Stelmag Pty Ltd v Long Paddock Pty Ltd & Ors [2005] ACTSC 20 (1 April 2005)

Last Updated: 11 May 2005

STELMAG PTY LTD v LONG PADDOCK PTY LTD & ORS [2005]

ACTSC 20 (1 April 2005)

CONTRACT - Breach of contract - written contract - recovery of amount owed.

CONTRACT - Breach of contract - whether greater payment made by defendant than admitted by plaintiff.

CONTRACT - Misrepresentation - breach of fiduciary duty - whether defendant entitled to repudiate contract based on misrepresentation by plaintiff

Albion Insurance Co Ltd v GIO of NSW (1969) 121 CLR 342

No. SC 25 of 1997

Judge: Higgins CJ

Supreme Court of the ACT

Date: 1 April 2005

IN THE SUPREME COURT OF THE )

) No. SC 25 of 1997

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: STELMAG PTY LTD

(ACN 008 571 159)

Plaintiff

AND: LONG PADDOCK PTY LTD

(ACN 008 662 968)

First Defendant

AND: ROBERT JOHN KING

Second Defendant

AND: SUSAN ROSALIE KING

Third Defendant

ORDER

Judge: Higgins CJ

Date: 1 April 2005

Place: Canberra

THE COURT ORDERS THAT:

1. Subject to submissions as to the accuracy of calculations, judgment will be entered in favour of the plaintiff against the first and second defendants in the sum of $223,838.51 plus interest.

2. The claim by the plaintiff against the third defendant is dismissed.

1. The plaintiff's claim is to recover an amount allegedly owing in respect of a written contract.

2. The Agreement (exhibit 1) was not challenged as to its validity or terms.

3. The plaintiff sued upon clause 1.6, which provided,

Tifferly [now named Long Paddock Pty Ltd, the first defendant "Long Paddock"] will pay to Stelmag [Stelmag, Pty Ltd, the plaintiff] a royalty of 20% of the gross value of any fire transponders sold, payable monthly.

4. Long Paddock and/or the second and third defendants were alleged to have sold "at least" $914,150.83 gross of transponders to 30 November 1993 and thereafter, to 21 May 2004 (date of amended statement of claim) "at least" $762,385.00.

5. Only $2,168.00 was allegedly paid.

6. Although that pleading would suffice to make out a claim for debt and breach of contract leading to damages in that same sum, Stelmag also pleaded, from clause 1.6,

Tifferly and King [the second defendant] undertake not to do anything, either directly or indirectly, which would have the effect of reducing or avoiding the obligation of Tifferly to pay to Stelmag its share of the income or capital return from the sale of transponders or the fire business as set out above.

7. That obligation is alleged to have been breached by King, as the controlling agent of Long Paddock causing the latter to decline to pay the royalty of 20% of transponder sales (over and above $2,168.00) to Stelmag (Pollard).

8. Stelmag was a corporate vehicle for Mr John Robert Pollard and his family interests. He was the controller of that company.

9. Before December 1990, Mr Robert King and his spouse, Mrs Susan King, had used as a corporate vehicle Tifferly Manufacturing Pty Ltd (now Long Paddock). There was a joint venture between them and Stelmag through a corporate vehicle named Torrens Industries Pty Ltd (Torrens).

10. At that time there were three main enterprises in which Torrens was engaged. First, the sale of transponders, a business largely developed and driven by King/Long Paddock. Second, a medical data and practice management system, largely developed by Pollard and being marketed to Mednetwork Systems Pty Ltd, a third party.

11. There were, thirdly, software packages known as SAMAIS and BMAC together with some other miscellaneous products and assets.

12. Stelmag and Long Paddock (Pollard and the Kings) agreed, pursuant to the Agreement (signed 6 September 1991) to transfer portions of Torrens' business between Stelmag and Long Paddock.

13. Stelmag, after discharge of a debt to Torrens, was entitled to the revenue from the development work carried out for Mednetwork. Stelmag was to pay a royalty of 20% of net revenue or net capital return from the Mednetwork "run time licences".

14. The full management responsibility for Torrens' affairs was ceded to King but with an obligation to provide financial information to Pollard, as reasonably requested (clause 9).

15. There was no special provision for revenue, if any, derived from SAMAIS and BMAC packages.

16. The alleged breaches by King were expressed in a number of ways, repudiation (par 8A and 8B) and breach of fiduciary duty by Mrs King (par 9,10, 11 and 12).

17. The evidence disclosed that between December 1990 and November 1998, Long Paddock received $1.676 million from sale of transponders ("the fire business"). The transponders were part of the fire monitoring system for buildings. There was also, separately, a security systems business. That had been purchased by Long Paddock from Torrens, though in the course of the liquidation of that company and from the liquidator. That appeared to have generated revenue of $1,267,782.30 between 1992-1997.

18. The Mednetwork contract, by contrast, generated only $264,527.00 and $4,870.70 for ZIM runtime and other software sales.

19. Stelmag complains that the result of the bargain, struck in January 1991, had unduly favoured Long Paddock and the Kings. That the Kings have had the better of the bargain is apparent. However, that result does not, of itself, support any conclusion that Long Paddock and/or the Kings have committed any legal wrong towards Stelmag and/or Pollard.

20. In any event, Stelmag's claim is simply for the balance of the royalty revenue from sale of transponders. The major dispute is not about that claim but rather as to whether some greater payment was made than that admitted by Stelmag.

21. Additionally, Long Paddock and the Kings claim to be entitled to repudiate that obligation by reason of misrepresentation by Stelmag (or by Pollard on its behalf). Those misrepresentations related to the likely revenue to be generated by the Mednetwork software development contract and the sale of runtime licences.

22. It was asserted by the defendants that Stelmag and Pollard owed them a fiduciary duty which they breached by false or misleading information concerning those contracts given by Pollard.

23. Further, the defendants claimed that Stelmag had received income from the sale of runtime licences not disclosed to or paid to Long Paddock.

24. There was a further assertion. That is, that about February or March 1991, it was agreed that Long Paddock would pay any monies due otherwise to Stelmag for transponder royalties to Torrens. Torrens, at that time, had insufficient funds to pay its creditors. It was asserted that a further variation was that Long Paddock and Mr King should be entitled to setoff any monies paid to or for Torrens. This referred to monies Long Paddock paid to creditors of Torrens after the latter was insolvent and threatened with liquidation.

25. Long Paddock further complained that Stelmag had breached the agreement by releasing Mednetwork Systems Pty Ltd from its contract requiring the latter to purchase runtime licences exclusively from Torrens.

26. It is apparent that in resolving factual disputes raised by these matters in issue, contemporaneous records assume great significance. However, I do not consider that merely because the King interests, as it happened, did better out of the bargain with Stelmag and Pollard, those interests should, in some way, be favoured in that process.

27. Indeed, in opening, Mr Purnell SC, counsel for the plaintiff, somewhat denigrated his client's business acumen.

28. Nor does it seem to be that the genesis of the Heads of Agreement is of any significance. It is not suggested that the Agreement is tainted by any misrepresentation.

29. It was not contested by Long Paddock and King that Stelmag was and is entitled to $335,307.16. That revenue was generated in periods as follows:

Period of time	Value of transponder sales	20% royalty from transponder sales owed to Stelmag
1/12/90 - 30/11/93	$914,150.83	$182,830.16
1/12/93 - 30/6/94	$112,712.50	$ 22,542.50
1/7/94 - 30/6/95	$248,240.00	$ 49,648.00
1/7/95 - 30/6/96	$187,630.00	$ 37,526.00
1/7/96 - 30/6/97	$113,780.00	$ 22,756.00
1/7/97 - 30/6/98	$ 78,162.50	$ 15,032.50
1/7/98 - 30/11/98	$ 24,860.00	$ 4,972.00
Total	$1,679,535.83	$ 335,307.16

30. Thereafter, it is not contested that transponder sales ceased. The above periods are relevant to a consideration of interest payments, noting that $4,000.00 was paid in the initial period.

31. I also note that the claim is not pressed against Mrs King, only against Long Paddock and Mr King. The latter was clearly the controller of Long Paddock and could have, but did not cause it to pay Stelmag.

32. It remains only to consider Long Paddock and King's claims against Stelmag. If valid, they would excuse Long Paddock and, hence, King, from paying that sum to Stelmag.

33. The initial basis on which Long Paddock declined to pay Stelmag was set out in a letter dated 6 December 1993 (JP1 250),

Costs paid by R K re Torrens Industries

This is not an exhaustive list - I spent ten minutes only compiling this list and I know I have ommitted (sic) a lot of payments. You can easily see the extent of what I have had to do.

2.1 cash from fire income input to Torrens Industries from 1/12/90 to 30/6/91 - this was done to ensure that AMP & other TI matters were finished off as best as possible. 1/12/90 was the date of split. Total amount - $114,226.82

2.2 lease payments made by RK on your Capri - early 1991 - $2,167.86

2.3 CBFC - lease payout on XT computers (boat anchor material): 16/8/91. $4,732.17

2.4 Contra re owing to NT Security for maintenance work pre 1/12/90 - $5,780.20

2.5 Amount paid re termination of factoring agreement with Scottish Pacific - $5,787.50

2.6 Loss on disposal of Astra cars - $10,424.17

2.7 Esanda - payout of Saxon 80286 computers incl Epson Laser (boat anchors again) - $16,476.78

2.8 Lease payments made on Astras and computers until they were paid out. This ignores lease costs on Commodore and one Astra (being used by King) - $15,297.03

2.9 Legal cost re Shatzman and liquidation matters - $7,771.00

2.10 Termination and unused holiday pay for Torrens Industries employees either paid directly by King or assumption of liability - $15,000 estimate only but likely to be more

2.11 Accomodation [sic] costs from Olims re AMP project - $5,099.10

2.12 Defects liability period for AMP. This extended from December 1990 to approx Feb March 1992. From approx May 1991 onwards, all costs associated with AMP were borne by King. Any time spent by SK/IP/RK and others, plus travel and some other costs, were paid directly by King. A very conservative estimate of $25,000 is given of these costs.

2.13 RK received no remuneration from Torrens Industries from approx April 1991 onwards. Since then an absolute minimum of 6 months time has been spent on various matters associated with the winding down of Torrens matters including AMP defects liability, ANG defects liability, Shatzman matter, action by Tax Dept re group tax & ACT Revenue re payroll tax (all paid), liquidation of company, etc etc. A very conservative estimate of $25,000 is given of these costs.

2.14 Godkin - I have paid all the amounts for Godkin payout. You were a joint signatory on that. Total paid - $95,000 plus $7/8,000 to go. Include 50% - say $50,000.

TOTAL TO HERE - $302,762.63

I have not bothered at this stage to go through all of the trade creditors to see what was paid directly by King - but there would be at least another $25,000 there.

I think you can get the gist of what we have had to do from the above.

What contribution are you going to make? ...

34. There were two Small Claims Court actions taken by Mr King against Pollard personally. Mr King says now (T702: 34),

I confess to trying to wind Mr Pollard up.

35. Mr King followed up his letter of 6 December 1993 with a demand for 50% of the legal fees incurred by Mr King in respect of the Torrens liquidation. This was delivered by fax of 13 December 1993 and demanded a response by 15 December 1993. Pollard did respond. Not unreasonably he said he needed more time to assess the King claim. On 16 December 1993, King responded that Pollard had already had sufficient time and information to have responded to his claims.

36. On 10 January 1994, Pollard sent a faxed response. It was dated, apparently mistakenly, 3 December 1993.

37. Leaving aside the responses to the offensive barbs aimed at him by King, Pollard responded (JP1 257),

I stand corrected re "not receiving any financial information". I meant any my advisers could do anything with. It is of little use receiving some of one side of the ledger without all of both sides. I have an appointment to discuss the matter again with the 13 Dec 93 summary figures you provided.

It is my current view (without supporting details or confirmation from my advisers) that your figures show excessive salary, legal and windup payments. In one instance the figure was "understated at $80k" (I assumed $100k), then within a few months it grows to $300k! Without supporting fire income details at that stage, I calculated fire royalties more than covered this. If it didn't you would have raised the issue well before then and you know it. So what is this smoke screen really about?

The QNZ & ZIM was always a longer term issue: even the most ambitious plan was over a four year period. There were never any assurances as you have decided to recall. The whole project was an unknown quantity as was the situation with Fire. Anything could happen in much less than 4 years.

As discussed the money for the investment property was borrowed. We were advised to do this as a responsible move as we will still have children to educate after retirement in 20 years. Also as discussed, I cannot see how this will even benefit as the rent we collect does not come close to even covering the interest. To an accountant it must be like the cars you sold at an incredible loss to enable the lease of newer more expensive cars.

After your advice that Fire was "right down", I expressed my uncertainty on which way the balance would fall. I stated I would be prepared to contribute funds for Torrens legal responsibilities though would count this against Fire royalties due. You felt sure in either case your contribution would be in excess of mine in which case a payment by me would be appropriate. Don't you think the million dollars from fire (the first fire figures provided by you) is stretching your credibility with "right down"?

Re my scheduled work, what you believe is of little consequence. At the time of our discussion the only paying work was as stated. Unlike your ADFA work of a few larger amounts, mine is smaller and more often. That week I was accepted for a small urgent Telecom system and the Defence contract I was expecting to finish had a problem with the scope of works: the contract was to convert a system I wrote a year ago in Object Vision to Paradox. I completed this but was unaware of processes and reports users had added during the year which were apparently to be included in the rewrite. As soon as this is completed (hopefully next week) we are leaving on interstate holidays and will be back approx Wed 26 Jan. After my [this] I have 6 months allocated to writing a Newsagency System in Paradox for Windows.

Any available XTs are not boat anchors to my newsagents. Until I can rewrite a DOS based system, they all still run on XTs with very few spares. Your other boat anchor, the Epson laser would be better than what I own. What happened to the leased equipment now paid off?

Despite the tone of your last fax, I am going to my advisers with an open mind on most issues. Though tempting, if I was giving you the salute, would I take the time to even explain the above[?]

38. One claim pressed by King is that, as one of the directors of Torrens, and co-guarantor of some its debts, he or Long Paddock or both, contributed funds to the winding up so that creditors might be paid.

39. King's claim was articulated, allegedly fully, by an attachment to a letter to Pollard dated 26 May 1994. It stated as follows (JP1 271-272):

1. Pollard

1.1 Pollard with either

a) agree to pay directly to King various amounts representing 50% of the direct costs incurred by King/Tifferly in all matters where both King and Pollard were joint guarantors, and for any employee leave entitlements. This includes leases, legal costs, contract termination payouts etc but does not include any costs/loss on disposal of motor vehicles used by King (Commodore and one Astra) and Pollard (Capri)

This amount represents approximately $35 - 50,000.

If this is agreed, King will provide Pollard with exact detail of the amounts involved.

The amounts being claimed by King from Pollard as per above were always intended to be used to get Torrens Industries Pty Ltd out of Court appointed Liquidation, and to the making of some kind of settlement offer, or ex gratia payment to any remaining creditor of Torrens Industries Pty Ltd. King will undertake that this will be the sole use of the funds paid by Pollard.

OR

b) Pollard will directly negotiate with the Liquidator and make settlement offers or ex gratia payments to all external creditors of Torrens Industries Pty Ltd (these now total approx $45,000 as listed in my Statement of Affairs), and that he will do all things necessary to retrieve Torrens Industries Pty Ltd from Court appointed Liquidation.

I would suggest that the latter would be a cheaper course of action for Pollard to take (i.e. make offers of X cents in the $, providing that the creditor withdraw all claim to the debt).

1.2 Pollard will unreservedly withdraw and apologise to both King and his wife, for the defamatory imputations contained in Foot's letter of 26 April 1994.

Pollard is free to make any arrangements he chooses regarding the payment or non payment of the Sloane funds.

1.3 Pollard and his associated companies will unreservedly withdraw all current claims against King on any matter concerning Torrens Industries Pty Ltd and undertake not to make any claims in the future on King or his associated companies concerning any Torrens Industries Pty Ltd matter.

2. King

2.1 King agrees to directly negotiate with and pay to Godkin all funds still outstanding regarding the previous purchase of shares in Torrens Industries Pty Ltd by Pollard and King from Godkin.

2.2 King agrees not to continue with a current defamation writ against Pollard.

2.3 King unreservedly withdraws all current claims against Pollard on any matter concerning Torrens Industries Pty Ltd and undertakes not to make any claims in the future on Pollard or his associated companies concerning any Torrens Industries Pty Ltd matter.

3. Pollard and King

3.1 At the conclusion of the "clean up" exercise as set out in 1.1, both Pollard and King agree that one of three possibilities will occur:-

a) Torrens Industries Pty Ltd will be voluntarily liquidated, and that any costs incurred in the voluntary liquidation (after 1.1 above) will be shared equally, OR

b) King will sell to Pollard his total interest in Torrens Industries Pty Ltd for a nominal amount, and Pollard is free to take advantage of any tax losses and company shell of Torrens Industries Pty Ltd as he sees fit, OR

c) Pollard will sell to King his total interest in Torrens Industries Pty Ltd for a nominal amount, and King is free to take advantage of any tax losses and company shell of Torrens Industries Pty Ltd as he sees fit.

King does not have a preference as to the course of action - Pollard can nominate his preferred course.

40. It will be apparent that there is no mention in this litany of demands of sums due from Pollard for QNZ or ZIM royalties.

41. It was, however, referred to in King's letter of 14 June 1994 to Pollard. King refers to the "assurances and representations from Pollard" that revenues from royalties generated by the MNS project would, over time, offset the transponder income.

42. King records:

It was only 4 weeks after the Heads of Agreement was signed on 16 January 1991 that it became obvious that the representations given by Pollard to King were totally without foundation and that no equivalent royalties would ever be forthcoming to King.

43. He threatened an action for damages for breach of that original representation.

44. It is apparent that following the Heads of Agreement, whilst Pollard managed the Mednetwork contract, the supply of necessary software products was, initially at least, through Torrens. After Torrens was liquidated, due primarily to a taxation debt, that was no longer possible.

45. The claim by King to contribution from Pollard is based on a claim that the Heads of Agreement were varied to include the acceptance by Pollard of such a variation.

46. There is no document which records such an agreement. Nor is there any evidence of any conversation in which it is alleged that Pollard accepted such an obligation.

47. It seems to me that when, in September 1992, King reported to the liquidator (JP1 221-222) that Long Paddock had paid income of $115,000.00 to Torrens between 1 December 1990 and May 1991, King was being accurate when he stated:

This was done with no expectation by King of eventual repayment and was voluntarily done to ensure that the affairs of Torrens Industries Pty Ltd were being wound down in an orderly manner.

48. I take the view that while King, on reflection, considered it unfair that, having made these payments, as I accept he did, through Long Paddock, he still remained obligated to pay the full royalty on transponder sales.

49. That disposes of all of King's claims against Pollard for monies paid to or on behalf of Torrens.

Misrepresentations

50. It is apparent that in February 1991, Sterling Software estimated that the value of ZIM sales was likely to be $1.6m. It is also apparent that Pollard, both before and following the Heads of Agreement, was confident that the project would proceed smoothly.

51. Nevertheless, one of the causes for contention between King and Pollard was the time Pollard was devoting to the Mednetwork project. I believe that King was then doubtful as to the ultimate success of the MNS venture and distrustful of Pollard's capacity to bring it to fruition.

52. There is certainly no evidence that by 16 January 1991 Pollard had any reason to be pessimistic about the MNS venture. The assessment of MNS's submission to Sterling Software, being the proposal written by Pollard on 22 April 1991, was highly favourable though subject to "minor" suggestions for improvement.

53. There is no support for the suggestion that Pollard misrepresented, knowingly or even negligently, the prospects for success of the MNS project.

54. It was not represented that the revenues would be precisely equal, though I accept that, over the longer term, it was expected by both parties that the revenue streams would, in total, have become approximately equal over the longer term.

55. I do not believe that King was, in any way, reliant on the truth of this "expectation". So much is apparent from his report to the liquidator under the heading "Nature of the Industry" (JP1 223),

...Whenever a variation from the contract occurred, considerable difficulty was experienced in persuading (non-technical) project Superintendents/Principals as to the merits of the variation claim being submitted by Torrens.

Release of Mednetwork

56. Of more substance is King's claim that Pollard failed to administer the MNS project so as to avoid the reduction of royalties which otherwise would have accrued.

57. There is no dispute that Mednetwork made a payment of only $42,000.00(US) in February 1992 (see Pollard affidavits pars 182-186; JP1 181-183, 195-196).

58. There were additional payments from Sterling Software, pursuant to the commission arrangement. The evidence does not disclose more than $4,870.70(AUD).

59. The correspondence does not establish that it was Pollard's fault that the arrangements for the MNS contract altered so that Sterling provided the software. Stelmag received 15% commission. No doubt this was less lucrative than the previous arrangement. However, it was not an arrangement that Stelmag could control.

60. It is not disputed by Pollard that 20% of the Sterling commission is due to King. That is $974.14 (plus interest from April 1992). A setoff should be allowed for that sum.

61. Having regard to the correspondence between Pollard (through his company Compucraft Pty Ltd) and both Sterling and MNA, it is apparent that Pollard made the best of a bad deal once MNS decided to deal with Sterling rather than Torrens.

62. However, much of that difficulty can be regarded as a consequence of the winding up of Torrens. Pollard had no part to play in that save that he concurred in King's proposal to split their interests in Torrens in January 1991.

63. The plain fact, as the Sterling fax of 23 January 1991 (JP1 119) reveals, is that Sterling could offer considerable savings to MNS.

64. This proposal preceded the memo of 22 April 1991, largely accepting the developmental work performed by Pollard for MNS. Even so, in May 1991 Pollard reported to King that:

I have submitted three requests to Med Net re the contract payments. Payment problems have arisen as much re-working of the system has been provided, at a priority over much of the original contract, and as a consequence is still not finished. An offer was made by Alan Coates re payment with conditions though I rejected it as inadequate - then he got sacked. A new GM (Kevin Dwyer IBM) is now handling those discussions, and being marketing rather than development has great difficulty understanding the contract and variations.

65. However, he optimistically expected 15% of $600,000. That never eventuated. Nevertheless, that expectation and disappointment certainly had no effect on either the Heads of Agreement or the liquidation of Torrens. It did not influence King to pay money to Torrens creditors or otherwise.

66. In brief, King has not, save as above, established any matter of cross-claim to offset Pollard's claim for fire transponder royalties apart from the joint liabilities incurred in the Torrens liquidation.

67. There is, in my mind, a concern that King did, partly, of course, to clear his own financial liabilities, pay out liabilities of Torrens. This, at least indirectly, benefited Pollard. However, as I have noted, this was King's choice. Pollard neither requested nor urged it though he offered no objection. One can, therefore, understand King's desire to retain the fruits of his (successful) business after receiving little or no offset from Pollard's much less successful ventures and having, as well, paid towards Torrens' liquidation to which Pollard had contributed nothing.

68. In respect of those expenses, it is not disputed by Pollard that King was entitled to have credit for the payments by King towards discharge of Torrens' liabilities. Pollard's only dispute was that the sum so found should be set off against the Fire revenue.

69. Pollard stated his agreement with King's assertion that he had paid (in toto, see 206, 214 and 215) $38,618.11. He also paid (246 and 247) $5,781.00 to solicitors engaged on behalf of Torrens.

70. Additionally, King claimed, on 6 December 1993, to have paid "cash from fire income" (though the source is irrelevant) in the sum of $114,226.82. That, of course, did not deny to Pollard his 20% which has otherwise been found due to his interests.

71. Additional to the matters referred to, King also paid (2.2)lease payments on the copier available to Pollard, $2,167.86; a "contra" to NT Security for maintenance work, $5,780.20; an amount re termination of factoring agreement (Scottish Pacific), $5,787.50; and to Esanda, payout on leased equipment, $16,476.78.

72. Those claims fall within the general right of one contributor to seek contribution from a co-surety or co-contractors.

73. So also would lease payments made to lessors before final termination of the relevant lease (2.8 $15,297.03).

74. However, the basis for the $7,771.00 for (2.9) "Legal cost re Shatzman and liquidation matters", is not so clearly a joint liability with Pollard. Nor is King entitled to contribution for his time and trouble (see 2.12 and 2.13) let alone accommodation costs "re AMP Project" (2.11).

75. Payout claims by Torrens Industry employees would not give rise to any joint or several liability. The guiding principle is that affirmed by Kitto J in Albion Insurance Co Ltd v GIO of NSW (1969) 121 CLR 342 at 350,

...persons who are under coordinate liabilities to make good the one loss (eg sureties liable to make good a failure to pay the one debt) must share the burden pro rata.

76. The other substantial claim by King was (2.14) "Godkin". Clearly, there had been an agreement by existing directors (ie King and Pollard) to pay Godkin out. King claimed to have paid $95,000.00. There is no evidence any further monies were paid. That sum may be accepted therefore as a co-liability between Pollard and King.

77. The total of those items that I am prepared to accept that King paid and to which Pollard was a co-contributor is $213,635.30. King is, therefore, entitled to a setoff of $106,812.65 against Pollard's admitted claim of $331,307.16 less the $974.14 setoff conceded, i.e. $330,333.02.

78. There will be judgment for Stelmag against Long Paddock and Mr King in the sum of $223,838.51.

79. I will hear the parties as to costs, as to the accuracy of the calculations I have made, and as to interest.

I certify that the preceding seventy-nine (79) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Chief Justice Higgins.

Associate:

Date: 31 March 2005

Counsel for the plaintiff: Mr F J Purnell SC with Mr D J C Mossop

Solicitor for the plaintiff: Lander & Co

Counsel for the defendants: Mr B J Salmon QC with Mr R Livingston

Solicitor for the defendants: Tetlow Jansen & Doyle

Dates of hearing: 14, 15, 16 and 19 July 2004

Date of judgment: 1 April 2005