Miller v Shea [1999] NSWSC 40 (12 February 1999)

Last Updated: 18 February 1999

NEW SOUTH WALES SUPREME COURT

CITATION: Miller v Shea [1999] NSWSC 40

CURRENT JURISDICTION: Common Law Division

FILE NUMBER(S): 13660/95

HEARING DATE{S): 24-28 August 1998; 04 November 1998

JUDGDMENT DATE: 12/02/1999

PARTIES:

David Miller

v

James Shea

JUDGMENT OF: James J

LOWER COURT JURISDICTION: Not Applicable

LOWER COURT FILE NUMBER(S): Not Applicable

LOWER COURT JUDICIAL OFFICER: Not Applicable

COUNSEL:

Plaintiff: R Colquhoun

Defendant: R J Weber

SOLICITORS:

Plaintiff: Lyons & Lyons

Defendant: John Cunningham

CATCHWORDS:

Contract - terms of oral contract - terms of Deed of Release - economic duress

ACTS CITED:

DECISION:

Verdict for Defendant

JUDGMENT:

1 HIS HONOUR: The plaintiff David Miller, who was formerly called David Hoare, brought these proceedings against the defendant, James Shea, claiming damages for alleged breaches of an oral agreement allegedly made in June or July 1990 between the plaintiff and the defendant or, alternatively, (as a result of a late amendment of the statement of claim which I allowed) between the plaintiff and his wife, Wendy Miller, of the one part and the defendant of the other part. The agreement alleged (regardless of whether Wendy Miller was a party to the agreement) was that the parties would set up a business of providing sanitary services in women's toilets, that is of providing bins for the disposal of used sanitary dressings; that a company to be known as Ladycare Services Pty Limited ("Ladycare Services") would be incorporated to carry on the business; that initially the defendant would own 100 per cent of the shares in the company but that after six months the defendant would transfer to the plaintiff 40 per cent of the shares in the company; that the defendant would provide such financial assistance as was required to make the business operational in its early stages; that the plaintiff, who had previous experience in this type of business, would provide advice; and that the plaintiff's wife Wendy Miller, who is a sister of the defendant, would be paid $5,000 per month as a consultancy fee for the first twelve months, the fee being paid initially by the defendant and then by the company.

2 The company Ladycare Services Pty Limited was incorporated on 4 September 1990 and on 8 October 1990 it commenced carrying on the business of providing sanitary services. The defendant or a company or companies controlled by the defendant became the owner of 100 per cent of the shares in Ladycare Services. The plaintiff alleged in the amended statement of claim that after six months had elapsed, that is after about March 1991, the original agreement was varied, so as to permit the transferring to Wendy Miller of the shares in Ladycare Services which were transferable to the plaintiff.

3 The plaintiff alleged that the defendant had committed the following breaches of the agreement.

1. Although the defendant had on a single occasion in November 1990 paid the sum of $5,000 to the plaintiff's wife, the defendant had subsequently failed to pay the sum of $5,000 each month to the plaintiff's wife.

2. In March 1991, after six months had elapsed, the defendant failed to transfer 40 per cent of the shares in Ladycare Services either to the plaintiff or his wife and the defendant subsequently continued to fail to perform this promise.

4 In his defence the defendant made inter alia the following allegations. The defendant accepted that an agreement had been entered into in about June or July 1990 but said that the agreement was between the defendant and Wendy Miller and that David Miller had not been a party to the agreement. Under the agreement the defendant agreed to provide capital for Ladycare Services, both the capital required for setting up the business and the initial working capital, such capital being referred to in the defendant's defence as "the initial capital injection". Under the agreement Mr Shea or a company associated with him was to remain the owner of all the shares in Ladycare Services, until the business of Ladycare Services had made sufficient profit to be able to repay the initial capital injection to Mr Shea from reserves which in Mr Shea's opinion were not required for the company's purposes (the attaining of such a position by Ladycare Services was described as the attaining of "profit maturity"). Only if Ladycare Services attained profit maturity and repaid Mr Shea the initial capital injection, would Mr Shea be obliged to cause 40 per cent of the shares in Ladycare Services to be transferred and those shares were to be transferred to Mrs Miller and not the plaintiff. Mr Shea agreed to pay Mrs Miller $5,000 on one occasion only and did not agree to make periodical payments of $5,000 a month to Mrs Miller.

The defendant then alleged in his defence that the amount of the initial capital injection he had made into Ladycare Services was $136,607. He also said that he had paid Mrs Miller an amount of $5,000 and that he had, without obligation, paid Mrs Miller other sums totalling $23,769. The defendant alleged that in 1991 disputes arose between the plaintiff and Wendy Miller on the one side and the defendant on the other. On 27 June 1991 the plaintiff, with the consent of the defendant, ceased to have any further involvement in the business of Ladycare Services. By August 1991 Ladycare Services had not attained a state of profit maturity. Pursuant to a deed dated 16 August 1991 made between the plaintiff and Mrs Miller on the one side and the defendant on the other side, the defendant paid the sum of $25,000 and David Miller and Wendy Miller released all claims they might have against the defendant.

5 By his reply the plaintiff alleged in relation to the deed of release of 16 August 1991:-

6 (i) That on its true construction it was only the plaintiff's wife Wendy Miller who released claims against the defendant and the plaintiff himself had not by the deed released claims which he had against the defendant.

7 (ii) The deed was vitiated by economic duress and unconscionable conduct on the part of the defendant. Particulars of this allegation were included in the reply. In summary, it was alleged that the plaintiff and his wife were in dire financial straits, that they needed $25,000 to pay immediate debts, that the defendant knew that the plaintiff and his wife were in dire financial straits, that the defendant had not paid all the instalments of $5,000 which he had promised to pay to Mrs Miller, that the plaintiff and his wife had been confronted by the defendant with the deed of release which they had not seen before, that the plaintiff and his wife were presented with an ultimatum by the defendant that they had to sign the deed of release or not receive the sum of $25,000, that the plaintiff and his wife had no opportunity of negotiating or of obtaining legal advice and that the plaintiff had signed the deed of release "under protest".

8 From the above examination of the pleadings in the proceedings, it can be seen that it was not in dispute that an oral agreement was entered into in June or July 1990 for the setting up of a business, that the company Ladycare Services was set up to carry on the agreed type of business and that initially the defendant or a company associated with the defendant owned 100 per cent of the shares in Ladycare Services. Issues arising from the pleadings include the following:-

9 1. Who were the parties to the agreement. It is clear that the party on one side of the agreement was the defendant James Shea. However, the plaintiff alleged that the party or parties of the other part were either himself or himself and his wife Wendy Miller, whereas the defendant alleged that the other party to the agreement was only his sister Wendy Miller.

10 2. To whom were 40 per cent of the shares in Ladycare Services to be transferred. The plaintiff alleged that under the original agreement 40 per cent of the shares in Ladycare Services were to be transferred to him and that under the variation to the agreement 40 per cent of the shares were to be transferred either to him or to his wife. The defendant alleged that the agreement always was that the person who was to receive 40 per cent of the shares was Mrs Miller.

11 3. To whom was the promise made by the defendant to transfer 40 per cent of the shares and could the promise be enforced by the sole plaintiff, Mr Miller.

12 4. What were the conditions which had to be fulfilled before an obligation arose to transfer 40 per cent of the shares in Ladycare Services and had those conditions been fulfilled. The plaintiff alleged that 40 per cent of the shares were to be transferred after the expiration of six months, it being somewhat unclear whether this period of six months was to be reckoned from the date Ladycare Services commenced carrying on business (8 October 1990) or from the date of the termination of the plaintiff's employment by Rentokil Pty Limited (apparently some date in September 1990). However, both of these dates were close together and nothing turns on when the period of six months would have commenced to run. The defendant, on the other hand, alleged that the obligation to transfer 40 per cent of the shares in Ladycare Services did not arise until after Ladycare Services had attained profit maturity and had repaid to the defendant out of reserves the full amount of the initial capital injection.

13 5. On a true construction of the deed of release, did the deed of release bar claims only by Wendy Miller(as alleged by the plaintiff) or claims by both David Miller and Wendy Miller (as alleged by the defendant).

14 6. Was the deed of release "vitiated" by economic duress and unconscionable conduct on the part of the defendant.

15 7. If an obligation on the defendant to transfer 40 per cent of the shares in Ladycare Services had crystallised and had not been performed and damages amounting to the value of 40 per cent of the shares in Ladycare Services were to be assessed, should the value of the shares be determined as at the date of the breach (which on the plaintiff's case was in about April 1991) or as of now and what, at the appropriate time, was the value of 40 per cent of the shares in Ladycare Services.

16 8. Had the defendant promised to make monthly payments of $5,000 for twelve months (as alleged by the plaintiff) or had the defendant promised only to make a single payment of $5,000 and could such a promise be enforced by the sole plaintiff David Miller.

17 As I have already indicated, it was the plaintiff's primary case that the agreement was between himself and the defendant, Wendy Miller not being a party. It was the defendant's case that the agreement was between himself and Wendy Miller, David Miller not being a party. It was in the interests of the plaintiff (and Wendy Miller) to adopt the position that David Miller, and not Wendy Miller, had been the party to the agreement. In the first place, it was a possible construction of the deed of release of 16 August 1991 that it barred claims by Wendy Miller but did not bar claims by David Miller. Secondly, Wendy Miller became bankrupt in 1993 and it was conceded by counsel for the plaintiff that any claim she had against the defendant would, with the rest of her property, have become vested in her trustee in bankruptcy and would have remained vested in her trustee in bankruptcy, notwithstanding her later discharge from bankruptcy. It troubled me throughout the hearing that no notice of the proceedings had been given to the Bankruptcy Administration and eventually a letter giving notice of the proceedings was sent to the Official Receiver.

18 The evidence in the proceedings consisted of affidavit evidence, oral evidence and various exhibits. The witnesses for the plaintiff were the plaintiff himself, Wendy Miller and Mr Jugmans, a valuer who gave evidence of the value of shares in Ladycare Services. The witnesses for the defendant were the defendant himself, his wife Mrs Shea, two witnesses Mr Hindmarsh and Mr McGonigal who gave evidence concerning the entering into of the deed of release of 16 August 1991, some other minor witnesses and Mr James a valuer who received and commented on a report by Mr Jugmans and himself gave evidence of the value of shares in Ladycare Services. Without attempting to make an exhaustive summary of the evidence, all of which I have taken into account, I will refer to certain aspects of the evidence of the three principal witnesses.

Plaintiff's affidavit

19 In his affidavit the plaintiff said that up to about September 1990 he had been employed by Rentokil, which inter alia carried on the business of providing sanitary services in women's toilets. The plaintiff's wife suggested that he start his own business of providing sanitary services and that her brother the defendant could be interested in such a venture. A meeting took place at the defendant's home, at which the plaintiff, Wendy Miller, the defendant and the defendant's wife were present. At the meeting the plaintiff said to the defendant:-

"We do not have the finances to establish the business and Wendy and I would need to have a minimum salary of $5,000 per month initially. I know how to run the business, I know what is needed but we need the input of finance to make it work. If you could put in the capital to get the business going and give us between us a minimum of $5,000.00 per month, we could probably strike a deal".

The defendant said that he was interested.

20 In July 1990 a further meeting took place at the defendant's home. At this meeting the plaintiff presented a budget for the new business. There was discussion about various methods of manufacturing bins, of cleaning the dirty bins and of disposing of the waste. The defendant said inter alia:-

"I will agree to put in $5,000.00 per month and pay this to Wendy or yourself if you want some as well as a consultancy fee for the first twelve months. After the first twelve months such fee will be paid by the company which I expect will then be self supporting. I suggest however that the fee be paid to Wendy as your contract of employment with Rentokil prohibits you from approaching clients of Rentokil for six months following termination of your employment with Rentokil. I will assist with the establishment of the business".

21 The defendant showed the plaintiff a document. The defendant said he had used the document when forming a partnership with a previous business partner. The defendant said "take the document home, alter or add anything to it relative to the new business and this will constitute our partnership". A copy of the document which it was alleged the defendant had shown the plaintiff was annexed to the plaintiff's affidavit. The document is in the form of an agreement. The typewritten name of one party to the agreement has been crossed out and the name "Wendy Miller Enterprises" (a business name solely owned by Wendy Miller) has been substituted in handwriting.

22 In July 1990 after a meeting with the defendant's solicitor the plaintiff and the defendant went to a Sydney hotel. At the hotel the defendant said to the plaintiff:-

"I should receive 60% shareholding in Ladycare Services as I am taking the financial risk. You should not become a shareholder in Ladycare Services until the six month period provided for in the employment contract of Rentokil has expired. I would like you to approach employees of Rentokil, ones that would be good, and persuade them to commence employment with Ladycare Services".

23 According to the plaintiff's evidence, he had been advised by Mr McCormack, the defendant's solicitor, that he (the plaintiff) could not approach clients of Rentokil for six months after he ceased to be employed by Rentokil. The plaintiff approached certain employees of Rentokil, who agreed to leave the employment of Rentokil and work for the new company.

24 On 8 October 1990 the new company Ladycare Services commenced carrying on business. The defendant said to the plaintiff:-

"I'm somewhat concerned about your employment contract with Rentokil and I suggest that for the first six months you do not call any clients of any description including non-Rentokil clients and you should adopt an office role".

25 On 2 November 1990 the defendant paid $5,000 to Wendy Miller. In late November 1990 the defendant said that he would not be paying any more money "at the moment".

26 On 12 December 1990 Rentokil brought legal proceedings against the plaintiff, two of the other former employees of Rentokil who had left Rentokil and were working for Ladycare Services, and Ladycare Services itself. Rentokil obtained various interim orders, including an order restraining certain of the defendants from competing with Rentokil for six months after the termination of their contracts of employment with Rentokil.

27 About the end of December 1990 Wendy Miller, who had been working only part-time for Ladycare Services, started working on a full-time basis as sales director.

28 Annexed to the plaintiff's affidavit is a copy of a letter bearing the date 11 September 1990. This letter purports to be a letter from the plaintiff to the defendant in the following terms:-

"Mr Jim Shea

19/16, Wilga Street

Bondi 2026

11 September 1990

Dear Jim,

Just a short note to confirm what has transpired in respect to the new business. I have tendered my resignation to Rentokil (which they were not too pleased about) and I am free to commence our new venture on 5/10/90.

I think they will try and negotiate with me to stay with them, however this opportunity to start our new business is too good to miss.

I should also keep you up too date with the outcome of the discussions I have had with the Rentokil staff you asked me to approach. Both Mary-Anne and Kim Blogg have agreed to join our sales team, and Lou Wilbow has agreed to run the service side of the business. My secretary Jan Wise has also agreed to join us. As we agreed, I will organise a lunch so you can meet with them, and confirm the remuneration packages we agreed to offer them

They are only required to give Rentokil two weeks notice however Kim and Mary-Anne have requested we source their company cars in time for them to move straight into their new jobs, as obviously they will have to return their current vehicles to Rentokil.

As far as Wendy and I are concerned, would you please confirm what day of the month you will be paying us the $5000 per month you agreed upon. The fifteenth of the month would be preferable as we would not then have to change the date of our mortgage repayment.

Would you also confirm that the car you have kindly offered me to use as replacement for my company car will be available on the fifth. I've never driven a Mercedes before, so I'm quite looking forward to that.

Jim, both Wendy and I are very excited about our pending partnership in business, and I know that with my expertise and that of the people I am bringing with me, together with your financial support, we can look forward to a very successful future.

I will be returning from this conference I am on in four days, so I will catch up with you then and discuss things at greater length then.

Best Regards,

David".

29 I note at this stage that the defendant denied having received such a letter and that the authenticity of the letter as a contemporaneous document written on 11 September 1990 was strongly challenged by the defendant.

30 At about the end of March 1991, after the six months period had expired (regardless of which of the events it was calculated from), the plaintiff asked the defendant to transfer 40 per cent of the shares in Ladycare Services to him. The defendant said that there was continuing trouble with Rentokil, that he did not want shares in Ladycare Services to be transferred to the plaintiff and that he wanted the shares in Ladycare Services to be transferred to the plaintiff's wife, who had had no connection with Rentokil. The plaintiff agreed to 40 per cent of the shares in Ladycare Services being transferred to his wife. No shares in Ladycare Services were in fact transferred either to the plaintiff or his wife.

31 In July 1991 the plaintiff and his wife were in deep financial trouble. The bank to which their home was mortgaged was pressing them to sell the home, because the bank was no longer prepared to defer receiving mortgage payments. The plaintiff and his wife instructed a firm of solicitors, Eddy McCausland & Walker, and those solicitors wrote a letter (which is not in evidence) requesting the transfer of 40 per cent of the shares in Ladycare Services to Wendy Miller.

32 On 19 July 1991 the defendant's solicitor McCormacks wrote a letter to Eddy McCausland & Walker, which was headed "without prejudice" but which was not objected to at the hearing. Part of this letter was in the following terms:-

"We note your clients threat to institute proceedings in the Equity Division in relation to the issuing to Mrs Miller of a 40% interest in the company (Ladycare Services) and the appointing of Mrs Miller as a Director of the company. We are instructed in relation to these two (2) matters as follows:-

1. The Directors of Lady Care Services Pty Limited acknowledge that Mrs Miller has an entitlement to 40% of the company. In view of the current state of things between Mr and Mrs Miller and Mr Shea the Directors of Lady Care Services Pty Limited do not wish to issue any shares. The arrangement made was that shares would be issued to a Mr and Mrs Sykes who would grant an option over those shares in favour of Mrs Miller which can be exercised on the happening of certain events. In view of the current situation and the proposal to sell the company the Directors of Lady Care Services Pty Limited do not consider it appropriate nor advisable that the shares now be issued. We are instructed to repeat that our client admits the entitlement of Mrs Miller to 40% of the company.

2. Regarding the appointing of Mrs Miller as a Director this was discussed in more amicable times. The Directors of Lady Care Services Pty Limited are not disposed to appoint Mrs Miller a Director in the present circumstances.

Our client has instructed us that he wishes this matter to be disposed of swiftly and amicably.

Would you please write to us and advise your instructions and what are your clients proposals in respect of the business conducted by Lady Care Services Pty Limited. We understand your client has a proposal for the sale of the business or is obtaining a proposal for the sale of the business".

33 Draft minutes were prepared for a meeting of Ladycare Services to be held on 18 July 1991. The draft minutes were not signed but no objection was taken to the adducing of the draft minutes in evidence. Parts of the draft minutes were in the following terms:-

"BUSINESS: Mr Shea reported to the meeting that certain problems had arisen in relation to Mr and Mrs Miller. Mr Shea informed the meeting that Mrs Miller was no longer working for the company. Mr Shea further advised the meeting that Mrs Miller had asked the Company to issue to her a 40% interest therein and to appoint her as an additional Director.

RESOLVED: The Company acknowledged Mrs Miller's entitlement to a 40% interest in the Company but in view of the conflict having arisen it was advised not to issue the shares at this stage. The Company would however acknowledge that Mrs Miller has a 40% entitlement in the Company. In relation to the appointment of Mrs Miller as an additional Director the Company resolved that in view of present circumstances not to appoint Mrs Miller as an additional Director".

34 By August 1991 the financial position of the plaintiff and his wife had worsened. The bank had commenced proceedings for possession of their home. Their car had been repossessed. American Express threatened to take bankruptcy proceedings against Wendy Miller. In these circumstances Wendy Miller telephoned her brother the defendant. In the telephone conversation she said that she needed $25,000 to pay major debts. The defendant said that he would give Wendy Miller a cheque and that they should meet the following day at a coffee shop at Chippendale.

35 On 16 August a meeting took place at the coffee shop between the plaintiff, his wife and the defendant. The plaintiff gave the following account of the meeting in his affidavit:-

"On 16 August 1991 Wendy and I met Shea and he produced a cheque made out to Wendy for $25,000. He also produced a document which he said would release him from any further action that may be taken against him. Shea said words to the effect,

`Unless you both sign the document you will not get the cheque and you will not get another opportunity. You must do it now or not at all'.

I refused to sign the document because we were not given the opportunity to get legal advice. Wendy became extremely upset that I would not sign the document. She said words to the effect,

`I am fearful of losing our home and our children will be under threat of being removed from school as we cannot pay the school fees.'

Wendy became severely distressed and under protest I signed the document. Shea then gave us the cheque and we left".

Wendy Miller's affidavit

36 Wendy Miller's affidavit confirmed some parts of the plaintiff's affidavit. She gave an account of conversations between the plaintiff and the defendant in her presence, which would indicate that the plaintiff was experienced in the business of providing sanitary services, whereas the defendant in 1990 knew nothing about such a business. Mrs Miller gave the following evidence about the payment of $5,000 on 2 November 1990:-

"On 2 November 1990, I approached Shea and said to him `Jimmy, we need the $5,000 monthly payment for October as we need to pay our mortgage and do a shop'. Later that day, Shea came up to me and said `Wendy here is your monthly $5,000 payment, I have made it out to Wendy Miller Enterprises, as I want to claim it as a consultancy fee'".

37 In late June 1991 Wendy Miller had a conversation with her husband, in which he said inter alia that he needed to do something to make the defendant listen to him and that he had decided to remove customer files from the business's office at Chippendale. The plaintiff proceeded to remove customer files from the office but the files were returned soon afterwards. Further evidence was given about this episode by other witnesses. The plaintiff and Wendy Miller also collected some cheques in favour of Ladycare Services from customers of the business and banked these cheques into the business's bank account. David Miller as a signatory on the bank account then drew a cheque on the bank account for $4,000 in favour of himself.

38 In July 1991 there were communications between Wendy Miller and the defendant, which were only lightly touched on in her affidavit but which were dealt with more fully in other evidence. According to Wendy Miller's affidavit, she made arrangements to meet the defendant at the business's office but when she went to the office the defendant told her that he did not want to see her on the premises again.

39 On 15 August Wendy Miller telephoned the defendant. In her affidavit she said that the conversation was as follows:-

"'Jimmy, both David and I have given up good careers to establish this business with you, and now because of your actions, we have no money, the bank is going to sell our house and the boys may have to leave their school because we can't pay their fees'. I said `Jimmy I don't believe you could do something like this particularly to your own sister'. Then I said to him `under the circumstances I think you should cough up with some money to help us pay some of our debts.' Shea replied by saying `How much will you need to cover your immediate debts?' and I said `about $25,000.' Shea then said `O.K Wendy, you and David meet me at the coffee shop in Meagher Street at about eleven o'clock tomorrow and I'll have a cheque for you'".

40 The meeting took place the following day. Para 16 of Wendy Miller's affidavit was in the following terms:-

"We met Shea as arranged and we sat and ordered a coffee. Shea produced a cheque for $25,000 made out to Wendy Miller together with a document. Shea then said to my husband and myself `I have had this Deed of Release made up to say that you both agree to have nothing to do with the business in the future or make any future claims against me and if you agree to sign this I will give you this cheque'. My husband replied by saying `You have to be kidding, that is not the arrangement you made with Wendy on the phone and besides I am not going to sign a document like that without getting legal advice first'. Shea then said to us `This is the last offer I am making if you don't sign this release now, you won't get the cheque'. I became very distressed with the whole situation and said to my husband `We desperately need this money to keep the kids in school and to pay our mortgage. We don't have money to seek legal advice against Jimmy and I just want to sign this and forget we ever became involved with him'. My husband said `All right I will sign it under protest.' After we both signed the release my husband said `Jimmy, I need a copy of this release'. He replied by saying `I will get it witnessed and have my solicitor Michael McCormack send you a copy'. We then got up to leave and Shea said `Would you like to have a drink at The Gladstone before you go and my husband replied, `We don't drink with con men and thieves' and then we both left and went home".

Defendant's affidavits

41 The defendant James Shea made three affidavits, a principal affidavit, an affidavit in which he replied to Wendy Miller's affidavit and an affidavit in which he described the business of Ladycare Services, as it has been carried on since 1991. I have taken all of this material into account but I will only refer to some of the more important parts.

42 In his principal affidavit the defendant agreed that in 1990 he had had a conversation with his sister in which his sister had suggested that he might be interested in a business providing sanitary services.

43 A meeting was subsequently held at the defendant's home, which was attended by the plaintiff, Wendy Miller, the defendant, the defendant's wife and the defendant's son James Shea. At this meeting the proposed business was discussed.

44 At a further meeting between the plaintiff and the defendant the plaintiff allegedly said that the company would be profitable within two months. According to the defendant, further conversation was in the following terms:-

"'Wendy, since she is my sister and has three children, I agree will receive 40% of this venture. This 40% will be signed over to Wendy when the company reaches profit and has paid back the money invested by me through the Shea Family Companies. When that debt is paid in full, then I will issue the shares to Wendy. The shares would be issued to Wendy after all moneys that have been paid to get it started have been re-paid to the Shea Family companies and the company is in a profit situation'.

The Plaintiff then said words to the effect:

`That is agreeable to me. My involvement in this venture is to provide expertise in this type of business'.

The Plaintiff then said:

`After the first month the company will generate enough money to cover all our needs. This is because the contracts in this industry are paid twelve months in advance, which is common in this type of business. So for a small capital investment, the company will be profitable and self funding within two months'.

The Plaintiff thereafter said:

`So when the capital is paid back to you, Wendy will get 40% shares.'

I said:

`Your remuneration will be from Wendy's share. Whatever agreement you have between yourselves is for you'.

The Plaintiff said:

`Yes. It will only take two months for the company to be in profit for a capital input of around $50,000.00 and from then on it will be self funding and be able to finance its own growth'.

I said:

`When the company can afford it, I will get back the capital, and when the capital is fully re-paid, Wendy will get her 40%.'"

45 The roles to be performed by the plaintiff and the defendant were agreed. The defendant was to provide capital and to exploit business contacts he had which might be useful for the new business. The plaintiff was to provide management skills and expertise. However, after the company commenced carrying on business the defendant found that he was working seven days a week in the company's business. The defendant complained in his affidavit that the plaintiff worked only short hours, that sanitary bins cost more than the plaintiff had predicted, that waste disposal was a greater problem than the plaintiff had represented and that some of the staff who the plaintiff had recruited from Rentokil turned out to be unsuitable.

46 The defendant said that the payment of $5,000 made to Wendy Miller Enterprises in November 1990 was made as a result of a specific request by Wendy Miller (and not pursuant to any standing agreement).

47 On 11 December 1990 Ladycare Services was served with court proceedings by Rentokil. Until these proceedings were served, the defendant had not been aware of any restraint on the legal capacity of the plaintiff to work in Ladycare Services' business. The court proceedings brought by Rentokil were not ultimately disposed of until November 1991, when they were settled. In April 1991 the managing director of Rentokil wrote a letter to the defendant, stating an intention then held by Rentokil to proceed with an action for damages against the plaintiff and calling for a return of Rentokil customer lists and printed material.

48 In his affidavit the defendant gave evidence about the taking by the plaintiff of the company records and of the cheques. On the afternoon of 25 June 1991 the defendant was out of his office. The following day he was informed by an employee that all the company's records had disappeared. The defendant ascertained that the company's records were indeed missing and that cheques in favour of the company which had come in the previous day's mail were also missing. The defendant telephoned the plaintiff and demanded that the records and the cheques be returned. On the afternoon of 27 June, at a time when the defendant was not present, the records were returned. The cheques were not returned. The defendant ascertained from banking records that on 27 June three cheques in favour of the company totalling $7,372 had been paid into the company's bank account by the plaintiff and that the plaintiff had drawn a cheque for $4,000 on the company's bank account payable to himself. Later the same day the plaintiff telephoned the defendant. The plaintiff said, "I'm through with your company". The defendant said, "Good. I don't want to see you around here ever again". However, the following day it was agreed that Wendy Miller would continue to work at the company with responsibility for sales.

49 On 29 July 1991 the defendant received two letter from Wendy Miller. It is necessary to set out both letters in full. The first letter was in the following terms:-

"Dear Jimmy,

Following our telephone conversation this morning please find herewith the points I believe we should agree on if we are to continue the business of Lady Care Services.

However because of the circumstances I think the best solution would be to sell the business at a price that will ensure you receive back your initial investment into the business. At this stage we have received two offers for the business that may come within the figure required to do that. You will also be aware that I can only negotiate 40% of the business with interested parties. However we are prepared if necessary to make up your loan account from this 40% to ensure my family does not have to carry on with the heartache, poor health and financial difficulties that we have endured and which we did not suffer from prior to being enticed into the business. I personally do not wish to carry on in this vain. (sic)

David and I are both now gainfully employed therefore please do not worry about that aspect.

To refresh your memory and I quote your statement `I will finance the business for 12 months only to get it up and running'. `I am only doing this for you Wendy' is the reason we agreed to your having 60% of the business.

Jimmy please let's do something for each other now by ending this current fiasco, or if we have to continue to run it in a true and ethical business fashion, as it should have been done right from the start.

I believe the following points will assist us in doing that and I hope they meet with your approval.

On receipt of this letter you can telephone me at home today to arrange a time to settle this matter or alternatively you can arrange for your solicitor to contact our solicitor.

Regards

Wendy.

P.S. I have taken the liberty of sending a copy of this to each of our solicitors as we cannot ask them to act on our behalf unless they are aware of our intentions."

The other letter was in the following terms:-

"Att: Jim Shea Without Prejudice

From: Wendy Miller

Re: Lady Care Services

Date: 29 July 1991

Following our telephone conversation this morning please find below recommendations to be agreed on should we continue with the business of Lady Care Services:-

1. Shares to be assigned as agreed, to Wendy Miller, equal to 40% of the business.

2. Management fee of $5,000.00 per month to be paid to Wendy Miller, as agreed on by both parties prior to commencement of the business.

3. Interest on loan account to be charged at 14% and not at 17% as interest was not discussed at any time prior or during commencement of business, this is why we agreed for you to have 60% of the business as upon with taking the risk.

4. $1,000.00 per month lease on Mercedes owned by Jim Shea to cease, as this was not discussed or agreed on prior to commencement of business. This vehicle is not required as other company vehicles are available.

5. Rent of premises was not discussed or agreed on prior to commencement of business, we offer $1,000.00 per month for rent should this not be acceptable LCS should move to premises that are cheaper.

6. All fuel accounts including Jim Shea's to come from business LCS and not from the loan account as has been the case.

7. All company cheques to have signatures of Jim Shea and Wendy Miller (both are required).

8. We need where necessary 30 days line of credit to be arranged with suppliers.

9. All correspondence to be seen by both parties and signed and such.

10. The two cars being paid by Walto Pty Limited to be sold as they are not required. Should they retained they are to be paid by LCS and not through the loan account.

11. A copy of all claims of the loan account to be forwarded in detail to either Wendy Miller or her solicitor Mr Nicholas Eddy, and amount of the loan account to be agreed.

12. If both parties (Jim Shea and Wendy Miller) agree to the above points in the agreement, I would recommend we commence this agreement back to 1 July 1991."

50 On 15 August 1991 the defendant received a telephone call from Wendy Miller. His account of this conversation was as follows:-

Wendy Miller said:-

"I don't want to have any further upsets in the Family. I do want to be friends with you. To do this we should separate and not have anything further to do with the company. Will you give me $25,000.00 and David and I will cease to have anything to do with the company'.

I said:

`Yes'.

We made an appointment to meet with David at a Coffee shop in Meagher Street, Chippendale at approximately 3.00 pm.

51 Following the telephone call from his sister the defendant instructed his solicitors to prepare a deed of release. He also contacted Colin McGonigal and asked him to come to the coffee shop as an independent witness. At the meeting at the coffee shop the deed of release prepared by the defendant's solicitor was signed. Mr McGonigal as a witness initialled each page. The deed of release was in the following terms:-

"THIS DEED OF RELEASE is made the 16th day of August 1991

BETWEEN: LADY CARE SERVICES PTY LIMITED A.C.N of 137 Regent Street Chippendale in the State of New South Wales (`the Company') of the one part

AND: JAMES FREDERICK SHEA of 137 Regent Street Chippendale in the said State (`Shea') of the second part

AND: DAVID MILLER of 6B Bate Avenue Allambie in the said State of the third part

AND: WENDY MILLER of 6B Bate Avenue Allambie in the said State of the fourth part

WHEREAS

A. The Company is in the business of providing and servicing Sanitary Napkin Bins and Air Fresheners (`the Business').

B. Shea is a Director of the company and the Managing Director of the Company and in that capacity is in charge of the day to day running of the Business.

C. Wendy Miller consulted to the Company and has from time to time asserted a claim for ownership of shares in the Company.

D. David Miller is possessed of certain knowledge of the Business and has from time to time discussed with Shea and the Company the method of conducting the Business and is aware of some facets of the running of the Business.

E. The parties to this Deed have agreed to settle all disputes between them on the basis of the payment and releases and covenants hereinafter contained.

WITNESSES that in consideration of the sum of twenty five thousand dollars ($25,000.00) paid by the Company to David Miller and Wendy Miller jointly and in consideration of the covenants and release in this Deed -

1. David Miller and Wendy Miller hereby forever release the Company and Shea from all claims actions rights conditions and the like which David Miller and/or Wendy Miller may have against the Company and/or Shea.

2. For a period of two (2) years from the date of this Deed and within the State of New South Wales David Miller will not either directly or indirectly alone or in partnership or in the employment of any person firm or corporation compete for the custom or business of any person firm or corporation who is at the date hereof a customer or client of the Company or Shea in connection with the Business.

3. For a period of (2) years from the date of this Deed and within the State of New South Wales David Miller will not either directly or indirectly alone or in partnership or in the employment of any person firm or corporation compete for the custom or business of any person firm or corporation in connection with the Business conducted by the Company."

52 In his affidavit the defendant said he "observed that all the parties appeared...to be at ease". After the signing of the document the defendant, the plaintiff and Wendy Miller went to the Gladstone Hotel at Chippendale and had a couple of drinks.

53 The defendant asserted that in August 1991 Ladycare Services was operating at a loss. The defendant saw himself as having two options, either to sell the business or to attempt to turn the business around. The defendant decided to "rebuild" Ladycare Services. The defendant changed the method of manufacturing sanitary bins used by the company. He applied himself to familiarising himself with new techniques and technology in the industry. He introduced a computerised operation system. He expanded the range of products Ladycare Services provided. He made a number of innovations in the business, including introducing an air freshener with a light sensor and a special type of washing machine for improving the washing of sanitary bins. Most of the current clients of the business had been introduced to the business by himself or by the current sales staff. The company now has a staff of nineteen or thereabouts.

54 In various parts of his affidavit the defendant denied that he had had conversations with the plaintiff in the terms alleged by the plaintiff in his affidavit. He also denied that he had ever agreed to pay $5,000 per month for the first twelve months the company was operating or for any period, that he had told the plaintiff that the plaintiff could make alterations to a document handed to the plaintiff and that the altered document would constitute the partnership agreement between them. The defendant said that he had never seen the alleged letter of 11 September 1990 (before a copy of it appeared as an annexure to the plaintiff's affidavit). The defendant said that in response to specific requests from Wendy Miller he had between 2 November 1990 and 16 August 1991 made payments to Wendy Miller totalling $53,769.14. These payments were as follows:-

DATE	CHQ #	PAYEE	PRESENTED	AMOUNT
2/11/90 7/12/90 1/02/91 1/03/91 21/03/91 10/04/91 24/04/91 1/05/91 15/05/91 16/05/91 31/05/91 6/06/91 27/06/91 16/08/91 TOTAL	419632 419677 419720 419746 419773 419792 517004 517011 517027 517030 517048 517052 1604 517126	Wendy Miller Enterprises Wendy Miller Enterprises Wendy Miller Enterprises Wendy Miller Enterprises Wendy Miller Enterprises Wendy Miller Enterprises Wendy Miller Enterprises Wendy Miller Wendy Miller Wendy Miller Wendy Miller Wendy Miller Cash. Cashed by David Miller D & W Miller	2/11/90 11/12/90 4/02/91 1/03/91 22/03/91 11/04/91 26/04/91 2/05/91 22/05/91 17/05/91 31/05/91 7/06/91 27/06/91 16/08/91	$5,000.00 $3,000.00 $3,000.00 $3,000.00 $1,000.00 $1,000.00 $3,000.00 $350.00 $200.00 $1,219.14 $2,000.00 $2,000.00 $4,000.00 $25,000.00 $53,769.14

57 The defendant denied that he had been aware of the financial circumstances of the plaintiff. He said that the minutes of a meeting of Ladycare Services to be held on 18 July 1991 were only a draft prepared by a solicitor and had never been adopted by the company.

58 In his second affidavit the defendant denied that most of the conversations alleged by Wendy Miller in her affidavit (which had been filed after his first affidavit) had occurred in the terms alleged by Wendy Miller. The defendant said that at the meeting on 16 August 1991 when the deed of release was signed, David Miller had handed him a document, saying "you might as well take this, as it is of no use to me". This document was a letter dated 17 July 1991 purporting to be "an opinion as to the fair value of the business conducted by (Ladycare Services) for use by yourself (David Miller) as a guide to what a willing buyer would pay a willing seller for the company's business on a going concern basis". In the letter the writer, Wayne A Aitken, accountant, expressed an opinion that "the value of the business on a capitalised future net revenues basis would be $170,797." It will be necessary to refer to this "valuation" later in this judgment.

59 In a further affidavit the defendant gave further evidence about the operations of Ladycare Services. He said that he is the managing director and devotes all of his time to the company's operations. Other members of his family also work in the business. The industry in which the company participates has become more competitive since 1991 and the standard form of contract with a customer has changed from a form of contract where fees were payable twelve months in advance to a form of contract where fees are payable one month in arrears. In the year ended 30 June 1991 a Shea family company provided Ladycare Services with funds totalling $106,607. In the next financial year the same company provided further funds of $30,000. Ladycare Services has a number of employees in administration, sales, management and operations.

60 The defendant also relied on affidavits by his wife Jan Shea, his son James Shea, Mr Hindmarsh, Mr McGonigal, Mr McCormack his solicitor, Jeffrey Miller (Wendy Miller's first husband) and Jan Wise (an employee of Rentokil who joined Ladycare Services). I have taken all of these affidavits into consideration. Mrs Shea claimed in her affidavit that she was present at meetings with either or both of the plaintiff and Wendy Miller at which her husband had said "when the business has paid back my initial contributions and is making a profit, I will give Wendy a 40 per cent share in the business". Colin Hindmarsh gave evidence that he was the owner of the Gladstone Hotel, Chippendale, that he knew the plaintiff, Wendy Miller and the defendant, that he could recall a late afternoon in or about mid 1991 when the three of them came to the hotel and had a couple of drinks. On this occasion there was conversation about the sale by the plaintiff and Wendy Miller of their interest in Ladycare Services. Mr Hindmarsh said "I observed that the parties were quite amicable and indeed jovial in their discussion".

61 Colin McGonigal said that he had had a business at Chippendale, and that on 16 August 1991 he had been asked by the defendant to witness the signing of a document. He met the defendant and the two of them went to a coffee shop. At the shop he was introduced to the plaintiff and Wendy Miller. A document was produced. The document was signed by the other persons present and Mr McGonigal witnessed their signatures. Mr McGonigal said "no person gave the appearance of signing under duress".

Plaintiff's Oral Evidence

62 In his oral evidence in chief the plaintiff said that he had not received any income between October 1990 and June 1991, apart from such payments as had been made by the defendant to Wendy Miller. He said that when he had taken the company's records in June 1991, he had written down "the values" from the service contracts and had supplied this information to the accountant Mr Aitken.

63 In cross-examination the plaintiff did not accept that most of the important conversations in which the venture had been discussed were conversations to which Wendy Miller was a party and did not accept that the defendant had said that he was prepared to enter into the venture only in order to help his sister.

64 The plaintiff was cross-examined about when in his view a breach of the alleged agreement had occurred. He said that 40 per cent of the shares in Ladycare Services should have been transferred to him by April 1991, so that by April 1991 a breach of the agreement had occurred. The plaintiff insisted that 40 per cent of the shares in Ladycare Services were "mine". He added "where I want to put them is my decision. He (the defendant) wouldn't sign them over to me, so I said `well sign them to Wendy'".

65 As regards the signing of the deed of release on 16 August 1991 the plaintiff said:-

"I didn't understand the document at the time because no document was even discussed prior to us coming to the meeting and it was just brought out and shoved under our noses and we were told `if you don't sign this, you won't get the $25,000' and therefore I didn't have a chance to have legal advice and my wife was in a very stressed situation and that's the reason it got signed but at no time prior to that did we even know that document had been prepared".

66 The plaintiff was cross-examined about the delay of four years in commencing the present proceedings. He explained "it took that long to get back on our feet because my wife had been made a bankrupt and the family had been in disarray and we were getting back on our feet. We didn't have any money to take him to court".

67 As regards the role the plaintiff was to perform in Ladycare Services, the plaintiff agreed that his only contribution was to inject his expertise and that he had had no obligation to inject any capital and that he had ceased to inject any expertise into the business in late June 1991.

68 The plaintiff confirmed that his claim was to receive 40 per cent of the current value of Ladycare Services, notwithstanding the long delay in instituting proceedings and the further delay of approximately three years to the commencement of the hearing.

69 The animosity the plaintiff feels for the defendant was apparent at a number of stages in his evidence. He said that the defendant "tried to threaten me away from Wendy" and that the defendant had never approved of his relationship with the defendant's sister.

70 The plaintiff was cross-examined about the document which he had said had been handed to him by the defendant and which he said the defendant had invited him to alter, so that it would become the agreement between them for the purpose of the venture. He agreed that the first alteration he had made to the document was to substitute as a party "Wendy Miller Enterprises", which was a business name of which Wendy Miller was the sole proprietor.

71 In regard to the alleged promise by the defendant to pay $5,000.00 a month for the first twelve months, the plaintiff alleged that the agreement was to pay his wife and himself. He was referred to para 2(vii) of the statement of claim, in which it is alleged that the promise by the defendant was a promise to make the payments to the plaintiff's wife.

72 The plaintiff was cross-examined about the letter bearing the date 11 September 1990. He said that the letter had been typed by him on a word processor during a lunch break at a conference of national branch managers of Rentokil being held at a hotel at Manly. He said that he had attended this conference, notwithstanding that on his evidence he had already tendered his resignation from the employment of Rentokil.

73 The plaintiff was cross-examined about the letter of 19 July 1991 written by McCormacks to Eddy McCausland & Walker, in which McCormacks referred to a claim by Wendy Miller to be entitled to a 40 per cent interest in Ladycare Services. The plaintiff said that it was he who had the entitlement to receive 40 per cent of the shares in Ladycare Services and "I was passing my shares on to Wendy". The plaintiff did not have a copy of Eddy McCausland & Walker's letter to which McCormack's letter was a reply. He asserted that "the letter stated that the shares were totally my entitlement but they be transferred to Wendy... to be held in trust".

74 The plaintiff said that he took the company's files in June 1991, partly as a way of putting commercial pressure on the defendant and partly as a means of obtaining information about the sales the company had made. He denied that the taking of the files had caused a final breakdown of the relationship between the defendant and himself. In re-examination he said that he had taken the files because the defendant refused to discuss the matter of the shares any longer. Taking the files was the only way he could see of making the defendant sit down and talk with him.

75 As regards the taking of the company's cheques, he said "we had a verbal agreement with Jimmy Shea and he told us that if we wanted money to go out and get it, which we did, we called on the customers and collected cheques". It was pointed out that no such assertion had been made in the plaintiff's affidavit and that it would have been important for the plaintiff to say, if it was true, that the company had through its director Mr Shea consented to the plaintiff taking the company's money.

76 Although he had denied that his taking of the company's files had caused the final breakdown of his relationship with the defendant, the plaintiff accepted that any dealings with the defendant in July 1991 were "through the vehicle of your wife". The plaintiff wanted to bring legal proceedings against the defendant but had no money for such proceedings. Wendy Miller had shown him the two letters of 29 July 1991, before they were sent to the defendant. The plaintiff said that he had "breezed through" the letters but later admitted that he had read them. He told his wife that he thought she was wasting her time in writing the letters. He said to his wife "do what you like, because I am fed up with this guy". He agreed that he had not said to his wife words to the effect "listen Wendy this is my 40 per cent equity in this company. I don't want you offering any deals in relation to it". He did not tell his wife that the shares she was referring to in her letters were not her shares but his. The plaintiff was cross-examined about the assertion in one of the letters that "David and I are both gainfully employed, therefore please do not worry about that aspect" and said that "we actually had jobs again".

77 The plaintiff was asked a number of questions about the meeting on 16 August 1991 and the signing of the deed of release. He denied that Mr McGonigal had been present. He denied that as at 16 August he still had solicitors acting for him. He had "finished" with Eddy McCausland & Walker, after having been advised by that firm that they could not take court proceedings which the plaintiff and his wife were financially unable to support. He denied that he was "happy to get $25,000 and disengage himself from Mr Shea". He asserted that the witness to the deed was "the guy serving in the coffee shop". He was asked whether he had been under any pressure to sign the document and he said "I wasn't personally except for my wife Wendy" and "she was really quite sick". He denied that he had gone to a hotel after the document was signed.

Wendy Miller's Oral Evidence

78 Wendy Miller gave brief oral evidence in chief. She was asked what had happened after the deed of release was signed and she replied:-

"We walked up the street, which was where our car was parked, on the other side, and we went home. Jimmy did ask us to go in for a drink but we didn't. It wasn't the most pleasant of circumstances and David was very aggravated and I was extremely upset, so I was in no condition to socialise, quite frankly, so we got in the car and we drove and we went to the National Bank at Mosman and then we went home...we were desperate for money at that stage...we were supposed to put it in the Westpac bank but we were quite concerned, if we did, the Westpac bank would take the whole $25,000 for the home payments and we needed money - I mean the people in the local area had been very good to us".

79 She said that the electricity and telephone services had been cut off a number of times for non-payment of accounts. She had three children who were still attending school. During 1991 the household of herself and the plaintiff had not received any income, other than what had been received from the defendant, "until we both went back to work and got jobs".

80 In cross-examination Wendy Miller was asked about the assertion in one of her letters of 29 July 1991 that she was by that time "gainfully employed". She said that in June or July 1991 she had started working for a company on a commission only basis.

81 Wendy Miller asserted that the plaintiff had wanted to commence legal proceedings against the defendant earlier but that it had been difficult for her to have court proceedings brought, because James Shea was her brother, "emotionally she was not up to court proceedings" and she had no money.

82 Wendy Miller confirmed that the relationship between her husband and her brother was bad. She said that the defendant had tried to stop her marrying the plaintiff, that the defendant and her first husband had been good friends and that the defendant had been upset about her divorce, more so than either her first husband or herself.

83 During cross-examination Wendy Miller insisted that the agreement for Ladycare Services had always been an agreement between the plaintiff and the defendant. She said "the agreement was always between David and Jimmy", even though she had been a participant in a number of the conversations. She said that "the agreement was always that David was to get 40 per cent of the business... the only time that it ever became apparent that the shares were going to be put into my name was when Jimmy didn't feel comfortable putting them into David's name, because he still had this six monthly agreement with Rentokil and Jimmy didn't feel comfortable about that and David suggested, `if you're not comfortable putting them into my name, put them into Wendy's name. I don't care'". She denied that it was part of the agreement that no transfer of 40 per cent of the shares was to take place, "unless and until Jimmy had recouped his initial investment from the funds available in the business". Under the agreement "we were to be paid $5,000 per month for the first twelve months of the business". It was put to her that the transfer of the shares was to be for her own personal benefit and she replied "no".

84 The following questions and answers occurred in her cross-examination:-

"Q. What I suggest to you is that that was always the deal, that Jimmy was to recoup his initial investment?

A. Well I guess it was yes.

Q. And he was to recoup his initial investment, before you would obtain any shares in the company?

A. No. The original agreement was not that".

85 Later she was asked:

"Even if you got the 40 per cent of the business and that 40 per cent was sold, you would have to account to Jimmy out of that sum for his capital injection?" and she replied "All right".

86 By the time Wendy Miller wrote her letters of 29 July 1991 "it was getting to the desperation stage... David and I just wanted to get out of it, because it was causing us a lot of distress".

87 Wendy Miller denied that in the beginning the defendant had said words to the effect "I'm only doing this for you Wendy". The defendant had said that "later on when things got very heated".

88 Wendy Miller reaffirmed that "the initial agreement was that the shares were to be assigned to David... I only came into the picture with the 40 per cent, when Jimmy wasn't comfortable to put the shares into David's name". The agreement was "between Jimmy and David, not me". It was agreed that the shares would be transferred to Wendy Miller, "when things were starting to get very messy". Even that agreement had been made between the plaintiff and the defendant.

89 Wendy Miller denied having lunch with the defendant on Friday 2 August 1991, as the defendant asserted she had. She said:-

"We didn't have lunch; we weren't going to ever have lunch. He said, `come in and we'll discuss it'. There was never a mention of having lunch, so we did meet - or I went into the office, David drove me and I really believed we were going to sit down and discuss the terms of the letter that I sent and hopefully come to some sort of agreement and that day, when I arrived, Jimmy met me at the top of the stairs and said he didn't want me on the premises any more and that there was no point in discussing any more and my things were in a box and James (the defendant's son) would take them down to the car for me and he didn't want me on the premises any more and there was never a discussion, there was never a meeting".

90 By August 1991 her "overriding concern was merely to get out of this company and its affairs". She was cross-examined about a telephone conversation she had had with the defendant. She agreed that she had told the defendant that she did not want any more upsets in the family and that she had said that the only way was "to separate and not have anything further to do with the company". She said "Jimmy, if it is not going to work, why don't we part company with dignity?" She also said to the defendant "do the right thing for us and we will call it quits... we will walk away". Wendy Miller added in her evidence "I honestly thought he would be pleased that we were out of the company as well and he would do the right thing by us and pay us out". She denied that she had said to the defendant that she would "walk away" for $25,000.

91 Wendy Miller said that she had another conversation with the defendant, which she said must have occurred on 16 August but was probably the day before. She said that during this conversation the following things were said. She said "Jimmy we need, you know, you've got to help me out here. We are absolutely sinking". The defendant said "well, what do you need to get out of your initial trouble, your initial debt?" Wendy Miller said "around you know $25,000 should see us out of our initial debt".

92 Wendy Miller was cross-examined about the signing of the deed of release. She said that she did not know Mr McGonigal and denied that Mr McGonigal had been there. She said that there had been no one else in the coffee shop, apart from the staff of the coffee shop. She thought that the deed of release had been witnessed by the person serving coffee. When shown Mr McGonigal's affidavit, she was prepared to concede that the signature on the affidavit and the signature of the witness on the deed of release "looked very much the same". She described the circumstances as follows:-

"We were merely to go in there, so Jimmy could give us a cheque to get us over our immediate financial problems and we got in there, he had this letter there, and unless I signed the letter, he wasn't going to give us any money".

93 Wendy Miller conceded in cross-examination that she read the deed of release, understood the general effect of the deed of release, signed the deed of release and accepted the cheque. As regards the plaintiff she said "David didn't want to sign the document... he was really very annoyed, furious when we got in there and he was confronted with the document". Wendy Miller had said to the plaintiff "let's just sign and get the money because we need the money".

94 In cross-examination Wendy Miller denied that she had been aware that if she had a claim to shares in Ladycare Services her claim would have been part of her property vesting in the trustee of her bankrupt estate.

95 As regards the alleged obligation of the defendant to make periodical payments of $5,000 per month, Wendy Miller said "it wasn't me being paid $5,000 a month; it was for both of us to be in the business... I was coming in on a very casual basis at that time, because at the very beginning of Ladycare Services I still had dealings doing Wendy Miller Enterprises. It didn't happen until late 1990/1991 that I came in and started selling Ladycare Services".

Defendant's Oral Evidence

96 The defendant gave oral evidence in chief about entries in a diary which he said he had kept. The diary was a 1985 diary but the defendant said he had used it for the year 1991, when the days were the same as they had been in 1985. The diary contains a number of entries purportedly recording dealings between the defendant and either the plaintiff or Wendy Miller. The entry for Friday 2 August 1991 is as follows:-

"1pm. Had lunch with Wendy. All went very well. She said that she didn't want anything from the business. I said that I wanted to pay her something & that her and David should talk about it & get back to me with a realistic figer. All finished well & both were happy with our meeting. Left aprox 3.15.

PS. Wendy said they had offers for the bus. of around $80,000".

97 The defendant said in his evidence in chief about the lunch on 2 August 1991:-

"It was a very happy and congenial lunch and Wendy actually said to me `I'm just happy to be out of the business and David and I are all right and we don't want anything from the business.'"

98 Another entry in the diary, an entry for Sunday 4 August, was in the following terms:-

"9. pm Phone call Wendy saying her & David had meeting & they wanted the 40% share signed over to them. I said that I would not do that on any acount. Phone call lasted about ¾ hr. She said offers around $60,000? I told Wendy to phone at office if they change their mind."

99 The defendant was cross-examined about the diary and the entries in the diary. There are very few entries in the diary, apart from the entries relating to the plaintiff or Wendy Miller. There was no entry in the diary between 5 August (the date of the last entry relating to the plaintiff or Wendy Miller) and the end of the year, apart from one brief entry on 2 September, which related to an insurance matter. The defendant said "I'm not a terribly good diary keeper but most important things I keep in it". Later he said "I don't enter a lot into a diary of that type". He said nothing had happened between 5 August and 31 December, apart from the solitary happening on 2 September, which was important enough for him to make an entry in the diary. The defendant could not recall whether he had kept a diary in the previous year 1990. Any such diary might be at his office but "I'm not saying it is".

100 The entries in the diary all have a similar appearance. The following questions and answers occurred in cross-examination of the defendant:-

"Q. Would you have a look at the entries and I would like to refer you to the way in which they are put in and the pen in which they are put in and now try and remember whether or not you put them all in at the same time?

A. No...

Q. Were these entries in the diary put in by you in late 1995 after you received the statement of claim in these proceedings?

A. No I would say not".

101 The defendant accepted that there had been other conversations with the plaintiff or Wendy Miller, which had not been recorded in the diary. For example, the defendant had not recorded any conversation with Wendy Miller concerning the payment of $25,000. The defendant accepted that that would have been an important conversation and should have been recorded in the diary but had not been so recorded.

102 On 2 May 1991 the defendant had had a meeting with Mr Crosby, the managing director of Rentokil, in which discussions had taken place with a view to avoiding further court hearings in the proceedings brought by Rentokil. The only entry the defendant made in his diary was to record Mr Crosby's name "Mr Bill Crosby". There are in fact no summaries of any conversations in the diary, apart from the summaries of certain of the conversations between the defendant and either the plaintiff or Wendy Miller.

103 The defendant agreed that the plaintiff had been employed by Rentokil and that he had been managing a branch of Rentokil's business providing sanitary disposal and hygienic services. The defendant accepted that the plaintiff's function in the joint venture was to start Ladycare Services, to manage Ladycare Services and to make Ladycare Services grow. The plaintiff was to "totally run the business". The following questions and answers occurred in the defendant's cross-examination.

"Q. What was the deal for David Miller then, what was he going to get out of leaving his job with Rentokil and going to work for Ladycare Services, what was in it for him?

A. I think that arrangement and I didn't go into this.. would have been between him and his wife.

* * *

A. I am saying the shares were Wendy's but the arrangements between Wendy and David was their own affair not mine."

104 Later in the cross-examination the following question and answer occurred:-

"Q. Are you saying that David Miller, who you accepted at the time had expertise in this kind of business and who was the person that was being engaged to manage the business, who was going to start work giving up the career that he had... on the basis that he was not going to be paid a salary, he was not going to be paid commission, he was not going to be paid any money or get any shares or interest in the business, he was just going to be there. Is that the arrangement you say you understood he had with you...?

A. Absolutely."

105 The defendant denied that he had incurred any obligation to pay money to the plaintiff or Wendy Miller. The plaintiff's remuneration was to have come out of the 40 per cent of the shares in Ladycare Services that Wendy Miller would eventually have got and what he personally received would depend on what agreement he had with Wendy Miller.

106 The defendant was asked "what were they (the plaintiff and his wife) going to live on?" and the defendant replied "I don't really know that that was my problem".

107 The defendant was asked "so the income that the Miller family had prior to that (that is prior to the plaintiff giving up his job at Rentokil) would be non-existent?" to which the defendant replied "I would not know that".

108 The defendant agreed that he had not given the plaintiff or Wendy Miller any warning that he would be taking a deed of release to the meeting on 16 August 1991. The defendant was cross-examined about what he knew of Mr and Mrs Miller's financial position in August 1991. The following questions and answers occurred:-

"Q. At the time you knew the Millers were broke, didn't you?

A. I cannot say that I did know. I did not look after their finances, I don't know.

Q. You believed they were broke, didn't you?

A. I cannot say that I had much thought about it, to be honest.

Q. Had you thought about how they had lived over the past twelve months?

A. It had concerned me because Wendy had asked me for some advances from time to time.

Q. You knew they were desperate for money in August 1991 didn't you?

A. I don't know how you define desperate.

...

Q. You knew they were desperately in need of money to pay some bills didn't you?

A. I would say no.

Q. Wendy had told you that they were in desperate need of money to pay bills didn't she?

A. No".

109 The defendant denied that Wendy Miller had told him that her family was in desperate need of money and that she needed $25,000 to cover immediate bills. The defendant said that he did not know "until some time later" that Mr and Mrs Miller had a mortgage on their house, even though he knew at some stage that a Mr and Mrs Sykes (Mrs Sykes was a sister of the defendant and Wendy Miller) had guaranteed the mortgage on the Miller's house. The defendant was cross-examined about the passage in one of Wendy Miller's letters of 29 July 1991 in which she had said "to ensure my family does not have to carry on with the heartache, poor health and financial difficulties that we have endured". The defendant said that he had read that letter "but I really didn't know or think too much of financial difficulties really". The defendant accepted that he had made a number of payments to Wendy Miller, after receiving requests from her for money. He had not asked the plaintiff why he had taken the step of cashing a cheque for $4,000, saying "do you ask a bank robber why they rob a bank".

110 After this survey of some of the evidence of the three principal witnesses, it is appropriate that I make some findings about the credibility of these witnesses. In my opinion, none of the three principal witnesses was a fully reliable witness. Each of the plaintiff and the defendant displayed a marked antipathy for the other and this antipathy affected their evidence. Each of the plaintiff and the defendant gave a number of pieces of evidence which I am satisfied were clearly untrue. For example, the plaintiff denied that his taking of the company's files in June 1991 had caused the final breakdown of the relationship between the defendant and himself, the plaintiff said that the defendant had consented in advance to the plaintiff taking Ladycare Services' cheques and the plaintiff said that the deed of release was witnessed by someone serving in the coffee shop. On the other hand, the defendant claimed not to know that from October 1990 the plaintiff would have ceased receiving the income he had been receiving when he was employed by Rentokil and claimed not to know that the plaintiff and his wife had a mortgage on their house. Wendy Miller also gave some evidence which was clearly untrue. For example, like her husband she said that she thought that the deed of release had been witnessed by a person serving in the coffee shop.

111 Each of the three principal witnesses had fixed and strongly expressed opinions on some matters on which I have to reach a conclusion, for example who were the parties to the agreement which was made in or about June or July 1990 and who was the person to whom 40 per cent of the shares in Ladycare Services were to be transferred or at least who was the person who was to be beneficially entitled to those shares. The views expressed by each of the principal witnesses on such matters were expressed quite dogmatically, were in accordance with the interests of that witness in the outcome of the proceedings and are, in my opinion, of limited assistance to me.

112 In a case where there is conflicting oral evidence about events which occurred several years ago, a judge usually finds it of assistance to have regard to contemporaneous documents. However, in the present case the authenticity of some apparently contemporaneous documents, as being genuinely contemporaneous, was challenged, including the plaintiff's letter of 11 September 1990, which the defendant denied receiving, and the entries made by the defendant in what he said was his 1991 diary. I do not consider that I can place much weight on either the plaintiff's letter or the defendant's diary entries. The letter of 11 September 1990 is a highly convenient letter for the plaintiff to have written in the course of negotiations which were otherwise conducted wholly orally. The entries by the defendant in what he said was his 1991 diary were attacked by counsel for the plaintiff as being "reconstructed concoctions". It is at least suspicious that among the very few entries made by the defendant in the diary are detailed, self-serving accounts of some only of the meetings or communications the defendant had with the plaintiff or Wendy Miller. The defendant was quite markedly unimpressive, both in the terms of his answers and in his demeanour, when being cross-examined about the diary.

113 I will now proceed to deal in turn with the issues which earlier in this judgment I said arose from the pleadings.

1. Who were the Parties to the Agreement

114 As previously stated, it is clear that the party on one side of the agreement was the defendant, James Shea. The defendant's wife, Mrs Jan Shea, did not actively participate in the discussions which led to the setting up of the business or in the carrying on of the business. In my opinion, there is no comparison between her position and that of Wendy Miller.

115 The principal witnesses gave conflicting evidence about who was the party, or who were the parties, on the other side of the agreement. Each of the plaintiff and Wendy Miller gave evidence to the effect that the agreement had at all times been an agreement between the plaintiff and the defendant. The late amendment to the statement of claim, alleging, in the alternative, that Wendy Miller had also been a party to the agreement, was sought, only in case the Court found, contrary to the evidence of the plaintiff and Wendy Miller, that Wendy Miller had been a party to the agreement. As previously observed, the position adopted by the plaintiff and Wendy Miller, that Wendy Miller had not been a party to the agreement, had advantages for the plaintiff and Wendy Miller, connected with the deed of release and Wendy Miller's bankruptcy. The defendant maintained in his evidence that the only party on the other side of the agreement was his sister Wendy Miller.

116 In my opinion, Wendy Miller was at least one party to the agreement. A telling piece of evidence against the plaintiff is his own evidence that, having (according to him) been handed by the defendant a document setting out an agreement the defendant had previously entered into in an earlier, unrelated venture and having been invited by the defendant to amend the document so that the amended document would constitute the agreement for the new business, the plaintiff altered the document by deleting the name of a party to the previous agreement and substituting in his own handwriting "Wendy Miller Enterprises", a business name of which Wendy Miller was the sole proprietor and in which the plaintiff had no interest.

117 The terms of the letters written by Wendy Miller to the defendant on 29 July 1991, which were read by the plaintiff before they were sent and which were not the subject of any objection by the plaintiff, are consistent only with a view that Wendy Miller, at least by the time the letters were written (and, in my opinion, originally as well) was a party to the agreement and would indeed lend some support to a view that she and the defendant were the only parties to the agreement.

118 I have, however, reached the conclusion that David Miller did become a party to the agreement for the new business. He was the only person with expertise in the line of business which was to be undertaken in the new venture. After the initial contact between Wendy Miller and the defendant, David Miller participated and took a leading part in all the discussions about the venture. Under the agreement which was arrived at he assumed the obligation of devoting himself full-time to managing the affairs of the new company.

119 My conclusion that both the plaintiff and Wendy Miller were parties to the agreement does not determine questions of the extent of their participation in the agreement, including whether certain promises made by the defendant were made to them jointly or only to one of them severally and accordingly whether such promises made by the defendant are enforceable by both of them or only by one of them.

2. To whom were 40 per cent of shares in Ladycare Services to be transferred

120 It was common ground in the evidence that, subject to the fulfilment of any condition precedent (a matter to which I will return later in this judgment) the defendant was to cause 40 per cent of the shares in Ladycare Services to be transferred. The issues to be decided are whether the shares were to be transferred to David Miller or Wendy Miller or both of them and if the shares were to be transferred to Wendy Miller, whether they were to be transferred to her in her own right or merely as a nominee of David Miller.

121 It was contended on behalf of the plaintiff that it should be inferred that the plaintiff would not have abandoned his job at Rentokil and assumed the heavy responsibility of managing the business of the new company, except on the basis that he was to receive some personal benefit. It was contended on behalf of the defendant that the defendant had made it clear at the outset that he was "only doing this for you Wendy" and what benefit the plaintiff would personally receive would depend on what private arrangement was made between the plaintiff and his wife in relation to the 40 per cent of the shares in Ladycare Services she was to receive.

122 In my opinion, it is clear that the person to whom 40 per cent of the shares were to be transferred was Wendy Miller. The plaintiff gave evidence that the shares were originally to be transferred to him but even he said that at about the end of March 1991 he had agreed that the 40 per cent of the shares in Ladycare Services could be transferred to Wendy Miller. It is clear from the defendants solicitor's letter of 19 July 1991, a copy of which was annexed to the plaintiff's own affidavit, that the demand made in July 1991 by Eddy McCausland & Walker, the solicitors acting for Mr and Mrs Miller, was that 40 per cent of the shares in Ladycare Services be issued or transferred to Mrs Miller. The letters written by Wendy Miller on 29 July 1991 are clear in their terms. Para 1 of the second letter reads:-

"1. Shares to be assigned as agreed, to Wendy Miller equal to 40 per cent of the business".

123 In the second letter Wendy Miller says "you will also be aware that I (my emphasis) can only negotiate 40 per cent of the business with interested parties". The plaintiff read Wendy Miller's letters of 29 July 1991, before they were sent to the defendant and he did not make any complaint or objection that the shares in Ladycare Services were "his", and not Wendy Miller's, or that it was beyond the power of Wendy Miller to negotiate for a sale of the interest she claimed in Ladycare Services.

124 The documents prepared on behalf of the defendant in July and August 1991 consistently referred to Mrs Miller as being the only person who could have an entitlement to the disputed shares. I have already referred to the letter from the defendant's solicitors of 19 July 1991. In the draft minutes of the meeting of Ladycare Services to be held on 18 July 1991 (a document annexed to the plaintiff's affidavit), it is "Mrs Miller's entitlement to a 40 per cent interest in the company" which is acknowledged. In the deed of release of 16 August 1991 it is Mrs Miller's claim to be entitled to the ownership of shares in Ladycare Services which is recited.

125 I conclude that under the agreement, both initially or even if not initially then from about March 1991, the person to whom 40 per cent of the shares in Ladycare Services were to be transferred was Mrs Miller and Mrs Miller in her own right, not as a nominee of the plaintiff.

3. To whom was the promise made by the defendant to transfer 40 per cent of the shares and could the promise be enforced by the sole plaintiff, Mr Miller

126 My findings that Mr Miller was a party to the agreement and that the shares were to be transferred to Mrs Miller do not decide this issue. The promise to transfer 40 per cent of the shares in Ladycare Services to Mrs Miller could have been a promise made only to Mrs Miller, notwithstanding that Mr Miller was also a party to the agreement, or could have been a promise made to Mr Miller and Mrs Miller jointly. I do not consider that it could be regarded as having been a promise made only to Mr Miller, particularly in the light of the various documents brought into existence in July or August 1991.

127 If the promise was made only to Mrs Miller, then only she could enforce the promise and she would have to be joined as a party in any proceedings to enforce the promise. Mrs Miller was never joined as a party in the present proceedings, notwithstanding remarks made by me in the course of the hearing that difficulties could arise from the non-joinder of Mrs Miller. It may be that the decision not to join Mrs Miller was influenced by the consideration that, as was conceded by counsel for the plaintiff, any claim she had under the agreement would have vested in her trustee in bankruptcy and would have remained vested in her trustee in bankruptcy, notwithstanding her subsequent discharge.

128 In my opinion, the promise to transfer 40 per cent of the shares in Ladycare Services to Mrs Miller was a promise made to her alone, which only she could enforce. As I have held, Mrs Miller was the only person who was to receive the shares and she was to receive the shares in her own right. Mrs Miller's letters of 29 July 1991, which the plaintiff read and of which the plaintiff did not disapprove, strongly indicate that the only parties to the promise to transfer 40 per cent of the shares in Ladycare Services were the defendant as promissor and Mrs Miller as promisee. Accordingly, I conclude that the present proceedings for damages for breach of the promise to transfer 40 per cent of the shares must fail, on the simple ground that Mr Miller cannot enforce a promise made to someone else, even if that other person is his wife.

129 If, contrary to the conclusion I have just reached, the promise to transfer shares in Ladycare Services to Mrs Miller was made to Mr Miller and Mrs Miller jointly, the question would arise whether Mr Miller could enforce such a promise and obtain a substantive award of damages for breach of such a promise, without Mrs Miller having being joined as a party to the proceedings.

130 Pt8 r3 of the Supreme Court Rules provides in part that where a plaintiff claims relief to which any other person is entitled jointly with him, all persons so entitled shall be parties to the action. The rule is expressed to be subject to s62 of the Bankruptcy Act, which provides that where a bankrupt is a contractor in respect of a contract jointly with another person or other persons, that person or those persons may sue or be sued in respect of the contract without the joinder of the bankrupt. Counsel for the plaintiff sought to rely on s62 of the Bankruptcy Act as justifying the non-joinder of Mrs Miller.

131 I was not referred to any authority on s62 of the Bankruptcy Act and the extent of its operation is not clear. For example, it is unclear whether it applies to a contract entered into by a person before he or she became a bankrupt and whether it continues to apply after a person has ceased to be a bankrupt.

132 However, whatever the extent of the operation of s62 of the Bankruptcy Act and notwithstanding the provision in the Supreme Court Rules (Pt8 r7) that proceedings shall not be defeated by reason of the non-joinder of any person as a party, I do not consider that, even if the promise to transfer the shares was made to the plaintiff and Mrs Miller jointly, the plaintiff can enforce the promise and obtain substantive damages for breach of the promise, where he is not the person who under the agreement would have received the benefit of the promise if it had been performed, and the person who under the agreement would have received the benefit of the promise, if it had been performed, has subsequently become bankrupt, with the consequence that that person's claim to enforce the promise became and has remained vested in her trustee in bankruptcy.

133 I am accordingly of the opinion that whether the promise to transfer 40 per cent of the shares in Ladycare Services was made to Mrs Miller solely or to Mr Miller and Mrs Miller jointly, the present proceedings brought by Mr Miller alone must fail.

134 Although I have decided that for the reasons I have just given the present proceedings must fail, I will proceed to deal with other issues which arose.

4. What were the conditions which had to be fulfilled before an obligation arose to transfer 40 per cent of the shares in Ladycare Services and were those conditions fulfilled.

135 The plaintiff gave evidence that the shares were to be transferred after six months, either six months after Ladycare Services commenced carrying on business or six months after the termination of his employment by Rentokil. Whether the period of six months was calculated from the date of Ladycare Services commencing to carry on business or from the date of the plaintiff's employment by Rentokil being terminated, the period would have expired by the end of March 1991 or by the beginning of April 1991.

136 The defendant gave evidence that the obligation to transfer 40 per cent of the shares in Ladycare Services would arise, only after Ladycare Services had attained "profit maturity" and had repaid to the defendant out of its reserves the full amount of the initial capital injection by the defendant and that this condition had not been fulfilled by August 1991. The defendant said that the plaintiff had assured him in their negotiations that the new company would become self supporting in two months, so that a condition which would defer the transfer of the shares until the new company had reached profit maturity would not have been unduly onerous to the plaintiff or Wendy Miller.

137 I do not consider that I should accept the defendant's evidence on this matter. In the defendant's solicitor's letter of 19 July 1991 and in the draft minutes of the meeting of Ladycare Services to be held on 18 July 1991 the defendant, while acknowledging that Mrs Miller was entitled to 40 per cent of the shares in Ladycare Services, refused to cause 40 per cent of the shares in Ladycare Services to be issued or transferred to her. However, the reason given in both the letter and in the draft minutes for the refusal to issue or transfer shares to Mrs Miller was, not that Ladycare Services had not yet attained profit maturity or that any condition precedent had not been fulfilled, but "the current state of things between Mr and Mrs Miller and Mr Shea" or "the conflict having arisen" (between Mr and Mrs Miller and Mr Shea). If it was truly a condition of Mrs Miller becoming entitled to a transfer of 40 per cent of the shares that Ladycare Services should have attained profit maturity and that the defendant should have been repaid out of reserves the full amount of the initial capital injection, then I would have expected that to have been stated in the defendant's solicitor's letter, when the solicitors were replying to a demand that 40 per cent of the shares in Ladycare Services be transferred to Mrs Miller.

138 In my opinion, any conditions which had to be fulfilled before an obligation arose to transfer 40 per cent of the shares in Ladycare Services had been fulfilled by July 1991. I consider that I should proceed on the basis, which was the basis contended for by the plaintiff, that the promise had become absolute by April 1991 and that the defendant, by not transferring the shares, had committed a breach of his promise in April 1991.

5. On the true construction of the deed of release did the deed of release bar claims only by Wendy Miller (as alleged by the plaintiff) or claims by both David Miller and Wendy Miller (as alleged by the defendant).

139 The plaintiff accepted that the deed of release, if valid, barred any claim by Mrs Miller to shares in Ladycare Services. However, it was submitted on behalf of the plaintiff that the deed of release, properly construed, did not bar claims by Mr Miller to shares in Ladycare Services. Of course, such a submission would not really assist the plaintiff, if, as I have held, the only person who had a claim to shares in Ladycare Services was Mrs Miller. The argument advanced on behalf of the plaintiff was that the operative clauses in a release can be limited by the recitals; that in the present case the only recital of a claim to ownership of shares in Ladycare Services was recital C, which referred only to a claim by Wendy Miller; and that consequently the general words in the first operative clause of the deed should be read down so as not to bar a claim by David Miller to ownership of shares in Ladycare Services.

140 I do not consider that this submission should be accepted. The deed of release is a short, simple document. Recital E provided that the parties to the deed, that is the plaintiff, Wendy Miller and the defendant, had agreed to settle all disputes between them and the first operative clause provided that David Miller and Wendy Miller release Ladycare Services and the defendant from all claims against Ladycare Services or the defendant. I do not consider that the general words in recital E and the general words in the first operative clause should be read down by reference to recital C. In my opinion, the deed of release on its true construction barred all claims by David Miller or Wendy Miller. If the deed of release cannot be invalidated, the deed of release is a complete defence to all claims made in the present proceedings.

6. Was the deed of release "vitiated" by economic duress and unconscionable conduct on the part of the defendant.

141 Counsel for the plaintiff referred to Equiticorp Finance Limited (in liquidation) v Bank of New Zealand (1993) 32 NSWLR 50. In Equiticorp Clarke JA and Cripps JA referred with approval at 149-150 to what McHugh JA said in Crescendo Management Pty Limited v Westpac Banking Corporation (1988) 19 NSWLR 40 at 45-56, where his Honour said:-

"A person who is the subject of duress usually knows only too well what he is doing. But he chooses to submit to the demand or pressure rather than take an alternative course of action. A proper approach in my opinion is to ask whether any applied pressure induced the victim to enter into the contract and then ask whether that pressure went beyond what the law is prepared to countenance as legitimate? Pressure will be illegitimate if it consists of unlawful threats or amounts to unconscionable conduct. But the categories are not closed. Even overwhelming pressure, not amounting to unconscionable or unlawful conduct, however, will not necessarily constitute economic duress".

142 I have already earlier in this judgment summarised the particulars the plaintiff supplied of the claim that the deed of release was invalidated by economic duress. It was submitted by counsel for the plaintiff that all of those particulars had been established by the evidence.

143 I consider that I should find that in August 1991 the plaintiff and Wendy Miller were in financial difficulty. Their household consisted of themselves and three school age children. During the first half of 1991 both had worked full-time in the business of Ladycare Services, Wendy Miller having ceased to carry on her own business, and the only remuneration they had received consisted of the sporadic payments made by the defendant to Wendy Miller. The plaintiff had not personally received any remuneration since ceasing to work for Rentokil in September 1990.

144 I am also satisfied that I should find that the defendant was aware that the plaintiff and Wendy Miller were in financial difficulty. The defendant denied being aware of this or even that the plaintiff and his wife had a mortgage on their home but I am satisfied that these parts of his evidence were untrue. The defendant would have been aware that the plaintiff and Wendy Miller had been working full-time in the business for many months without remuneration, except that the defendant had, at intervals and in response to requests by Wendy Miller for money, made sporadic payments to her.

145 I am also satisfied that the plaintiff and Wendy Miller were given no warning about the deed of release, which the defendant had had his solicitors prepare. At the meeting at the coffee shop the plaintiff and Wendy Miller were confronted with the deed of release and presented by the defendant with the choice of signing the deed of release or not receiving the $25,000. No opportunity was given to them to negotiate or to obtain legal advice.

146 What I have said so far would indicate a case for the plaintiff that the deed of release was vitiated by economic duress. I have, however, reached a conclusion that economic duress has not been established.

147 Although I have found that the plaintiff and Wendy Miller were in financial difficulty, I do not accept that the evidence establishes that in August 1991 they were in "dire financial straits". As counsel for the defendant submitted, the oral evidence of the plaintiff and Wendy Miller was vague and not supported by any documents. The defendant had between 2 November 1990 and 27 June 1991 made the payments to Wendy Miller which he listed in his affidavit. Wendy Miller's first husband had made some contribution to the expenses of her children. Notwithstanding the plaintiff and Wendy Miller's expressed concern about Westpac appropriating the sum of $25,000 for mortgage payments, Westpac did not appropriate any part of the $25,000, when it was deposited into a Westpac account within a couple of days of 16 August 1991. The proceedings by American Express on which Wendy Miller was made bankrupt were not commenced until more than a year after August 1991. In one of her letters of 29 July 1991 to the defendant Wendy Miller said "David and I are both now gainfully employed therefore please do not worry about that aspect" and it was in fact true that both the plaintiff and Wendy Miller had obtained other employment. Although I have held that the defendant was aware that the plaintiff and Wendy Miller were in financial difficulty, the defendant would have believed, reasonably, that the plaintiff and Wendy Miller had both found other employment.

148 Although Wendy Miller denied it, I consider it probable that in a telephone conversation or conversations with the defendant in August 1991 there was discussion between her and the defendant regarding the payment of a sum of money by the defendant not, or not merely, as a fund for paying the immediate debts of the plaintiff and Wendy Miller but as a consideration for Wendy Miller relinquishing any interest in Ladycare Services. Wendy Miller had been making apparently unsuccessful attempts in June and July 1991 to find a purchaser of the company's business or of the shares in the company or the shares in the company to which she claimed to be entitled. Wendy Miller agreed that by August 1991 her "overriding concern was merely to get out of the company and its affairs". She agreed that in a telephone conversation with the defendant she had said that the only way was "to separate and not have anything further to do with the company". She had said to the defendant "Jimmy, if it is not going to work, why don't we part company with dignity?" She had said to the defendant "do the right thing for us and we will call it quits... we will walk away".

149 The plaintiff and Wendy Miller are incorrect in at least one part of their recollection of what happened at the coffee shop, in saying the deed of release was witnessed by a person serving in the coffee shop. It is clear that Mr McGonigal's initials appear on the document and I consider that I should accept his evidence that he was at the coffee shop and that he witnessed the signatures of the parties to the document and that, so far as he could see, "no person gave the appearance of signing under duress". On the other hand, I have serious reservations about whether Mr Hindmarsh had any real recollection of the events he referred to in his affidavit and I would place no weight on his evidence.

150 The sole plaintiff in the present proceedings is Mr Miller. Mr Miller gave evidence that he personally did not feel any pressure to sign the deed of release, although he was concerned about his wife who was distressed and upset.

151 The defendant gave evidence that on 16 August 1991, after the deed of release had been signed, David Miller had handed him Mr Aitkens' "valuation" letter, saying "you might as well take this, as it is of no use to me". Mr Aitkens' letter is addressed to Mr Miller and no other explanation has been offered of how it came to be in the defendant's possession. In the absence of any other explanation, I consider that I should accept the defendant's evidence about how he got the document and this explanation is inconsistent with what the plaintiff and Wendy Miller say was the tone of the meeting.

152 I have concluded that although the plaintiff and Wendy Miller had had no warning that they would have to sign a deed of release, they were willing to give up such rights as they had in consideration of payment of sum of $25,000. I consider that their present recollection of the circumstances surrounding the execution of the deed of release may be coloured by their awareness of how Ladycare Services has prospered in the years since the deed of release was signed.

153 In my opinion economic duress has not been established.

7. If an obligation on the defendant to transfer 40 per cent of the shares in Ladycare Services had crystallised and had not been performed and damages amounting to the value of 40 per cent of the shares in Ladycare Services were to be assessed, should the value of the shares be determined as at the date of the defendant's breach of contract (which on the plaintiff's case was in about April 1991) or as of now and what, at the appropriate time, was or is the value of 40 per cent of the shares in Ladycare Services.

154 If the promise to transfer 40 per cent of the shares in Ladycare Services was enforceable by the plaintiff and if, as I have found, the conditions for the performance of that promise were fulfilled and if the plaintiff was not bound by the deed of release, then the question would arise of what damages the plaintiff would be entitled to for breach of the defendant's promise.

155 Counsel for the plaintiff submitted that the plaintiff was entitled to have damages assessed at the current value of 40 per cent of the shares in Ladycare Services. The plaintiff relied on a valuation by a chartered accountant, Mr Jugmans, dated 29 or 30 July 1998, in which Mr Jugmans calculated the value of 40 per cent of the shares in Ladycare Services as being between $1,415,000 and $1,540,000. At the beginning of his report Mr Jugmans recorded that his instructions had been "to provide our opinion as to the value of the equity in the company Ladycare Services...as at the most recent possible date" and it is clear that Mr Jugmans' valuation was intended to be a current valuation. It was submitted by counsel for the plaintiff that it was appropriate to assess damages at the current value of 40 per cent of the shares in Ladycare Services, because "the plaintiff if successful is entitled to an asset but is not given that asset. The asset, albeit changed, still exists and has a current day value".

156 The defendant adduced a report by Mr Brian James, a chartered accountant, in which Mr James noted that his instructions had been to review and comment on Mr Jugmans's valuation and in his report Mr James dealt with Mr Jugmans's report as being a current valuation of shares in Ladycare Services.

157 However, while relying on Mr James's report in the event of the Court holding that damages should be assessed at the current value of shares in Ladycare Services, counsel for the defendant submitted that damages should be assessed as at the date when the breach of contract had occurred and that, accordingly, if the plaintiff's contention about the date when the breach of contract had occurred was accepted, what had to be determined was the value of 40 per cent of the shares in Ladycare Services as at April 1991.

158 In Johnson v Perez (19988-89) [1988] HCA 64; 166 CLR 351 Mason CJ said at 355-6:-

"There is a general rule that damages for torts or breach of contract are assessed as at the date of breach or when the cause of action arises. But this rule is not universal; it must give way in particular cases to solutions best adapted to giving an injured plaintiff that amount in damages which will most fairly compensate him for the wrong he has suffered....One established exception to the general rule relates to the assessment of damages for personal injury...The general rule that damages are assessed as at the date of breach or when the cause of action arose has been applied more uniformly in contract than in tort and for good reason. But even in contract cases courts depart from the general rule whenever it is necessary to do so in the interests of justice".

159 I do not consider that in the present case it is necessary in the interest of justice to depart from the general rule. The plaintiff last did any work for Ladycare Services in June 1991. Wendy Miller last did any work for Ladycare Services in August 1991. In August 1991 Wendy Miller was prepared to "walk away from Ladycare Services" and "call it quits". She had been endeavouring to find a purchaser for whatever interest she had in Ladycare Services. The plaintiff waited more than four years before commencing these proceedings, which were commenced on 26 September 1995. Another three years elapsed before the proceedings came on for hearing. In the meantime between 1991 and the present, according to the unchallenged evidence of the defendant, Ladycare Services had been "rebuilt" and transformed and had been rebuilt and transformed as a result of the defendant's efforts. The defendant had changed the method of manufacturing sanitary bins. The defendant had familiarised himself with new technology. The defendant had introduced a computerised operation system. The defendant had expanded the range of products Ladycare Services provided. The defendant had made a number of innovations in the business. The defendant had obtained most of the current clients of the business. The company under the defendant's administration had adapted to the usual form of client contract being radically changed. The company's staff had expanded many times. In my opinion, what has to be determined is the value of 40 per cent of the shares in Ladycare Services as at April 1991. It is accordingly unnecessary for me to resolve the differences of opinion between Mr Jugmans and Mr James concerning how shares in Ladycare Services should currently be valued, although, if I had to do so, I would, for the reasons given by Mr James, prefer his opinions.

160 Mr James was asked how he would value shares in Ladycare Services as at 30 June 1991. Having examined Ladycare Services' accounts for the period from the commencement of business to 30 June 1991 Mr James said:-

"If you were valuing this company at 30 June 1991 in my view the only way you could value this company at that point in time would be on a net asset basis because you can't use maintainable earnings when there hasn't been any history of earnings. At June 1991 the profit for the - the result for the year is a loss of $159,954. Any valuer asked to do a valuation at that point in time would have to approach it on the basis that you have no history of making a profit and the only way that you can value a company that has no history of that is to value it on a net asset basis, what assets you have there and you would have to value Ladycare at 30 June 1991 as worthless because it's actually got more liabilities than assets".

161 Mr James said that this expression of opinion would not be affected by the circumstance that in the period ended 30 June 1991 Ladycare Services had received income in advance for contracts which it had written. He said inter alia:-

"I don't know whether that company in getting into the market place might have done those contracts at a rate that wouldn't enable them to earn a profit and that's not uncommon in a start up situation".

162 Counsel for the plaintiff sought to rely on Mr Aitkens' "valuation" as being some evidence of the value of shares in Ladycare Services as at the date of breach. This letter from Mr Aitken had found its way into evidence as an annexure to one of Mr Shea's affidavits and had not been tendered as being any evidence of the value of shares in Ladycare Services but as going to another issue. Counsel for the defendant expressly disavowed relying on Mr Aitkens' letter as being any evidence of value.

163 I do not consider that I can place any reliance on Mr Aitkens' letter as evidence of the value of shares in Ladycare Services as at April 1991. The letter purports to be a valuation of the "business" conducted by Ladycare Services as a guide to what might be paid for the business on a going concern basis and does not purport to be a valuation of the shares in the company carrying on the business. In fact, what Mr Aitken did in his letter was to attempt to determine the present value as at July 1991 of the estimated adjusted net revenues of Ladycare Services for the period from July 1991 to October 1992. As Mr Jugmans said, "in fact, what he (Mr Aitken) has done is simply pre-value the net revenue of the business for the period from July 1991 to October 1992". In preparing the letter Mr Aitken relied on information supplied by the plaintiff for the company's revenue and expenses and the figures supplied by the plaintiff varied greatly from the actual revenue and expenses of Ladycare Services as recorded in its formal accounts for the period ended 30 June 1991.

164 An attempt was made by counsel for the plaintiff to obtain from Mr Jugmans an off the cuff valuation of 40 per cent of the shares in Ladycare Services which would be based on Mr Aitken's figures. However, in cross-examination Mr Jugmans made it clear that he was not prepared, on the information available to him, to offer any opinion of his own about the value of shares in Ladycare Services as at 30 June 1991 or as at an earlier date such as April 1991.

165 It was submitted on behalf of the plaintiff that since April or June 1991 Ladycare Services had in fact prospered and that "to value something at a particular date it is permissible to take into account what has actually happened since that date". Reference was made to authorities in other areas of the law, such as Bwllfa v Merthyr Dare Stream Colleries (1891) Limited v Pontypridd Waterworks Co (1903) AC 426. However, this submission is contrary to established principle in valuation law. See Spencer v Commonwealth of Australia [1907] HCA 82; (1907) 5 CLR 418.

166 In my opinion, it has not been established that shares in Ladycare Services had any value in April 1991 and accordingly, even if the plaintiff was entitled to a verdict, it would only be for a nominal amount.

8. Had the defendant promised to make monthly payments of $5,000 for twelve months or had the defendant promised only to make a single payment of $5,000 and could such a promise be enforced by the sole plaintiff David Miller.

167 I am satisfied that the promise was to make payments for twelve months but that the promise was a promise made solely to Wendy Miller to pay her $5,000 per month. These conclusions are supported by para 2 of Wendy Miller's second letter of 29 July 1991. Even in the amended statement of claim the promise the plaintiff alleges was made was a promise to pay Wendy Miller and not the plaintiff. The first payment which was made on 2 November 1990 and all of the subsequent payments which were made were made to Wendy Miller and not the plaintiff.

168 As the promise was made solely to Wendy Miller, the promise cannot be enforced in the present proceedings in which David Miller is the sole plaintiff. Even if the promise to make payments to Wendy Miller was a promise made to the plaintiff and Wendy Miller jointly, then in my opinion the promise cannot be enforced so as to produce a substantive award of damages in proceedings in which David Miller is the sole plaintiff, particularly where Wendy Miller's claim (if any) would have become vested in a trustee in bankruptcy.

169 The promise to make payments would be barred by the deed of release unless the deed of release could be invalidated.

170 Even if the plaintiff was entitled to damages, the payments actually made by the defendant would have to be offset against the damages.

171 I hold that this part of the plaintiff's claim also fails.

172 In the proceedings generally there should be verdict for the defendant and the plaintiff should pay the defendant's costs.

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LAST UPDATED: 12/02/1999