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South Pacific Produce Ltd v Procorp Company Ltd [2004] TongaLawRp 13; [2004] Tonga LR 88 (26 May 2004)

IN THE SUPREME COURT OF TONGA

South Pacific Produce Ltd anor

v

Procorp Company Ltd anor

Supreme Court, Nuku'alofa
Ford J
CV 39/2001

8 August 2001, 1-4, 23-25 March 2004, and 2 April 2004; 26 May 2004

Civil dispute – squash growing agreement claimed – no evidence

The plaintiffs alleged that in January 2000 they entered into a special agreement with the two named defendants and the second defendant's brother, Hon Clive Edwards, for the growing of squash in Tonga. They contended that the agreement provided for the pooling of resources and the division of the proceeds from the eventual sale of the squash in Japan. They claimed that under the arrangement the amount they were entitled to be paid by the defendants for the 2000 squash season was $167,360. The plaintiffs further allege that from "about mid-June 2000 to late October 2000" the second defendant, Stephen Edwards, asked for and was given financial assistance totalling $39,344.55 to cover ongoing expenses incurred by the defendants and their growers on the promise that these cash advances would be repaid from the proceeds of the sale of the squash. Therefore the plaintiffs claimed they were owed by the defendants at the end of the 2000 squash season a total amount of $206,704.55 and of this sum, they say that they only received in cash or credits $58,197.54, leaving a deficit of $148,507.01 which was the amount claimed. The defendants strongly denied the existence of any agreements with the plaintiffs. They accepted that the second plaintiff was a registered grower with Procorp Ltd for the 2000 season and that he made a financial contribution towards the growing of his own squash but they contended that that was as far as it went. The defendants alleged that there was in fact, a balance owed to them by the second plaintiff arising out of the 2000 squash season which they quantified in their counterclaim. The alleged agreements were never reduced to writing and there was, therefore, no contemporary documentation that might assist the court in its task of determining what, if anything, was agreed to between the parties.

Held:

1. The onus was on the plaintiff to satisfy the court to the required standard in civil cases that the agreement pleaded had, in fact, been entered into. The Court was not so persuaded.

2. With respect to the cash advances claim, the plaintiffs failed to satisfy the Court, to the required standard of proof in civil proceedings, that they were made at the request of Steve Edwards as alleged. The Court concluded on the evidence that the defendants should not have to bear any liability for the items listed unless they were specifically acknowledged by some person on Procorp's behalf. The Court was satisfied that the remainder of the expenses claimed were for the plaintiffs own squash growing purposes.

3. The counterclaim was directed at the second plaintiff. It was made up of seven items totalling $91,235. The Court dealt with each item:

(I) The second plaintiff was to buy the defendants' diesel engine for $4,000 – the engine in question was owned by Stephen Edwards who was not one of the defendants therefore the claimed item failed;

(II) Claim of $2,520 for plowing costs – the plaintiffs admitted this item;

(III) The second plaintiff bought seeds on credit from the defendants totalling $15,060 - the onus was on a defendant to prove a counterclaim in the same way that the onus was on a plaintiff to prove his substantive claim. In the absence of the required documentation this particular head of claim must fail except to the extent admitted by the plaintiffs. The amount allowed, therefore, based on deliveries of 36.75 kgs of seeds, is $8,820;

(IV) The defendants claimed that the second plaintiff bought 689 bags of fertiliser on credit from Procorp amounting to $24,876 - however, they failed to produce the necessary back-up documentation to support the claim. Stephen Edward's field records showed a figure of only 403 bags which would have amounted to $14,508. This item of claim succeeded, therefore, but only to the limited extent of $14,508;

(V) The defendants claimed that the second plaintiff purchased chemicals on credit which totalled $3040 but the evidence fell short of establishing this figure to the required standard of proof. Therefore the claim was disallowed;

(VI) The defendants claimed $26,880 made up of hireage of a forklift at a rental hireage rate of $20 per hour for 1344 hours over an undefined eight week period. The court did not accept the evidence relating to the hireage rate and allowed the sum of $2000;

(VII) The final item claimed was $5,327.00 on account of cartage of the second plaintiff's empty and full bins between Havelu and Kolonga. The documentation produced in support of this claim showed that there appeared to be some "double billing". Therefore the second plaintiff conceded the claim but only to a total figure of $3452. The Court accepted this.

4. With respect to the total amount which the plaintiffs actually received from the defendants at the end of the 2000 squash season, the defendants alleged that they paid out $32,215.00 while the plaintiffs admitted to receiving only $25,000. Proof of payment was not dependent upon production of receipts. In many commercial situations receipts for payments by cheque were the exception rather than the rule. The original cheque books were produced containing the relevant cheque butts. There were 10 cheques and they total $32,215.00. The Court was satisfied that the entries were genuine. They provided adequate proof that the payments were, in fact, made.

5. The plaintiffs failed in their claim and the defendants succeeded in their counterclaim but only to the limited extent detailed.

Counsel for plaintiffs: Mr Niu
Counsel for defendants: Mr Kaufusi

Judgment

1. The Claim and Counterclaim

The second plaintiff, Henry Tahau, is a New Zealand citizen. The first plaintiff, South Pacific Produce Ltd, is a New Zealand company. The plaintiffs allege that in January 2000 they entered into a special agreement with the two named defendants and the second defendant's brother, Hon Clive Edwards, for the growing of squash in Tonga. The agreement, they contend, provided for the pooling of resources and the division of the proceeds from the eventual sale of the squash in Japan. They claim that under the arrangement the amount they were entitled to be paid by the defendants for the 2000 squash season was $167,360.00.

The plaintiffs further allege that from "about mid-June 2000 to late October 2000" the second defendant, Stephen Edwards, asked for and was given financial assistance totalling $39,344.55 to cover ongoing expenses incurred by the defendants and their growers on the promise that these cash advances would be repaid from the proceeds of the sale of the squash.

The total amount, therefore, that the plaintiffs claim they were owed by the defendants at the end of the 2000 squash season was $206,704.55 and of this sum, they say that they only received in cash or credits $58,197.54, leaving a deficit of $148,507.01 which is the amount they now claim in this proceeding.

For their part, the defendants strongly deny the existence of any agreements with the plaintiffs. They accept that the second plaintiff was a registered grower with Procorp Ltd for the 2000 season and that he made a financial contribution towards the growing of his own squash but that, they say, is as far as it went. The defendants allege that there is, in fact, still a balance owing to them by the second plaintiff arising out of the 2000 squash season which they have quantified in their counterclaim.

The alleged agreements were never reduced to writing and there is, therefore, no contemporary documentation that might assist the court in its task of determining what, if anything, was agreed to between the parties.

2. The Initial Hearing

When the hearing began on 8 August 2001, the plaintiffs were represented by a local law practitioner Mr Lopeti Foliaki. Mr Foliaki opened his case and called the second plaintiff ("Henry") as his first witness. At the conclusion of Henry's evidence in chief, Mr Foliaki sought an adjournment of the hearing to enable him to call other evidence from New Zealand witnesses in relation to the damages aspect of the claim.

At that stage, the case had been set down for a two-day hearing and no satisfactory explanation was given to the Court by Mr Foliaki as to why he had not made previous arrangements for the overseas witnesses in question to be present.

Be that as it may, in the overall interest of justice, the court granted the adjournment. Mr Foliaki was to make application to the court for a further fixture date after he had made inquiries and ascertained the availability of his New Zealand witnesses.

On 29 October 2001 Mr Foliaki wrote to the Registrar stating that his overseas witnesses were then in Tonga but they would be departing for New Zealand on 2 November. Counsel inquired as to whether their evidence could be heard within that time frame. Unfortunately, that letter was not referred immediately to myself as the presiding judge but, in any event, the notice was totally inadequate and the court would not have been able to accommodate Mr Foliaki's request within such a short time frame.

The plaintiffs then experienced what can only be described as a period of disgraceful professional misconduct on the part of their counsel, Lopeti Foliaki. It is unnecessary for me to detail all the developments but suffice it to say that Mr Foliaki's conduct led to the plaintiffs' claim being struck out and an award of costs being made against them. At some stage, around this time, Mr Foliaki left for the United States and he has never returned to practice in Tonga. He has now been struck off the role of local practitioners and his present whereabouts is unknown to the court.

I mention that unfortunate background in passing. It's only relevance to the present situation is that when the hearing resumed again in March 2004, with Mr Niu then acting as counsel for the plaintiffs, he was granted leave to have Henry's evidence in chief called again but, of course, his original evidence still stands as part of the court record.

3. The Case for the Plaintiff

Henry Tahau told the court that he lives in Tonga and now works for Safeguard Security. He first came to Tonga in October 1995 to work for a New Zealand-based squash company called Growex Ltd. That company had a working arrangement with Steve Edwards and Procorp Ltd for the packing and exporting of squash. Henry said that he had been sent to Tonga by Growex to manage the packhouse for "IPC". IPC or "Island Produce Co" was, and still is, the trading name for Procorp Ltd. Henry managed the IPC packhouse during the 1995, 96 and 97 squash harvesting seasons. He then left Growex and in 1998 and 99 he grew his own squash on leased land and sold it through a local businessman, Fred Sevele.

Henry told the court that in the year 2000 he started another venture with Steve Edwards and Procorp Ltd. It began when he received an approach from Steve in Auckland one day in January 2000 and they then had a meeting at Steve's mother-in-law's house. Referring to the meeting, Henry said in evidence that he and Steve discussed investment and marketing opportunities for Procorp and Steve put a proposal to him whereby Henry would come to Tonga with financial backing he was able to secure in New Zealand and virtually manage the Procorp operation. At the same time, Henry would continue to grow his own acres of squash but it would be marketed through Procorp.

Henry told the court that his meeting with Steve was followed up with telephone calls but the essential terms of the agreement upon which the present litigation is based, were reached between the two men at the meeting held at Steve's mother-in-law's house in Auckland on that particular day in January which neither party was able to date precisely.

In evidence in chief, Henry was asked details of his alleged agreement with Steve. He explained:

"A. Basically the agreement was that we would help him with his company acreage.

Q. Which was how much? Did he say or did you discuss?

A. As I recall it, it was about 130 -140 acres.

Q. Which area?

A. This was all over the place but the bulk of it was –

Q. Wait a minute. You said your own acreage would be 100 acres and Procorp's acreage was to be how much?

A. Roughly 120 -130 I think -- about that.

Q. Were there any other acreages to be included in addition?

A. Yes, there were other growers as well adding up to roughly 300 acres. I can't remember how many growers there were.

Q. What was the arrangement with them?

A. The arrangement was that three big growers, myself, Steve and Clive would finance our own, we would pool resources.

Q. What would happen to your squash?

A. The squash produced would be packed through Procorp and sold through Procorp. We would then - as well as including the other growers, the small ones, we would then payout the other growers first and the proceeds remaining would be divided between the three of us less costs and less commission to Procorp.

Q. What was the commission to Procorp?

A. About three seniti a kilo.

Q. What?

A. Three seniti a kilo

Q. When did you say you came to that agreement Henry?

A. Well it was a verbal agreement.

Q. Yes I know, but when was it? What month?

A. It would have been January of that year were talking about.

Q. Yes, how was it made, was it at a meeting, a telephone call, a letter or what?

A. No, that would have been just an informal meeting.

Q. An informal meeting?

A. M'mmm.

Q. Where?

A. Between the two of us at the place I mentioned in Auckland.

Q. In Auckland?

A. Yes.

Q. When you were saying that you would do this and do that, were you meaning yourself personally or did you mean somebody else or you and somebody else?

A. U'm, meaning me and the backers; the company people that I was associated with at the time.

Q. What company was that?

A. South Pacific Produce.

Q. Was Steve Edwards aware or did you tell him of that company?

A. Yes, he was.

Q. Pardon?

A. He was -- later.

Q. When did you tell him or when did he find out?

A. I told him that we'd have some backers but I informed him of whom the backers were when I actually got to Tonga in March.

Q. And what did Steve say?

A. That's fine. He didn't actually take much notice."

Henry mentioned very briefly in his evidence that the financial backers in New Zealand who he was referring to were Graham Body, an orchardist from Katikati in the Bay of Plenty, a Mr John Watson who he had met through his cousin Fred Tahau and his cousin Fred Tahu. Henry gave no details of the financial support he received but Graham Body, a director of the first plaintiff, did give evidence.

Henry spent the rest of his evidence in chief endeavouring to prove what I shall refer to as his "cash advances claim" totalling $39,344.55 and in attempting to rebut the defendants' counterclaim. He gave virtually no evidence in chief in relation to the main damages claim which was the alleged shortfall the plaintiffs say they received from the sale of the Procorp squash in Japan. Nor, for that matter, did Mr Body refer to this aspect of the claim in his evidence.

It was a feature of the case that the plaintiffs were unable to produce any satisfactory evidence to prove the income Procorp had received from the sale of its squash to Japan for the 2000 season. Its claim was based on a figure of $1,398,329.00 which, after deductions of $744,870.00, left a figure of $653,459.00 to be paid out to the growers in accordance with the formula the plaintiffs allege had been agreed to at the Auckland meeting but the evidence fell well short of establishing those figures.

Mr Graham Wallace, a New Zealand produce exporter, was called and gave evidence as to how a company which he operates, International Produce Ltd, handled the export to Japan of 166 tonnes of Procorp squash in the year 2000 but that was only a small proportion of the total tonnage of 1245 tonnes which the plaintiffs allege Procorp sold to Japan that season. In any event, I am satisfied that the deal made with Mr Wallace was a one-off exceptional transaction at an inflated price. His evidence alone was insufficient to establish the plaintiffs' claim.

At the original hearing back in 2001, the plaintiffs ran into similar evidentiary problems. On that occasion they attempted to prove this part of their damages claim by producing detailed costing schedules from two New Zealand companies who had an involvement with Procorp in the 2000 squash season. The companies were Bearsley Produce Ltd and Millennium Foods Group. Mr Kaufusi, as he was entitled to do, objected to the production of those schedules unless a witness from the respective companies was going to be present for cross-examination. It was for that reason that Mr Foliaki sought an adjournment of the hearing to allow representatives from those two New Zealand companies to be called as witnesses. That, of course, never happened.

At the resumed hearing, Mr Niu attempted to cross examine Steve Edwards on those same schedules but Mr Kaufusi again objected and I ruled that, apart from any concession Mr Niu might have obtained up until the point in time when the objection was taken, the schedules were inadmissible because the plaintiff did not intend calling any witnesses from the New Zealand companies in question.

Mr Niu then subpoenaed an officer from the ANZ Bank to produce information relating to Procorp's account held with that bank and an adjournment was granted for that purpose. In the end, however, counsel had to concede that the bank officer was unable to produce the particular information he had been seeking. Mr Kaufusi correctly made the point that all of these matters should have been sorted out through the discovery process long before the hearing began. Surprisingly, no formal discovery order was taken out by the plaintiffs at any stage.

It was no doubt in the realisation of these evidentiary problems relating to the main head of the plaintiffs' damages claim, that Mr Niu appeared to focus most of his efforts on endeavouring to establish the plaintiffs' cash advances claim and in rebutting the defendants' counterclaim.

The only other witness for the plaintiffs, apart from Henry and Mr Body, was Tuakoi Tu'itupou who gave evidence in relation to both the cash advances claim and the counterclaim.I will need to come back to this witness.

When Mr Body gave evidence, it was clear, perhaps understandably, that he had little first-hand knowledge of what had taken place in Tonga during the relevant period but he said that he John Watson and Fred Tahau came to Tonga in March 2000 to inspect the land that Henry had available for growing squash that season. For some reason, which was not explained in evidence, Henry, somewhat surprisingly, was not in Tonga at the time but Tuakoi met them at the airport and showed them around. They also had a meeting with Steve Edwards at the Friendly Islander Hotel.

Mr Body said that he asked Tuakoi to arrange the meeting but subsequently, in his evidence, Steve Edwards told the court that before he returned to Tonga from Auckland, Henry had asked him if he would meet with these gentlemen from Tauranga who were going to go to Tonga and Steve said that he agreed to the request and so he disputed that it had been Mr Body who had arranged the meeting at the Friendly Islander Hotel. I accept that evidence although I also accept that Mr. Body no doubt mentioned the topic to Tuakoi.

In any event, Steve was adamant that the discussion at the Friendly Islander Hotel was in very general terms and nothing whatsoever was agreed to. I accept that statement. It is consistent with Mr Body's own evidence in chief where he was asked:

"Q. What happened when you met Steve (at the Friendly Islander Hotel)?

Nothing was arranged. We attended a meeting. We sat around a pool and talked about squash. We did not talk about any arrangements but we were clear and he was clear, I guess. He would be handling our fruit."

Whether and to what extent the plaintiffs can succeed in either their main claim i.e. in relation to the alleged shortfall in their returns from the sale of their squash to Japan or on the balance they claim is owing in connection with their cash advances claim will, of course, depend upon the conclusions reached by the Court in relation to the alleged oral agreement made in January 2000 between Henry and Steve in Auckland.

4. The Case for the Defendants

In his evidence 66-year-old Steve Edwards (I shall refer to him throughout as "Steve" to distinguish him from his son "Stephen" who also gave evidence) outlined to the Court his background in the Tonga Squash industry going back to its origins in the year 1991.

It is an impressive background and no one could doubt his credentials. Steve is Managing Director of Procorp Ltd. He and his son Stephen are certainly the majority shareholders in the company. It was not clear from the evidence whether there are any other shareholders.

Steve explained to the court that during the mid-1990s, Procorp had entered into a special arrangement with a New Zealand-based company, Growex, in relation to the growing and marketing of squash and Henry had been sent from New Zealand to manage the packhouse.

Steve said that in 1998 he came to the realisation that there were people in Tonga who could handle the work that Henry had been sent over from New Zealand to perform and so he approached Growex and arranged for Henry's employment to be "voluntarily terminated". His evidence in this regard was not challenged.

Turning to the crucial meeting in Auckland in January 2000, Steve told the court that it was Henry who had contacted him while he was staying at his mother-in-law's house, not the other way around. Henry, according to Steve, was unemployed at the time and he was keen to get back into the squash business in Tonga. He was seeking Steve's help and support in this regard.

Steve acknowledged that Henry knew "the mechanics" of the squash industry in Tonga and all about the grower/exporter relationship. I accept that, as Henry apparently had financial backing in New Zealand and access to 100 acres of leased land in Tonga for the growing of squash, Steve would have been keen to include Henry in Procorp's list of registered growers for the season. But that, Steve told the court, was as far as it went. Henry would simply be another registered Procorp grower just like Steve himself and Steve's brother Clive.

Steve explained that in acknowledging that Henry knew "the mechanics" of the squash industry, he was referring to the established and well recognised system whereby growers would register each year with a particular export company and finance would then be advanced to the grower either by the Tonga Development Bank or the exporter to cover the costs of plowing, seeds, fertilisers and chemicals. Alternatively, the exporter might allow credits for these items. The exporter would eventually fix a grower's price for the season. The evidence was that for the 2000 season, the grower's price for Procorp's growers was fixed at 40 seniti per kilo. The Bank loan or the exporter's advances or credits, as the case may be, would then be repaid or accounted for at the end of the squash season before any money was paid out to the grower.

By way of further background, Steve explained that the 1999 squash season had been "a disaster" and, as a result, he had terminated his association with Growex because they had incurred "big losses". Steve said that when it came to the year 2000, he approached two New Zealand produce exporting firms, Bearsley Produce Ltd and Millennium Foods and he ended up entering into an arrangement with them, that had been reduced to writing, for the production and marketing of Procorp's squash.

In cross-examination, Mr Niu put it to Steve that it was he who had approached Henry in Auckland for a meeting because he needed Henry's support in negotiating the arrangements with Bearsley Produce and Millennium Foods. Steve strongly denied this proposition. He retorted: "I did not contact Henry and I did not need his support."

Earlier in his evidence in chief, Steve had been referred by Mr Kaufusi to paragraph 7 of the plaintiffs' statement of claim which sets out in detail, under several subparagraphs the various matters that allegedly made up the verbal agreement reached between Henry and himself at their Auckland meeting. Counsel's invitation to Steve for his comments on that particular part of the plaintiffs' pleading evoked the following, somewhat vitriolic, response:

"In fact, when I read this alleged agreement I was annoyed for the simple reason that the first reaction that came to my mind when I read this -- it says that I said you know -- these New Zealanders, they have the audacity to think that they are smarter than us and we are fools. It was my first reaction. Because there's no way in any case that I would have agreed to these sort of terms because at the time I was already operating as a squash exporter. I didn't need anybody to ride another horse. That was my reaction, Your Honour, for this situation to happen. This is my reaction after reading this amendment or amended claim. From the first I considered this as a fabrication of the truth to create an agreement that never existed."

5. Findings in Relation to Plaintiffs' Claims

The meeting in Auckland was obviously a crucial meeting in terms of the plaintiffs' case. The onus was on the plaintiff to satisfy the court to the required standard in civil cases that the agreement pleaded had, in fact, been entered into. I say at once that I have not been so persuaded. I did not find Henry's evidence on this aspect of the case and in other areas at all convincing. In general he appeared to be uncomfortable in the witness box and much of his evidence was delivered in an off-hand and glib sort of way.

On the other hand, with one or two exceptions, I found the evidence given by Steve and his son Stephen cogent and credible. To the extent, therefore, that there were conflicts, and there were many of them, in the evidence given by these witnesses then, apart from in the specific areas that I will indicate, I prefer the evidence given by Steve and Stephen.

What that finding on credibility means is that, even had the plaintiffs not experienced the evidentiary problems I have referred to in establishing the income figures Procorp derived from squash sales to Japan in the year 2000, they would still not have succeeded. There was no agreement made at the Auckland meeting in January 2000 to share the profits from those sales. At the most, it was agreed that the second plaintiff would become a registered grower with Procorp for the season. In other words, Henry would simply receive the same payout for his squash as any other registered grower.

Significantly, the evidence established that both Steve and his brother Clive were treated no differently from Procorp's other growers. The payments they received from Procorp at the end of the season were calculated in the same way as the payments made to other registered growers based on the announced figure of 40 seniti per kilogram. Clive Edwards told the court that he was, in fact, unhappy with the payout from Procorp for the 2000 season and the following year he took his squash to another export company.

In his written submissions, Mr Niu appeared to resile somewhat from the agreement pleaded in the statement of claim. Paragraph 7 of the statement of claim refers to the agreement sued upon having been entered into between "the second plaintiff and the second defendant" in Auckland in January 2000. In his submissions, however, Mr Niu states in paragraph 10 that "the agreement was properly, and legally, concluded on 8th March 2000 between the first plaintiff and the first defendant. . ." That was the date of the meeting at the Friendly Island Hotel.

The contention that the agreement was made on 8 March 2000 is something new. That was not the allegation made in the statement of claim nor is it an allegation supported by the evidence. I reject it out of hand. I accept Steve's description of the meeting at the Friendly Island Hotel. It was purely a "get to know you meeting" and no business arrangements whatsoever were agreed to between the plaintiffs and any of the defendants.

When it comes to the other part of the plaintiffs' claim relating to the cash advances, the plaintiffs face the same problems in terms of credibility that I have just alluded to. They have produced a 1 1/2 page schedule listing various items which they allege they paid between mid-June (the first item is actually dated 24 March) and late October 2000 at the request of Steve Edwards on the promise by Steve that he would repay the advances from the defendants' squash proceeds or in return for seeds, fertilisers and chemicals.

There are 75 items listed in the schedule. I do not propose to list them. Steve Edwards's response to this particular head of claim in general was that he would only acknowledge those payments for which he had issued a receipt and he proceeded to identify those particular items. A small number of the cash advances fell into that category and Steve acknowledged them and said that they had been accounted for in his calculation of Henry's payout entitlement at the end of the season.

However, Steve strongly disputed any liability for other payments allegedly made on behalf of or for the benefit of Procorp and he told the court that even if some payments were of benefit to Procorp, they were never authorised by him or by the company and the defendants can, therefore, accept no liability for them. Expanding on this statement, Steve said that the squash industry is so competitive that keeping proper control of expenses is "critical to survival". He went on to say that there was no way he could afford to allow anyone to purchase products or make payments on behalf of Procorp without his express authority. In any event, he contended, that many of the claimed items related to expenses connected with the packhouse at Kolonga and that packhouse, Steve maintained, was Henry's packhouse. Procorp had only the one packhouse and that was at Havelu.

I found all these arguments cogent and convincing and they made sound business sense. In essence, Steve was rhetorically stressing to the Court, how could a company exist in a competitive business environment without having some sensible proper control over its expenses and outgoings?

Mr Niu submitted that although Henry packed and quarantined his squash at the Kolonga packhouse, the packhouse belonged to Procorp. In support of his submission, counsel placed reliance also on certain statements made by the witness Tu'akoi.

The evidence satisfied me that Henry arranged to rent the buildings making up the Kolonga packhouse from the Catholic Church for his own purposes and the packhouse belonged to the plaintiffs, not to Procorp. I did not find Tu'akoi a particularly convincing witness. He did not appear to be telling the court the whole truth in relation to his involvement in the various events he gave evidence about and I was left with the impression that he was harbouring a grudge against Steve for some reason which never fully emerged during the trial. It appears that during 2000 he worked for periods for both Henry and Procorp but it was apparent that his sympathies lay with Henry.

Returning, then, to the cash advances claim, the plaintiffs have failed to satisfy me, to the required standard of proof in civil proceedings, that they were made at the request of Steve Edwards as alleged. My conclusion on the evidence is that the defendants should not have to bear any liability for the items listed unless they were specifically acknowledged by Steve or some other person on Procorp's behalf. I am satisfied that the remainder of the expenses claimed were for the plaintiffs own squash growing purposes.

At one point under cross-examination, Steve appeared to acknowledge that one or more of the payments (he did not specifically identify them) may have been for Procorp's benefit but he stressed that if that was the case then they certainly had not been authorised by himself or the company.

Why Henry would make any gratuitous payment for the benefit of the defendants given, as I have found, that he did not have any special relationship with Procorp other than being one of the company's registered growers, is something that was not fully explored before me

One conclusion, however, that could properly be drawn from the evidence was that Henry, apparently for the first time having access to and complete control over considerable funding from the New Zealand investors, had simply been over-generous with the sums advanced to him by his financial backers. In colloquial terms, he had "splashed the money around" as a way of ingratiating himself in the longer term to Steve who he obviously recognised was one of the big players in the Tonga squash industry.

It is not necessary for me to make any firm findings in this regard, however, and I am conscious that the proposition was never put to Henry in those terms but there was support for the scenario just described in Mr Body's evidence. He was asked by the court how he felt when he learned that Henry had allegedly been making cash advances to Steve. He replied:

"We were a bit alarmed for a while but we had discussions. We knew it was not the regular way of doing business but he (Henry) explained what the reasons were and we agreed."

He did not elaborate on the reasons Henry had given but, significantly, he did not say that it was pursuant to any agreement the plaintiffs had with Steve or Procorp.

Mr Niu seemed to suggest in his submissions that the first plaintiff agreed to make cash advances to Procorp at the meeting on 8 March 2000 at the Friendly Island Hotel. As I have indicated, I reject that proposition. I do not accept that any business matters were discussed at that meeting.

In any event, Mr Body's evidence was that he and his co-investors had no knowledge of the alleged cash advances until their visit to Tonga in October 2000.

Mr Body told the court that by that stage he and Mr Watson were keen to find out what was going on and it was they who were then instrumental in having Henry instigate the present court action.

The implication from all of that evidence was that by October 2000, the investors did have concerns about the financial situation and it may well have been because of those concerns that Henry came up with the cash advances explanation which probably went some way to appeasing his financial backers.

I stress, however, that this possible motive only has relevance if Henry did make some gratuitous payments on Procorp's behalf. If Henry did, in fact, make some such payments (and I have not been persuaded that he did) then they were simply that -- gratuitous and the defendants have no liability in respect of them. Essentially, however, my finding under this heading is that the plaintiffs simply have not been able to prove their alleged claim to my satisfaction.

6. The Counterclaim

I turn now to the counterclaim. The first statement of defence filed on 22 May 2001 did not contain any counterclaim. The counterclaim included in the amended statement of defence dated 27 January 2003 is directed at the second plaintiff. It is made up of seven items totalling $91,235.00. I will deal briefly with each item in turn:

(I). Diesel engine $4,000

The pleading reads that "the defendants and the second plaintiff had agreed for the second plaintiff to buy the defendants' diesel engine for $4000.00." The problem for the defendants is that, on their own evidence, the engine in question was owned by Stephen Edwards who is not one of the defendants. The claim must inevitably, therefore, fail.

(II). Plowing costs $2,520

The plaintiffs' admitted this item of claim.

(III). Costs of seeds $15,060

It is alleged in the counterclaim that the second plaintiff bought seeds on credit from the defendants totalling $15,060.00. The defendants produced invoices which, on the face of it, showed that the second defendant had been supplied with 62.75 kg of seeds at $240 per kilogram. The problem was, however, that Mr Niu had put the defendants to strict proof of every item of claim and the only supporting records the defendants were able to provide in support of the figure shown in the invoices were field records kept by Stephen Edwards which showed that 36.75 kg of seeds had been supplied to the second plaintiff. The plaintiffs accepted that figure.

Mr Kaufusi put it to one of the plaintiffs' witnesses that 1 kg of seeds would have been required for every acre of land ploughed but the witness did not accept that proposition and so there was no consensus as to the exact quantity of seeds used on Henry's 100 acres. It was up to the defendants to provide the records requested by Mr 550 Niu showing that either Henry or someone on his behalf had signed for the 62.75 kg of seeds allegedly supplied by Procorp.

Steve told the court that the invoices had been prepared by Procorp's accountant but the accountant was not called to give evidence nor was the documentation produced upon which the accountant presumably would have relied. It is Procorp's counterclaim. The onus is on a defendant to prove a counterclaim in the same way that the onus is on a plaintiff to prove his substantive claim. In the absence of the required documentation in the present case, this particular head of claim must fail except to the extent admitted by the plaintiffs. The amount allowed, therefore, based on deliveries of 36.75 kgs of seeds, is $8,820.00.

(IV). Fertilisers $24,876

The defendants claimed that the second plaintiff bought 689 bags of fertiliser on credit from Procorp amounting to $24,876.00. Again, however, they failed to produce the necessary back-up documentation to support the claim. Stephen Edward's field records showed a figure of only 403 bags which would have amounted to $14,508.00

Steve was highly critical of Henry for trying to claim reimbursement of payments he claimed to have made on behalf of Procorp without Steve's written authority. He cannot have it both ways, however. When it came to Procorp's counterclaim, the defendants should have been able to produce appropriate receipts or other such documentation signed by Henry or someone else on Procorp's behalf acknowledging receipt of all the fertilisers supplied.

This item of claim succeeds, therefore, but only to the limited extent of $14,508.00.

(V). Chemicals $3,040

The defendants claimed that the second plaintiff purchased chemicals on credit totalling $3040.00 but once again the evidence falls well short of establishing this figure to the required standard of proof. The claim is disallowed.

(VI). Forklift hire $26,880

Mr Niu described this claim as "the most unfair of all the claims of the defendants." It totals $26,880.00 made up of a rental hireage rate of $20 per hour for 580 1344 hours over an undefined eight week period.

Much time was spent on this particular claim in evidence. In his evidence, Henry tried to downplay the claim and pass over the matter as though there was no real forklift problem at all. Steve's evidence was more forthcoming but he readily admitted having only limited first-hand knowledge of the facts because it was a matter handled by his staff and his son. Steve did agree with Mr Niu in cross-examination, however, that there was no hireage agreement as such with Henry and the $20 figure had never been put to Henry. Steve said that the problem came when Henry refused to return the forklift and in the end he had to seek assistance from the police. By that time the relationship between the two men had deteriorated significantly.

With one exception, I found young Stephen's evidence relating to the dispute over the forklift to be the most cogent. The position appears to have been that Procorp hired the forklift in question for the 2000 squash season from Millennium Foods in New Zealand for a total figure of just under $10,000.00. Steve then agreed to allow Henry to have the use of the forklift at his Kolonga packhouse for an unspecified period and at an unspecified hireage rate on the basis that Henry would return it as soon as and whenever Procorp needed it for handling the squash bins of other growers. Henry, however, refused to return the forklift when requested and the police eventually had to be called in to assist in resolving the dispute.

Stephen said in evidence that Henry was renting the forklift from Procorp. He told the court that after his father and Henry had completed their discussions relating to the hireage of the forklift, they called him into the Procorp office and explained to him what had been agreed to. Stephen said that he was told at that point in time that the agreed hireage rate was $20 per hour for 24 hours for each day Henry had possession of the forklift but he was required to return the machine whenever the company needed it elsewhere.

I do not accept that evidence. It marred what was otherwise a convincing recollection of events by Stephen of many other aspects of the claim and counterclaim. What he said about the hireage agreement, however, was totally unconvincing and his version of events was not even supported by his father's evidence.

Mr Niu made some forceful submissions in relation to the forklift rental claim and he invited the court to reject it altogether. I am satisfied, however, that Henry expected to have to pay something for the use of the forklift and in the absence of any agreed figure, the principle of quantum meruit or a reasonable amount (which comes to the same thing) would apply.

Steve told the court that $20 was the commercial hireage rate charged for forklift usage at the wharf but he explained that he normally charged his growers $5 per bin for the use of his forklifts. The evidence was that Henry had produced 523 bins of squash.

In answer to a question from Mr Niu arising in turn out of a question from the Court at the very end of his evidence, Steve conceded that when he sent Henry the invoice for the forklift hireage, he expected him to come and discuss the matter in a sensible manner and he would then probably have agreed to charge him only $2000.00. As it turned out, by that stage, Henry and Steve were not on speaking terms.

I, nevertheless, consider that Steve's proposal would have been appropriate in the circumstances and under this head I, therefore, allow the claim in the sum of $2000. I reject the "miscellaneous" claims included under this head.

(VII). Cartage of bins $5,327

The final item claimed in the counterclaim is $5,327.00 on account of cartage of the second plaintiff's empty and full bins between Havelu and Kolonga. Again, however, the claim was not well presented or documented.

Mr Niu cross-examined Steve at some length on the documentation produced in support of this claim and obtained a concession from him that there appeared to be some "double billing". In his submissions, therefore, after taking into account this factor, Mr Niu conceded the claim but only to a total figure of $3452.00.

In reply, Mr Kaufusi contended that there was no double billing because the truck numbers and the numbers of bins on the relevant invoices are different.

I have analysed the evidence and various documentation in some detail and it appears to me that there is substance in Mr Niu's submission. I am satisfied that there is evidence of double billing. In the circumstances, the amount I propose to allow under this head, therefore, is $3452.00.

7. Payments made to the Plaintiffs

The only other outstanding matter relates to the total amount which the plaintiffs actually received from the defendants at the end of the 2000 squash season. The defendants allege that they paid out $32,215.00. The plaintiffs admit to receiving only $25,000.00.

Mr Niu accepted that the defendants had produced cheque butts which show total payments to Henry in the amount claimed but he contends that the defendants had to go further and produce either the receipts signed by Henry or the actual cheques and bank statements to show that Henry had, in fact, received the cheques.

Proof of payment is not dependent upon production of receipts. In many commercial situations these days receipts for payments by cheque are the exception rather than the rule. In this case the original cheque books were produced containing the relevant cheque butts. There were 10 cheques and they total $32,215.00. I am satisfied that the entries are genuine. They provide adequate proof for my purposes that the payments were, in fact, made and that is my conclusion.

8. Summary

In summary, therefore, the plaintiffs fail in their claim and the defendants succeed in their counterclaim but only to the limited extent that I have detailed.

In addition, the defendants are entitled to costs to be agreed or taxed.