1. The
Plaintiff is seeking to recover monies which he claims are owed to it by the
Defendants. A number of matters are common case, others are in issue.
2. What
is common case is that the Defendants defaulted under a number of agreements
made between them and the Plaintiff's predecessor in title (referred to as
Highland), and that proceedings were issued to recover the sums alleged to be
owing. After the proceedings were issued, Appearances were entered and Motions
brought for liberty to enter final judgment.
3. At
this stage, efforts were made to recover the monies without recourse to the
proceedings. The first meeting between representatives of Highland and the
Defendants led to a slanging match. However, a further approach was made and
an arrangement was entered into. This was on the 3rd March, 1992. Whether
this resulted in a concluded agreement and, if so, upon what terms is in
dispute. What is accepted by both parties is that the Defendants indicated
willingness to meet their obligations by agreeing to put certain items of
machinery up for sale. The arrangement was made between John O'Neill on behalf
of Highland and John Killeen. Its purpose was to produce a formula by which
the claim could be compromised. It was agreed that a reduced amount would be
accepted provided that various items of equipment were returned by the
Defendants to be sold. These items were to be returned to main dealers. This
was to enable them to be sold in the ordinary course of sale rather than in the
obvious course of the repossession.
4. The
items to be returned were agreed. Valuations were placed upon each item.
There is some disagreement as to who actually valued the items of equipment.
In my view, this was done initially by John Killeen but I accept that John
O'Neill had an input and that largely the resulting figures had the approval of
both of them. The list and valuations placed upon them was as follows:-
9. There
is no real disagreement on these matters. There is, however, a serious dispute
as to what was to happen if the valuations were not achieved in practice.
10. The
evidence of John O'Neill was to the effect that the Defendants were to provide
the items already set out and that they were to pay in addition a further
£10,000 by two payments of £5,000 each, one in October 1992 and the
other in July 1993. If the several items failed to achieve £98,000, then
the Plaintiff would bear the loss up to £5,000 and thereafter the
Defendants would bear the next £10,000. If the shortfall was greater than
this, they would supply two further tractors for sale. He says that he made a
note at the time and this note was adduced in evidence. Though its contents
were not strictly admissible as to their truth, no objection was made to its
admission in evidence. This note refers to a settlement at £103,000.
11. The
evidence of John Killeen denies any additional payment of £10,000. He
accepts however that a further liability to £10,000 could have occurred in
the event of a shortfall below £93,000. He further denies that two
further tractors might have to be sold. He was to deliver the items,
thereafter it was for Highland to achieve sales and collect the purchase monies.
12. James
Killeen also gave evidence. It was clear that the details of the arrangement
were made by his brother and that he had merely a peripheral knowledge of them.
He was, however, of the opinion that the Defendants would probably have to pay
the further sum of £10,000 by way of the two instalments of £5,000
each payable on the 20th October, 1992 and the 20th July, 1993. This meeting
took place on 3rd March, 1992. It is agreed that whatever arrangement was made
it had to be authorised by head office of Highland. This was done and on the
4th March, 1992, the Defendants were notified of this fact. On the 5th March,
1992 Highland wrote setting out the terms of the arrangement in the form of an
offer to be accepted in writing.
13. This
letter is at variance with the evidence of John O'Neill to some extent. It
suggests a settlement at £103,000.00 or £108,000.00. It also
suggests that a shortfall below £93,000.00 to be made up by the sale of
two further Mercedes tractors which should be made up by the Defendants not to
£93,000.00 but to £98,000.00. In any event, the Solicitors for the
Defendants replied on the 10th March, 1992 in which they took issue with the
letter of the 5th March on a number of points. The relevant portions of this
letter are as follows:-
14. The
letter then continued to deny that the two sums of £5,000.00 were to be
paid in any event and that the shortfall below £93,000.00 was to be made
up by disposal of Mercedes tractors.
15. Notwithstanding
the contradictions contained in the letter of the 10th March, there was no
disclaimer by Highland. In the course of a letter dated the 22nd April, 1992
the Solicitors for the Defendants wrote to the Solicitors for Highland
indicating the stage at which performance of the arrangement had reached. The
letter, so far as is material, was as follows:-
16. Again
there was no disclaimer of these matters on behalf of Highland. The
proceedings were subsequently adjourned generally with liberty to re-enter and
in a letter dated the 10th August, 1992 from Highland's Solicitors to the
Defendants' Solicitors, the following was also indicated:-
17. Of
the several items agreed to be put up for sale all were delivered to the
various main dealers by whom they were to be sold. An exception was the first
item, the two grain dryers which because of their size were more easily
disposable from the site where they were erected. In addition, the Defendants
delivered up two further trailers.
18. Leaving
aside for the moment which party is correct as to the terms of the arrangement,
I am satisfied that an oral agreement was concluded on 3rd March, 1992 subject
to a condition subsequent which was fulfilled.
19. I
accept John Killeen's version of the arrangement made between him and John
O'Neill. I accept that one purpose of the valuations was to ensure a valuation
before the items left the Defendants' premises. Both acknowledged that the
valuations might not be achieved and that accordingly loss might be borne. If
so, the first £5,000 was to be borne by Highland and the next £10,000
by the Defendants. I do not accept that two further tractors were every to be
made available. I accept that if the Defendants had to make good shortfall up
to £10,000 that this was to be by two instalments of £5,000 each on
the 20th October, 1992 and 20th July, 1993 respectively following sales of
harvest. I do not accept that the Defendants were to pay £10,000 even if
there was no shortfall unless a total of £108,000 was achieved. James
Killeen acknowledged that this £10,000 would probably have been payable.
I accept this not as meaning unless £108,000 was achieved but as an
acknowledgement that he did not expect the valuations to be realised. The fact
that two additional trailers were handed over supports the suggestion that the
Defendants wanted to avoid liability for shortfalls so far as possible.
20. In
my view it would be reasonable to expect the items to reach in or about their
estimated values if sold in the ordinary course of business. The grain dryers
were very large and it is not surprising that they were not brought in to a
dealers premises. I accept the evidence of John Killeen that they were
dismantled by Mr. Craigie after they had been seen by a number of potential
buyers.
21. Evidence
has been adduced by the Plaintiff as to the figures appearing in its financial
records representing the proceeds of sale of all the items, save the grain
dryers and the grain trailers. No evidence was given on behalf of the
Plaintiff by anyone of any direct knowledge of the circumstances surrounding
the sales or any other matter which could verify the figures contained in the
Plaintiff's books.
22. It
would appear that all the items, save the dryers and the trailers, have been
sold. Only in relation to the two tractors is there evidence to suggest how
they were sold and to whom. They were sold by Craigie at auction trading as
The Machinery Sales Specialist to Blackchurch Farm Machines for £5,000 and
£3,500 respectively. Both these sums were credited to the accounts of the
Defendants. It would seem therefore that either no commission was charged or
that the auctioneer has acted as principal in the transactions or that a higher
price was in fact obtained.
23. While
the books of the Plaintiff show other sums credited to the accounts, there is
no evidence as to the manner of sale or the purchaser.
24. The
agreement between the parties allowed for ordinary retail sale and only if this
could not be obtained by specified dates, could the items presumably be sold by
auction. The obligation to arrange the former mode of sale lay upon Highland.
Save for some letters furnished by the Defendants, which in any event are
neither admissible as to the truth of their contents nor, even if they were of
much assistance, there is no evidence as to what happened to the various items
after they were delivered to the various retail firms, where they were stored,
when they were removed and on whose authority. Nor is there any evidence as to
where they were moved, assuming that to be the case and how they were sold.
There is no evidence as to the condition of the items when they left the
Defendants' premises nor any evidence that on those dates the estimates were in
any way unreasonable.
25. In
my view, in the absence of explanation by admissible evidence of which I have
none that the estimated prices were unreasonably high, I accept them as proper
valuations believed to have been reasonably accurate. That is not to say that
they would necessarily have been achieved, particularly if sold in the course
of repossession at auction. Since the Plaintiff cannot establish the prices
which would have been obtained had the items been sold in accordance with the
terms of the agreement, it must accept the valuations in their place. So far
as the dryers are concerned, there has been no evidence as to the circumstances
in which they came to be dismantled other than that this was to facilitate
their removal. No evidence has been adduced as to any sale, and, if so, the
price achieved nor why the sale, if any, did not proceed.
26. Having
regard to the breach by Highland of its obligation to effect sales in the
manner agreed, there is no evidence of a shortfall. In these circumstances the
Plaintiff must accept that no liability on the part of the Defendants to meet a
shortfall can have arisen. I accept the Defendants' submission that they
performed their part of the bargain and that no further obligations on their
part came into being.