Klupfel v Salter[1999] QDC 34

HELD AT BRISBANE

QUEENSLAND

[Before McGill DCJ]

[Klupfel v. Salter]

BETWEEN:

AND:

JUDGMENT

BETWEEN:

AND:

REASONS FOR JUDGMENT - McGILL D.C.J.

Delivered the 11th day of March 1998

By this action the plaintiff seeks to recover the balance of money payable to him by the defendant under a contract between them. The defendant claims that the agreement has been discharged, or in the alternative, seeks to set off against the plaintiff's claim a liability in damages sufficient to extinguish it.

Background

Prior to 1988, the plaintiff leased a Kenworth prime mover which he had obtained in 1985: p. 3. He worked as a sub-contracting driver for Comet, a subsidiary of TNT, hauling a trailer overnight between Brisbane and Mackay, or less frequently, Brisbane and Townsville. Comet operated from a number of different places, and a particular number of drivers would be required to operate a regular run between, for example, Brisbane and Mackay: p. 34. The drivers, who supplied their own prime movers, operated as sub-contractors: p. 35. There was no written contract between the drivers and Comet (p. 31), the drivers being paid separately in respect of each trip completed, on a rate per kilometre travelled: p. 32. The line haul drivers, that is, drivers hauling loaded trailers long distances, as distinct from drivers making pick up and delivery runs, or travelling shorter distances, were on a regular roster, so that Comet would know that a driver would turn up for each of the regular runs, and the drivers would know for some time in advance which runs they were required to undertake: p. 51. The roster of regular drivers was enough to meet Comet's recurring needs: p. 51. Extra drivers if required would be obtained from a pool of casual drivers used from time to time by the TNT group: p. 52. Although there was no written contract with the drivers, the regular drivers had preference for the available work (p. 30) and so long as they were responsible people who appeared when they were required and did the work properly, they were provided with continuous work, provided the work was there: p. 31. The practical effect of this arrangement is that it can provide a regular source of work in the long term for a particular driver; one witness, Mr. Lawson, had been a regular driver with Comet for some 20 years: p. 38. Clearly, however, there was no obligation on Comet to continue to provide work to any particular driver.

Comet management took steps to ensure that anyone who became a regular driver was first informed that, so far as Comet was concerned, there was no goodwill in the position, and no contract of employment: p. 31. Being a regular Comet driver was regarded as a desirable position (p. 55), but this state of affairs was not exploited by Comet, who did not receive any payment when a person became a new regular line haul driver. However, Comet would allow a driver who wished to give up his place on the line haul roster to introduce a replacement who would take over that place: p. 34-35. Comet management would interview the proposed replacement driver, who would be told the details of the arrangement, particularly that there was no written contract and that Comet did not accept that there was any goodwill (p. 31) and he would have to undergo a security check and satisfy Comet management that he was a responsible person: p. 32. This was the ordinary way in which there was a change of personnel in the line haul roster; one witness who had had experience with Comet management, Mr. Harker, could only recall two instances when sub-contractors left the roster without organising replacements. Comet organised replacements, who did not pay Comet anything to go on to the roster: p. 35. It follows that the ordinary way in which one became a regular line haul sub-contractor for Comet was by being introduced to Comet as a person willing to take over the place on the roster of an existing sub-contractor who was willing to give it up.

Because Comet operated its business in this way, the practical effect was that a driver with a place on the line haul roster had, in effect, something to sell, in that such a person could, in return for being paid a sum of money, vacate the roster and introduce to Comet as a replacement the person who paid the money. Such an arrangement would have to be subject to Comet's acceptance of the “purchaser” as a replacement sub-contractor in the roster. Whether the payment being made was properly identified as remuneration for performing the service of giving up the place in the roster and introducing the payer to Comet as a suitable replacement for that position, or as payment for the sale of a place in the Comet line haul sub-contractor roster, viewed as a species of property, is probably irrelevant for present purposes. One thing is clear: although Comet management recognised the existence of this arrangement and no doubt took advantage of it as a convenient source of suitable line haul sub-contractors, they were careful to refrain from making any formal commitment to the drivers in respect of future work. Although Comet's requirements for drivers were fairly constant (p. 51), I think it was careful to ensure that it was not under any obligation to continue to engage any particular driver if, for any reason, it no longer wished to do so. One obvious reason could be if a particular driver ceased to perform satisfactorily for any reason; another reason could be if Comet no longer needed as many regular drivers.

There is an issue on the pleadings as to whether or not part of what was sold by the plaintiff to the defendant amounted to goodwill. I do not think it is helpful to consider whether the effect of the way in which Comet operated the long haul driver roster meant that the individuals on that roster had something which could be characterized as “goodwill”. It is certainly not “goodwill” in the conventional sense, but that is a concept with no clear and fixed boundaries (see Commissioner of Taxation v. Murry (1998) 72 ALJR 1065 at 1068), and it may be that for some purposes a place on the Comet roster could be regarded as a kind of “goodwill”. I do not think that matters for the purposes of this action. Insofar as the plaintiff sold a thing, what he sold was a place on the Comet roster. I do not think it is necessary, or helpful, for the purposes of this action to define it in any other terms.

It is possible to describe this situation, for convenience, as a process by which a driver bought a run seen as a form of property, although it was an insecure form of property. It was rather like purchasing an assignment of a tenancy of will. If everything went well, the result might be many years of regular and profitable work, but it might not go well. The source of the dispute in the present case is that the plaintiff “sold his run” to the defendant, but the run proved less profitable than expected (p. 68), and some time later following a re-arrangement of its schedules, Comet decided to reduce the number of regular sub-contractors on its roster, and the defendant was put off the roster, in April or May 1993: p. 74. In effect, the run that he had purchased disappeared. As a result, he lost his investment. To make matters worse, before this occurred, the defendant had purchased a new prime mover to enable him to do this work. He had taken over the plaintiff's leased prime mover, but subsequently Comet began to use longer trailers, which could only be hauled by a different type of prime mover which was itself shorter so that overall length limits could be maintained: p. 69. In these circumstances the whole transaction was undoubtedly a tragic financial disaster for the defendant.

Making the Agreement And Its Terms

The defendant had some experience as a truck driver working for a company which went into receivership, after which he made inquiries about obtaining a Comet job: p. 55. He said that he originally spoke to a Clint Sealy, who was not interested in selling, and that subsequently he was contacted by the plaintiff: p. 56. Mr. Lawson said, and I accept, that the defendant had also contacted him to inquire if he was interested in selling: p. 38. Mr. Lawson said that he was not, but if he had been he would have wanted about $90,000 and for the purchaser to take over the liability on his truck: p. 39. He says he suggested that the defendant ring the plaintiff, since he had been told by the plaintiff that he (the plaintiff) was interested in getting out: p. 39. The plaintiff had been driving trucks overnight for several years, and had decided he had had enough: p. 4. He was encouraged to do so by a woman who he subsequently married: p. 15, 57. The plaintiff heard of the defendant's interest and telephoned him: p. 4, 56.

The defendant indicated that he was interested in looking at the proposition, and either then or in a later call arrangements were made for them to meet at the defendant's house at Palmwoods: p. 4, 56. There is no evidence from either party that anything of significance to this action was said over the telephone. At the meeting at Palmwoods the parties discussed the job; the plaintiff said he told the defendant how it all worked, and that the situation with Comet was that “if you fell down on the job you were out the door [and] if you kept going you could be there for as long as you want”: p. 5. The terms the plaintiff was offering were for the defendant to take over the plaintiff's lease on the truck from Esanda, and pay $90,000 for the run and a number of spares and accessories including some tyres. The plaintiff apportioned $10,000 to the spares and accessories: p. 17. The plaintiff said that there was an agreement reached on that occasion for the transaction to go ahead on those terms (p. 5) but later (p. 19) said that the agreement was later, after some accounts had been provided. The defendant's evidence was that he was keen on that occasion, but that he made no commitment at that stage. He told the plaintiff he was seeking to arrange finance for the transaction: p. 57. The plaintiff denied that he was told details of the proposed finance (p. 5) but agreed that the transaction was subject to the defendant's obtaining finance: p. 18.

It was submitted on behalf of the defendant that I should find that there was a contract between the parties which was concluded during the conversation at Palmwoods. The defendant's evidence at pp. 57-58 which deals with that conversation does not say that anything was agreed on that occasion, and indeed, the overall impression it leaves is that, although the defendant was keen on the idea, he wanted to look at the question of obtaining finance. When asked in evidence in chief on p. 59 when he agreed to the terms which he had just described, his answer was:

That is not particularly clear, but is, I think, not consistent with the agreement having been made at the meeting at Palmwoods. I think that the effect of that answer is that there was an agreement once he thought he had finance and Comet had accepted him. There was certainly no point in the parties' agreeing to anything until the latter had occurred, and I think the effect of this evidence, and the evidence in general, is that the agreement came into effect at that time. Either the parties had not in fact agreed until that time, or any earlier agreement was subject to a condition precedent that Comet approve the defendant. The result was the same.

There is an issue on the pleadings about whether the contract was subject to finance. The defendant certainly needed finance to complete the transaction, and did promptly get in touch with a financial adviser to seek to arrange such finance (p. 57); the evidence from both parties as to what occurred at and after the meeting at Palmwoods is very vague, particularly as to the sequence of events, and I think it unlikely that they got to the stage of sorting out between them precise terms on which they were agreeing. I strongly suspect that any attempt to define the terms of the agreement in the way in which it was defined in the pleadings is somewhat artificial. Both parties had in mind what they wanted: the defendant would take over the plaintiff's truck and his run and obtain a particular quantity of spare parts, and pay $90,000 in return: p. 59. The transaction was clearly conditional on the approval of the defendant by Comet. Both parties went to see Comet management (p. 6, 58), before anything was done to complete the agreement, and I think this indicates that there must have been some prior discussion during which the need for such approval was made clear. The evidence does not indicate clearly where in the sequence of events this occurred, but it was before the registration was transferred and probably before the finance was thought to be approved. The representatives of Comet explained the arrangement to the parties in the terms that I have outlined earlier. In particular, they explained to the defendant that there was no goodwill as far as Comet was concerned, and there was no contractual commitment to continue to provide work. I think it probable the defendant made clear that he did, in fact, need finance, and that this was accepted by the plaintiff. The defendant's financial advisor subsequently thought that he had arranged finance, told the defendant of this, and the defendant told the plaintiff that he had finance: p. 59. At that point if there was a contract subject to a condition for finance, it became unconditional so far as finance was concerned.

Unfortunately the arrangement the defendant's financial advisor thought he had made fell through, and finance was not forthcoming. In the meantime, however, the parties had taken further steps. After there was the advice that the finance was available, the registration of the truck was transferred to the defendant, which involved payment of a significant amount of stamp duty: p. 6. The defendant was taken on a trip to Mackay and back in the truck to be shown the ropes, and he in fact took over the operation.

The Varied Agreement

The finance that the broker thought he had arranged fell through, and he was not able to arrange substitute finance. The plaintiff was informed of this, but did not want to undo the transaction, and indeed could not afford to change the registration back: p. 7. As a result, the obligations under the agreement, or at least the outstanding obligations, were varied; the accessories being provided were reduced, since the spare tyres were sold by the plaintiff separately, and the amount payable was reduced to $85,000: p. 8. It was agreed that this would be paid off over time, at the rate of $2,000 per month, and interest would be paid, although all of the payments would be credited in reduction of principle until the full amount had been paid off: p. 7-8. The plaintiff was not positive about whether the interest rate was 16% or 18% per annum: p. 22. The defendant said that it was 16% (p. 81 and see Exhibit 6) and in the circumstances I am not persuaded to accept the higher figure. Subsequently, the plaintiff asked for the payments to be increased, and the defendant agreed and increased the payments to $2,500 per month: p. 9, 80, Exhibit 6.

Apart from the disagreement over the rate of interest, there is really no dispute between the parties that an agreement was made for the payment of this sum of money over a period of time by the defendant to the plaintiff. In the circumstances I think it is therefore, strictly speaking, irrelevant whether the original contract was subject to finance, or whether it was unconditional, since, whether it was the plaintiff or the defendant who had a right to terminate the original contract, it was not in fact terminated, but there was a further agreement under which the terms, in particular the term for payment, were varied. There was clearly consideration on both sides for the first variation, and in view of the somewhat unusual arrangement for payment of interest, where all of the monthly payments were credited against the principal until it had been fully paid off, I think there was consideration on both sides for the subsequent agreement to vary the amount of the monthly payments, since increasing the monthly payments would mean that the principal would be repaid more quickly, and hence the amount of interest paid under the agreement if completed in accordance with its terms would be reduced. Hence, there were advantages and disadvantages for both parties from this change. I therefore find that there was a contract as varied under which the defendant was to pay the plaintiff $85,000, together with interest at 16% per annum by monthly payments of $2,000, later increased to $2,500.

The defendant said that fairly soon after he took over the truck, the work started to drop off, rosters were changed, and the amount he could earn from the truck was reduced: p. 64-65. The defendant eventually arranged finance from the Commonweealth Bank to enable him to buy out the lease of the truck, which up to then had been left in the plaintiff's name, with the defendant making the payments under that lease: p. 67. This gave the defendant a better right to the truck, but the monthly payments were not reduced.

The Final Payment

The defendant also was faced with the burden referred to earlier of replacing the prime mover with one which could couple to a 45 foot trailer without being over length, which was done, because otherwise he would have been out of a job: p. 69. Although the defendant did not say so in as many words, the sequence of his evidence suggests that the cost of this change made the run even less profitable so that, as he put it, there was virtually no money in it. He then decided to speak to the plaintiff about terminating the payments. He arranged to meet the plaintiff outside the Comet depot, and told him that he could offer him $4,000 but there was no other money at all, and the regular payments would have to stop: p. 70. The plaintiff asked what he was supposed to do, and the defendant said that there was nothing more that he could do. There was no other money. The defendant said that the plaintiff responded to the effect of “Well, if that's it, that's it, there's not much else I can do”: p. 70. They had arranged to meet outside the Comet depot for the purpose of handing over the cheque, but in fact the defendant left the cheque at home, so he simply told the plaintiff that his wife would put the cheque into his bank in the morning. The defendant said that again there was some statement by the plaintiff to the effect of “Well, if that's it, well, that's it” which he took as assent. The plaintiff denied that he expressed agreement to the proposal that he accept $4,000 in full satisfaction: he said that his response was “You know where this is going to end up”: p. 11. The defendant's wife gave evidence of a similar phone call, in which she said that the $4,000 was a final payment; the plaintiff was not happy about it but said something to the effect that “If that's what has to happen, that's it, there's nothing I can do”, and she took this as agreement on his part: p. 106, 113. (There is an error on p. 113 line 45: my notes are that she said he didn't say that it wasn't going to be the end or anything.) The $4,000 was subsequently paid into the plaintiff's bank account by the defendant's wife, in the same way as other payments had been made. The defendant said that he heard nothing further from the plaintiff thereafter: p. 71. The plaintiff said he made a couple of phone calls trying to get more money.

Although the payments to the plaintiff had been made fairly regularly by the defendant, they were not always made strictly in accordance with the agreement, and by the time this money was paid, an amount in excess of $4,000 was outstanding in terms of the rate of payment agreed to: Exhibit 1, Exhibit 8. It follows that there is no question of the defendant having given consideration for any promise to release the balance of the debt by paying money which was not then payable. The circumstance that the money was paid directly into the bank account means there is no question of a conditional tender, and nothing which the defendant or his wife said they said amounted to making a conditional tender.

About six months later the plaintiff spoke to solicitors to see where he stood and what he could do: p. 11. He said that he subsequently instructed his solicitors to take proceedings against the defendant to recover the money, but it was not done at the time because he could not afford to finance the action: p. 13. This was not challeged in cross-examination, and I accept it.

The substance of the defendant's evidence is that the effect of what was said by the plaintiff was reluctant agreement to the proposal that he accept $4,000 and abandon the balance of the amount owing. Even at its highest, the defendant's evidence is of a statement which, in my opinion, was ambiguous, and may amount to no more than a resigned acknowledgment that, whatever the legal position, no more payment would be forthcoming. There was in several respects a lack of precision about the evidence of the defendant, but I think he was generally trying to be honest in his evidence, and I accept that there probably was something to this effect said by the plaintiff on these occasions. It does not follow however that this should be treated as a promise by the plaintiff not to pursue the balance of the debt.

From the plaintiff's point of view, he was still owed a significant amount of money, and there is no obvious reason why he should willingly accept $4,000 rather than the balance owing under the previous agreement, even if he was resigned to the fact that, if the defendant chose to stop paying, there was not much that he could do about it, at least at that time. He did agree to meet the defendant, but this was in the expectation that a cheque for $4,000 would be handed over, and it is understandable that someone in his position would be keen to get in what money he could. The fact that the plaintiff consulted solicitors fairly soon after the incident, and would have taken action then but for financial constraints, suggests (although it does not prove conclusively) that he did not agree or promise to abandon the balance of the amount payable under the agreement. In the light of this, I accept that he also made phone calls chasing the money. The defendant on the other hand was obviously keen to rid himself of this continuing obligation, and may well have felt that it was unfair that he should have to continue to pay for something which had proved to be less valuable than he had expected it to be, and may well have been susceptible to regarding almost anything as acceptance of the situation by the plaintiff. It has been agreed between the parties that the total amount paid by the defendant was $65,000, so that the amount of the price unpaid is $20,000, and that all of the payments already made come off the principal which simplifies the calculation of interest.

Misrepresentation

The defendant alleges in the further amended Entry of Appearance and Defence and Counter-claim that on or before 26 September 1988 the plaintiff had represented to him that the plaintiff was the owner of a Comet line haul run contract, such representation having been made in a telephone conversation and subsequently at the Comet depot: p. 23-25. On the evidence of both parties, various terms were used to describe the situation with Comet^[1], and the plaintiff probably did at times describe it as a contract, but I do not think there was in the circumstances any magic in the use of that term. The plaintiff said that he explained the position to the defendant and I have no reason to doubt that he explained the position reasonably accurately, and the position was. I am satisfied, made quite clear to the defendant by the Comet employees when he met them. The defendant agreed under cross-examination that he got what he bargained for, at least at first: p. 83. I am not prepared to find that the plaintiff represented that he had (and could transfer to the defendant) a contractual right to continuity of work, which is what matters if this claim is to succeed. Nothing the plaintiff said to the defendant about the nature of the relationship he had with Comet, and the position the defendant would be in with Comet, involved any misrepresentation about that position, or any misleading or deceptive conduct. There was certainly no deliberate misstatement of the position by the plaintiff, that is, there was no fraud. Further, if the true position was not made clear by the plaintiff, I am satisfied it was made clear by the Comet representatives, so that by the time the contract was made (or ceased to be subject to a condition precedent), there was no operative misrepresentation on the part of the plaintiff, that is to say, there was no inducement. I am not persuaded the defendant was misled in any respect about the legal nature of the relationship he was buying into, and it follows that there is no question of fraudulent misrepresentation, or misleading and deceptive conduct.

It follows that the counter claim fails, and it is really unnecessary to go further. I would add, however, that there is actually no evidence from the defendant that the statement that the plaintiff was the owner of a Comet line haul run contract was made to him by the plaintiff over the telephone, which is the basis on which the Trade Practices Act is alleged to become relevant. It follows that there can be no claim under that Act. Further, there is a difficulty in relation to the proof of damage. Ordinarily the measure of damages where the sale of something is induced by fraudulent misrepresentation is the difference between the price paid for the thing and its real value at the time: De Vries v. Wightman [1961] Qd.R. 196; Mallett v. Jones [1959] VR 122; Netaf Pty Ltd v. Bikane Pty Ltd (1990) 26 FCR 305. In the last of these cases the majority said at p. 308:

Their Honours referred to a passage by Dixon J in Potts v. Miller (1940) 64 CLR 282 at 298, when dealing with the cause of a subsequent loss of value:

The additional loss suffered by the plaintiff in this case was inherent in what was bought; as I have said already, there was necessarily a risk involved in buying one of these runs, in that there was no right to obtain further work from Comet, and the continued value of the run depended on Comet continuing to require the same number of drivers. It ultimately depended on the amount of work required to be done by Comet. This, I think, is clearly a case of a loss which is inherent in the thing itself, and its existence should have been taken into account in arriving at the value of the “run”.

There is no evidence that the “run” was worth less than the defendant paid for it, at the time he bought it. The only evidence of value is the evidence that was agreed to be paid in this case, and the evidence of Mr. Lawson that he thought his run was worth about $90,000 which does not suggest a market value for the plaintiff's run of less than $80,000. The defendant was put off the roster, not because of anything the plaintiff did or did not do, but because of changes in the way in which Comet operated its business, for reasons which did not emerge clearly. However, they had nothing to do with the plaintiff. It was simply the maturing of a risk which ought to have been taken into account by the market in determining the value of one of these “runs”, and there is no reason for me to assume that it was not.

Other Matters

There were two particular matters which emerged in the evidence, and to some extent in submissions for the defendant, which I should address, although I do not think they arose directly in the pleadings. It is clear that one matter which really concerned the defendant was the fact that he bought the run expecting it to be permanent, but ultimately it proved not to be: p. 83. He said that this was something that he was concerned about (p. 58) as did his wife (p. 102), and it may well have been that the plaintiff contributed to this impression. He certainly regarded the position as permanent: p. 26. I suppose it is a question of just what is meant by permanent. The defendant continued to work regularly as part of Comet's roster for some 4½ years: p. 74. During that time his work was permanent, as distinct from casual. He worked regularly, not from time to time as Comet required him. I do not think that the plaintiff, insofar as he indicated that the work was permanent, is to be taken as representing that Comet would continue to provide work no matter what. He said he told the defendant that “If you fell down on the job you were out the door” (p. 5), and this may be analogous to a situation where an employer dismisses a permanent employee for misconduct. An employer can also dismiss a permanent employee on the ground of redundancy, and the employment is no less “permanent” because of that possibility. I think the analogy applies here. The defendant's position was “permanent” in accordance with Comet's practice, but subject to the consideration that there was no legal obligation on Comet to continue to provide work, and Comet's need for continued work might change in time. I do not think that anything the plaintiff said about the nature of the run could reasonably be treated as a misrepresentation of that position. I think it necessarily follows from the fact that there was no contract with Comet, which the defendant knew before he was bound to purchase the run, that it always remained open to Comet to dispense with a driver's services if the driver was no longer required for its business. There is, I think, no basis for concluding that the plaintiff knew or even had reason to suspect at the time when he made his statements to the defendant that Comet would be restructuring and reducing the number of drivers on the roster. I think that there is nothing actionable in what was said by the plaintiff about the nature of the position with Comet.

The other matter that was complained of was the application of the policy of “last on first off” which the defendant said he did not find out about until May 1991: p. 62. He said that it came as a surprise to him and concerned him because he was the last on: p. 73. The existence of this policy at the time when some drivers were ultimately put off was touched on in cross-examination of Mr. Lawson: p. 43. That questioning appears to have been directed to the occasion when the defendant, and apparently some others, lost their positions on the roster, but no attempt was made to establish from either of the witnesses associated with Comet, Mr. Harker called by the plaintiff and Mr. McNee called by the defendant, that Comet had such a policy in 1988, nor is there evidence that the plaintiff knew about it. There is certainly no evidence that there was any representation to the effect that there was some different policy. The evidence is that the need for regular line haul drivers was fairly constant: p. 51. It may be that in 1988 Comet had no policy about putting drivers off this roster, because the issue had not arisen. I accept that the plaintiff was told by Comet that the continuity of work depended upon the work being there: p. 31. The defendant thought that Mr. Harker was present when he was interviewed: p. 58. If the “last on first off” policy did come as a surprise to the defendant in 1991, I do not think that any ground for complaint against the plaintiff in respect of that has been shown.

The Effect of The “Final” Payment

The next issue is as to the circumstances surrounding the payment of $4,000 in 1991 and the legal effect of those circumstances. As I have said, I do not think there was any consideration for an agreement to vary the earlier agreement, nor was the $4,000 the subject of a conditional tender, but neither of those matters was relied on on behalf of the defendant. The matter is pleaded by way of waiver (para. 16) and estoppel (para 19), but in written submissions on behalf of the defendant, it was said that the estoppel constituted the waiver in the circumstances of the case, and reference was made to Freshmark Ltd v. Mercantile Mutual Insurance (Aust) Ltd [1994] 2 Qd.R. 390. In that case Dowsett J, with whom McPherson J A agreed, thoroughly reviewed the judgments in the High Court in Commonwealth of Australia v. Verwayen (1990) 170 CLR 394 so far as they touched on the question of waiver, and concluded at p. 403:

Given the nature of the right in issue here, I think that that conclusion is on point and is applicable, and it follows that to succeed on this ground the defendant must show either estoppel or election. Not surprisingly, no attempt was made to rely on election.

Reliance on estoppel, I think, depends upon the sort of estoppel which was discussed by the High Court in Waltons Stores (Interstate) Ltd v. Maher (1988) 164 CLR 387. In that case Mason CJ and Wilson J, at p. 406, said:

Their Honours went on to apply this to the facts of that case and concluded that the appellant's inaction in the circumstances constituted a clear encouragement or inducement to the respondents to continue to act on the basis of the assumption that they had made. “It was unconscionable for it, knowing that the respondents were exposing themselves to detriment by acting on the basis of a false assumption, to adopt a course of inaction which encouraged them in the course they had adopted.”

Brennan J (as he then was) said at p. 428:

His Honour had earlier said at p. 423:

In the present context, the relevant detriment must be found not in failing to make the payments which were otherwise payable under the agreement between the parties, but in some other act or omission of the defendant which occurred in reliance on the absence of a need to make such payments. There is no evidence, and no reason to infer, that the plaintiff knew or intended that the defendant would act to his detriment, in the relevant sense, if he promised not to enforce the balance of the debt, or by inaction led him to believe that the balance of the debt would not be enforced. That, I think, is a necessary element which is absent from the defendant's case on promissory estoppel. Indeed, there is also no evidence of reliance, as the purchase of the new prime mover was a matter where the defendant had no choice (p. 69) and there was no evidence that the defendant relied on the absence of this debt in buying a new house: p. 116.

Apart from this, there are difficulties in that there was clearly no express promise not to sue for the balance of the debt. The matter did not, on any view of the evidence, proceed on the basis of the plaintiff's encouraging the defendant to believe that he need not pay the balance of the debt. On the contrary, the clear indication from the evidence was that it was the defendant who was simply presenting the plaintiff with a fait accompli, that the balance of the debt would not be paid. No doubt from the practical point of view, he was presenting this on the basis that it would be unfair for him to pay any more than he had already paid in circumstances where he could not afford to do so because what he had bought had proved to be less valuable to him than he had expected, and was perhaps less valuable than it had been to the plaintiff when he had had the run himself. The defendant said he had other obligations, and a situation had arisen where he could not afford to continue to pay the original price, and simply asserted that the plaintiff had no choice but to accept that position. This is, I think, a very different case from the sort of situation contemplated in Waltons Stores.

The fact that no action was taken to enforce the debt for some years after the payments ceased was, I think, fairly readily explained by the plaintiff. This was not a case where the plaintiff was deliberately refraining from enforcing the debt and thereby behaving in a way which was tantamount to encouraging the defendant to assume that it would not be enforced; he wanted to enforce it but could not afford to at that time: p. 13.

I think therefore that there was no relevant estoppel. There was no clear representation or promise by the plaintiff that the defendant need not pay the balance of the amount owing. Indeed, the defendant acknowledges that the plaintiff was unhappy about such a situation. The defendant and his wife may have taken the plaintiff's response as amounting to an agreement to what was proposed, but I do not think it was intended to be an agreement, and do not think that objectively it amounted to a promise or representation that the balance of the debt would not be enforced, which is what matters for present purposes. The plaintiff was faced with a unilateral assertion that nothing more would be paid, and even if he did not expressly assert an entitlement, or write letters in demand to the defendant or immediately take proceedings against him, I do not think what the plaintiff has done or omitted to do, in all the circumstances, would make it unconscionable for the plaintiff now to enforce the balance of the debt. I think the defence based on estoppel fails, and hence there is no waiver.

Conclusion

It follows that the plaintiff is entitled to recover the balance of the sum agreed to paid together with interest. It is agreed that the balance of the debt is $20,000 and interest is to be calculated on that. I have been provided with a calculation by counsel for the plaintiff which calculates interest at 16% on the basis of the balance outstanding at the end of each period of 12 months after the agreement was made. I am content to adopt this methodology, but the payments of the third year would have to be adjusted to allow for the agreement that a total of $65,000 has been paid, so these payments will become $16,500. This leaves a balance at the end of the third year of $20,000, on which interest at 16% per annum is $3,200. In addition, the balance at the end of the second year should be $36,500, so the interest should be $5,840. Interest for the first year was $9,440. After the third year interest runs at $3,200 per annum, for a further 7½ years, so that interest totals $42,480. This is a lot of interest, and the action has taken a long time to come to trial, but as the interest is payable pursuant to a contract, I do not think that I have any discretion in the matter and must give judgment on the balance outstanding at the agreed rate.

There will therefore be judgment that the plaintiff recover against the defendant the sum of $62,480. I expect that the appropriate order is that the defendant pay the plaintiff's costs of and incidental to the action to be taxed.