AOT FcR Dist eiBuTi on) 2 ——— JUOGMENT No. A584 <n IN T OF AUSTRALIA T AN DISTRICT REGISTRY No. TG3 of 1987 GENERAL DIVISION BETWEEN: CAFIKE PTY. LTD. trading as PORT ARTHUR CIDER COMPANY Applicant AND: R.R. & 3.M. POWELL PTY. LTD. Respondent BETWEEN: R.R. & 3.M. POWELL PTY. LID. Cross-Claimant AND: CAFIKE PLY. LTD. trading as PORT ARTHUR CIDER COMPANY Cross-Respondent CORAM: BEAUMONT J PLACE: Hobart DATE: 25 May 1988 MINUTES OF ORDER THE COURT ORDERS: 1. That judgment be entered for the applicant on its claim in the sum of $54,965.57; and that judgment be entered for the respondent on its cross-claim in the sum of $1,320.77; order that the respondent do pay the applicant the sum of $54,965.57 and that the applicant do pay the respondent the sum of $1,320.77; direct that the one judgment be set off against the other and that execution do issue for the balance of $53,644.80 only. 2. That, without prejudice to any order for- costs , already made, Che respondent pay three-quarters of the applicant's costs of the proceedings. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL CCURT OF AUSTRALIA ) ) TASMANTAN DISTRICT REGISTRY ) No. TG3 of 1987 ) ) GENERAL DIVISION BETWEEN: CAFIKE PTY. LTD. trading as ID r PORT APTHUR CIDER COMPANY AND: BETWEEN: R.R. & S.M. DCWELL FI'. Cross-Claimant AND: CAFIKE PTY. LTD. trading as PORT ARTHUR CIDER COMPANY Cross-Respondent CORAM: BEAUMONT J PLACE: HOBART DATE: 25 MAY 1988 REASONS FOR JUDGMENT Cafike Pty. Ltd. ("Cafike"), trading as Port Arthur Cider Company, sues R.R. & S.M. Powell Pty. Ltd., tradirgd as Grove Fruit Juices (Tas.) ("Grove"), on several causes of action 'alleged to have arisen out of an arrangemert made between the parties in 1984 for the marxeting and distribution of apple juice. Grove has cross-claimed against Cafzke in respect cf several causes of action said to arise out of their ralaticnshio, which subsisted until early 1987. Mr. Robert Peterswald, discassicns, a marketing arrangement was cencluded betweer the parties; zh 1s this arrangement which has given yrse ts the present litigation. At 'the time of these negotiations, Geove was ergaged ir the whelesale marketing and distcibutron of frurt juices Shroughout Tasmania on a substantial scale Cafixe had commencei the production of apple juice in a relatively small way az Koonya ou the Tasman peninsular a few years earlier. At this times, Cafike was distributing its product under the trade name 'Orchard Pressed Frezh Apple Juice" ona modest scale to local retail outiets. 22 was also supplying juice to Chung Sing, a waclesale feuit and vegetable merchant in Hobart. In early 1984, Cafike carried out a number of improvements to its product and changed the name of the juice to "ADPLEMAID". It cbtained registration 4. of that tceade mark in Part A of the Pegister of Trade Marks i- respect of "apple juice and fruit juices containing apple wuice" for a period of seven years from 16 February 1984. Cafike also launched an advertising campaign for its product. A label was designed and about $3,000.00 was spent in advertising costs. At the first meeting, Mr. Powell andicated Littles enthusiasm fer Mr. Peterswald's proposition. Mr. Peterswald and Mr. Powell met again in late March or early April 1984. On this occasion, Mr. Powell showed more interest in fa Oming *2> an arrangement. A possible price structure was discussed. Mr. Peterswald says that he then indiszated to Mr. Powell that it was Cafixe's wish to maintain some "control prices were mentioned. It is common grsund that the parties wera appropriate wholesale price for apple juice; and that Mr. Ocwell then indicated that approximately 30 cents shculi be allowed For the container and the label, that Grove''s distributors would ask for 28 cents per unit for distribution and that Grove wouid require 22 cents per unit to handle the product. It is also common ground that Mr. Peterswald then accepted that, on these figures, a deal was only feasible if Cafike were prepared to accept $1.10 as the price per unit it would recezive from Grove. Rr Aitheugh the discussion was in general terms and necessarily tentative, Mr. Peterswald informed Mr. Powell that he would write a letter to Mr. Powell stipulating the basis, in terms of price, upon which Cafike would be prepared to deal. By letter dated 4 May 1984, Mr. Peterswald wrote to an Powell as follows: "further to our conversations regarding the marketing of apple juice, we have arrived at some costs for you to consider. Firstly, in respect of a volume of around 1000 units per week, we think that the following price structure looks reasonable. Wrolesale 1.90 Distributor 2B $1.62 Package 30 $1.32 Grove 22 $1.10 If sales or (sic) arsund 2000 units ver week were achieved we could reduce the unit cost by arcund five cents. As I mentioned on the phone todav our preferred FS ¥ E position would now be to give you th sole Gistributien rights, using the "Apolemaid" abel provided a minimum level of sales (say 1200 vw. was achieved. Thi would save ¢ceveloping a new label and point of sale promotional material, as well as TV and radio packages. Qur costs are calculated including 'the cost of these items as well as the initial promotional expenses. I leok forward to your visit next week." (I ct is common ground that a "unit" was a two litre container refrigerated juice; that $1.90 was the wholesale price; that 28 cents was the projected cost of delivery and distribution retail outlets by contractors (described by the ovarties "independent distributors" or "vendors"); that 30 cents allowed as the cost of the container, the cap, the labe2? and carton in which a number of containers were packed; that cents was the margin to be allowed to Grove for its efforts; that Cafike would receive $1.10.) According to Mr. Petearswaid, ina t lepko nm é conyer mm shortly afterwards, Mr. Powell indicated that the terms of - as Was the ae and ie) os aa + t m letter "looked okay". It was arranged that they meet at Koonya to discuss the matter further. It is common ground that, at this stage, both parties were keen to enter inta a long term relationship if this were possible. The making of an agreement at Koonya The Koonya meeting took place as arranged. There was a Lengthy discussion. It is commen ground that the parties then concluded an agreement but there 1s a dispute as to some of 145 Tt terms. Evidence of this discussion was given by the hr 3) wo persons present - Mr. Peterswald, his wife, Mrs. Rosemary Peterswald (another director of Cafike!, and Mr. Powell. (i) Mr. Peterswald's version According to Mr. Peterswald, the discussion proceeded as follows: (a) Mr. Powell agreed to the proposition contained in the 4 May letter, subject to proof of packaging costs as actual costs incurred; the sum of 28c. was confirmed as the price to be paid ta contractors to deliver the product from Grove's warehouse to retail outlets; Cafike agreed to bear the cost of cartage from Koonya to Grove's warehouse; (hb) the parties agreed that although Cafike would bear the promotional costs already incurred, all future costs of promotion would be shared equally by Cafike and Grove; (c) Mr. Peterswald asked for a "guarantee" of "minimum throughput"; Mr. Powell thought that he could "achieve" 100,000 litres per year (i.e. approximately 1,000 containers per week); (d) Mr. Peterswald again indicated that Cafike wished to maintain "control" over the price at which its product was to be sold by Grove to retail outlets; Mr. Powell agreed that this was a reasonable proposition. It was accepted by both parties that any variation in the prices in the 4 May lett o S would have tc be mutually agreed; it was further agreed iD that Cafike's apple juice would not be sold by Grove at a price higher than the wholesale price of orange juice (at that time, Grove's wholesale price for orange juice was $1.90); (@) it was agreed that Grove''s trade rame "Grove" would appear on Cafike's "Applemaid"™ label on the containers holding Cafike's product; (f)} 1t WAS agreed that, subject to Cafike's right to continue te deal with Chung Sing, Grove should have the exclusive right to sell Cafike's juice in Tasmania with Cafike retaining distribution rights outside Tasmania; Grove also agreed not to sell any competing product; (g) Grove agreed to pay for product on a 30 day account basis; (h) a new type of container was agreed upon; (i) it was arranged that another sticker he designed to he placed on the top of the container stating that the product was 100 per cent fresh apple juice; (j) it was proposed that the new product be launched in June or perhaps July; (k) the agreement was to last for five years with two options to renew of five years' each; (1) Mr. Powell was to arrange for the agreement to be put into a written form; (m) as an administrative matter, it was proposed that Cafike outlay in the first instance the cost of the container and the cap and Grove pay the cost of the label and the carton in which the containers were packed on the footing, in each case, that the party meeting these costs would be reimbursed out of the proceeds of sale arising on the wholesale transaction at $1.90 per unit. In his evidence, Mr. Peterswald explained that, at the Koonya meeting, Mr. and Mrs. Peterswald had before them an aide-memoire prepared by Mrs. Peterswald to serve as an agenda of matters to be discussed with Mr. Powell. It was in the following terms — (For convenience a typewritten version was prepared at the hearing and this version precedes the handwritten one): WE PAY PROMOTION COSTS SO FAR. 50/50 AFTER MINIMUM THROUGHPUT 100,000 LTRS CONTRACTUAL ARRANGEMENT WHAT PERIOD PRICE VARIATIONS INDEXED TO ORANGE JUICE ?7 5+5+5 J STILL MAINTAIN DISTRIBUTION RIGHTS OUTSIDE TASMANIA TIME FOR CONTRACT DO WE WANT TO BOTTLE HIS qurey Vv TERMS OF PAYMENT. 30 DAY a/c BIG STICKER ON BOTTLE J . BOTTLE TYPE / 250ml. ETC 10 SUPPLY OF BOTTLES - LABELS ETC 11.CHUNGS STILL GET ORCHARD PRESSED @n ee OBRANAAU 3 i 12.CARTAGE UP b : 13.SOUTHERN FRUITS LAUCH WITHIN NEXT 2 WEEKS 14.PACKAGING PROCUREMENT -20 PRODUCT LIFE 7 JUNE ?12 ; Ly ([a6end obi ——— | Lap by A Pee K hahet ek on Phus pe reload frccael} . wae It will be noted that item 3 in the aide-memoire referred to the period of any contractual arrangement. The document also mentioned the figures "5 +5 +5". Mr. Peterwald said that it was agreed that the arrangement between the parties was to subsist for a period of five years with options ta renew for two further periods of five years' each. It will also be noted that item 5 in the aide-memoire mentioned "time for contract" with a tick beside it. Mr. Peterswald said that he wrot the figures "5 + 5 + 5" on the aide-memcire at the meeting. It will also be recalled that item 3 in the aide-memcire also referred to price variations in the context of prices being indexed to orange juice prices. Mr. Peterswald's understanding at the time was that the wholesale price then of a two litre container of chilled orange juice was $1.90. Mr. Peterswald said that after the meeting concluded, Mr. Powell stayed on at his home for dinner at his request. It was then mentioned that the agreement should be formalised in writing. (il) Mrs. Peterswald's version Mrs. Peterswald substantially corroborated her husband's account of the meeting. She also referred to Mr. Peterswald's concern that ""control" be retained by Cafike over the wholesale price at which Grove was to market the juice. Her evidence was that it was agreed that any variation proposed to the wholesale orice was to be the subject of discussion with, and agreement by, Cafike. (iit) 10. Mrs. Peterswald also confirmed that it was arranged that the sum of 28 cents was to be allowed as the cost of distribution. However, she said that it was accepted that this cost was not applicable in the case of sales to supermarkets. In the1rr case, it was anticinated that distribution costs would be less than 29 cents and that Cafixe would be credited with the shortfall. In one respect, namely, the time limits of the agreement, there was a discrepancy in the versions given by Mr. and Mrs. Peterswald respectively. Although Mrs. Peterswald recalled a discussion of a five year term together with two five year options, Mrs. Peterswald did not recall any definite conclusion being arrived at in this regard. She thought that it was accepted that this was something which needed to be left to the solicitors to work out. Mr. Powell's version Mr. Powell gave evidence that in his discussions with Mr. Peterswald prior to the Koonya meeting, he had informed Mr. Peterswald that, in his opinion, a fair market price for his product on a wholesale transaction was $1.90 and that Grove's distributors should receive a "margin" of 15 per cent, that is, 28 cents. Mr. Powell's version of the agreement reached at Koonya was as follows: (a) Grove's initial wholesale selling price was to be $1.90; (b) Cafike was to receive from Grove $1.10 for its product; (c) any variation to "price structure" (i.e. Cafike's selling price to Powell or Powell's wholesale price) would be the subject of "mutual discussions" or alternatively would proceed by "independent arbitration" (according to Mr. Powell, this term was arrived at as a result of a statement made bv Mrs. Peterswald that Cafike wished to retain "total control of the wholesale price"); (d)} the name "Greve" would appear on the label along with 'Applemaid"; Ce) the arrangement was to subsist for five years with two options to renew for periods of five years each; (f) Cafike was to bear the promotional costs already incurred but future costs of promotion were toa be shared equally; (g) packaging costs were estimated at 30 cents; however, until Cafike had generated sufficient cash flow to pay for packaging costs, Grove was to provide the labels and the cartons so that Cafike had only to outlay, in the first instance, the cost of the containers (at 2.04 cents each) and the caps (at .2 cents each). Mr. Powell said that the parties then discussed, in a general way, the need to retain solicitors to draw up a formal agreement. There was also talk that Grove might later acquire an "equity participation" in Cafike. As has been said, it is common ground that some agreement was arrived at in the Koonya meeting. But there are 12. several questions of fact and of law which arise for determination as to what, if anything, was agreed in two main areas: (1) the term of the agreement; (2) the rights, if any, of Cafike in respect of the wholesale price to be charged on a sale by Grove. These questions are central to the present dispute. Before attempting to resolve them, 1t is necessary to describe the subsequent history of the arrangement. The course of dealings between the parties (1) August 1984 to September 1986. Deliveries of product from Cafike to Grove commenced in August 1984. The invoiced price available by Grove to Cafike was agreed at $1.323 per container, being $1.10 for the juice and 22.3 cents for the container and the cap. As from 1985, it was agreed that the price be increased to $1.37 per unit. The increase, of .05 cents, was represented substantially, if not wholly, by an increase in the costs of packaging. In September 1985, Cafike introduced a "long life" product as well as its original refrigerated version. Marketed as "Longlife Applemaid", its agreed invoiced price to Grove until 1 October 1986 was $1.51 per unit in the case of "Straight" apple juice and $1.61 for each container of a mixed or blended type. It was subsequently agreed that, as from 1 December 1985, the invoiced price of chilled juice increase from $1.37 per 13. unit to $1.44; this price was increased to $1.45 as from 1 January 1986; it appears that these increases were allowed to cover the cost of the cartons which it was agreed that Cafike should assume at that stage. (ii) October 1986 to February 1987 Against the background of a number of significant discussions which took place between the parties in 1986, the prices to be paid by Grove to Cafike were substantially increased as from 1 October 1986. Details of the new price structure, which is complicated, will be mentioned later. By September 1986, the packaging costs borne by Cafike had increased to 0.4992 cents per unit made up as follows: Bottle $0.2403 Cap 0213 Carton -9736 Tape O01 Wrap -O1 50% label 031 Neck Label .013 Carrying cost .O1 $0.4092 In February 1987, the relationship between the parties collapsed and Cafike ceased to supply its products to Grove. The 1986 discussions (i) Conversation in late January or early February 1986 (a) Mr. Peterswald's version Mr. Peterswald said that in late January or early February 1986, he spoke to Mr. Powell in his office at Grove's premises and informed Mr. Powell that (b) 14. Cafike was feeling considerable cost pressures in its operation and "would be very keen to get a price rise". Mr. Powell said that he was also experiencing cast pressures in orange juice and that he would like to put his orange juice prices up. Mr, Powell said that he "thought he could not do that in isclatzion in the market but he thought there would be a general tendency during the next few months far orange juice prices to rise...He would be taking advantage of that and that would be a good time to bring apple juice prices up. I Ci-e. Mr. Peterswald] agreed with his logic." At this time, Grove was selling the juice to ordinary retail outlets at $1.90 but, after taking into account rebates and discounts, Grove was receiving something less than $1.90 from the supermarkets (Coles, Purity and Roelf Vos). Mr. Powell's version Mr. Powell said that he "voiced Chis] concern to Mr. Peterswald at the large volume of funds we were outlaying and the general increases that the retailers had applied to promotional costs of products." Mr. Powell said that he told Mr. Peterswald that he "was going to increase the price of all Grove products". Mr. Peterswald "seemed to 15. agree that was necessary...He said he could see that I would have to do that." Mr. Peterswald's price was not discussed. Mr. Powell's evidence in chief continued as follows: "MR. BROWN: ...Did you then have discussion with Mr Peterswaiid with respect to th future of your company and his company?-- do net believe that we had exhaustiv discussions in January or February or March of that year towards that end. Did you subsequently have some discussions towards that end?---Yes, not till later on, but at that stage we were dwelling on price and I put to Mr Peterswald that it was almost two years that we had been - our price had increased from Cafike. Our general costs had increased. We had maintained the price for almost two years. Our promotional costs were increasing and we would have to move but there was no mention of anything else much at that stage... HIS HONOUR: Was there no discussion abcut figures?---Figures? When you say, have to move?---Exactitudes. No, your Honour, all of the work with the grocery trade with working out the margins, the promotional schedules, the promotional moneys was left to me. A Yes, but did not - did Mr Peterswald as what sort of price movements wer likely?---I am pretty sure that I indicat that a general price of 10 to 15 per cen would be necessary to look towards redressing the erosions we had had of the previous two years. D ct iD Erosion vis-a-vis inflation or what?---CPI increases, your Honcur? Yes. And you did mention that sort of thirg to him, did you?---Yes, your honour." 16. In cross-examination, Mr. Powell gave this evidence: "You had made a price change without reference at least - and we will come back to discuss this in a minute - without reference at least to the details of the price change to your customers, without reference to Cafike?-- We had etfected one price change only in the whole duration of our agreement and that was effected in April 1986 with tacit approval being obtained and knowledge of Mr Peterswald in February of that year. But on no version of the facts do you put forward that you consulted Mr Peterswald with the amount of the price rise?---Yes, I did. I explained to Mr Peterswald at that time that I anticipated that Aa price increase be in the range of 1C to 15 certs." Later, Mr. Powell added this explanation: ",.-I did explain that it would be in the region of 10 to 15 per cent and I think that I justified the amount of that increase when I went through the charges that our company was absorbing with Mr Peterswald..." (ii) Conversation in April 1986 (a) Mr. Peterswald's account In April 1986, Mr. Peterswald noticed that some supermarkets had increased the retail price of "Applemaid" by 20 to 30 cents. He then spoke to Mr. Powell as follows: "And what did you say to Mr Powell? What did you put to Mr Powell?---T said ta Me Powell had he seen the prices in the supermarkets; did he have any reasen why they were as they were and he said tu me, "T think the supermarkets must be beng greedy". Yes. What else did Mr Powell say to you as 17. far as taking the problem on board?---Right. He said that he would approach the supermarkets and see tf something could be done about the price rise. Did Mr Powell say anything to you that he had increased the wholesale price during the course of this meeting?---Na, no." (b) Mr. Powell''s version Mr. Powell did not have a clear recollection of this conversation, although he did recall a discussion with Mr. Peterswald about prices in May 1986, to which reference will be made shortly. However, Mr. Powell accepted that, at about this time, Mr. Peterswald raised with him the price rises in the supermarkets and Mr. Powell did say that "the supermarkets must be greedy." (iii) First conversation in May 1986 Prices were again discussed at a meeting held in May 1986 in Mr. Powell's office between Mr ind Mrs. Peterswald and Mr. Powell. The meeting tack place after Mr. Peterswald discovered, by inquiries made of supermarkets, that Grove had substantially increased its wholesale price - in some cases by as much as 15 per cent. (a) Mr. Peterswald's account According to Mr. Peterswald, he said to Mr. 18. Powell that he had discovered that Grove had "put the prices up in supermarkets throughout Tasmania. This was done without our knowledge and we regard it as a breach of the agreement. We want an immediate remedy to the situation." Mrs. Peterswald asked Mr. Powell "why had he done it?" Mr. Powell replied that "he had done it because he had not been making much money out of the proposition." Mr. Powell accepted that Grove was in breach of tle agreement, Mr. Peterswald's evidence continued as follows: "Well, what was then discussed?---I put two options to Mr. Powell, either that the pricing situation was remedied immediately and that we return to the margins that we had agreed on - - - Yes? --- - - - or - we had had previous discussions on him having equity participation in the company, which was a mechanism for solving a lot of this sort of - - - Yes? --- - - - potential problem, and I said that along with the equity participation in the company must come = an agreed pricing structure which would reflect margins for what Grove actually did. Yes. Were there any other options put to him?---And the third option was that if neither of those were taken we separated as from that day. Right. Now, what did Mr Powell say to those three options?---He said that he was happy to pursue the proposal of equity participation, that he saw that as the only alternative for us fo continue trading. Right. And could ycu tell us what you discussed so far as equity participation 19. was concerned?---I produced for the meeting - which I gave to Mr Powell during the meeting - a series of notes. The first page of that explained the variation in margins that he had achieved, in most cases his margin had been double. Yes. I said that that situation was completely unacceptable. Yes?---And the new proposal put to him a series of pricing structures which would compensate Grove for the actual costs that they incurred in performing the function and would be an integral part of the equity participation, so that equity participation had two facets to it; purchase of equity and an understanding of the price structure that would be implemented. Right. Now, could you tell us, please, what Mr Powell said when you said to him that if you could not reach equity participation and return to the original price structure then you would have to terminate your relationship?---He agreed to that proposition." The notes prepared by Mr. Peterswald dealt, inter alia, with "margins" and "points of contention" as follows: "ITEM 1 - MARGINS 1. Original margins as at 4 May 1984 Manufacture $1.10 68% ) Package 30 18.5%) Grove .22 13.5% 2. Current margins - Southern distributors ($2.00) Manufac. & package $1.45 72% Grove (.5 label) «685 28% 3. Current margin - Purity (2.12) Manufac. & package $1.45 68% Grove (incl deliv.) -67 32% 4. Current margin - Coles ($1.91) Manufac. & package $1.45 7h% Grove (no dist/whouse) .36 24% 86.5 we (b) 20. ITEM 2 - POINTS OF CONTENTION 1. The current margins are unbalanced and do not reflect fair and reasonable reward for functions performed. The agreed price of the fresh product has been increased without reference to PA Cider. 2. More efficient means of distribution exist for many customers. 3. The point of sales performance by distributors has been patchy. 4. Management decisions effecting P A Cider must be made by P A Cider Management. ITEM 3 1. Stemming from the above, we need to agree on the resolution of these problems or operate separately. 2. Resolution is dependent on Steve having the intention and opportunity of equity participation in P A Cider." Mr. Peterswald put to Mr. Powell, and Mr. Powell accepted, that their discussions about possible future "equity participation" was not to delay implementation of a price rise far Cafike. Mr. Powell said that he would, "within the next month, rectify the price situation". A proposed pricing structure was suggested in Mr. Peterswald's notes. Mrs. Peterswald's version Mrs. Peterswald's account was in substance in the same terms as that given hy Mr Peterswald. (c) Powell's account Mr. Powell disputes much of the version given by Mr. and Mrs. Peterswald. His evidence wus as follows: "Do you recall what he said?---Mr Peterswald said to me that he believed the products - the prices of the Grove Apple Maid products were too high in the supermarkets and believed that as a consequence my company must be making too much money out of them. Did he say that to you? Yes, that is correct. Yes?---And that seeing as he had not received an increase in the price trom us he thought that that was not fair. T explained to Mr Peterswald that the price that was achieved at retail level Was not necessarily - the difference between that price and the price we were paying him was not our profit; there were a lot of other things that eroded that amount, and went along those lines to try and reinforce in Mr Peterswald's mind that there was not an excessive amount of increase being - had been applied by our company when we had had our price increase. Right. Was there any discussion between yourself and Mr Peterswald as to whether or not that was in breach of any agreement between you?---Mr Peterswald did not discuss any breach of agreement at that stage. Now, you had the discussion about price, did that lead Mr Peterswald to come up with any proposal to you?---Well, Mr. Peterswald seemed to think - - - No, I am sorry, did he say anything to you?-~-He said that there seemed to be a problem in us having adjustments of our margins, in other words his maryin might have decreased whereras now with the price increase, mine might have increased and that he thought the only way we could do something about that was either to look at simplifying distribution methods, several proposals about distribution, or looking at a joint venture, or I think he might have had on his note, going separate ways. (iv) (v) 22. All right. Did he discuss going separate ways as one of the matters?---No. Right. He brought a note with him to the office, did he?---That is correct. Did he give you a copy?---I believe he left a copy. Yes. Did you read that prior to having any aiscussions with him?---No." Second conversation in May 1986 Later in May, another discussion tock place in Mr. Powell's office. It is common ground that at this meeting Mr. Peterswald produced a written document outlining a basis upon which Grove could acquire an "equity" in Cafike. Under the proposal in the document, Grove was to pay $25,000.00 immediately, and the Peterswalds were to lend Grove $90,900.00 over three years at 14 per cent; repayment could "take the form of capital injection to the company." Meetings in July and August 1986 A series of meetings were held in July and August 1986 (4 and 11 July, 14 or 15 August) between the parties and their accountants. There was lengthy and detailed discussion of the financial position of Cafike and of the terms on which Grove might acquire an "equity" in Cafike. It is common' ground the substance of these discussions was recorded in notes made by Mr. D.A.C. McDougall, a chartered accountant retained by Cafike. These notes and other evidence indicate that the negotiations proceeded on the following footing: (a) Grove would need time to examine Cafike's financial records; for this purpose, Cafike's books would be made available to Mr. J. Pastoor, an accountant employed by Grove; (b) Grove would have until 1 January 1987 to exercise its "option" to take up an "equity participation" in Cafike; (c) an the interim, Mr. Pastoor would write up Cafike's books and do certain other clerical work for Cafike. It is also common ground that the parti1e6 recognised that a deal could only be achieved 1f satisfactory arrangements could be made for the acquisition of the shares held in Cafike by Mr. Hallam, a muir.ority shareholder. According to the notes kept by Mr. McDougall of the meeting held on 11 July, Mr. Powell made it clear to Mr. Peterswald that, so far as he (Mr. Powell) was concerned, the negotiations were proceeding against the background of the parties' "snrrent axyangement".,.on heads of agreement...5 years + © years + 5 years. To forgo this would he expensive.... CMr.1 Powell says he can put in his own press." On the other hand, Mr. McDougal?''s notes, of 14 August meeting quote Mr. Powell ani Mr. Peterswald as follows: "7, Powell says there must be a buy cut figure for Grove not to be involved, Peter-wald say. no value... 8. Peterswald said that any arrangement made 2-1/2 years ago could well have been broken by Grove increasing the price without reference to Peterswald." There was also discussion at these meetings of the increased prices to be paid to Cafike for its products. Mr. Peterswald made notes of the August meeting as follows: "GENERAL 1. The purpose of the meeting was to discuss the trading situation of the Port Arthur Cider Company (PAC) with a view to improving its trading terms and improving its capital situation hy the participatian in the company by R R & S M Pewell Pty [Lia (Powell). It was recognised that the PAC was not in the capital situation and did not have the distribution capacity in its current form tu undertake a successfiil expansion into the production of ciders and carbonated fruit beverages based on a glass carbonated bottling line, Powell indicated that they were prepared to enter into an arrangement with PAC provided a new corporate entity was established controlling current PAC operations and the operation of the expanded facilities, and that they had the option to purchase a 50% equity in the new entity. This option was to remain open until 1 January 1987 and is calculated on the basis of 50% of the current operation being valued at $92,500. In the event of additional plant or capital being placed in the PAC prior to the option being exercised the price of obtaining 50% equity would reflect the situation, For instance, if the Tasmanian Development Authority provides capital to the PAC Powell must resume its share of liability, and if the capital 15 injected by R K Peterswald, Powell must also inject a proportional amount, RESOLUTION: It was agreed that a new entity would be established with Powell having the Mr. option of purchasing 50% of the shareholding by 1 Jan 1987. The current terms of trade between PAC and Grove Fruit Juices were discussed. The following was agreed: (a) COLES PvC_2 LTR FRESH 2 LTR Gross 13.20 per carton Gross 14.10 per carton 8% 12.144 Dist 9% 12.83 2% CD 11.90 2% CD 12.57 Grove 6% 11.18 Grove &% 11.P) Freight 37 Treight —.45_ $10.81 per carton $11.76 per carton Delivered to Grove (1.890) Delivered tuo Grove (1,89) NOTE: Ordering and invoicing through Grove, distribution PAC GROVE> COLES. (b) PURITY PvC_2 LTR FRESH 2 LTR Gross 13.20 per carton Gross 14.10 8% WH 12.144 2% TD 13.81 5% TD 11.536 15% Grovell.?74 per ctarton 6% Grove 10.84 per carton Delivered to Purity (1.81) D?livered to Grove NOTE: Ordering and invoicing through Grove. Distribution PVC, PAC > PURITY: Fresh, PAC -7 GROVE 7 PURITY. (ce) ROELF VOS pvc ( Gross 12.90 8% DISTR 11,88 6% Grove 11.17 Freight .37 10.80 per carton delivered to Grove (d) GROVE PVC FRESH Store Vendor 12.30 12,00 Grove 10% 11.07 (1.84) 11.04 (1.84)" Peterswald's account was that the new prices were to come into effect as from 1 September 1986. In fact, this (vi) was delayed and the new prices were not implemented until 1 October. For that morth and November and December products were supplied by Cafike and paid for by Grove at the higher rates. Products were also supplied to Grove in January and February 1987. Cafike invoiced Grove for these products at the new prices but Grove paid only part of the invoiced amount and refused to pay the balance because, in February, negotiations for the acquisition of "equity" by Grove collapsed in circumstances to be mentioned shortly. Discussions in January and February 1987 (a) Mr, Peterswald's version There were a number of meetings betweer: the parties after the discussions in July and August 1984. According to Mr. Peterswald, in November 1986, Mr Powell informed him that he "saw no reason why he would not proceed with the option" On 15 January 1987 Mr. Powell said that he would make "a once and final" offer of $25,000.00 for Cafike Mr. Peterswald told Mr. Powell that he found the offer "insulting". Mr. Powell replied that the trading figures over the previous six months did not justify the price of $90,000.00 previously discussed. (In fact this figure had been altered t* $87,750.90 to allow for the buy-out of Mr. Hallam's shares. Mr. and Mrs. Peterswald had acquired Nr. Hallam's shares at a cost of $16,000.00 in October 1986). "r. Peterswald then 27. said that cash flow had suffered in recent times because it had been used to finance the development of two new products - "Tasman Scrumpy" and "Tasmanian Cider Cooler". Mr. Peterswald then indicated that he was not rejecting Mr. Powell's offer at that stage and that he would like to think about 3+. Mr. and Mrs. Peterswald then went away om holidays. In late January or early February, Mr. Peterewald informed Mr. Powell that he had still not made up his mind on Mr. Powell's offer but that he was still unhappy about it and that he would ask Mr. McDougall to "look over the figures". On 19 February, Mr. Peterswald reminded Mr. Powell that he had not taken up the earlier option = $ and informed Mr. Powell that his coffer of $25,900.00 was rejected. Mr. Peterswald also said that he nronpased to lease distribution of "Applemaid" to Grove from 1 March. Mr. Peterswald confirmed his) positian by letter to Mr. Powell dated 19 February in the following terms: "T wish to confirm my verbal advice of taday. As from 1 MAR 87 TI intend to cease distribution of 'Apple Maid' products through Grove Fruit Juices, as it appears that we cannot put in place an agreement which: (a) Maintains the pricing structure on which our arrangement was based. It remains unacceptable to me that a significant change in the price structure of our product was arbitarily introduced by you, without reference to me, resulting in the complete corruption of the agreed margins. (b) Ensures adequate loyalty to the 'Apple Maid' brand. It is not acceptable that you are 28. in a position of promoting a brand in competition to ours, and to find that product replacing ours in specific markets. Should you wish to discuss continued distribution under arrangements which are compatible with those which we had agreed I will be happy to hear from you. As far as our production of Mr Juicy products is concerned, I have no wish to disrupt your supply and will be happy to discuss this if you should wish." (The reference to Mr. Juicy 1s to another product in respect of which the parties entered into a separate arrangement in August or September 19A4F). Mr. Powell agreed substantially with Mr. Peterswald': version of their meeting on 15 January. WYowever, Mr Powell's account of the discussion on 19) February differed from that given by Mr. Peterswald. Mr. Powell's evidence was as follows: "Mr. Peterswald told me that negotiations had been concluded with another party for the sale of the 50 per cent of Cafike and that we would not be receiving product as at the end of that month, which was the end of the following week, and that he would be doing the distribution and that the 50 per cent of Cafike that we were negotiating about had been sold to others. What did you say in response to that?---Well, I was incredulous and - - ~ But what did you say?---Well, I asked Mr Peterswald whether there was any possibility of redemption from this position. Yes?---But Mr Peterswald was quite adamant that the sale to other parties of the 50 per cert we were looking at had been concluded and that there was no possibility of any redemption of the situation and that he might be prepared only to look at packaging our Mr Juicy apple juice and apple and blackcurrant juice. Yes?---And I said to Mr Peterswald that would he please put it in writing, that I was totally incredulous and I believed him to be an honourable gentleman and I did not think he would live with himself after taking that course of action." (vii) 29. Mr. Powell's memorandum dated 23 February 1987 On 23 February, after the relationship between the parties had collapsed, Mr. Powell prepared a memorandum setting out his version of the history of their dealings. The document was apparently prepared with the object of providing retailers with Grove's point of view. The memorandum was not sent to Mr. Peterswald but he did see it under the circumstances described by Mr. Powell in his evidence as follows: "Did you give that letter to Mr Powell or what did you do - Mr Peterswald or what did you do with it?---Yes, I gave it to Mr Peterswald and Mr McDougall to read while I was there and - while they were in my office and - which going to take it but I asked him to leave there and I had circulated those to other amongst the documents it should have discovered so - but Mr Peterswald and McDougall sat down and read the contents of letter in my office." The memorandum was as follows: "GROVE APPLEMAID PRODUCT - DEVELC *MENT u% MARCH 1984 R.K, Peterswald, Director Cafike Pty. Ltd. approached myself at 210 Collins Street re Grove Fruit Juices being willing to distribute their Port Arthur Cider Co's apple juice product "ORCHARD PRESSED APPLE JUICE," Grove Fruit Juices declined because; - q a) bd) c) a) product needed improving with special attention to ensur- ing product life-span. product/labelling, packaging and presentation sub- standard. Grove Fruit Juices needed sole distribution rights to gain full market penetration with orderly marketing. Grove Fruit Juices was considering purchase option on cool rooms, packing sheds and orchards in Huon Valley for pressing and packaging fresh apple juice. they proceeded - they read it and Mr McDougall was areas and rather than post it I did believe that Mr Peterswald got a copy of it so - plus it was been that 30. Mr. Peterswald was advised that although he had been rejected by our industry competitors, we might be interested ina manufacturer/distributor agreement shculd he wish to implement a, 6 and c above in a joint venture product as we believed in and were currently working towards releasing a fresh apple juice. Mr. Peterswald reverted several weeks later to the effect that Cafike Pty. Ltd. were very interested in pursuing a manufacturer/ distributor joint venture product and a meeting was held at Koonya in April 1984 for the purpose of formalising the agree- ment. Mr. and Mrs. R. Peterswald were present on behalf of Cafike Pty. Ltd. and myself on bvbehalf of Grove Fruit Juices (Tas.) The following minutes were tabled and agreed upon by all present:- 1) A joint venture apple juice product "GROVE APPLEMAID" would be conceived. 2) Cafike Pty, Ltd. to be producer/manufacturer, Grove Fruit Juices (Tas.) ta,be sole purchaser/distributor. 3) Manufacturer/distributor agreement for period of five years, with two five year options. 4) Pricing = Product sale price from Cafike Pty. Ltd. and Grove Fruit Juices' wholesale price was set at meeting. . Variations to be result of primary, market or other pertinent fluctuations. Inability to agree was to be decided by independent arbitration. 5) Initial launch cost to be paid by producer. Ongoing promotional costs to be shared 50% Grove Fruit Juices, 50% Cafike. 6) Grove Fruit Juices (Tas.) to pay for its products 30 days from statement issue. Under the direction of Grove Fruit Juices (Tas.) Grove Apple- maid preparation and presentation was completed in July 1984. Figures for Grove Applemaid purchases by Grove Fruit Juices since inception for the two year period following are as follows:s- PERIOD AVERAGE MONTHLY TOTAL PERIOD PURCHASES PURCHASES AUG '84 - DEC '84 $ 7,037.91 $ 35,189.56 JAN '65 - JUNE '85 $17,223.70 $103,342.22 JULY '85 - DEC '85 $26,956.90 $161,741.45 JAN '86 - JUNE '86 $32,552.98 $195,317.92 Grove Fruit Juices disbursements for development and promotional support over the same period:- 31. PERIOD PROMOTIONAL PREPARATION OF ARTWORK EXPENSES PLATE OLING AND "LABELS AUG '84 - DEC '84 $5,544 # $ 2,328 ## JAN '85 - JUNE '85 - $ 5,232 $ 3,301 JULY '85 - DEC '85 $ 5,392 $ 10,397 JAN '86 - JUNE '86 $ 7,245 $ 6,916 ® Cafike Pty. Ltd. invoiced for 50% *f Cafike Pty. Ltd. invoiced for $3,860 only. PRICING Grove Fruit Juices (Tas.) did not vary its wholesgle selling price for 24 months from those decided in April 1984. The price of apples remained constant during that period, production units flourished, but Cafike Pty. Ltd. increased its sales prices in August 1985 and January 1986, albeit to a total of 5%, In January and February 1986, Mr. Peterswald was advised of the large increases in promotional costs, and the necessity to provide for them to adequately increase our market share. In March 1986 I advised Mr. Peterswald that I would be increasing the wholesale selling price of all Grove products and implemented during April 1986. Since launching Grove Applemaid products -nearly two years previous Grove Fruit Juices had absorbed the following increases id order to gain maximum market penetration for its products. 1) - Cafike Pty. Ltd. increase - 5% 2) Successful penetration of grocery trade business during previous 24 months (Coles, Purity, Vos) meant parting with credits for their warehousing, trade and settlement discounts ranging from 5% to 14%. These costs were borne solely by Grove Fruit Juices. 3) Pressure of increasing Grove Applemaid sales necessitated increased refrigeration capacity in Hobart and warehouse facilities in Launceston for Northern distribution at 5% cost to Grove Fruit Juices. 4) Servicing of Roelf Vos stores in North West of state necessitated 5% freight ingredient to forward these products to distribution system. 5) Grocery trade (Coles/Woolworths) increase in promotional charges (50% - 100%) coupled with the need to promote more vigorously (June 1986 to December 1986 promotional ' disbursements by Grove Fruit Juices totalled $14,751.76 - previous half year was $7,244.64.) In April 1986 Grove Fruit Juices increased 1ts wholesale price of chilled apple juice by 15%, bat did-not increase the prices of its PVC juices to the grocery trade as 1t was striving for market position. 32. In May 1986 Mr. Peterswald challenged the necessity for the implementation of the aforesaid increase and was advised of our initial agreement to preserve respective margins. Mr. Peterawald stated that he believed that our price increase would disadvantage sales, which has not been the case. The preceding reasons 1 to 5 were explained to Mr. Peterswald in justification of our chilled apple juice increase. ! At this time Cafike Pty. Ltd. was experiencing cash flow shortages despite Grove Fruit Juices not only adhering to agreed purchaser's trading terms but also giving 50% of amount within 14 days of issue. It was jointly resolved between Mr. Peterswald and myself that concummation of much discussed equity participation by Grove Fruit Juices was the logical step to pursue to assist ongoing pricing structures and cash flows. It was resolved in June 1986 that for Grove Fruit Juices to obtain equity in Cafike, a minor shareholder would need to be purchased by R. and R. Peterswald enabling them tod remain 50/50 on equity with Grove Fruit Juices in the sew entity. It was also agreed that a balance sheet and profit and loss accounts for that year were needed to ascertain the 50% purchase price, After several meetings involving directors, accountants, financial and legal advisers of both Gorve Fruit Juices and Cafike Pty. Ltd. a heads of agreement for Grove Fruit Juices! purchase of 50% of Cafike Pty. Ltd. was finalised as follows: A three month period - October, November and December 1986 (inclusive) was given to Grove Fruit Juices to appraise the financial status of Cafike as stated by K. Peterswald, with Grove Fruit Juices to do all accounting work pertaining to Cafike. This was necessary as there was dissention concerning Mr. Peterswald's projection of an estimated stock value (surplus above liabilities against assets) as at the end of assessment at 31st December, 1986. On the basis that Mr. Peterswald's projection proved correct (and that Cafike's nett was as stated to be $90,000 per annum) purchase price was agreed upon for Grove Fruit Juices' 50% of Cafike as follows:- Grove Fruit Juices' capital payment of $25,000 witn a further Capital liability of $45,000 to be paid within 36 months with 14% per annum to be paid on interim bulance. This was a concessional price to take into consideration that Grove Fruit J ices would cede its joint venture status over the Grove Applemaid products in favour of its 50% equity in the new production/distribution company. Grove Fruit Juices would relinquish 1ts then current distribution and marketing margin to operate on a purely marginal rate in order to fully maximise returns to the new company. These concessions in distribution and marketing margins were effected in October 1986 on the totally accpeted and intrinsic / undertaking by both parties that negotiations would be pursued and consummated fully on the aforesaid basis. 33. In mid January 1987 Mr. Peterswald was advised that Cafike's Operations for the previous six months had operated at a loss, ang that there would not be a surplus of assets over liabilities as at 1st January as predicted. Mr. Peterswald was asked to submit our figures for the period monitored to his accountant for substantiation. Should Mr. McDougall be unable to find error in our estimation of Cafike's financial position as at ist January 1987, J. estimated the capitalization shortfall of Cafike to be $65,000 less than that promised by Mr. Peterswald on agreement for purchase. In light of Mr. Peterswald's overstatement of Cafike's position, our 50% purchase offer was reduced accordingly to $25,000. Mr. Peterswald had also recently disclosed that we would be jointly liable for a $70,000 T.D.A. advance to assist in the new venture's development. Mr. Peterswald was asked to have our accounting of Cafike's performance and our revised offer vetted at his earliest Opportunity, so that we might finalise the cost of our mutually committed future. ; Me. Peterswald undertook to assess the preceding and discuss nis findings with a view to final negotiations being concluded at a meeting of directors and accountants at 210 Collins Street Hobart on Friday the 20th of February 1987. Mr. Peterswald, however, called at Grove Fruit Juices on Thursday the 19th of February and advised that Cafike had concluded negotiations to sell 50% of Cafike to others. He also advised of cessation of all previous commitments and was asked to consolidate his rhetoric in written form , which was received on Monday 23rd of February (attached.) Paragraph (b) of his letter must pertain to the fact that Orange Investments Pay. Ltd. of which I also am a director acquired the Tasmanian operations of Mr Juicy twenty months ago - with associated products and distribution system, Our Grove Fruit Juices distribution system has not altered apart from progressing (as can be seen from figures on page 2) and definitely does not handle any products in competition to our Grove Applemaid commitment. 34. Those products inferred in paragraph (b) are integral to our Mr Juicy business only, and are directed specifically against our citrus based competitors. They have not been implemented into the grocery trade. Mr Juicy's marketing of its long-life product range at corner store level over the past two months has been assisted by:- a) Cafike's lack of production quality control during munageria] absence mid to late 1986 resulting in contamination and unsaleability of our Grove/Applemaid pgoducts. db) Labelling of Grove/Applemaid long-life products. Cafike were directed to vary the initial one label concept to incorporate individual formats being devised for our proven flavour blends. Our Grovedistribution system has been armed with point of sale marketing stands and sales racks and is currently awaiting the improved products and formats for a marketing push. Mr. Peterswald is well aware of this and has apparently been "sitting" on these @utually agreed upon progressions whilst he has been undertaking and concluding negotiations elsewhere. As Mr. Peterswald has been liasing with artwork development, Grove Fruit Juices has been pressing him constantly for these new formats to be presented since December 1986. Grove Fruit Juices (Tas.) has not wavered or varied in its commitment made with Cafike in April 1984. It has not received one complaint on marketing or distribution from its grocery trade customers statewide, nor failed to fill an order within 24 hours of receipt , since it evolved its Grove Applemaida products. Grove Fruit Juices (Tas.) has not wavered in its undertaking to pursue negotiations for the purchase of promised 50% of Cafike Pty. Ltd., and has passed over fully its agreed conces- sions towards formation of the joint venture company. Mr. Peterswald through his short-noticed correspondence has dis- honoured his initial agreement, and also his more recent under- taking to complete negotiations with Grove Fruit Juices (Tas.)" a (viii) 35. Threats of litigation On 25 February 1987, Mr. Peterswald wrote to Mr. Powell in these terms: "I refer to my letter of 19 Feb 87, 1n which I sought clarification of certain matters. To date no reply has been received, All orders for products will now only be received through our Hobart office, located at the ahove address. In view of my advice to you, all Apple Maid orders would need to be accompanied by order numbers from respective retailers. As regards Mr duicy products, you will appreciate that your lack of advice reyarding your requirements or otherwise, creates difficulties in planning production. Should you require Mr Juicy products, I reinterate (sic) that I am happy tu discuss the matter." On 26 February Cafike's solicitors wrote to Grove's solicitors as follows: "We are instructed that the Manager of Port Arthur Cider Company Pty. Ltd., Mr. R.K. Peterswald, wrote to your Mr. Powell on the 19th instant advising your client that the distribution of Apple Maid products through Grove Fruit Juices would cease from the lst March, 1987. t Our client intends ceasing to use any labels or packaging containing the word 'Grove'. We write to request that your client refrain from using any labels or packaging containing the words 'Apple Maid'. We understand your client's practise has been to order bottles and labels. It will consequently be necessary for him to re-arrange labels and packaging to exclude the words 'Apple Maid' as appropriate. Could you therefore please advise your client accordingly and communicate with us if there are any remaining matters which need discussion or clarification." On the same day Grove's solicitors wrote to Cafike in these terms: 36. "As you are aware we act for Grove Fruit Juices (Tas) Pty Ltd. We understand you have given notice to our client determining the distribution agreement with our client regarding the "Apple-maid" products. We are currently advising our client with respect to his rights of action regarding the early determination of that agreement. In the meantime we advise that should you distribute your product utilising the label upon which our client's name and mark "Grove" and our client's APN codes appear we will immediately and without further notice to you obtain an injunction prohibiting further distribution. In addition to obtaining an injunction preventing distribution utilising that label we shall also seek Carages in relation to the same. A similar position applies with respect to the new lahel developed jointly and between yourselves and our client " On 4 March 1987, Cafike's solicitors wrote to Grove's solicitors as follows: "Further to our client's letters to your client of the 19th of February, 1987 and of the 25th of February , 1987 we have not had any request from your client to supply it with our client's products except that yesterday you asked the terms upon which our client would be prepared to supply. Our client's terms are as follows: 1. It will supply fresh Apple Juice at $11.98 per six cartons and its Longlife Apple Juice at $12.12 per six cartons. It will also provide the Mr. Juicy Apple Juice and the Mr. Juicy Apple and Blackcurrant Juice at a price agreeable to our client depending on your clients requirements. The prices quoted are those to which our client presently agrees which prices are subject to alteration by our client from time to time. 2. Quantities would have to be agreed between our clients as would times and places of delivery. 3. Immediate payment of the balance of the January account which is now overdue. 4. Your clients agreement to pay the February trading account, half in the middle of this month and the balance at the end of this month without deduction. 37, 5. Your client would be free to mark up the product purchased as he wishes. 6. The product supplied to your client may display the word "Grove" and your clients bar code and if your client wishes this. 7. This agreement is of indefinite duration and may be terminated on reasonable notice. 8. The product sold to your client under' this agreement must be paid for in cash an delivery. 9. This agreement is not an exclusive agreement to supply." The offer was rejected by Grove's solicitors. On 4 March 1987 Grove commenced proceedings in this Court (No. TG2 of 1987) seeking to restrain the use by Cafike of the word "Grove" in relation ta fruit juices. Interlocutory relief was granted in that matter. On 18 March 1987 the present proceedings were commenced. In these proceedings Grove has cross-claimed on a number of alleged causes of actiom including the claim for relief made in proceedings TG2 of 1987. At the conclusion of evidence in the present proceedings, on 29 April 1988, by consent I dissolved the existing interim injunction in proceedings TG2 of 1987 and ordered that those proceedings be dismissed but noted that this dismissal was not to constitute a dismissal on the merits of Grove's claims and in particular was not to prejudice Grove in respect of its cross-claim in the present proceedings. (1) 38. Cafike's claims in the proceedings As has been noted, Cafike has sued on several alleged causes of action. It will be convenient to deal with them separately. Cafike's claim for the price of goods sold and delivered in January and February 19987 Cafike claims for the price of product delivered in January and February as follows: January 1987 3843 (Cartons of 6 Applemaid) @ base price $9.60 $36,892.00 Plus agreed add ons from various supermarkets as per January account 3,255.00 Plus 130 Mr. Juicy cartons @ $5.60 728.00 Plus agreed Coolers - 270.00 Plus agreed adjustment for Kokavesis deliveries in previous months 460.80 $41,605.80 Less agreed adjustment as per January account 4,373.11 $37,232.69 Less amount paid $19,000.00 Total claimed for January $18,233.00 F uar 87 1983 (Cartons of 6 Applemaid) @ $9.60 $19,036.80 Plus 138 Mr. Juicy cartons @ $5.60 772.00 Plus agreed add ons for various supermarkets - 39. Coles 21.85 Coles fresh 322.14 Purity 696.90 Vos 128.04 $20,977.73 Plus Total January $18,233.00 Total claimed for January and February 1987 $39,210.73 Cafike also claims inlercst om Lhis amount. Grove's defence to this claim is that only the sum of $28,568.00 is owing for the following reasons. Grove accepts that goods were sold and delivered as claimed by Cafike but contends that Cafike's prices were increased as from 1 October 1986 only upon the condition that Grove would receive back one-half of the increase. The issue here is whether the term or condition contended for by Grove was, in fact, agreed to by Cafike. It may be accepted that in the latter half of 1986 at least, the parties were anticipating that Grove would exercise its option to become an equity participant in Cafike and that a joint venture arrangement of that kind would be "consummated". However, I am not satisfied that Mr. and Mrs. Peterswald agreed to any profit-sharing with Grove before such "consummation" occurred. The conclusion of a joint venture arrangement may have been thought to be 40. likely but it was never regarded by anybody as a certain thing. Grove was given an option to take up an "equity" at a price of $87,750.00. It was not bound to exercise this option. The parties must have contemplated the possibility that Grove would not exercise its option. Nonetheless, some arrangement had to be made in the interim to deal with the prices to be paid by Grove to Cafike for product. Grove had increased its price and, to that point, Cafike had not, apart from increases in packaging costs. On behalf of Grove, it is accepted that no express agreement was made that the increase in Cafike's price was conditional upon Grove receiving back one half of the increase. The suggestion is that the Court should infer such a condition from the whole of the circumstances. In my opinion, such an implication should not be made. It is clear that the parties contemplated the possibility that no joint venture arrangement might ever come into existence. That being so, the interim arrangement as to Price which was put into operation from 1 October 1986 must have proceeded upon the express understanding of all concerned that it was at least possible that Grove would never participate in any profit accruing to Cafike from the payment for product ata higher rate. It must be borne in mind that Grove had increased its wholesale price from April 1986. From that time at least, Cafike was 41. seeking to increase its price and its claim for a higher price had been deferred pending the negotiations which occurred between the parties. In August 1986, it was agreed that a price increase should be granted to Cafike. It was first thought that this could be implemented by l1 September 1986 but, as it turned out, it could not be implemented until the following month. Thus, although Grove had increased its price in April 1986, Cafike had to wait for six months before it received its increase. In those circumstances, it is not unlikely that the parties would have proceeded on the footing that, as an interim arrangement, Cafike should receive its higher price without any condition as to accounting back to Grove for a share of its profits being attached. It is unlikely that Mr. Peterswald would have agreed to a condition of the kind now suggested. In the first place, as has been said, Cafike had seen its price rise deferred for some months while Grove had had the benefit of an increase in price for a considerable period. Moreover, the cumbersome and indefinite nature of the condition now contended for indicates improbability that it was agreed upon. An effort was made in argument to suggest what would be a suitable division of profit for this purpose but any solution is open to debate as an attempt to arrive at a fair and equitable distribution of profit as between the contracting parties. It is more likely that, in the bargaining that occurred in August 1986, Mr. Powell agreed with Mr. Peterswald that as an (11) 42. interim solution only (that is while Mr. Powell was considering whether he should exercise his option to take up "equity") Cafike should receive a higher price for its product; and that the receipt of this price should be free of any obligation to account to Grove for any share of profit accruing to Cafike in that respect. In the result, I uphold the claim by Cafike in respect of the month of January in the sum of $18,233.00 and in respect of the month of February in the sum of $20,977.73. In each case, the claim should bear interest. It is agreed that an appropriate rate of interest is 14% per annum. The amount of interest on $18,233.00, calculated on a daily rate from 1 February 1987 until 25 May 1988, is $3,356.87. This makes a total of $21,589.87 in respect of the claim for January 1987. The amount of interest on $20,977.73 calcululcd on a daily rate from 1 March 1987 until 25 May 1988, is $3,636.91. This nakes a total of $24,614.64 in respect of the claim for February 1987. Cafike's claim for product delivered and not accounted for In February 1987, 1983 containers of juice were supplied by Cafike to Grove. Discovery of Grove's records disclosed that it was possible to trace the distribution by Grove to various outlets of all but 475 cartons of product. Cafike claims that it should be inferred that these cartons were in fact distributed to supermarket outlets in which event Cafike would have been entitled to an average "add-on" of $1.51 per carton. Alternatively, (111) 43. it is contended on behalf of Cafike that it should be inferred that one half of these cartons (237 in number) were distributed to supermarket outlets. It is true that it is common ground that approximately one half of the distribution of "Applemaid" by Grove was to supermarkets. However, Cafike bears the onus of making good this claim and I am not prepared to draw either of the specific inferences suggested by Cafike. It is possible that the product in question could have been distributed to other outlets and the general evidence of the distribution of business overall is not, in ny opinion, a sufficiently safe guide for this purpose. It is said on behalf of Cafike that this is a matter within the exclusive knowledge of Grove. On the other hand, discovery of Grove's records was given to Cafike. I am not satisfied that this claim has been established and it is accordingly rejected. ike's cla for es yr breach of contract or for breach of fiduciary duties under an alleged joint venture arrangement (paras. 6 and 7 of the amended statement of claim) In the amended statement of claim, it was contended on hehalf of Cafike that the marketing arrangements arrived at between the parties at Koonya had been breached by Grove. The breach consisted of Grove increasing its price without fully informing Cafike of its intention to do so. It is 44, common ground that in March 1986, Cafike increased its prices, such price increase to be effective as from April 1986. In the amended statement of claim (para.6), Cafike claimed damages for breach of contract, alleging that it had lost the opportunity to raise its price accordingly. In para.7 of the amended statement of claim, Cafike put this claim in an alternative way, alleging that the arrangement arrived at in the Koonya meeting should be regarded as a joint venture giving rise to fiduciary obligations. It was said that Grove was in breach of its fiduciary obligations by increasing its price without fully informing Cafike; Cafike accordingly claims an account of profits in this behalf. The questions, first, what were the terms of the Koonya agreement and, secondly, whether there was any breach of those terms on the part of Grove, are considered below in the context of the cross-claim made by Grove that Cafike wrongfully terminated the Koonya agreement. For the reasons I there give, I am of the opinion that Cafike was entitled to terminate the Koonya agreement in May 198 6. However, no doubt because it was recognised that it would be difficult for Cafike to establish anything more than nominal damages in this connection, I was informed during addresses that although Cafike maintained that Grove breached the Koonya agreement by increasing prices in April 1986, nonetheless Cafike was not pressing the claim for damages or for an account of profits. In other words, the claims made in paras. 6 and 7 of the amended statement of claim were not pressed. (iv) 45. Cafike's claim that Grove passed off its product in February and March 1987 (paras. 12, 13 and 14 of the amended statement of claim) It appears that in the period immediately after the collapse of the relationship between the parties, Grove marketed apple juice in containers bearing the "Grove Applemaid" label which was not product produced by Cafike. The passing off is admitted by Grove. The evidence of the extent of the passing off is sketchy. On 16 March 1987, Mr. Peterswald saw some of the offending products in Purity shops in Sandy Bay. It appears that there were in the order of six dozen or s0 containers seen by Mr. Peterswald. It also appears that the passing off occurred over a period of about 19 days because the juice was seen by Mr. Peterswald on 18 or 19 March. An account of profits 4s sought. There is evidence from Mr. Jones, a chartered -accountant retained by Grove, that its gross profit on the sale of "Grove Applemaid" products in the eight month period from 1 July 1986 to 28 February 1987 was $22,826.00. This would suggest an average monthly profit in the order of approximately $2,800.00 gross or for a period of 18 days, an amount inthe order of $1,600.00. In an account of profits for passing off or _infringement of trade mark, an attempt must be made to estimate what profit should be properly attributable to the use of the name or mark in question. In the present case, the position is even further complicated by the circumstance that there are two names involved - "Grove" and "Applemaid". (v) (vi) 46. In my opinion, an appropriate amount to be allowed as a notional profit to be attributed to the use of the mark "Applemaid" over the period of this passing off is the sum of $400.00. Cafike's continuing claim for passing off (para.17 of the 2 d st mt of c ) Cafike alleges that since March 1987, Grove has continued to pass off its product. Grove has since that date adopted the use of new labels for use in connection with the sale of apple juice. Although there are some similarities between this label and the earlier label adopted by the parties, it appears to me that they are sufficiently distinguished. In any event, I note that during addresses this claim was no longer pressed. Cafike's claim that Grove wrongly debited an item of $1,449.00 against the account of Cafike in November 1986 (paras. JIA and 11B of amended statement of claim) It is now common ground that in August or September 1986, it was agreed between Mr. Peterswald and Mr. Powell that Cafike would bottle Grove's Mr. Juicy product under an arrangement which had as one of its terms an undertaking by Grove to meet the cost of the cartons. In November 1986, Grove debited an amount of $1,449.00 against the account of Cafike for Mr. Juicy cartons. It appears that this was an error. It is true that the error was not discovered by Cafike for some time but the claim is not (vil) 47. statute-barred by a lapse of time and there is no reason why a mistake of fact of this kind should not now be rectified. In my opinion, the claim for $1,449.00 should be upheld, with interest at the rate of 14% p.a. over a period of 18 months, i.e. giving an amount of interest of $304.29 and a Lolal claim in this respect of $1753.29. ke' a t. 4 ailed to account properl to Cafike in respect of promotional deductions alleqedly made (para.1] of amended statement of claim) Cafike contends that in a number of instances, Grove purported to deduct from monies due by it to Cafike, amounts said to be by way of promotional deductions when part only of the amount should have been deducted. In short, Cafike's contention is that in several cases a supermarket outlet charged Grove for the cost of promoting both apple and orange juices. In such a case, Cafike says Grove should only have debited Cafike with one quarter of the cost of the promotion, being one half of a one half share of its cost. The evidence makes good this claim in respect of the following invoices: PURITY OVERCHARGE Invoice 3170 $218.50 Invoice 7581 $650.00 Invoice 8150 $417.00 Invoice 9000 $250.00 (viii) 48. COLES Invoice 185966 $747.00 Invoice 137560 $150.00 VOSS/STATEWIDE Invoice 0171 $181.00 Invoice 0632 $181.00 Invoice 1181 $181.00 Invoice 3757 $218.00 It is further contended that similar inferences should be drawn in respect of other deductions where no invoice was discovered. In my opinion, such an inference is not warranted and I reject this part of the clain. In the result, I uphold this claim to the extent of $3,193.50. Again, it is appropriate that this claim should carry interest. The amounts in question were outstanding over several periods, one as early as January 1985 and some as late as July 1986. I propose to round off this aspect of the claim by allowing interest at the rate of 14% p.a. on the amount claimed over a period of three years, i.e. giving an amount of interest of $1,341.27 anda _ total claim in this respect of $4,534.77. Ca ° sold a delivered to Kokavesis a.1l of ended statement of claim) It is common ground that from time to time Mr. Kokavesis, who resides in New South Wales, ordered "Grove Applemaid" product. Because of the exclusive distributorship held by Grove, Mr. Kokavesis dealt with Grove as a principal. Product was supplied and paid for. (ix) 49. In January 1987, as the relationship between the present parties was deteriorating, it appears that Mr. Kokavesis ordered 192 cartons of product. There is evidence that this order was met by Cafike and consigned by it to Mr. Kokavesis by sea. There is documentary evidence that the product departed Hobart on 30 January 1987. It appears that Cafike sent no invoice to Grove in respect of this transaction. However, I think that the whole of the surrounding circumstances and, in particular, the previous course of dealings between the parties and Mr. Kokavesis, permit an inference to be drawm that these goods were ordered by Grove and accordingly Grove is liable for their price. It is common ground that, if Grove is liable, the amount of its liability is $2,073.00. I propose to uphold this claim but not to award interest. Cafike's claim that Grove failed to account for amounts received by Grove in respect of Cooler and Cider (para.1l of amended Statement of claim) Cafike contends that Grove is further indebted to it in respect of Grove's failure to account for the proceeds of sale of Cooler and "Scrumpy" Cider. It is common ground that there was a consignment arrangement between the 50. parties in this respect. It is agreed that Grove received from Cafike in February 1987: (1) 72 cartons of Cooler (2) 64 cartons of "Scrumpy" Cider Cafike's case is that Grove is indebted to it in the sum of $1,404.00 in respect of Cooler and in respect of "Scrumpy" Cider in the sum of $691.00. Cafike contends that this product was delivered to Grove who abandoned or dumped the Cooler at the South Hobart tip and that Grove is liable to account to Cafike for its value. The evidence of this claim is not satisfactory. It appears that some at least of the Cooler went off and its dumping would then have been justified. There is also a suggestion in the evidence that some of the product was taken back by Mr. Peterswald. However, Mr. Peterswald denies this. The evidence on both sides is sketchy. Cafike bears the onus of proof and I am not satisfied that it has made out any breach by Grove of the terms upon which the goods were bailed to Grove. Sl. Grove's cross-claims (1) Grove's claim for damages for alleged breach by Cafike of the Koonya agreement (amended defence and cross-claim ras. 2 27, 28 and 29 (a) The terms of the Koonya agreement As has been said, two of the terms of the agreement are contentious. I will deal with them separately. ql) The duration of the agreement It is common ground that five years was contemplated as the initial term. However, it is contended on behalf of Cafike that no final agreement to a five year term was made because it was intended that the arrangement be documented by the parties' solicitors. In my opinion, the parties agreed on an initial five year term at Koonya. There was probably mention of solicitors being involved but once the parties began to implement their arrangement on 1 August, it must be inferred that they intended to be bound whether or not their transaction was formally documented. Moreover, both parties then wanted a long-term arrangement. I am satisfied that the parties then agreed on an initial five year term. The subsequent options to renew the first term raise more difficult questions. Even on Mr. (2) 52. Powell's version, it appears that no details of these options were discussed. But, in any event, this aspect is now academic. It 1s accepted by both parties that no enforceable agreement was arrived at in respect of these options. It would seem that this branch of the Koonya discussion was severable from the agreement as to the first term of five years. In the result, I find that the parties agreed at Koonya on a five year term to commence in June or July 1984. Price structure Cafike's case is that the Koonya agreement provided that prices to be charged by either party could only be varied with the consent of the other party. Grove accepts this but seeks to add the qualification mentioned by Mr. Powell in his evidence that failure to agree on a price revision was to be resolved by arbitration. Mr. and Mrs. Peterswald deny that any reference was wade to arbitration at Koonya. I have difficulty in accepting Mr. Powell's version of the Koonya discussion in this respect. It will be recalled that his evidence was that the price structure then agreed upon could be varied "by mutual discussion or 53. independent arbitration". In his memorandum of 23 February 1987, Mr. Powell stated (at p.2) that Cafike's price and Grove's wholesale price were "set at (Cthe Koonyal meeting. Variations to be result of primary, market or other pertinent fluctuations. Inability to agree was to be decided by independent arbitration". Even if Mr. Powell mentioned arbitration in the course of the discussion, it seems unlikely that the parties would have committed themselves' to this course as a matter of agreement. It was agreed that the marketing arrangement was to last for five years. Both parties had come up with prices that were acceptable to each of them. It tis difficult to imagine that either party would have been prepared to place itself in the hands of an independent arbitrator on such a vital matter as price. It is particularly unlikely when the vagueness of the proposal is considered. On the whole, I think it is unlikely that the parties were prepared to submit to arbitration to break a deadlock over price. I prefer the version given by Mr. and Mrs. Peterswald. I find that it was an express term of the Koonya agreement that prices to be charged by both parties were then set and that any variation of 54. those prices could only occur with the consent of the other party. (b) Did Grove breach the Koonya agreement by increasing its prices in April 1986? (1) The discussion in January or February 1986 As has been seen, competing versions of this discussion were given by Mr. Peterswald and Mr. Powell. In my opinion, Mr. Peterswald's account should be accepted as more likely to have occurred. According to Mr. Powell, he then told Mr. Peterswald that Grove would be increasing its prices by 10% to 15% but Mr. Peterswald made no comments about Cafike's prices. This is a most unlikely situation. As Mr. Powell said in his memorandum of 23 February 1987, prices of both parties were "set" at Koonya. It is difficult to believe that Mr. Peterswald would stand by and accept no change in his price whilst Grove increased its price significantly. At the very least, a discussion of Mr. Peterswald's price would have been provoked. The respective margins to be earned by the parties was a critical consideration to each of them. It was to the forefront of their earlier discussions as the terms of the letter of 4 May demonstrate. 55. In his memorandum dated 23 February 1987, Mr. Powell said (at p.2) that - "In January and February 1986, Mr. Peterswald was advised of the large increases in promotional costs, and the necessity to provide for them to adequately increase our market share. In March 1986 I advised Mr. Peterswald that I would be increasing the wholesale selling price of all Grove products and implemented during April 1986... In May 1986 Mr. Peterswald challenged the necessity for the implementation of the aforesaid increase and was advised of our initial agreement to preserve respective margins. Mr. Peterswald stated that he believed that our price increase would disadvantage sales, which has not been the case..." This is a curious version of the events. Why would Mr. Peterswald wait until May to protest about a price increase said to be notified in March? I accept Mr. Peterswald's version of the discussion in January and February and reject Mr. Powell's account as unreliable. It is true that, on Mr. Peterswald's version, Mr. Powell foreshadowed the possibility of a future increase in Grove's prices. But the discussion was general and tentative. It is not possible to spell out of it an agreement by Cafike that Grove was to be at liberty to increase its price of "Applemaid" by any particular amount. The conversation proceeded 56. upon the footing that any increase was to be the subject of further discussions, and, no doubt, bargaining between the parties. (2) The Grove price rise It is common ground that Grove increased its price in March, effective April by up to 15%. (3) The discussion in April 1986 Mr. Peterswald's recollection of this discussion was better than Mr. Powell's. I accept Mr. Peterswald's version. I find that Mr. Powell then failed to disclose that he had increased his prices and, instead, sought to blame the supermarkets. (4) The first discussion in May 1986 Again, Mr. Peterswald's account of this meeting was more convincing than that offered by Mr. Powell. Mr. Peterswald's notes also support his account. I find that Mr. and Mrs. Peterswald then accused Mr. Powell of breaching their agreement and that Mr. Powell then accepted the three options put by Mr. Peterswald. (5) Breach by Grove It must follow, in my opinion, that in April 1986, Grove breached the Koonya agreement by increasing its price without informing Cafike of {c) 57. its intention to do so. In my view, this was a breach of an important, indeed fundamental, term of the marketing arrangement. As has been said, the pricing structure was of central significance to the parties. Without proper performance of this aspect of their contract, their relationship could not continue. Termination by Cafike Given the serious breach involved, Cafike was entitled in May 1986 to terminate the Koonya agreement. In my view, the first discussion between the parties in May, as described by Mr. Peterswald, was consistent only with the exercise by Cafike, and the acceptance by Grove, of that right. In substance and in form, Mr. Peterswald then put to Mr. Powell, and Mr. Powell accepted, that their existing relationship had ended. Mr. Powell did not wish to revert to the "original margins", which was the first option. The remaining possibilities were (the second option) a "joint venture" or (the third option) a Parting of the ways. This meant that the parties accepted that the original agreement had gone. It is true that, thereafter, Cafike continued to supply product to Grove but this was done in accordance with the on-going discussions between the parties which continued for many months. The product supplied after the first discussion in May 1986 was 58. sold under the umbrella of and, in the context of, those and the later discussions. These goods were not sold under the original Koonya agreement. For one thing, in August, Grove agreed, onan interim basis, to a price structure which was quite different to the Koonya arrangement. As events happened, the "joint venture" negotiations were not fruitful. This meant that Mr. Peterswald's third option came into operation and each party was then free to go its own way. It is true that in the negotiations in July 1986, Mr. Powell asserted that Grove had subsisting rights under the Koonya arrangement. But this assertion, late as it was, has to be seen against the background of the May discussion when Mr. Powell accepted that Grove was in breach of the Koonya agreement. To summarise the foregoing in point of legal analysis: (1) in April 1986, Grove committed a fundamental breach of the Koonya agreement. (2) In May 1986, Cafike exercised its right to terminate the agreement. (3) In May 1986 the parties agreed to negotiate for a "joint venture" on the footing that, if the negotiations proved unsuccessful, the parties could go their own ways. (4) In August 1986, an interim price structure was adopted pending the outcome of the "joint venture" negotiations. (5) In (11) 59. February 1987, those negotiations failed. (6) At that stage, each party was free of any future commitment to the other. In the result, this cross-clain fails. Grove's claim for debt for accounting services rendered (amended defence and cross-claim paras. 36, 36A, 36B_ and 3D As has been noted, Grove rendered certain accountancy and similar services to Cafike between September 1986 and February 1987. Grove puts its case in several ways: (1) Cafike is liable to pay a proportion of the Management fee of $15,000.00 per annum being an amount discussed in the "joint venture" negotiations in August 1986. In my opinion, this claim should he rejected. For one thing, it appears that the fee of $15,000.00 was to be payable in respect of services of a managerial kind extending beyond accounting or similar services; secondly, the management fee was part of the "joint venture" arrangements when and if they were put in place. I am not satisfied that Cafike expressly or by implication agreed to pay for the accounting and similar work done by Mr. Pastoor and his clerical staff at the rate of $15,000.00 per annun. (2) 60. Alternatively, Grove claims that if no fee for the services was actually agreed, Cafike is liable to pay a reasonable amount ona quantum meruit or "unjust enrichment" basis. Cafike disputes any liability to pay for these services. It contends that Grove elected to have access to its books and records for the private purpose of satisfying itself in respect of Cafike's financial position. In my view, this defence should be rejected on the facts. It is true that one of the purposes of handing the books to Mr. Pastoor was to assist Grove in its "joint venture" negotiations. But it was further contemplated Mr. Pastoor would write up the books in the interin. This was done and a corresponding benefit was conferred upon Cafike at its implied, if not express, request. In those circumstances, there should be imposed upon Cafike a liability to pay a reasonable amount for what was done. In support of this claim, Grove contends for the following: Office Manager (Mr. Pastoor) September 1986 to February 1987 5 months at average of 8 hours per month = 40 hours Annual salary $25,000.00 = 12.65 per hour (38 hour week) Plus "on costs" at 25% = 15.81 x 40 hours = $623.00 61. Clerical September 1986 to February 1987 5 months at average of 10 hours per month = 50 hours Average salary of $4,500.00 = $7.33 (38 hour week) Plus "on costs" of 25% = 9.16 = $458.12 $1081.12 In my opinion, these figures are reasonable. I uphold this claim together with interest in the sum of $239.65 being a rounded off period of 19 months at 14% p.a. (411) Grove's claim that Cafike passed off its product (Amended defence and cross-claim paras. 30, 31, 32, 33 and 34) These claims were not pressed. (iv) Grove's claim that Cafike is indebted to it in respect of the cost £ els Amended defence -and cross-claim para.14) This claim was not pressed. SUMMARY OF THE RESULT OF THE PROCEEDINGS A. Cafike's claims (i) I uphold the claim for the price of goods sold and delivered in January and February 1987 in the gums of 318,233.00 for January together with interest in the (ii) (iii) (iv) (v) (vi) (vil) (vill) 62. sum of $3,356.87, and $20,977.73 for February together with interest in the sum of $3,636.91. I reject the claim for 475 cartons of product delivered and not accounted for. I reject the claim for damages for breach of contract or for breach of fiduciary duties under an alleged joint venture arrangement. I uphold the claim that Grove passed off Cafike's product in February and March 1987 in the sum of $400.00. I reject the continuing claim for passing off. I uphold the claim that Grove wrongly debited an item of $1,449.00 against the account of Cafike in November 1986 in the sum of $1,449.00 together with interest in the sum of $304.29. I uphold the claim that Grove failed to account properly to Cafike in respect of promotional deductions in the sum of $3,193.50 together with interest in the sum of $1,341.27. I uphold the claim for goods sold and delivered to Mr. Kokavesis in the sum of $2,073.00. 63. (ix) I reject the claim that Grove failed to account for amounts received by them in respect of Cooler and Cider. B. Grove's cross-claims (i) Grove's claim for damages for alleged breach by Cafike of the Koonya agreement is rejected. (ii) Grove's claim for debt for accounting services rendered is upheld in the sum of $1,081.12 together with interest in the sum of $239.65. (iii) Grove's other cross-claims were not pressed. Costs In all the circumstances, it is appropriate that Cafike receive three-quarters of its costs of the proceedings. Counsel for Cafike Pty. Ltd. : 64. I certify that this and the preceding SixTJ-THREE (63) pages are a true copy of the Reasons for Judgment herein of Mr. Justice Beaumont. hoe Associate Lente Ce Dated: 2S en IVES Mr. W. Ayliffe Mr. R. Curtis Solicitors for Cafike Pty. Ltd.: Counsel for R.R. & S.M. Powell Pty. Ltd.: Solicitors for R.R. & 8. Powell Pty. Ltd.: Dates of Hearing: Date Judgment Delivered: Abetz Curtis & Dutton Mr. C. Brown Mr. L. Sealy M. Piggott, Wood & Baker 18, 19, 20, 21, 22, 27, 28, 29 April, 24 May 1988 25 May 1988