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Melcoffee Sawmill Ltd v Mark [2009] VUSC 134; Civil Case 11 of 2006 (9 November 2009)

IN THE SUPREME COURT OF
THE REPUBLIC OF VANUATU
(CIVIL JURISDICTION)

Civil Case No. 11 of 2006

BETWEEN:

MELCOFFEE SAWMILL LIMITED
Claimant

AND:

GREG MARK
Defendant

Coram: Justice Oliver A. Saksak

Counsel: Mr. J. Malcolm for the Claimant
Mr. N. Morrison for the Defendant and Cross-Claimant

Date of Hearing: 6th August, 2009
Date of Decision: 9th November, 2009

JUDGMENT

Introduction

1. This is a reserved judgment. By way of background the following facts are relevant -

1. In May 2005 the Claimant advertised for a logging contractor to which the defendant responded.
   
2. The Claimant made representations to the defendant in two separate documents namely:
   

(i) Monthly Logging Costs; and

(ii) Answers to Likely Questions.

100. As a result of those representations a written agreement (First Agreement) was concluded and signed by the Claimant and the Defendant on 10th August, 2005.
     

4. The First Agreement included the following terms:
   

(i). Five years renewable but reviewed annually.

(ii). Minimum logs of 8,000 cubic metres annually

(iii). Contract price covered direct costs of logging and delivery.

(iv). All tally sheets to be kept and made available on request.

(v). Equipment required was specified and listed.

(vi). Hirage needs could be negotiated.

(vii). Variation to be by written agreement.

(viii). Payments not later than 20th of the month following delivery.

5. On or about 10th November, 2005 the Second Agreement was made and signed by the Claimant and the Defendant on 16th November, 2005.
   
6. The Second Agreement included a new Clause 8 (a) which included:
   

(i) a reduced hirage charge of VT 1,000 per cubic metre,

(ii) In-creased equipment, requirements for –

- 1 x Kenworth Logging Trade,

- 1 x Cat DGD Bulldozer, and

- 1 x Cat 950 Loader.

(iii) the requirement that the Defendant as a contractor would be responsible for all fuel, oil, filters and general maintenance of the equipment as listed above.

7. On 16th November, 2005 on the signing of the Second Agreement the Claimant made payments by cheques to the Defendant in the sums of VT 500,000 and VT765.587. The Defendant cashed the cheque for VT500.000 on the same date.
   
8. On 19th November, 2005 the Defendant wrote to the Claimant advising them that Second Agreement of 16th November, 2005:
   

"....... Is Not Acceptable as it lacks much needed clarification and detail in many areas. I therefore make it void".

In the same letter the Defendant suggested a meeting be held at the Claimant's office at 9 o'clock on 22nd November, 2005 to discuss issues and to draw up a contract to be signed by 30th November, 2005.

1. On 21st November, 2005 the Defendant cashed the other cheque for the sum of VT 765,587.
   

10. On 22nd November, 2005 at 9 o'clock am a meeting was held at the Claimant's office. The Claimant, the Defendant and Mr. Colin Venter were present at the meeting.
    
11. Later on 22nd November, 2005 the Claimant wrote to the Defendant informing him that –
    

"We hereby accept your cancellation of the logging contract of 10th November."

Claims Alleged By Claimant

2. Resulting from these background facts the claimant alleged against the Defendant as follows:-

1. The Defendant failed to pay the Claimant in the sum of NZ$95,000.00 (VT7,718,000) being the purchase price of:
   

(i) 1 x Cat. D6D Bulldozer NZ$60,000-00 (VT4,875,000)

(ii) 1 x Cat. 950 Loader NZ$15,000-00 (VT1,218,750)

(iii) 1 x Kenworth Log Trade NZ$20,000-00 (VT1,625,000)

As such, the Defendant had breached the First Agreement.

2. That 2 chainsaws and 4 x skidder wheels were loaned by the Claimant to the Defendant under the terms of the First Agreement and that those equipment have not been returned by the Defendant.
   

100. That the Defendant has an outstanding debt of VT1,190,and 390 owing to the Claimant.
     

Claims Alleged By Defendant in Counter-Claim

3. The Defendant filed a counter-claim against the Claimant alleging that –

(a) The Claimant had committed breach of the First Agreement by failing to make payments due to him for work done between 26th August and 31st October, 2005. The first part should have been paid by 20th September 2005 and the second part by 20th October, 2005. Instead there were paid by cheques in two instalments, the first on 16th November 2005, for the sum of VT500,000, and the second on 21st November 2005, for the sum of VT765,587.

(b) That the above payments made on 16th and 21st November 2005 were under-payments in the sum of VT941,594 since the Claimant had made calculations not based on the VT4,668 per cubic metre under the First Agreement, but under the Second Agreement which made a deduction ofVT1,000 for machine hire for each cubic metre, thus reducing VT4,668 down to VT3,668. In doing so, it is alleged by the Defendant the Claimant had breached the First Agreement.

(c) That the Claimant made an under-payment in the sum of VT993,473 for work done from 1st November to 21st November 2005 by making calculations under the First Agreement, but making a deduction of VT1,000 per cubic metre under the Second Agreement to which the Defendant had not agreed.

(d) That the Claimant had cancelled the First Agreement and that his action amounted to a universal act. The Defendant alleged he is entitled to be paid the balance of his contract which is some 4 years and 9 months. However he had made concessions and claimed only for 3 years of the balance of the contract calculated to amount to VT36,481,500.

(e) Finally the Defendant alleged the Claimant's claims were vague, duplicated and concocted due to contradictory evidence. As such the claims should be dismissed with costs.

Burden and Standard of Proof

4. This case being a civil matter, the burden of proof rests on the party alleging a particular fact to prove those facts by relevant and admissible evidence on the balance of probabilities. In the substantive claim, the burden rests on the Claimant. And on the counter-claim, the burden of proof rests on the Defendant.

Evidence

5. The Claimant relied on the evidence contained in the sworn statements of-

a) Neil Croucher dated 5th July, 30th August, 2007 and 30th October, 2007 respectively,

b) Julie Nibel dated 30th August, 2007 and

c) Rodney Aru also of 30th August, 2007.

5.1 The Defendant relied on his evidence contained in his sworn statement dated 15th June, 2007 and filed on 11th July 2007 in support of his defence and counter-claims.

5.2. Issues and determination of them are made in light of those evidence in so far as they are relevant to the issues raised.

Issues

6. From the point of view of the Claimant the issues are as follows:-

(a) Whether or not the Defendant is liable for the use of the two Chainsaws and for the costs thereof and/or for their return?

The evidence

In the sworn statement of Mr. Croucher dated 5th July, 2007 included under Exhibit H is an Invoice/Statement (2) dated 10th November 2005. It makes mention of Log Chains and Fitting (4) and cost of VT92, 000, and of VAS (Spare Part C/Saw and cost of VT8, 112.

Finding

On the balance of probability the Court is satisfied that 2 Chainsaws were given by the Claimant to the Defendant for use and hire.

A further issue however arises as to whether these have been returned or not.

The Defendant's evidence was that he had returned the Chainsaws. The Claimant on the other hand was unsure about their return. The Claimant did not specify the actual costs of the two Chainsaws in his claims or in his evidence orally or by sworn statements.

The Defendant, submitted this part of the Claimant's claim should be dismissed. The Court agrees with that submission. The Claimant's claims for two Chainsaws and/or the cost thereof is hereby dismissed.

(b) Whether or not the Defendant is liable for the use of 4 Skidder tyres and the costs of them and/or the return of them?

The evidence

(i) Again in the sworn statement of Mr. Croucher dated 5th July, 2007 included in Exhibit G is an Invoice dated 25th November 2005. This Invoice/Statement 2 makes reference to 3x23.1x26 tyres at VT150,000 each, and 1x23.1x26 tyre at VT75,000.

The Defendant acknowledged in his evidence that he was given these tyres by the Claimant but argued they were given as gifts and not for hire. He appeared to have conceded that the tyres have not been returned on the basis he alleged that they were gifted to him. He did say in cross-examination that the tyres were not used. He did not indicate where the tyres were or could be located.

The Contract

(ii) On 10th August 2005 the Claimant (as Principal) and the Defendant (as Contractor) entered into a Contract of Log Production And Supply.

Clause 8 states-

"It is understood that the principal will make available on hire basis, when requested by the contractor, any of his own available spare machinery to cover breakdowns from time to time and to ensure production levels are maintained as contracted. The rates for the dry hire of this machinery will be negotiated by the concerned parties form (sic) time to time."

Finding

Applying this part of the contract to the facts, the Court is satisfied it is probable the Claimant gave the four Skidder tyres to the Defendant for hire. The Court does not accept the Defendant's argument that they were given to him as gifts. The Defendant has not disputed the costs. Therefore the Court concludes that this part of the Claimant's claims is successful and he will have judgment against the Defendant for the costs of the four Skidder tyres which is the total sum of VT525,000 rather than issue an order for their return.

(c) Whether or not the Defendant is liable for the payment of outstanding expenses to the Claimant in the sum of VT1, 190,390?

Evidence

Again in the sworn statement of Mr. Croucher included in Exhibit G are 'two Invoice/Statements dated 28th November, 2005 respectively. On Invoice/Statement 1 a figure of VT960,118 are shown for 205.681 cubic metres of logs at VT4,668 per cubic metre. Also indicated are wages – VT283,900 and fuel – VT473,127 bringing a total of VT757,027. These are deducted from VT960,118 leaving the balance of VT203,091. This amount is brought forward to Invoice/Statement 2 and added to the total expenses of VT1,238,650 including V.A.T at VT154,831 making a total of VT1,393,481. The final total sum is VT1,190,390. This is the sum that the Claimant alleges the Defendant still owes them.

Findings

The Court finds that included in the VT1,393,481 are the costs of 4 Skidder tyres of VT450,000 for 3 tyres at VT150,000 each and one for VT75,000. That is a total of VT525,000.

The Defendant does not appear to dispute the costs of Skidder tyres. He however disputes the total amount that is claimed against him and submits they are misconceived or are the subject of a double counting.

The Court agrees there is a double counting but rejects that the claims are misconceived. It is therefore proper that the sum of VT525,000 be deducted from the sum of VT1,393,481 leaving the balance of VT768,481. The sum of VT203,091 is then added to VT768,481 giving the total of VT971,572.

The Court concludes that the sum of VT971,572 is the correct sum outstanding against the Defendant and not the sum of VT1,190,390. Accordingly, this part of the Claimant's claim is successful against the Defendant and judgment is entered in favour of the Claimant.

Counter-Claims of the Defendant

7. The counter-claims of the Defendant are stated under paragraph 3 of this judgment and I need not repeat them.

The Defendant has raised one main issue –

"Was the Agreement of 16th November 2005 a lawful amendment of the Parties' Agreement of 10th August 2005, or was it a purported new Agreement?"

The Evidence

7.1 (a) In Mr. Croucher's sworn statement of 5th July 2007 he annexes as Exhibit J his letter on behalf of the Claimant to the Defendant dated 10th November 2005. It reads –

"The Manager

Wise Logging

PO Box 224

Santo

Dear Greg,

As per our earlier discussion in regard to your current inability to pay as agreed the prices for our Kenworth Logging Truck, Cat D6D Bulldozer and Cat 950 Loader.

My family has agreed for you to continue using the above equipment including the two chainsaws, Land cruiser and other incidental items owned by ourselves on the condition that you accept a new contract for Logging Production and Supply.

The price will be VT3,668 per m³.

This new contract is attached

Your production and income for the period 26.09.05 to 31.10.05= 941.594 m³ x 3,668 VT = 3,453,766 VT

Also a statement of production and income up to 31.10.05 is attached which includes Invoices for items used by your company.

At this time M.S.L accepts that the purchase of an excavator is required only if you believe such purchase is warranted.

We wish to remind you that one of the conditions of this contract is that the contractor in person is required to be on the logging site at all reasonable times. We note that during the last two weeks you have been absent for a total of 10 working days and this is completely unacceptable to our company.

Any future long absence from work by yourself should be notified to me at least four weeks prior to planned departure and a relief Manager should be appointed. The only acceptable exception would be families emergencies or bereavement.

Yours faithfully

(Signed)

Neil H. Croucher

Managing Director"

(Emphasis by underlining)

(b) The new contract s dated 10th November 2005 which was on a Thursday and not a Saturday as claimed by the Defendant. It reads -

"CONTRACT FOR LOG PRODUCTION AND SUPPLY

BETWEEN:

MELCOFFEE SAWMILLS LTD (MSL) - PRINCIPAL

AND:

WISE LOGGING – CONTRACTOR"

Preamble

This contract is entered into by both parties with the understanding that is success is vital to the fiscal survival of both parties, i.e. Melcoffee cannot continue to exist without regular adequate log supply and neither can the contractor. Any disputes will be solved by negotiation between the parties with the above thought in mind.

1) The contract is offered for a period of five years with right of renewal.

2) The contractor will produce logs at a minimum level of 8,000 m³ per annum. Where possible the contractor will secure all staff from the existing labour force.

3) The logging contract price will cover all direct costs of logging and delivery to MSL Sawmill. Contractor to be involved in the formulation of logging plans and Management of roading.

4) The price of logging to be paid to the contractor not later than 20th of the month following.

Log production and delivered to Sawmill price will be VT 4,668 m³.

Less hire charge as per 8a - VT1,000

Total net logging price - VT3,668

5) Scaling of production will be carried out in the sawmill yard by the principal's staff as soon as convenient after delivery. All tally sheets will be kept and made available to the contractor for check scaling as requested.

6) Logging will require the extraction of species as directed by the principal and the contractor will operate on the basis that the primary market demands are for whitewood (Endospermic spp).

7) The contractor is responsible to have on site at all material times sufficient equipment namely:-

1 x Cat D6D or similar

1 x Cat 950

2 x Logging Trucks

1 x Cat 518 Log Skidder

Incidental crew transport and supervision vehicles, to produce the contract volume (8,000 m³ per minimum) as demanded by the principal.

8) It is understood that the principal will make available on a hire basis, when requested by the contractor, any of his own available spare machinery to cover breakdowns from time to time and to ensure production levels are maintained as contracted. The rates for the dry hire of this machinery will be negotiated by the concerned parties from (sic) time to time.

8) a. The contractor agrees to hire for VT1,000 per m³ from MSL and or its agents the following equipments –

1 x Kenwoth Logging Truck

1 x Cat D6D Bulldozer

1 x Cat 950 Header

The contractor will be responsible for all fuel, oil, filters and general maintenance of above three machines.

9) The contractor shall carry insurance as required by Vanuatu Law. The contractor in person is required to be on the logging site at all reasonable times.

10) The contractor will comply with and obey all relative laws imposed by the State of Vanuatu over the term of this contract.

11) The terms of this contract may be varied at any time by the written agreement of both parties.

12) Any timber sawn by the contractor on MSL areas will be sold only to MSL at an agreed price.

DATED this 10th day of November 2005

Between Parties:

Wise Logging (to be known as "the Contractor") and

Melcoffee Sawmills Ltd (to be known as "the Principal")

MELCOFFEE SAWMILLS LIMITED and WISE LOGGING BOTH AGREE TO BE BOUND BY THESE TERMS AND CONDITIONS

(c) Julie Nibel, Secretary/Typist to the Claimant gave evidence by sworn statement, dated 30th August 2007. She typed the above contract on 10th November 2005. She was present on Wednesday 16th November 2007 at Mr. Croucher's Office when the contract was signed by Mr. Croucher and Mr. Mark (defendant). She confirmed that there was no argument between Mr. Croucher and Mr. Mark upon signing the contract on 16th November. She said Mr. Mark had a heated argument with Mr. Croucher on 21st November 2005 at about 5 o'clock pm.

Duress and Undue Influence

7.2 (a) The defendant alleged the contract dated 10th November 2005 and signed on 16th November 2005 was done under duress and undue influence.

(b) It was his evidence that upon signing the contract on 16th November the defendant was shown two cheques one for the sum of VT500,000 and the other for VT765,587. It was his evidence that if he did not sign the contract, he would not get his cheques. (see Exhibit L to Mr. Croucher's statement of 5th July 2007).

(c) In cross-examination, the defendant conceded there was no threat made to him by Mr. Croucher or any of the Claimant's staff or employees.

(d) It was submitted by the defendant that when Mr. Croucher was presenting a varied contract at the same time as he was presenting long overdue payments for work done, there was undue influence that was exerted upon the defendant in respect to the signing of that varied new contract on 16th November 2005. That being so, it was further submitted the defendant was at liberty to avoid the contract.

(e) The defendant avoided the new contract by his handwritten letter dated 19th November, 2005. (see Exhibit M of Mr. Croucher's sworn statement of 5th July 2007). It reads –

"The Shareholders

Melcoffee Sawmills Ltd (MSL)

Box 224

Santo

To: The Managing Director And Associated Shareholders

Re: Contract Headed "CONTRACT FOR LOG PRODUCTION AND SUPPLY" Dated 16 – 11 – 2005

I Greg Mark owner of Wise Logging, wish to advise that the above contract after thorough (sic) reading is Not Acceptable (his underlining) as it lack's much needed clarification and detail in many areas. I therefore (sic) make it void.

I would appreciate a meeting with all Melcoffee Sawmills Ltd (MSL) Shareholders and Forestry Management to discuss the obligations of both parties about. All matters in regard to the extraction of logs with the intensional (sic) outcome of a new clearly defined contract stating the obligations of both parties.

A suggestion. To held the meeting at MSL office 9:00 am, 22-11-2005 and contract drawn up and signed by 30-11-2005.

Your urgent attention to the above matter would be greatly appreciated.

Thanks,

Yours faithfully,

Signed:

Greg Mark Owner,"

(f) The Claimant's evidence was that at 9 o'clock am on 22nd November 2005 at meeting was held at the office of MSL between Mr. Croucher, Mr. Mark and Mr. Venter. (see Annexed A of Mr. Croucher's sworn statement of 30th October 2007). The record of meeting indicates the defendant had terminated the contract of 16th November 2005. The resolution of the meeting is annexed as Exhibit H to Mr. Croucher's statement of 30th August 2007.

(g) On 22nd November 2005 the Claimant wrote to the defendant advising -

"Dear Greg,

We hereby accept your cancellation of the logging contract dated 10th November.

M.S.L require return of all their property including 2 x chainsaws and 4 x skidder Tyres which is currently in your possession.

Please refrain from entering any M.S.L property including log licensed areas.

Yours faithfully,

Neil H. Croucher (signed)

Managing Director"

(Emphasis by underlining)

This letter was tendered as Exhibit N in the sworn statement of Mr. Croucher dated 5th July 2007.

(h) By letter dated 7th December 2005 the Defendant wrote to Mr. Croucher referring to the above letter. At paragraph 2 he said:

"Your decision is accepted, however there is still outstanding monies owed to Wise Logging ......... I am invoicing you on my own tally as taken in the bush and written in my diary. Total cubic metre 375 m³ x 4,668 VT + Vat = 2000571-40. Less fuel, oil and wages paid by your company for the period of 1-11-2005 to 22-11-2005, this money is due now..........."

"............ I give you seven days in which to organize the amount owed to finalize the entire matter. After which then I will be seeking full compensation interest and costs through the Court system........"

(Emphasis by underlining)

8. Submissions

(a) It is submitted by the defendant that the deductions by the Claimants in the sum of VT205,681 were made unilaterally. From the claimant's submissions at paragraph 6 on page 4 it is apparent counsel accepts the claimants had no right to unilaterally deduct a sum prospectively. Regardless of that he submitted it is a fact that the Defendant had breached the First Agreement by not paying the NZ$95,000,000 for the Claimant's vehicles as agreed to.

(b) As regards cancellation of the Second Contract it is submitted by the claimant that the defendant had cancelled the contract not for duress but for the perusal period, which was 7 days. It is argued by the claimant that the belief held by the defendant that if he did not sign the Second Contract, he could not receive his cheques could not be correct, as in cross-examination, one of the two cheques was cleared on 19th November and the other on 22nd November 2005. If Mr. Croucher was using the payments for duress or blackmail in respect of the Second Contract he had the time to cancel the Second Cheque making it impossible for the Defendant or cash it on 22nd November 2005.

It is submitted by counsel therefore that there was no duress.

(c) In respect to the VT80,000,000 counter-claimed by the Defendant against the Claimant, the claimant argued it is a claim arising out of the defendant's dishonest signing of the Second Contract with full intention of cancelling it later and not honouring it. It is also argued that the Defendant had failed to mitigate his losses when he has indicated that he has contracts in Vanuatu and New Zealand, that he lives in both countries and that he has contracted out his machinery in Vanuatu. Having disclosed those interests, it is argued the defendant did not disclose how much he actually earns from those contracts and thus mitigate his losses.

Finally, it is submitted by the claimant the defendant is not entitled to the VT80,000,000 claimed because he –

a) Has failed to honour the First Contract by paying NZ$95,000.00 for the claimant's machinery he used at the time he had promised in the contract (i.e. upon the sale of a farm).

b) Fraudulently signed the Second Contract knowing he was going to avoid it after planning to do so over a 6 day period.

c) Voided the Second Contract for the perusal period which did not exist.

d) Failed to return the Claimant's skidder tyres.

e) Failed to mitigate his losses; and

f) Failed to establish the quantum of his claim.

For those reasons, it is submitted the cross-claims of the defendant should be dismissed in its entirety.

The Law on Duress And Undue Influence

Chitty on Contracts – Volume I General Principles, 29th Edition pages 512 – 514 and paragraph 7 – 008 describes duress of the person as follows:

"Duress of the person may consist in violence to the person, or threats of violence, or in imprisonment whether actual or threatened. It is submitted that the threat of violence need not be directed at the Claimant: a threat of violence against a spouse or near relation must also suffice and it is suggested that threat against even a stranger should be enough if the Claimant genuinely believed that submission was the only way to prevent the stranger from being injured or worse."

The cases that support this are Friedeberg-Seeley v. Klass (1957) 101 S.J 275 and Barton v. Armstrong [1976] A.C 104.

Before perhaps 1975 it was common to treat the legal rules relating to duress as resting on the absence of consent. In a case where a party subject to duress or even undue influence, was often said to have his will "overborne" so that he was not capable of making a free choice, or even acting voluntarily. But these were reconsidered in light of the speeches in the House of Lords in Lynch v. D.P.P of Northern Ireland [1975] UKHL 5; [1975] A.C 653. That case was concerned with the defence of duress in the criminal law, and there are certainly important differences between civil and criminal law on what can constitute duress, but this case contains by far the most extensive analysis of the juridical nature of duress in the law reports, and on this question, there is no difference between the criminal and the civil law.

In the above case, all five members of the House of Lords rejected the notion that duress deprives a person of his free choice, or makes his acts non-voluntary. Duress does not "overbear" the will, nor destroy it, rather it "deflects" it. (per Lord Simon at p. 695). Duress does not literally deprive the person affected of all choice, rather it leaves him with a choice between evils. (per Lord Simon at pp 690-691). Lord Wilberforce specifically stated that "duress does not destroy the will, for example, to enter into a contract, but prevents the law from accepting what has happened as a contract valid in law." (per Lord Wilberforce at p.680). Similarly, Lord Simon of Glaisdale said that in the law of contract "Duress again deflects without destroying the will of one of the contracting parties. There is still an intention on his part to contract in the apparently consensual terms; but there is coactus volui on his side. The contrast is with non est factum. The contract produced by duress is therefore not void; it is voidable at the discretion of the party subject to duress." (per Lord Simon at p. 695).

The phrase "Coactus Volui" is descriptive of the mental state of a person acting under duress.

(Emphasis by underlining).

Variation of Contract

Clause 11 of the contract dated 10th August 2005 states:

"The terms of this contract may be varied at any time by the written agreement of both parties."

Findings

11.1. The Court has considered all issues arising out of the defendant's main issue in light of the evidence discussed above and in light of the law applicable to contracts, and makes the following findings:-

1. On the main issues under paragraph 7 of this judgment:
   

(i). Was the Agreement of 16th November 2005 a lawful amendment of the Parties Agreement of 10th August 2005?

First, there is no evidence that the Parties had agreed to vary the contract in accordance with clause 11 of the contract of 10th August 2005. There is evidence Mr Croucher wrote to the defendant on 10th November 2005 (Exhibit J of Mr Croucher's statement of 5th July 2007). There is also evidence of the defendant's hand written conditions suggested by the defendant attached to the Minutes of Meeting of 22nd November 2005 (Exhibit O of 5th July 2005 statement). However, there is no evidence showing that the defendant had agreed to the terms and conditions of the new agreement.

(ii). Was the Agreement of 16th November 2005 a purported new Agreement?

The letter of 10th November 2005 is clear that the contract was new Agreement.

Conclusions

To answer both limbs of the issue, the Second Contract dated 10th November, 2005 but signed on 16th November, 2005 was not a variation, rather it was a completely new contract. The effect of it was that is superseded the First Contract dated 10th August 2005.

(b) Was there Duress?

From the evidence, the Court is satisfied there was no duress.

(c) Was there undue influence?

Undue influence is defined as influence that prevents a person from exercising an independent judgment with respect to any transaction (see Oxford Dictionary of Law 6th Edition). The burden was on the defendant to establish that undue influence existed at the time of signing the Agreement on 16th November 2005. The defendant's letter of 19th November 2005 avoiding the contract was for specific reason that it was "Not acceptable as it lacks much needed clarification and detail in many areas." There was no mention of duress or undue influence. The Court accepts the Claimant's submission that the allegations of duress and/or undue influence came only later and not on 16th November 2005.

Upon a plea of undue influence, the defendant must show that –

1. There was coercion amounting to illegitimate pressure on the part of the Claimant;
   
2. The Claimant was the stronger party exercising a degree of domination and control over the defendant's mind to the extent that his independence of decision was substantially undermined.
   

The Court of Appeal in Bank of Credit and Commerce International SA v. Aboody [1990] 1 Q.B 923, 967 laid down what appeared to be the test when Slade L.J said:

"[W]e think that a person relying on a plea of actual undue influence must show that (a) the other party to the transaction ........ had the capacity to influence the complainant; (b) the influence was exercised; (c) its exercise was undue; (d) that its exercise brought about the transaction."

From the evidence, the Court is not persuaded that the defendant had established that all the four tests were met.

Conclusion

The Court therefore concludes there was no undue influence exerted by the Claimant on the defendant so as to undermine his independent decision to sign the Contract on 16th November 2005 voluntarily.

Other Issues Arising

(a) Was the Contract of 16th November 2005 effectively cancelled?

The Court finds there was evidence by the defendant cancelling the contract by his letter of 19th November 2005. The Claimant accepted that cancellation by their letter of 22nd November 2005. Effectively, both parties had terminated the contract dated 10th November 2005. The effect of that termination was that all relationships between that had ceased as from 22nd November 2005 when the Claimant advised of their acceptance. The Court therefore answers this question in the affirmative.

(b) Was the Contract of 16th November 2005 a lawful Contract?

Despite the finding that there was no duress or undue influence by the Claimant on the defendant to coerce him into signing the contract on 16th November 2005, the defendant did write to the Claimant on 19th November 2005 advising that the Contract was not acceptable and that he had voided it. At best, it can be said that the bottom line as far as the defendant was concerned, was that he did not agree to the terms and conditions of the Contract. In other words, there was no "meeting of the minds" of the parties on the terms and conditions in the Contract. The defendant could have pleaded non est factum but he did not. Instead, he pleaded duress and undue influence.

In a contract where there was no meeting of the minds of the parties, the contract is void from the beginning and cannot be enforced. As such no duties, responsibilities and liabilities can arise as a result of its performance.

In this case, there was no performance of the contract of 16th November 2005. The Court concludes that it was a void contract. As such, the defendant was entitled to have voided it as he did. No liabilities arose and could be claimed by either parties out of that contract.

(c) Was the Contract of 10th August 2005 terminated?

There was no termination clause in the contract. Clause 1 states the contract was offered for a period of 5 years to be reviewed annually with right of renewal. There is no evidence that it was terminated. There is however evidence that the contract of 10th August 2005 was superseded by the contract of 16th November 2005. Technically speaking as at 16th November 2005, the Claimant and the defendant had signed the Second Contract, the First Contract dated 10th August 2007 came to its end. It had been superseded by the Contract of 16th November 2005. That Contract had a life of three days to 19th November 2005 when the defendant voided it. It appears to the Court therefore that termination of the First Contract is not in issue. The only issue is liabilities arising from that First Contract, so what are they?

(i). First, the defendant claimed he was under paid due to the unilateral deduction of VT1.000 for machine hire from the original rate of VT4.668 under the First Contract. Counsel for the Claimant conceded that point. The sum claimed was VT941.594. In the Court's opinion, this is a valid claim of the defendant under the First Contract that he can be entitled to. And accordingly, he succeeds on his counter-claim in respect to this part of his claims.

(ii). Secondly, the defendant's claims included under-payments for the period from 1st November to 21st November 2005. The amount specified by the defendant is VT960,118. In the opinion of the Court, the defendant is not entitled to VT960.118 for the following reasons-

(a). On 18th May 2005, the Claimant offered to the defendant a purchase of three pieces of heavy-duty equipment at NZ$95,000.00 the equivalent of VT7,718,000 (See Exhibit D of 5th July 2007 statement).

(b) On 14th July 2005, the defendant sent a fax letter to the Claimant informing then he had agreed to purchase the equipment at NZ$95,000.00 to be paid upon completion of the sale of their farm in West Port, South Island of New Zealand.

(See Exhibit G of 5th July 2007 statement).

(c) On 10th November 2005, the Claimant wrote to the defendant referring to earlier discussions concerning his inability to pay the purchase price of the equipment as agreed. The Claimant prepared a new contract and attached a draft to the letter for the defendant. The new price was VT3,665 per m³ after deduction of VT1,000 from the original sum of VT4,668 being for equipment hires. There was no evidence by the defendant showing that he responded to that letter and expressly objecting to or opposing the draft contract, and the proposed new price.

(d) On 10th November 2005, the same date he was given the letter and the draft, the defendant requested a seven-day perusal period and that period was given to him. The evidence of Julie Nibel confirmed this.

(e) On 16th November 2005, the defendant returned to the Claimant's Office and signed the Contract with Mr Croucher for the Claimant in the presence of Ms Nibel without duress or undue influence.

(f). That Contract remained valid and enforceable for 3 days until 19th November 2005 when the defendant informed the Claimant by letter that he had voided it.

(g). By 10th November 2005, the defendant was aware and had knowledge that he had failed to honour his agreement by his letter of 14th July 2005. There is no evidence from him showing that he did anything to remedy that breach or failure. During the period from 1st to 21st November 2005, the defendant had used the Claimant's machinery effectively for free.

Conclusions

The Court therefore concludes that the defendant's second part of his counter-claim must fail.

(iii). The third part of the defendant's counter-claim relates to VT36,481,500 claimed for unexpired term of the First Contract.

In the opinion of the Court, this part of his counter-claim must also fail for the same reasons stated in (a); (b); (c); (d); (e); (f); and (g) above. But there is another reason and that is that the defendant has not shown how the sum of VT36,481,500 is calculated and arrived at. These claims are so uncertain that they could not possibly be realistic. The defendant did not produce his tally sheets in evidence to show an average volume of logs he had logged for the periods from August to November 2005. The same would go for wages, fuel and other expenses. This part of the defendant's counter-claim is therefore dismissed.

Conclusions

12. In the final analysis -

1. The Claimant succeeds in part in his claims against the defendant and accordingly he gets judgment against the defendant only for the sum of VT971,572. His claims for the return of the two chainsaws are dismissed.
   
2. In regards to the defendant's counter-claims, the defendant is only partly successful and he has judgment on the first part against the Claimant for the sum of VT941,594 only. The second and third parts of his counter-claims are dismissed.
   

100. I will hear counsel further in relation to costs.
     

13. That is the judgment of the Court.

DATED at Luganville this 9th day of November 2009.

BY THE COURT

Oliver A. SAKSAK
Judge