, to call upon the several persons making claim thereto to interplead concerning the same, or he or she may, if he or she thinks fit, pay the same into court under and in conformity with the provisions of the Acts for the relief of trustees.

21. Mr Hassall argued that the letter of 15 September 1996 did not constitute an assignment in writing. It is clear that the assignment was not to be effected by the letter itself but on the payment of the agreed sum of $5,000. Hence, even if the initial letter of demand, or the service of the statement of claim, could properly be regarded as express notice to the first respondents in writing, there was no legal assignment of the debt.

22. Mr McKeown did not contend to the contrary. He submitted, however, that the agreement evidenced by the letters effected an equitable assignment of the debt. He argued that any clear expression of an intention to assign a legal chose in action will be sufficient to assign it in equity: William Brandt's Sons Co v Dunlop Rubber Co Ltd [1905] AC 454 and Norman v Federal Commissioner of Taxation [1963] HCA 21; (1963) 109 CLR 9.

23. In response to this contention, Mr Hassall did not dispute that a debt could be assigned in equity if not in law by such an agreement, but argued that an equitable assignment could not be asserted in any proceedings unless the person with legal title to the debt was joined as a party: see, for example, Performing Right Society Ltd v London Theatre of Varieties Ltd [1997] UKHL 17; [1924] AC 1. Whilst the appellant had joined the second respondents as defendants in the proceedings before the Magistrate, she had not joined the Official Trustee in Bankruptcy. Mr Hassall maintained that legal title to the debt would have vested in the Official Trustee upon the making of the sequestration orders and that, even if the second respondents had subsequently been discharged from bankruptcy, this would not have caused any property to have been revested in them: see Gosden v Dixon (1992) 107 ALR 329 at 331. He argued that the point could not be maintained on appeal for the same reason.

24. There would appear to be at least one obvious answer to this argument. As previously mentioned, the letter from ITSA stated that the debts of the second respondents' business had been subject to a charge in favour of the Commonwealth Bank and would not have fallen into their estate for the purpose of the Bankruptcy Act 1966 (Cth). Mr Hassall objected to the tender of this letter not on any basis relating to the form of the document but on the basis that no notice had been given of it and he had not had the opportunity of taking instructions on its contents or investigating the issues that it raised. Whilst I was not unsympathetic to these considerations, the document was tendered in answer to a point that Mr Hassall had himself raised without foreshadowing it in a notice of contention. Having regard to the nature of the information conveyed in the letter, it appeared to me to be in the interests of justice to admit the document into evidence. Mr Hassall was unable to point to any real prejudice other than the matters to which I have referred. I indicated that I would give him leave to further address me on the document and that I would consider any application for adjournment that he might make as a consequence of its admission into evidence. In fact, he did subsequently make further submissions concerning the document but did not press any application for adjournment.

25. Furthermore, whilst I accept that a person with the legal title to an assigned debt should generally be joined as a party to the proceedings, I do not accept that this rule is so inflexible that a failure to join such a person will deny a court jurisdiction to entertain the proceedings. The rule is merely one of practice and may be departed from if a court is satisfied that it would be in the interests of justice to do so. The jurisdiction of this court is governed by s 48A of the Australian Capital Territory (Self Government) Act (1998) (Cth), and s 15 of the Supreme Court Act 1933, each of which provides that the Court is to have "all original and appellate jurisdiction that is necessary to administer justice in the Territory".

26. In other circumstances it may well be necessary to join the Official Trustee in Bankruptcy if only to protect the debtor from the possibility of a further claim in relation to the same debt. However, in the present case it is clear that the Trustee made no such claim and did not wish to be joined in the proceedings. In any event, having regard to the amount involved, the absence of any evidence of competing claims and the fact that any new claims would now be outside the limitation period, I was satisfied that the interests of justice did not require either the dismissal of the appeal or an adjournment to enable the Trustee to be conscripted into the proceedings.

27. Having considered all of the relevant evidence, I was satisfied that the issue of an equitable assignment had been validly raised and that the first debt had been so assigned.

28. Little attention had apparently been paid to the quantum of the debt owed by the second respondents at the time of the assignment. Mr McKeown argued that, although the first respondents had constantly disputed the amount prior to the trial, the proceedings before the Magistrate had essentially been confined to the question of whether the debt had been validly assigned to the appellant and that no dispute as to the quantum of the debt had been effectively raised. However, this proposition was not conceded, and, since the whole transcript had not been included in the appeal book, I am unable to confirm its accuracy. Furthermore, Mr Booth had plainly been unable to confirm the amount that had been outstanding at the relevant time with any real confidence and cross-examination on the issue may have been considered unnecessary. On the other hand, Mrs Pead gave clear evidence that some of the stock in question had been returned and that the amount claimed should have been reduced accordingly. She said that she had previously told Mr Booth that the amount owing was $4,332.39. Whilst it is true that the Magistrate made no finding on this issue she obviously found Mrs Pead to be a credible witness.

29. In the circumstances I am satisfied that it is unnecessary to remit the matter to the Magistrates Court for the resolution of this issue. The only reliable evidence seems to have been Mrs Pead's concession that the amount owed was $4,332.39. Accordingly, I find that the debt was in that amount.

30. The appellant is entitled to interest on that amount. However, I am not satisfied that it should be calculated at the rates specified in the Practice Direction for the whole period since September 1996. The first respondents had clearly been left in a state of uncertainty as to who to pay. They were subjected to continuing demands by Mr Booth even after the sale of the business, and the appellant's failure to provide prompt notice of the assignment presumably contributed to this difficulty. On the other hand, they could have paid the undisputed portion of the debt into Court and/or interpleaded when the proceedings were commenced. In the circumstances I think it is appropriate to allow a lump sum of $1,000.

The second debt

31. The second debt arose during the course of the first respondents' contractual relationship with the appellant. As previously mentioned, the learned Magistrate found that the first respondents had entered into a verbal agreement with the plaintiff which was generally in accordance with the terms of the 1993 agreement. Term 2 of that agreement provided as follows:

2 In consideration of his appointment, the Sub-agent -

(i) shall sell, as agent for and on behalf of the Newsagent, the Publications from, and only from, his premises situated at the address hereinbefore stated;

(ii) shall not sell the Publications to a person or company if the Sub-agent knows or has reason to believe that the Publications are to be resold;

(iii) shall maintain up-to-date and correct records of the supplies and unsold copies of each of the Publications;

(iv) shall pay to the Newsagent punctually at times specified by the Newsagent for each copy of a Publication that has been supplied to the Sub-agent for resale, the maximum resale price specified by the Publisher of that Publication less a commission equal to 50% of the difference between such maximum resale price and the price charged by the Publisher to the Newsagent for that Publication, less credits for publications returned unsold;

(v) shall return to the Newsagent unsold complete copies of the Publications showing the name and address of the Sub-agent and the number of copies of each Publication being returned, at the Sub-agent's cost, so as to reach the Newsagent at a time and day specified by the Newsagent;

(vi) shall display a sign and otherwise represent to the public that he is a sub-agent, but shall not display a sign or otherwise represent that he is a newsagent;

(vii) shall comply with all other reasonable directions of the Newsagent, such directions not to be inconsistent with the Rules or the terms of the Newsagent's agreements with the Publishers.

32. The appellant's case was straightforward. She had supplied stock to the first respondents and was entitled to payment unless the stock was returned as specified in the agreement. She had not known of the sale of the sub-agency business until 2 September 1997, had not entered into any agreement to release the first respondents from their contractual obligations to her and had not had the stock returned to her. Hence she was entitled to be paid for it.

33. The first respondents conceded that they had failed to give the appellant at least one week's written notice of the sale as required by the agreement but said that they had come to distrust her and her husband, and had feared that if they had known of the impending sale they might have demanded the full amount claimed for the first debt and denied supply to the Simoncinis if it were not paid. Whatever the reality of those concerns, they plainly provided no entitlement for the first respondents to fail to comply with their contractual obligation to the appellant.

34. Mr McKeown submitted that the first respondents had actually sold the stock to the Simoncinis. He pointed out that the contract for sale of the sub-agency required that "consumerable stock to the value of at least $25,000 pass with the business". On the other hand, Mr Hassall submitted that the stock had not been sold and pointed to evidence from Mr Pead to the effect that the stock referred to in the agreement had been items other than the newspapers and magazines to which the appellant's claim had related. Whilst it may be understandable that the covert nature of the sale may have generated confusion or suspicion concerning this issue, the learned Magistrate found, and in my view was entitled to find, that the stock in question had remained the property of the appellant.

35. However, the appellant's claim must be determined by reference to the terms of the agreement between the appellant and the first respondents. It was not disputed that the appellant provided the stock to the first respondents and that they did not pay for it. It was not disputed that they had failed to return the stock as required by paragraph (v) of Term 2. In fact, it was common ground that Mrs Pead had expressly refused to do so. It was plain that, by failing to provide the required notice, the first respondents had effectively deprived the appellant of the opportunity of conducting a stock take prior to the takeover of the sub-agency business by the Simoncinis. It may be true, as the learned Magistrate observed, that the stock on the shelves remained the property of the appellant, but the first respondents seemed to have done nothing that could properly be regarded as involving the return of the stock to her. On the contrary, they had simply walked out leaving it effectively in the possession of the Simoncinis to whom they had assigned their rights to sell it. In these circumstances the appellant was entitled to payment under paragraph (iv) of term 2 of the agreement.

36. Mr Hassall submitted that term 2 had to be read subject to term 4 which was in the following terms:

4 (a) The Newsagent may terminate this agreement subject to the consent of the Newsagency Council and to the right of appeal conferred under the Rules -

(i) without notice in the event of a failure by the Sub-agent to comply with any of his obligations,

or

(ii) by giving not less than one week's notice in writing to the Sub-agent.

(b) The Sub-agent may terminate this agreement by giving not less than one week's notice in writing to the newsagent.

(c) The appointment of the Sub-agent will be automatically cancelled upon the business of the Sub-agent being relocated, sold, transferred or there being any change in the proprietorship whatsoever. However, in the case of a sale, the purchaser will be automatically appointed as a Sub-agent by the newsagent unless the newsagent has requested and received the prior consent of the Newsagency Council, in writing, not to appoint the purchaser or the Newsagency Council has notified the newsagent that it does not consent to the purchaser's appointment as a Sub-agent.

37. Mr Hassall argued that it was implicit in this term that any obligations assumed by a sub-agent pursuant to term 2 would be simply transferred to the new sub-agent upon a sale of the sub-agency. Hence, the Simoncinis must be taken to have assumed the obligation to pay for stock previously supplied, and the first respondents must be taken to have been released from such liability. I am unable to accept this submission.

38. In BP Refinery (Westernport) Pty Ltd v Shire of Hastings [1977] HCA 40; (1977) 16 ALR 363 at 376 the majority of the Privy Council held that:

[F]or a term to be implied the following conditions (which may overlap) must be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract so that no term will bee implied if the contract is effective without it; (3) it must be so obvious that "it goes without saying"; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract.

39. This statement has been adopted by the High Court in a number of cases such as Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596 at 605-606; Codelfa Construction Pty Ltd v State Rail Authority (NSW) [1982] HCA 24; (1982) 149 CLR 337 at 347 and 404; Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41 at 65-66, 95, 117-118 and 121; and Hawkins v Clayton [1988] HCA 15; (1988) 164 CLR 539 at 571-573.

40. Whilst I have no doubt that the sale of a sub-agency is frequently accompanied by an agreement of the kind suggested, I do not think that there is anything in clause 4 which warrants a conclusion that the first respondents were entitled to slough off their contractual obligations to the appellant without her agreement. It would not be reasonable or equitable to imply a term effectively requiring her to relinquish any right to payment from the people with whom she had an existing business relationship and accept in lieu thereof the dubious right to claim payment from any other people to whom the first respondents had been able to sell the sub-agency business. Such a term would neither be necessary to give business efficacy to the contract nor so obvious that it "goes without saying".

41. Mr Hassall argued, in effect, that the appellant had failed to mitigate her own loss. She could, and should, have carried out a stock take on 2 September 1997 or so soon thereafter as what time permitted. That would have revealed that all of the stock save for any sold by the Simoncinis during that or the previous day was still on the shelves. As her Worship suggested, the appellant could then have removed it or notionally supplied it to the Simoncinis. That proposition ignores the difficulties that had been created for her by the first respondents' failure to give due notice of the sale, and assumes not only that she or her husband were able to carry out such a stock take immediately but that she must have known that she was free to effectively repossess the stock. The letter dated 2 September 1997 advising her of the sale was in confrontational and even threatening terms and certainly did not explain whether the stock had been included in the sale of the business. Mr Hassall submitted that the first respondents would have been unable to sell the stock to the Simoncinis because they did not own it, but they were, of course, agents for sale. He was on somewhat firmer ground in alluding to the provision in term 2 precluding sales if the publications were to be resold, but by then the appellant had known that the first respondents had already breached the requirements of clause 2 in one respect and could have been expected to have little faith in the proposition that they might have honoured it in others. In any event, it would have been too late to get a wholly accurate picture of the situation that existed as at 31 August 1997. Had it been relevant, I would have found that the first respondents had not established that the appellant had failed to take steps reasonably open to her to mitigate her own loss. However, the issue does not arise. The appellant's claim was not for damages but for enforcement of a debt due under the agreement.

42. There was no significant challenge to the evidence from the appellant's husband that the amount owed to the appellant as at 31 August 1997 for goods supplied to the first respondents was $3,502.57. Since those goods were not returned to the appellant as stipulated in the agreement, the first respondents remain liable to the appellant in the amount claimed.

43. There is no reason to deny the appellant interest on this amount on the usual basis. That amounts to $1,540.00.

44. In summary the appellant is entitled to damages as follows:

First debt: $4,332.39

Interest on first debt: 1,000.00

Second debt: 3,502.57

Interest on second debt: 1,540.00

Total $10,374.96

45. Accordingly the appeal will be upheld, the orders of the Magistrate set aside and in lieu thereof judgment will be entered for the appellant in the sum of $10,374.96.

46. I will hear counsel as to costs.

I certify that the preceding forty-six (46) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Crispin.

Associate:

Date: 18 April 2002

Counsel for the appellant: Mr C McKeown

Solicitor for the appellant: Joseph Tallarita

Counsel for the first and second

respondents: Mr D Hassall

Solicitor for the first and second

respondents: pappas j - attorney

Date of hearing: 25 March 2002

Date of judgment: 18 April 2002