Brambles Australia Limited Trading As CHEP Australia v Tatale Pty Limited and Anor

Brambles Australia Limited Trading As CHEP Australia v Tatale Pty Limited and Anor - [2006] NSWSC 204 - NSWSC 2006 case summary — Zoe

[22]

EXCLUSION OF WARRANTIES CHEP accepts liability for all warranties implied under the Trade Practices Act 1974 or any other legislation the effect of which cannot be excluded. All warranties and conditions that are capable of exclusion and would, apart from this provision, form part of the terms of hire of Equipment, are expressly excluded. Except where by legislation liability may not be limited, or where a limitation of liability would otherwise render CHEP liable to a penalty, CHEP's liability for breach of terms which cannot be excluded is limited to replacement or repair, at CHEP's option, of the Equipment in question or supply of equivalent Equipment. 3 As at 13 February 2006 the plaintiffs had: 11,907,010 CHEP pallets on hire throughout Australia, and 24,549 customer accounts for hire for CHEP pallets from 15,825 customers throughout Australia. 4 The first defendant, Tatale Pty Limited, trades as Downton & Dyer and carries on business as a wholesaler of grocery products. The second defendant, Venasti Pty Limited, trades as Arncliffe Freezers and carries on business as a wholesaler of frozen foods. The defendants are not customers of the plaintiff. Each have large numbers of CHEP pallets at their premises. 5 Between 2000 and 2003 the plaintiff communicated with the defendants and their solicitors in an attempt to recover possession of the CHEP pallets that were on the defendants' premises. That process included the plaintiff providing to the defendants copies of the terms of hire between the plaintiffs and its customers. Although some CHEP pallets were recovered, the plaintiff commenced District Court proceedings in detinue and conversion claiming damages for the loss of hiring fees in respect of those pallets that were not recovered. The District Court proceedings were summarily dismissed but such order was set aside on appeal: Brambles Australia Ltd t/as CHEP Australia v Tatale Pty Ltd & Anor [2004] NSWCA 232. 6 The plaintiff commenced these proceedings against the defendants by Summons filed on 6 July 2005 for delivery up of the pallets and damages. On 9 September 2005 an order was made removing the District Court proceedings into this Court together with an order that the removed proceedings be tried at the same time as these proceedings. 7 The defendants filed a Commercial List Response, a First Cross-Claim Cross-Summons and a Commercial List Cross-Claim Statement on 4 October 2005. On 9 November 2005 the plaintiff filed a Notice of Motion seeking orders that various paragraphs of the Cross-Summons and the List Response be struck out. After case management, that Motion was listed for hearing before me on 24 February 2006. Mr Coles QC, leading Mr P Russell of counsel, appeared for the plaintiff/applicant on the Motion and Mr Garnsey QC, leading Mr J Redmond, appeared for the defendants/respondents to the Motion. For ease of identification I shall refer to the parties as the plaintiff and defendants rather than cross-defendant and cross-claimant. 8 On 24 February 2006 I formed the view that there were flaws in the pleadings and that it was necessary for the defendants to re-plead. I ordered the defendants to provide drafts of the proposed pleadings to the plaintiff by 17 March 2006 and re-listed the Motion on 24 March 2006. The defendants provided a draft First Cross-Claim Amended Cross-Summons (the Pleading) to the plaintiff and on 24 March 2006 the plaintiff opposed leave being granted for the filing of the Pleading. There are some corresponding paragraphs in the Commercial List Response filed on 4 October 2006 but the only document with which I am dealing in this judgment is the Pleading. The appearances on 24 March 2006 were the same as on 24 February 2006. 9 Practice Note SC Eq 3 (the Practice Note) governs the conduct of proceedings in the Commercial List. There is provision for contentions to be set out in summary form. Contentions should avoid formality, state the allegations made with adequate particulars and identify the legal grounds for the relief claimed (pars 8, 9 & 12). Notwithstanding the avoidance of formality, the pleading should make clear the allegations of fact on which reliance is placed to seek the relief claimed. This requirement is to ensure that each party knows the case made against it and sets the ambit within which pre-trial procedures such as discovery will proceed. The pleadings also define the limits within which the trial will be conducted.

[23]

The structure of the Pleading 10 Under the heading "Pleading and Particulars", paragraphs 1 and 2 set out the formal matters in relation to the identity of the defendants. Paragraphs 3 to 8 are as follows: 3. At all material times Tatale & Venasti purchased from their respective suppliers (the Cross-Claimant's Suppliers) and received and receive goods being groceries or frozen foods as the case may be, which they had and have ordered from and which have been sold to them by their respective Defendants' suppliers in the ordinary course of trade and for the purposes of their respective businesses. 4. The Cross-Claimant's Suppliers are and were at all material times corporations manufacturing, processing and supplying or supplying as the case may be groceries or frozen food products to persons and corporations in the Commonwealth of Australia including Tatale and Venasti. 5. At all material times, the Cross-Claimant's suppliers in the ordinary course of trade supplied and delivered those groceries and frozen food products packed on pallets including wooden pallets in which the Cross-Defendant claims ownership and which the Cross-Defendant at all material times hired out and hires out for reward to its customers. 6. The wooden pallets supplied and hired out for reward by the Cross-Defendant in which the Cross-Defendant claims ownership are painted blue and stencilled with a logo referred to as "the CHEP logo" and bear words to the substance or to the effect of "always remains the property of CHEP" "CHEP Pallets". The Cross-Defendant has not at any material times numbered or identified and does not number or identify any particular or otherwise individual CHEP pallet so as to distinguish it from any other CHEP pallet. 7. At all material times the Cross-Claimants' Suppliers chose and determined whether those groceries and frozen food products should be packed and delivered on CHEP pallets or on pallets owned and supplied by corporations other than the Cross-Defendant and Tatale and Venasti did not and do not request and were not and are not aware until delivery of those groceries and frozen food products by the Cross-Claimants' Suppliers whether of those groceries and frozen food products would or will be packed on CHEP pallets or on pallets owned and supplied by corporation other than the Cross-Defendant. 8. The customers of the Cross-Defendant for CHEP pallets include a substantial number of the Cross-Claimants' suppliers. 11 Paragraph 9 pleads the terms of hire between the plaintiff and its customers set out earlier and paragraph 10 relies upon the whole of those terms. Paragraphs 11 and 12 are in the following terms: 11. Further, at all material times, the Cross-Defendant hired and supplied and held itself out as a hirer and supplier of CHEP pallets to customers for the purpose of transportation of goods in trade and commerce in Australia by those customers to other persons or corporations until those goods reached a wholesaler or consumer and the Cross-Defendant knew that its customers parted with and would part with possession of the CHEP pallets hired to them in the ordinary course of trade to persons or corporations who, in the ordinary course of trade, parted with or would part with possession of the CHEP pallets delivered to them by the customers until the pallets and goods reached a wholesaler or consumer. 12. Further, it is and was the fact that, and the Cross-Defendant knew that it is and was the fact that, its customers in the ordinary course of trade supplied goods packaged on CHEP pallets which the customers intended should remain on the pallets, and those goods did remain on the pallets, until the pallets reached a wholesaler or a consumer and that the pallets were not and would not be available for return in the ordinary course of trade to the person or company who delivered the pallets to the wholesaler or consumer or the Cross-Defendant until the goods had been unloaded or unpacked from the pallets in the ordinary course of trade by a wholesaler or consumer.

[31]

Further, and alternatively, if the Standard Conditions or any part thereof purporting to give the Cross-Defendant an immediate right to possession of CHEP pallets, including clause 4(d), are incorporated in any contract with the Cross-Claimants' Suppliers for the purchase and supply to Tatale and Venbasti of groceries or frozen foods on pallets as the case may be, then those clauses purport to exclude, restrict or modify, and have and at all material times had, the effect of excluding restricting or modifying the liability of the Defendant's Suppliers to compensate or indemnify Tatale and Venasti as the case may be that may arise under Division 2 of Part 5 of the TPA, namely the implied warranty pleaded in paragraph above and are and were at all material times void. Particulars (a) The Cross-Claimants rely on the true construction of TPA s69 and TPA s68 and clause 4(d) and clause 10 of the Standard Conditions. (b) Alternatively, and in addition, the Cross-Claimants rely on the facts and matters pleaded in paragraphs 3 to 12 above and 23 and 24 below. 13 There are a number complaints made in respect of this part of the Pleading. The first is that the defendants, who are not parties to the contracts between the plaintiff and its customers, claim that a term of those contracts, clause 4(b), is void. No declaratory relief or orders are sought in respect of that allegation. However, putting the matter of privity to one side for the moment, there are also complaints made in respect of the alleged implied warranties under s 69(1)(b) and s 69(3) of the Trade Practices Act 1974 (the Act). 14 In paragraph 15 the defendants claim that there is an implied warranty in the contracts between the plaintiff and its customers pursuant to s 69(1)(b) of the Act. That is not mentioned again in the pleading. Part of the plaintiff's complaint is that it simply goes nowhere. That is a valid complaint. There is then a claim that there is an implied warranty pursuant to s 69(3) of the Act in the contracts between the plaintiff and its customers. The plaintiff submitted that s 69(3) could not apply to those contracts because they are contracts for hire and there is nothing within the terms of those contracts dealing with the transfer of "title" as provided for in that section. That submission also seems to have force particularly in the context, or lack of it, in which the claim appears. 15 There is a further complaint that paragraph 17 is quite untenable. That is a claim that clause 4(b) of the contract between the plaintiff and its suppliers purports to exclude, restrict or modify, the plaintiff's liability under the Act. The veracity of that claim requires construction of the relevant provisions of the Act and clause 4(d) of the plaintiff's Terms of Hire. The claim may well appear to be untenable but that may be a matter for trial, if the claim were not otherwise flawed by the problems of the surrounding paragraphs in the Pleading. It is however infected by the flaws in the other paragraphs. 16 In paragraph 20 the defendants make no mention of the alleged implied warranty pursuant to s 69(1)(b) and only rely upon s 69(3) of the Act. This is a claim in respect of the implied warranty in each of the contracts between the defendants and their suppliers. It is a claim that as between the defendants and their suppliers the defendants were entitled to enjoy the quiet possession of the pallets. There is no claim suggesting that such a warranty as between the defendant and its suppliers has been breached, or alternatively that such a warranty supersedes or is superior to the plaintiff's claim of an entitlement to immediate possession. 17 The problem is compounded by paragraph 21, which is a tentative or conditional claim. It is not claiming that clause 4(d) is included or incorporated into the contracts between the defendants and their suppliers but rather it is posing a possibility with suggested consequences if such a possibility exists. I agree with the description Mr Coles QC attributed to this paragraph, that it is a "conditional balloon on a contingency going nowhere". There is no positive allegation that the conditions of hire between the plaintiff and its customers are incorporated into the contracts between the defendants and its customers. As Mr Coles QC submitted there are absolutely no averments of fact to support how such incorporation could have occurred. I agree with this submission. 18 Paragraphs 13 to 21 will not be allowed. Contracts 19 Paragraphs 22 to 24 of the Pleading are as follows: Contracts with the Cross-Claimants' Suppliers

[34]

By reason of the facts and matters pleaded in paragraphs 3 to 12 and 23 above, and further and alternatively, by reason of the facts and matters pleaded in paragraphs 13 to 21 above, at all material times: (a) Tatale and Venasti received CHEP pallets from the Cross-Claimants' Suppliers who were themselves customers of the Cross-Defendant or who had, directly or indirectly, received CHEP pallets from customers of the Cross-Defendant, and were permitted and obliged to hold the CHEP pallets on the terms and conditions pleaded in paragraph 23 above, and (b) the Cross-Defendant had authorised and consented to the supply of the CHEP Pallets, to Tatale and Venasti by the Cross-Claimants' Suppliers on the terms and conditions pleaded in paragraph 23 above, and (c) further and alternatively the Cross-Defendant was and is estopped and prevented from denying that it had authorised and consented and authorises and consents to the supply of the CHEP Pallets, to Tatale and Veansti by the Cross-Claimants' Suppliers on the terms and conditions pleaded in paragraph 23 above, and (d) further and alternatively the Cross-Defendant has not had and does not have any right to immediate possession of the CHEP pallets which it can enforce against Tatale and Venasti, and (e) further and alternatively the Cross-Defendant was and is estopped and prevented from asserting any right to immediate possession of the CHEP pallets which it can enforce against Tatale and Venasti. 20 The plaintiff submitted that paragraph 23 is deficient in a number of respects. Firstly the defendants' alleged suppliers are not identified. Secondly, there are no specific contracts (either written or oral) referred to and there are no terms and/or conditions identified, pursuant to which it is alleged the defendants had the rights and obligations referred to in paragraph 23(a)-(c). The same complaint is made in respect of paragraph 24(a). There is force in the plaintiff's complaints. Although formality is avoided, the defendants still have an obligation to state the facts or allegations upon which the claim is made. The contents of paragraph 23 really amount to conclusions from facts that are not stated. The facts that should be stated are the contracts upon which the defendants claim they have these rights and obligations together with the terms and conditions from which it is said those rights and obligations arise. Only in that way is the plaintiff then able to assess the claims and respond either by way of admission, non-admission or denial. At the moment paragraph 23 is a broad claim of rights and obligations with unidentified persons in unidentified contracts. 21 Mr Garnsey QC submitted that this was an appropriate summary form of allegation that avoids the need for lengthy pleadings. The Court endorses contentions made in summary form, but it will not endorse contentions that are flawed and do not provide proper particulars to the opposing party of the case it has to meet. Accordingly, I am satisfied that paragraph 23 should not be allowed in its present form. I am also of that view in respect of paragraph 24(a). 22 That finding means that paragraphs 24(b) and (c) fall away. Additionally I should say that in respect of paragraph 24(b), there does not appear to be the appropriate nexus between what was pleaded in paragraph 23 and any specific allegation that the plaintiff "authorised and consented to" the CHEP pallets being supplied to the defendants by its suppliers on the terms and conditions that were pleaded in paragraph 23. It is all very well to cross reference paragraphs at the commencement of a claim but when a claim is made that a party authorised and consented to certain events occurring, it is necessary to identify the specific conduct (or lack of it) that is relied upon to establish such authorisation or consent. That has not been done in this instance. 23 Paragraph 24(c) claimed that the plaintiff was estopped from denying that it had authorised and consented to the supply referred to in paragraph 24(b). The same flaw identified in paragraph 24(b) is present in paragraph 24(c). There is also no claim that by reason of any conduct or words the parties proceeded on a common assumption or otherwise and there is no claim that there was any detriment suffered. It seems to me that even if paragraph 23 had survived, paragraph 24(c) was fatally flawed. The claims in paragraph 24(d) and (e) suffer from the same flaws and will not be allowed.

[40]

By reason of those contraventions of TPA section 52 and FTA section 42, Tatale and Venasti have suffered, and will, if the contraventions continue to suffer further suffered loss and damage. 25 The true meaning of paragraph 26(c) is rather elusive. I think it means that the plaintiff has failed to take steps to enable a recipient of a CHEP pallet to work out whether the person from whom the pallet was received had a right or obligation to retain possession of the pallet. It is not clear where such an allegation can fit within this particular claim and it is also not clear what steps it is alleged the plaintiff should have taken. I am of the view that paragraph 26(c) is embarrassing. 26 Paragraph 27 relies on paragraphs 3 to 22. Paragraphs 13 to 21 have not survived. Reliance is also placed on paragraphs 23 and 26. They also have not survived. In any event paragraph 27 alleges that the defendants were "led into the belief" or were "likely to be led into the belief" that they were entitled to hold and possess and retain the pallets until the goods stored or packaged on them had been "dealt with or disposed of in the ordinary course of trade". 27 Although I understand that this cross-referencing was for brevity's sake it does not assist in this instance. There are many allegations made between paragraphs 3 and 22. However from argument it appears that the specific paragraphs focused upon for this allegation are paragraphs 11 and 12. There are of course two different aspects of the claim outlined in those paragraphs. There is nothing to suggest that the defendants knew of the matters contained in paragraph 11 whereby they could be led into any belief. Paragraph 12 is a claim about what the plaintiff knew. One may be able to "eke out", as Mr Coles QC put it, from that claim that by reason of the defendants receiving their goods on the CHEP pallets and their customers not requiring them to remove the goods from the CHEP pallets at the time of delivery, they were somehow led into the belief that they could keep them until the goods were removed or disposed of in the ordinary course of business. That seems to be a claim that they were led into that belief by reason of the conduct of their own suppliers, some of whom are not the plaintiff's customers, rather than the plaintiff being connected with that course of conduct. 28 Paragraph 28 of the Pleading claims that the plaintiff is guilty of misleading or deceptive conduct because it has made a representation that it is entitled to immediate possession of its pallets. The cross-referencing relied upon in paragraph 28 is particularly confusing. There is no pleading as to what particular facts or matters are relied upon to allege that the plaintiff does not have a right to immediate possession. The problem is exacerbated by reason of the fact that some of the cross-referenced paragraphs have not survived. In those circumstances the whole of this section of the Pleading in respect of misleading and deceptive conduct will not be allowed.

[51]

Particulars The reasonable steps which the Cross-Defendant should have taken include inter alia the following: (a) to issue warning in substance to the effect stated in the duties pleaded in (1), (2) and (5) above; (b) to number or otherwise identify individual CHEP pallets and consignments of individual CHEP pallets by individual pallet supplied and hired to its customers, including the Cross-Claimants' Suppliers; (c) to take reasonable steps to enable CHEP pallets supplied by the Cross-Defendant and hired by it in the course of trade to be identified in the hands of and traced in the course of trade to the possession of those persons and corporations coming into possession of CHEP pallets; (d) to take reasonable steps to compel compliance by persons or corporations to whom it hired CHEP pallets in accordance with the Standard Conditions to comply with the Standard Conditions including clause 2; (e) to take reasonable steps to obtain information from persons or corporations to whom it hired CHEP pallets and who had parted with possession of those pallets as to the persons and corporations to whom or which possession had been given; (f) to exercise reasonable skill, care and diligence in identifying and tracing CHEP pallets and in providing the means of identifying and tracing CHEP pallets supplied by hirers from the Cross-Defendant to other persons or corporations and further supplied by those other persons or corporations to other persons or corporations and the hiring or cessation of hiring of those pallets by its customers; (g) to take reasonable steps to ensure compliance with or to ensure that its customers including the Cross-Claimants' Suppliers complied with, and to enforce the provisions of the Standard Conditions including clause 2(c) as a matter of ordinary routine and practice and (h) to take steps to enable the Cross-Defendant or any person or corporation coming into possession of CHEP pallets to ascertain whether CHEP pallets had been supplied or delivered by its customers to other persons or companies in circumstances where the recipient, including the Cross-Claimants' Suppliers, and Tatale and Venasti, had a right or obligation to retain possession of those pallets as against the Cross-Defendant or its customers.

[54]

Particulars The Cross-Defendant failed, inter alia, to take the steps particularised in the particulars under paragraph 37 above. 37 Having regard to the flaws identified in the paragraphs cross-referenced in paragraphs 34 and 35, these paragraphs cannot survive. However, I should say something further about the submissions that were made in respect of this aspect of the Pleading. Although there are circumstances in which the law recognises a duty of care, such that will permit the recovery of pure economic loss, such claims present peculiar difficulty: Perre & Ors v Apand Pty Ltd (1999) 198 CLR 180 per Gleeson CJ at 192; Woolcock Street Investments Pty Ltd v CDG Pty Ltd & Anor (2004) 216 CLR 515, per Gleeson CJ, Gummow, Hayne & Heydon JJ at 529. In determining whether a duty exists of liability for pure economic loss, it is relevant to consider the principles concerned with reasonable foreseeability of loss, indeterminacy of liability, autonomy of the individual, vulnerability to risk and its magnitude and the defendant's knowledge of the risk and its magnitude: Perre v Appand per McHugh J at 220 [105]. 38 In paragraph 35, with multi layered cross-referencing to paragraphs that have been disallowed, foreseeability that the plaintiff's acts or omissions would lead to loss and damage to "wholesalers and consumers" including the defendants is claimed. 39 Paragraph 36 is also cross-referenced to the earlier disallowed paragraphs and claims vulnerability of the defendants that they "did not have the power to protect themselves" from the risk of loss and damage caused by the acts or omissions of the plaintiff. It is not clear from the Pleading on what basis it is alleged that the defendants could not protect themselves. As Mr Coles QC submitted, it was not clear why it was it not possible for the defendants to protect themselves by having in place their own hiring arrangement of pallets, or having a storage system that did not depend upon utilising the property of another, the plaintiff's pallets, without fee. That of course may be a matter for trial but the problem with the Pleading is that it does not set out the basis upon which it is claimed that the defendants are vulnerable. That seems to me to be an essential aspect to this claim and should have been properly pleaded.

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