Ross Evans v. Bruers & Brooks Design Consultants Limited

HCA005837/1985

No. 6434 of 1984

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

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Coram: Deputy Judge Ryan in Court.

Dates of hearing: 4th-8th, 11th, 14th, 15th, 18th-22th, 25th, 26th July; 9th-11th August, 1988.

Date of delivery of judgment: 19th August, 1988.

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JUDGMENT

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1. The plaintiff (Evans) met the 1st defendant (Bruers) in Perth, Australia, in the late 1960s. They had a mutual interest in design and became very close friends, a relationship which continued to exist until the latter part of 1983. They were both studying design and Evans established a small design business. Bruers helped him in this in his spare time and it is common ground that they spent a good deal of their time together discussing the design business and their future prospects. They found they had similar ideas and saw the real prospects in their field as being outside of Australia. They made joint applications for jobs in Asia and together came to the Far East looking for job opportunities. One of their topics of conversation was the prospect in the future of their establishing their own design business. It was in Evans' view one of their constant objectives and Bruers agrees that they did talk of setting up together while in Australia, Singapore and Hong Kong.

2. Following the trip to the Far East Bruers was appointed to a designer's position in Hong Kong and Evans accepted a job which took him to Indonesia. Bruers transferred to Singapore and he and Evans spent time together there when Evans visited that city. When Evans' job in Indonesia finished, he stayed at Bruers' flat in Singapore. With some help from Bruers, Evans obtained employment in Hong Kong in 1975, and in 1979 took a position with Chiap Hua Comalco. Bruers had meanwhile also returned to Hong Kong, and during the period 1977 to 1982 in Hong Kong the very close relationship between Evans and Bruers and their respective families continued. As friends, Evans and Bruers were as close as one could expect to find. They saw each other regularly during the working week and their families spent most weekends in each other's company.

3. In 1980, Bruers decided to start a design company in partnership with a Mr Brian Brooks, and on the 12th December 1980 the firm of Bruers & Brooks Design Consultants Limited (B. & B. Ltd.) was incorporated, with 5,000 $1 shares issued divided equally between Bruers and Brooks. The firm made good progress but the personal relationship between Bruers and Brooks deteriorated. In about April 1982 Bruers told Evans that it was he who was bringing in most of the work at B. & B. Ltd. and that he was going to get Brooks out of the company. There was correspondence between Bruers and Brooks and it is not in dispute that Bruers, whose native tongue is Dutch, got Evans to help him draft letters in relation to that correspondence. Evans was, therefore, fully aware that the connection between Bruers and Brooks was coming to an end. It was at this time that Evans says Bruers raised the question of him joining B. & B. Ltd. It is Bruers' case that Evans had told him that he was dissatisfied with his job at Chiap Hua Comalco and that he was going to resign. By 1982 Evans was into his second marriage, he had a child by that union with another expected and he had a child by his first marriage to support in Australia. It was at one time pleaded by the defendants that Evans had been or was about to be dismissed by Chiap Hua Comalco and Mr Dickinson, who gave evidence for the defendants, stated this to be his impression of Evans' position in early 1982. Mr J.R. Nicholls, who gave evidence for Evans, was then the Chief Executive Officer of Chiap Hua Comalco, and it is his evidence, which I accept that he wanted to retain Evans' services. He was satisfied with Evans' performances, and in fact, employed Evans when he was with B. & B. Ltd. to carry out a contract for his company. There is, therefore, no truth in any suggestion that Evans left Chiap Hua Comalco other than of his own volition.

4. After the suggestion by Bruers that he joined B. & B. Ltd. Evans approached Mr Nicholls and told him he was thinking of resigning. It is Nicholls' evidence that he was aware of Evans' family commitments and that he pointed out to him the hazards of leaving a large well-established company, where he was in receipt of a good salary and excellent fringe benefits, for a small recently established firm where the future was uncertain. Evans was very interested in joining with Bruers as he saw it as the fulfilment of the dream he and Bruers had had for many years, of establishing their own design company. He had believed that this was not possible when Bruers had formed the company with Brooks. However, as this meant leaving a secure job he decided, following his discussion with Nicholls, to give the matter further thought. Approximately one week later he told Nicholls that he had decided to accept Bruers' offer and to join B. & B. Ltd. Evans was at that time totally confident that he and Bruers would complement each other and make B. & B. Ltd. even more successful than it had been to-date. He accordingly tendered his resignation to Chiap Hua Comalco on the 17th July 1982 to be effected from the 15th October 1982 and joined B. & B. Ltd. on the 1st November 1982.

5. The position he gave up in Chiap Hua Comalco paid a basic salary at that time of $19,500 per month, provided him with a very substantial home in Kadoorie Avenue (the rental being $18,500 per month) and full expatriate terms, it was a package which Evans assessed as worth $55,000 per month. Mr Nicholls did not agree with all of the itemized details provided by Evans to support the figure of $55,000 per month but he did assess the package overall as being worth between $50,000 and $55,000 per month. In 1982 that was a very good package, as Bruers in his evidence agreed. It is not disputed by Evans that he was not entirely happy at Chiap Hua Comalco. He did not consider their product to be satisfactory nor did he consider all of the personnel to be up to the standard. He says, however, that he was on balance satisfied with the job and that he was not, as claimed by Bruers, about to resign. While Evans is, in my view, a man who would place a good deal of emphasis on job satisfaction, given his family commitments and the very satisfactory employment package which he had with Chiap Hua Comalco, I consider it ridiculous to suggest that in June 1982 he was about to resign without, any immediate prospects. In my view, he would only have done so if he had received an offer which was satisfactory to him. Evans says such an offer was forthcoming from Bruers, and it was then that he considered taking the step of resigning from Chiap Hua Comalco. I accept that evidence as true.

6. I turn now to what Evans says were the terms of the offer which were such as to induce him to leave Chiap Hua Comalco. Evans was aware that Bruers and Brooks were in equal shares in B. & B. Ltd. When Bruers told him he was going to get Brooks out of the company he also told Evans that he could have Brooks' shares. They discussed the financial position and Evans was told that the profits would be shared 50:50. They agreed that the purchase price for the shares would be the price that Bruers had to pay Brooks to buy him out of the company. Bruers was, at the time, negotiating the price through his solicitor Mr Bonsar of Messrs Denton Hall & Burgin. Subsequently a figure of $450,000 was agreed with Brooks, this figure was advised to Evans and was acceptable to him. He told Bruers that he did not have ready cash and Bruers said that that would be no problem, that he could pay for the shares out of future profits. Those were, according to Evans, the terms of the deal that he settled with Bruers.

7. It has to be appreciated that the discussions between Evans and Bruers relating to Evans' joining B. & B. Ltd. took place in an informal atmosphere. These were not two hard-nosed businessmen dealing at arm's length in formal business meetings. Bruers and Evans were the closest of friends and had been for years. They both say that at that time they trusted each other implicitly and neither saw any urgent need to reduce the contract to writing. Evans claims that he did ask for a formal agreement before commencing work at B. & B. Ltd. and was told by Bruers that he would arrange for this to be attended to by his solicitors. Evans was not worried when the document was not forthcoming before the 1st November 1982 as he was dealing with his closest friend and with a man in whom he had total trust.

8. It is Evans' evidence that it was further agreed that initially the parties would keep drawings to a mimimum so as to build up the company reserves with a view to expansion. The package was $20,000 per month, $6,500 being allocated to salary and $13,500 for expenses. The allocation was made in this way for tax purposes, a matter clearly very dear to Mr Bruers' heart. In addition, Evans says it was agreed they would personally pay for other expenses which would subsequently be refunded to them in due course by the company out of accumulated profits. The parties discussed future expansion plans and I am sure that neither of them saw anything ahead for the company other than incresed business success and increased profits.

9. Bruers says that there was no such agreement. It is his evidence that as Evans was going to resign in any event from Chiap Hua Comalco, and as he needed an office manager and someone to handle business development, he offered a job to Evans on local terms. The package was to be $20,000, per month and it was to remain so for the first few years. He does agree that the parties discussed the shares in the company and eventually in cross-examination, with considerable reluctance, agreed that it could have been said that Evans could take Brooks' shares. He also agrees that at that time the price for the shares was fixed at $450,000. This was the figure that he agreed with Brooks although the shares were, in due course, transferred to the 3rd defendant (Solarhead) a company wholly owned by Bruers. Bruers says, however, that there was no agreement for Evans to have the shares transferred to him immediately he joined the company, that all that was agreed was that if company did well and if the company accumulated profits and if it was decided from those profits to make a distribution, then Evans would be entitled to half of those distributed profits and with those profits he would then have a right to buy shares in the company. Bruers agrees that as the controlling shareholder in B. & B. Ltd. he had total control of any decisions made by the company and that the question of distribution of profits would be entirely within his control.

10. When Evans joined the company on the 1st November 1982 he was immediately appointed a director. He says that there were two matters which were not drawn to his attention at that time which, if he had known of, would have been relevant to his decision to join the company. He was aware that Bruers had been negotiating for the purchase of premises but was not aware that the title to the property was taken in the name of the company which committed itself for a loan of $1.5 m. with Dubai Oriental. Subsequently when this matter came to his attention and he raised it with Bruers, he was told that it had been a matter of expediency at the time of the purchase and that the property would be taken out of the books of the company. As far as Evans is aware this was never done. Had he been aware that the company had committed itself to such a liability, he would have had serious reservations about proceeding to take a stake in the company. He was under the impression that there were two directors of the company, Bruers and himself, but subsequently found out that Bruers' wife was also a director. Nothing much turns on these two points as far as the respective rights of the parties is concerned, but they do give some support to Evans' contention that Bruers was less than forthcoming with him about company matters. It is also indicative of Bruers' attitude that at a later time without any reference to Evans, he removed Evans as a director of the company and cancelled Evans' cheque signing authority.

11. Evans says that from time to time he asked Bruers to get the written contract finalized but that Bruers procrastinated saying that the solicitors were busy or out of town. He was at the time not worried as he still had trust in Bruers.

12. Part of Evans' responsibilities with B. & B. Ltd. was business development. In pursuance of this he sent out many letters to prospective clients and prepared a company profile. Some of the letters were signed by himself and some by Bruers, these include references to Evans and Bruers being in partnership; to Evans having taken over the interest of Brooks in B. & B. Ltd. and of Bruers and Evans being the principals of the firm. Bruers explains away these references by saying that he considered Evans only as a working partner not as a legal partner, that should accumulated profits be sufficient to justify a distribution, he would have paid Evans 50% of the distribution, and that at that time Evans could buy some shares and obtain a legal interest in the company. I find this explanation unconvincing.

13. On the 13th April 1983 there was a meeting attended by Evans and Bruers with Mr Azedo and Mr Chiu, partners in the accountants' firm of John P. Bryne & Co. Evans is very vague about the meeting and cannot recall the exact date but thought it would be later than the 13th April. He also says that the discussion was limited to expenses and equality of profit sharing, but that there was no discussion concerning the shares. In the light of Mr Azedo's evidence, which I accept, Evans is quite clearly wrong about this. It is Bruers's evidence that the meeting was to discuss expenses and it was the accountants' view that as Evans' salary was low compared to the claim for expenses, there could be a query from the Inland Revenue Department. He says the accountants felt, in case there was such a query it would be better if Evans had some option agreement stating that he could eventually buy into the company. As far as they were concerned he was an employee. Accordingly, on the 14th April 1983 Evans and Bruers saw Mr Grant of Messrs. Denton, Hall and Burgin and asked if he could draw up an agreement that would meet the accountants' requirements. Mr Azedo's evidence is that there was a meeting on the 13th April 1983 attended by Evans, Bruers, himself and Chiu. As he recalls it, the discussion related to two topics. First, the tax issue and the question of expenses that could be claimed by Evans and Bruers. In this regard Evans says Azedo told him he could claim one-half of his household, food account as entertainment expenses. Azedo is adamant that while a deduction for such expenses was discussed he did not tell Evans in detail as Evans claims. Secondly, they discussed ownership of the shares, his recollection is that there was no concrete agreement at that point between Evans and Bruers, that the parties were vague as to terms and he suggested that they should see a lawyer so that an agreement could be drawn up. He was reluctant to give advice when there was no formal agreement and he told the parties that the sooner the acquisition of the shares by Evans was finalised the better. His recollection is that the parties had agreed that, given certain circumstances, shares were to be sold to Evans. Azedo could not recall if a price was mentioned but did recall that the price was to be paid for out of future profits that Evans would be entitled to as a shareholder. He assumed they had meant that the profits would be distributed to Evans, he would then pay for his shares. This is of course Evans' case; that he was to be a shareholder and out of his profits (dividends) he would pay Bruers for the shares. The attendance note produced which was made by Mr Chiu states "In last November Ross Evans was brought into the company and it was agreed he had the option to buy the shares of Solarhead but no formal agreement was signed. The company is now under their two partners administration basis". The note also states "However we suggest that Ross should complete his acquisition of shares as soon as possible". In respect of the word "option" Mr Azedo says it meant nothing concrete in the context of the attendance note, that it was simply to indicate that there was some mechanicism by which Evans could buy, that from memory he thought the purchase was relative to future profitability. Quite clearly the question of the share acquisition did not arise, as claimed by Bruers, from the discussion of expenses, it was a separate topic and it was not the accountants who suggested that an option agreement should be prepared. I consider that the evidence of Mr Azedo highlights the difficulty that Evans and Bruers as laymen were having in explaining to their professional advisers what they were trying to achieve.

14. On the 14th April 1983 Evans and Bruers had a meeting with Mr Anthony Grant of Messrs. Denton, Hall & Burgin. In his evidence Grant makes it clear that he saw his duty as protecting the interests of Bruers and he felt no duty towards Evans. Given this attitude it is somewhat surprising that he felt no need to suggest to Evans that he seek independent legal advice. Mr Grant was not able to produce an attendance note, his evidence being based entirely upon his recollection of the discussion which took place on the 14th April 1983. He says that he was instructed to prepare an option agreement. Given Mr Azedo's evidence that Bruers and Evans had been vague about the details of the share acquisition and his recommendation that they see a solicitor to formalise the matter, and given the evidence of both Evans and Bruers that at the time they had no clear idea as to what an option agreement meant, I find Mr Grant's evidence on this point difficult to accept. The inference I draw from all of the evidence surrounding the events of the 13th and l4th April 1983 is that Mr Grant took from what he had been told that an option agreement was the most appropriate document to reflect the intentions of the parties. It was made clear to him that the purchase price was $450,000 and that Evans did not have the money to pay. The draft agreement which was subsequently prepared and submitted to Evans and Bruers is an option agreement referring to a 2 year period with the share price at $180 per share. There is in that document no mention of the shares being paid for out of profits. After receipt of the document, Evans wrote to Grant stating that "We approve the document". The first draft was subsequently amended by the addition of a clause relating to interest which Evans says was part of the original bargin. He also says that he did not fully comprehend the meaning of the agreement but that he thought he was getting what he had expected, that is half of the shares in the company at a price of $450,000. He did not object to the term of 2 years although this had not been originally agreed as he felt that as the expansion proposals of the company had by then been deferred the profits would be more than sufficient to meet that commitment. It was agreed that in tandem with the option agreement the parties would sign a service contract setting out the terms of Evans' employment with B. & B. Ltd. Mr Grant is not sure whether this was discussed on the 14th April 1983 but does agree that the contract was to include a reference to the use of profits to complete the purchase of the shares. The service agreement which was subsequently produced made no reference to this provision.

15. Following production of the second option agreement Bruers had a discussion with his friend, Mr Dickinson of Dubai Oriental and then a further discussion with Mr Grant, neither of which included Evans, and unilaterally decided to change the terms of the contract. Whereas he concedes he had previously agreed to Evans being entitled to acquire 50% of the shares in the company, he instructed Mr Grant to prepare a document which reduced the shareholding that Evans could acquire to 4,999 and required Evans to sign an undated letter of resignation as a director. Not surprisingly Evans refused to sign the contract in this form. Bruers says that by that time Evans had shown signs of wanting to take control of the company, even if this were so, which I do not accept, the steps Bruers took clearly reflect in my view his aggressive personality. He did not consider it right or necessary in going back on a firm agreement with his best friend, that he could have Brooks shares (that is 50% of the company), to first discuss the proposal with that friend.

16. The service contract which was prepared, but which was never signed, sets out what Evans says were the terms of employment agreed to with the company through Bruers. This is a document prepared by Mr Grant as Bruers solicitor and sets out what could loosely be called expatriate terms. It is Bruers' case that Evans was told in June 1982 that the company could not afford expatriate terms and that he agreed to local terms on a total package of $20,000 per month. In January 1983 Evans prepared a letter for Bruers' signature setting out his terms of employment. He says that the first draft of that letter included reference to the price to be paid for the shares but that Bruers asked him to delete this in case the letter came to the attention of the Inland Revenue Department. The letter was specifically prepared to assist with Evans' application for a visa and a copy was sent to the Immigration Department. For this reason the letter, although prepared in January 1983, was dated the 24th June 1982, the approximate date upon which the parties reached the agreement concerning Evans' employment. Evans says that except for the absence of reference to the purchase price, the letter accurately reflects the arrangement he had with Bruers concerning his employment. Bruers claims he did not read the letter thoroughly but agrees that he did sign it. He says he did so only to assist Evans' application. In addition, the parties signed an undated waiver which states that the terms of the letter were null and void and that the terms were to be renegotiated. Evans' evidence says that this was done at Bruers' request as it might be that the Grant could get a better tax deal when he came to complete the final agreement. Bruers says that the waiver were signed because Evans stated that the letter of 24th June, 1982 did not reflect the true position. Although Grant cannot recall specifically what happened, he assumes that the letter of 24th June 1982 was given to him as the basis for the service contract. Bruers, not surprisingly, says he knew nothing of that and that it must have been Evans who gave it to Grant. Grant however presumes that it was Bruers who told him of the terms to be included in the service contract as Bruers was his client and he was the one with whom he discussed the matters. I am satisfied that his assumption is correct, that the letter of 24th June 1982 does reflect the terms of Evans' employment with B. & B. Ltd. and that Bruers is not telling the truth when he claims otherwise.

17. Relations between Bruers and Evans deteriorated from then on and I am satisfied that this was mostly as a result of the attitude of Bruers who by then quite clearly had decided that the arrangement with Evans was not going to work. He did not take the matter up with Evans but continued to procrastinate concerning the contract. Evans for his part, I accept, was in a difficult position in that he had little money, family commitments which included the medical expenses for a son who was very ill and he had given up a secure well paid job to find himself in a situation which appeared to be going nowhere. I accept that in late 1983 he was still desperately anxious to try to get some arrangement with Bruers which would satisfactorily resolve the problem. It was at this time that he made some tape recordings of conversation to which he had with Bruers. The transcript of the conversation which took place on the 4th January 1984 reflects that Evans was trying to get the contract finalized. He is recorded as saying: "What happened is since I've joined, I've tried to get a contract out of you many times. Now it always keeps getting postponed. Now all I have ever asked you is when is the contract going to be ready". This is some confirmation of Evans evidence on this point. Further on in the conversation he says: "Right, because I agreed to come into this company as you partner", Bruers replied, "Right", then Evans says: "You offered me 50% of this business and you agreed that I would pay for it from company profits", and Bruers replies "Right". There was no suggestion at this point from Bruers that such arrangement was subject to the conditions which he now claims were attached to it.

18. Following further discussions Bruers proposed to Evans that he take a consultancy position with B. & B. Ltd. and as Evans was still trying to salvage the position, he tentatively agreed and a draft was prepared. In a letter to Bruers dated the 12th January 1984 commenting on the terms of the proposed consultancy agreement he stated "During a previous discussion you indicated that you are prepared to offer additional terms which might compensate for our original agreement whereby I joined the company in acceptance of your offer to sell me half of shares of B. & B. Ltd. at the cost price of $450,000 and an agreement that I would pay this sum from profits which were to be divided equally".

19. The proposed consultancy agreement came to nothing but the paragraph sets out what was then and is still now Evans' case. I am satisfied that when these two very old friends discussed the prospects of Evans joining B. & B. Ltd. Bruers did agree that Evans could have Brooks' shares, i.e. 50% of the shares in the company, that the price for those shares would be the amount that Bruers had to pay Brooks to get him out of the company, that this figure was subsequently agreed at $450,000 and that Evans was to pay Bruers for those shares from future company profits. There is no doubt that this was a very good offer as far as Evans was concerned but in my view not an unexpected one in the light of the long friendship which the two men had shared and their long shared desire to enter into business together. I reject Bruers' evidence that Evans joined B, & B, Ltd. on a $20,000 per month total package on local terms and on nothing else other than an understanding that if the company made profits and if a distribution was made, he would then get 50% of the profits and would be entitled to buy shares in the company, a process over which Bruers would have total control. I did not accept that Evans, a responsible and intelligent man with little cash and heavy family commitments, would have resigned from a secure job on excellent terms with Chiap Hua Comalco to take up a position in B. & B. Ltd, on the terms claimed by Bruers. I find there was a contract between Bruers and Evans that Bruers would transfer the share of Brooks in B. & B. Ltd. to Evans when he joined the company for the price of $450,000 to be paid for out of future profits.

20. It is further pleaded by Evans that he was induced into entering into this contract as a result of what Bruers told him concerning the profits of the company. The allegation is that at a meeting early in June 1982 at which only he and Bruers were present, Bruers represented to him that the clear profit of the company made in the previous year was $800,000 and $400,000 for the year before that. The company was incorporated on the 12th December 1980 and it is agreed that the net profit of the company before tax for the period from the 12th December 1980 to the 31st March 1982 was $465,457.24. Evans says he accepted Bruers' word and accordingly did not ask to see any company accounts. It is Bruers' evidence that what he told Evans in casual conversation was that the accumulated profits were about $800,000. He was at the time in consultation with Mr Bonsar over the price to offer Brooks and so was quite familiar with the then financial position of the company. Although the pleadings says the conversation took place early in June 1982 Evans did concede in evidence that he was unsure of the exact date and that the conversation may have been mid to late June. He was also vague as to whether or not these figures were mentioned on more than one occasion.

21. In a letter which Brooks wrote to Bruers when the question of the dissolution of the partnership was being discussed and dated the 3rd June 1982, reference was made to $800,000 profit for the year ended 31st March. Bruers did show this letter to Evans, but Evans says that he only skimmed through the letter and the figure of $800,000 did nothing more than to unconsciously confirm what Bruers had already told him. Although the various Statements of Claim filed by the solicitors acting for Evans made various references to alleged misrepresentations, I do accept that his instructions to his solicitors were and have always been the same as that which appear in the re-re--amended Statement of Claim. He does, however, concede that in his instructions to his solicitors he advised there that Bruers had disputed the figure of $800,000 referred to in Brooks' letter and that Brooks had conceded there was an over-estimate. Evans was therefore aware that the figure of $800,000 profits to 31/3/82 was not accurate.

22. Evans was reluctant to concede that he was aware of the details of the company accounts which show that the accumulated profits up to the 30th June 1982 were in excess of $800,000. He was employed as the office manager, he had access to the monthly management accounts and to all the company files, he prepared proposed budgets and I am satisfied that he was fully aware of the financial position of the company. He never, at any time, raised with Bruers the allegation that he had been so misled about the financial standing of the company such as to induce him to take up employment with B. & B. Ltd. His explanation is that even if he had been aware of the financial position there was little he could then have done as he had already resigned from Chiap Hua Comalco - that he had, in effect, burned his bridges. However, even when relations had reached an impossible situation and he had started to record conversations with Bruers, there is no mention of the alleged misrepresentation. It does seem somewhat strange that Bruers would in June 1982 make reference to $400,000 as profit "for the year before that when the company, as Evans was well aware, had only been in business for 3½ months prior to the 1st April 1981. Bruers had up-to-date figures on the company's performance and it is difficult to understand why he would feel the necessity to tell lies to his good friend, Evans. He was clearly keen to get Evans into the company just as Evans was keen to join, but the manpower position was not so desperate that he had to resort to an untruth to induce his friend to join him.

23. It is also hard to accept that Evans would believe that the company had made $400,000 clear profit in the first 3½ months of its operations. Evans was constantly visiting Bruers office, Bruers showed him the contracts the firm had in hand and work coming up. Evans knew that the company was doing very well by June 1982. His attitude is best, summed up from his own evidence where he says: "I was only interested that it was a good company run by a friend making a good profit". There is no doubt in my mind that if he had been told by Bruers as Bruers claims that the company had accumulated profits of $800,000 he would have been more than satisfied. That he was happy with what he saw at B. & B. Ltd. comes from the fact that he never thought it necessary to look at the company accounts before joining the company. Nor did he raise with Bruers any query when he had access to the company accounts and was, I am satisfied, fully aware of the company's financial position.

24. While I accept as true Evans' evidence as to the terms of the contract with Bruers relating to the transfer of shares on the evidence I have before I cannot on balance, the burden of proof being on Evans, be satisfied, that in the course of their informal discussion Bruers uttered the words alleged. It is just as likely that he referred to $800,000 as accumulated profits and that Evans recollection of what was said is incorrect.

25. The claim for damages based on the alleged misrepresentation fails.

26. The alternative claim for damages is for breach of contract. Having found that there was a contract between Evans and Bruers as pleaded Bruers was clearly in breach of that contract and Evans is entitled to damages. As agreed between the parties at the commencement of the trial such damages are to be assessed by a Master.

27. The question of trusteeship which has been pleaded is irrelevant as there is no claim for specific performance. The claim for expenses merges with the claim for damages and the claim against the B. & B. Ltd. for damages is dismissed. To assist with the assessment of damages there will be an order for an account to be token of the profits of B. & B. Ltd. from the 1st April 1983 to the 5th March 1984 being the last date upon which the shares are valued in accordance with my ruling at the commencement of the trial.

28. There is no evidence as yet before the court as to diversion of assets by Bruers or B. & B. Ltd. and I do not propose therefore to make the orders sought in Paragraph 3 of the Prayer.

29. The costs of the action will be to the Plaintiff.

30. B. & B. Ltd. counterclaims for $17,713 and the parties agree that the 2nd defendant is entitled to $1,413 under this claim. There will therefore be judgment to the 2nd defendant on the counterclaim in the sum of $1,413 together with interest thereon at the rate of $7½% per annum from the date of service of the counterclaim to judgment and thereafter at the rate of 6 1/8% per annum until satisfaction. Costs on the counterclaim to the 2nd defendant.

Representation:

Mr Denis Mitchell inst'd by Hampton, Winter & Glynn for Plaintiff.

Mr Michael Bunting inst'd by Denton, Hall, Lurgin & Warrens for Defendant.