Dunbrae Pty Ltd v Armani Restaurant Pty Ltd

Solicitors: Rostron Carlyle Rojas Lawyers, Solicitors for the Plaintiff/Cross Defendant Grove Lawyers, Solicitors for the Defendant/Cross Claimant File Number(s): 2019/00016357

THE PARTIES

1. The plaintiff/cross-defendant sells, supplies, installs and maintains commercial kitchen equipment across Australia and trades as Global Food Equipment. The defendant/cross-claimant is the operator of the 500 seat Armani Restaurant in Parramatta, NSW. It is convenient to refer to the plaintiff/cross-defendant as "GFE", without intending any discourtesy by not specifically naming the associated corporations in its substantial business involved here; and likewise to the defendant/cross-claimant as "Restaurant".

PLEADINGS AND OPENINGS

1. Pursuant to a Sales Contract made 10 May 2015, GFE sold and supplied to Restaurant, substantial commercial kitchen equipment for $217,800.00 (the "Sales Contract").
2. By Statement of Claim filed 16 January 2019 GFE sues Restaurant for payment of invoices for after sale servicing of the equipment pursuant to a contract, in these reasons identified as the Preventative Maintenance Service Contract made on 28 March 2017 or in the alternative 19 July 2017: SOC [3]. As the case was run, GFE relied on documentation, principally its quotation (revised) dated 19 April 2017 (Exhibit MD-3) and Restaurant's email dated 19 July 2017 (Exhibit MD-4) accepting option 1 from within that offer, as the documentation of the Preventative Maintenance Service Contract. GFE also relies on a 30 day Credit Account Application (Exhibit MD-2), completed by Restaurant and accepted by GFE on 28 March 2017. GFE claims $23,876.75 on account of unpaid invoices for service callout and preventative maintenance work performed on the commercial kitchen equipment it sold and supplied to Restaurant, such work having been performed in the period after 12 April 2017 and up to 16 August 2018 when payment of those invoices became overdue. In SOC [10] GFE describes its claim against Restaurant as "being a debt owed by the Defendant to the Plaintiff for breach of the Contract".
3. By its Amended Defence filed 18 September 2019, Restaurant pleads that pursuant to the Sales Contract, GFE agreed to a 5 year Parts and Labour warranty and that the whole of the jobs the subject of the invoices upon which GFE sues was covered by that warranty and Restaurant is not liable: AD [3] and [5]. Restaurant denies that the goods and services, the subject of the plaintiff's invoices, were provided pursuant to a Preventative Maintenance Services Contract: AD [4].
4. By First Cross Claim filed 24 September 2019, Restaurant pleads for relief in damages pursuant to Competition and Consumer Act 2010 (Cth), Sch 2 - Australian Consumer Law, s 236 ("ACL") and in the alternative pursuant to ACL, s 243 that GFE recover the appliances and equipment and refund the contract price. Restaurant also sues on the statutory implied condition of contract that the appliances and equipment would be reasonably fit for purpose - Sale of Goods Act 1923 (NSW), s 19(1); the statutory implied condition that the commercial kitchen appliances and equipment having being bought by description would be of merchantable quality (Sales of Good Act, s 19(2)); and pursuant to ACL, s 54 that the commercial kitchen appliances and equipment were guaranteed to be of acceptable quality. Restaurant sues in breach of contract for damages on account of invoices it paid for servicing of the equipment which servicing fell within the Sales Contract warranty. In a final alternative cause of action, Restaurant sues pursuant to GFE's representation giving rise to a collateral warranty that the equipment was of a high quality suitable for use in Restaurant's restaurant including ready access to parts in the event of breakdown and on the basis of GFE's misrepresentations in contravention of ACL, s 18. In essence, the factual basis of Restaurant's defence and cross claim is that the equipment misfunctioned and broke down excessively.
5. The invoices upon which GFE sues, are presented in a schedule to paragraph [24] of an affidavit of GFE's Managing Director, Mr Dickenson made 14 October 2020 and are Exhibited at MD-6 to his affidavit. Exhibit MD-8, Mr Dickenson's email to lawyers for Restaurant on 31 August 2018, shows, as it was GFE's case during the hearing, that all of the claimed service charges making up the total of $23,876.75, were based on GFE's assumption that the 5 year warranty "was conditional upon the completion of 6 monthly preventative maintenance services, for which [Restaurant] was required to pay" (the "conditional warranty"). Whereas GFE relies on the warranty in the terms and of the exclusions set out in the Preventative Maintenance Service contract, Restaurant maintains that the 5 year warranty was in the terms and of the exclusions expressed in the Sales Contract made 10 May 2015.
6. During opening GFE acknowledged, that, on a first observation basis, there appeared to have been a very substantial occurrence of repairs and service needed including provision of substantial parts which would often indicate a component cause of misfunction of the equipment during the period of the invoices upon which it sued; but said that there were other reasons for those equipment malfunctions: T 16. 44 - 17. 2. GFE amended its prayer for relief number 1 ASOC, from a pleading of debt in the specific sum of $23,876.75 to include "or such other amount as the court deems fit" so as to proceed for a reduced sum in the event that I determine a portion of the invoices on which it sues to be not a debt payable by Restaurant: T 17. 30. GFE alternatively described its case as not a claim for damages for breach of contract (note above regarding ASOC [10]) but rather "…a liquidated debt arising from the contractual terms": T 17. 25. In a third description of its cause of action, during opening GFE referred to its "common money count suit on the invoices": T 23. 49.
7. The parties agreed during opening that the Sales Contract including all handwriting on the GFE printed documentation of quotation and the attached handwritten Annexure A (Exhibit MD-1). It was further agreed that these documents evidence the way in which the parties initially contracted for the sale and supply of the equipment from GFE to Restaurant: T 21. 41 - 22. 24. The parties believed on 10 May 2015 that they had reached a contract: T 22. 26 - 34.
8. In opening, GFE explained that it relied on the Thirty Day Commercial Credit Account Application made between the parties on 28 March 2017 as "…the first way in which we say, leaving aside the common money count suit on the invoices, there was in any event, an agreement that arose whereby the [Restaurant] agreed to pay invoices issued by [GFE]. So, as a matter of contract, we submit a liquidated debt arose, upon the issuing of invoices, pursuant to that term": T 23. 44 - 24. 2.
9. The Thirty Day Credit Account Application provided "[Restaurant] understand goods/services sold to [Restaurant] must be paid for within thirty (30) days from the month on which GFE issued each invoice.": Exhibit MD - 2.
10. At the outset I observe that by the Credit contract the parties agreed not more than a time for payment. It does not support an action for debt prosecuted on the basis of an invoice for which GFE was not otherwise entitled to payment.
11. In regard to the Preventative Maintenance Service Contract documents (Exhibit MD-3) including the Quotation dated 19 April 2017, in particular the page headed "Warranty exclusions as per the manufacturer" (Exhibit MD-3 page 25) and "Quotation conditions" at page 27, GFE opened that, the parties agreed terms to "Give[s] some clarity to the words used in the notation to the [Sales Contract], whereby the warranty was to be expanded": T 24. 50.
12. When asked, during opening, whether GFE was saying that by the Preventative Maintenance Service Contract (Exhibit MD-3) documents, the parties were entering into a new contract or a refinement of the Sales Contract by amendment, counsel for GFE responded: "well, we submit its difficult to work out what occurred here, but we would submit that its either a refinement of that 2015 agreement or it's a variation or separate agreement to it.": T 25. 35.
13. Following the morning adjournment, GFE re-stated its position in regard to the Preventative Maintenance Service Contract to be that it was "an independent agreement in its own right" and, with some apparent inconsistency to the Sales Contract. Plaintiff Counsel added that in regard to the Sales Contract warranty: "We don't accept that there was a concluded agreement in the terms due to uncertainty really": T 27. 11 - 35. I understood GFE to be saying that whereas on 10 May 2015 the parties agreed a Sales Contract for the supply of appliances and equipment for a price, that was all they agreed, and that the balance, of the terms, being provisions as to warranty, were uncertain and unenforceable: T 27. 35 (see also GFE closing T 226. 6 - 27).
14. GFE says that on 19 July 2017 the parties made the Preventative Maintenance Service Contract when Restaurant accepted the terms of GFE's quotation dated 19 April 2017 by emailing its selection for acceptance of the option 1 scope of preventative maintenance service work: Exhibit MD-4; T 30. 10 - 20.
15. It was at this point, that Restaurant amended its defence by insertion of AD 3(f)(a) to plead that on 19 July 2017 Restaurant accepted an offer from GFE to provide preventative maintenance services solely: T 36. 21 - 34 (leave to amend unopposed and granted: T 38. 15).
16. Importantly, for determination of the issues in the case, Restaurant maintained that the servicing and repair of defects in the equipment fell within the Sales Contract 5 year warranty: AD [3(e)(f)]; T 36. 5 - 35; T 37. 5 - 16. In short, Restaurant's position was to concede that it agreed to incur the cost of preventative maintenance services but not of services for repair and rectification of misfunction of the equipment which would otherwise fall within the terms of the Sales Contract warranty.
17. In response to the cross claim, GFE pointed to the absence of expert opinion evidence in Restaurant's case and that the Court would not, in the absence of such evidence, conclude that the equipment was not fit for purpose, not of acceptable quality or was defective. Further, that the goods were sold by reference to the Angelo Po trade name and in any event were inspected by Restaurant such that the Sale of Goods Act, s 19 would not apply. Finally, that Restaurant does not put forward any evidence of any loss flowing from any such breach: T 41. 10. GFE pointed to the absence of evidence in Restaurant's case, of any employee of the restaurant who worked with or used the equipment to establish how it was actually used and why it was not suitable.
18. During closing submissions the parties contested who bore the onus of proof. The first step in approaching the question of onus is to determine the construction of the Sales Contract and the Preventative Maintenance Service Contract and what the terms of warranty were. Both parties referred to Wallaby Grip Limited v QBE Insurance (Australia) Limited & another (2010) 240 CLR 444; [2010] HCA 9.
19. Finally, that Restaurant conceded that it did not attempt to sell the equipment and thereby mitigate loss which its claims: T 41. 35.

FACTS - EVIDENCE

1. Mr Krich is the sole director of Restaurant. Mr Marabani was the manager of Restaurant. In 2014, in the course of renovation and expansion of the restaurant, Restaurant engaged with GFE toward fit out of the commercial kitchen for servicing a seating capacity of 500 diners. Meetings occurred between Mr Robertson, then NSW Sales Manager of the relevant division of GFE and Messrs Krich and Marabani for Restaurant. Chef Maher Asaad also participated on behalf of Restaurant. Mr Robertson recommended Angelo Po brand commercial kitchen appliances. He was well familiar with those appliances having been employed as Managing Director of the Australian division of Angelo Po Kitchen Appliances for 8 years prior to his employment with GFE. During the course of approximately 15 meetings over several months, mainly at the Restaurant but once at GFEs showroom, Restaurant did consider other brands of kitchen equipment but ultimately settled mainly on the Angelo Po Brand; affidavit of Krich 12 November 2021 paragraphs [7] - [8]; equipment list in Sales Contract MD - 1, page 12 - 14.
2. The unchallenged evidence of Mr Krich (at paragraph [7] of his affidavit) is that during those fifteen or so meetings, he took the advice of Mr Robertson and was influenced by Mr Robertson's recommendations as to the equipment to be chosen for the restaurant's new kitchen. The unchallenged evidence of Mr Krich (paragraph [8] of his affidavit) is that he on one occasion attended GFE's showroom "to inspect the equipment they had recommended for my new kitchen". The evidence is no more precise than that. The inspection occurred at some time between late 2014 and May 2015. The Angelo Po equipment arrived in around September 2015 and was commissioned between December 2015 and February 2016. The evidence does not identify whether the type of every appliance and piece of equipment ultimately purchased was inspected or whether or not the appliance or equipment inspected was of identical model and specification as the appliance or equipment ultimately supplied.
3. At a meeting in late 2014, in response to Mr Marabani's enquiry of the availability of spare parts, Mr Robertson stated, in effect; "…We have a very large warehouse in Melbourne that holds all spare parts. Millions of dollars worth of equipment. Everything we need is available there. The waiting time is very short from Melbourne to Sydney."

PRESENTATION OF THE TECHNICAL ASPECTS OF THE CASE

1. At several points during the hearing I raised with the parties my concern that examination of the Exhibit 1, TSM worker created record of work performed was likely to involve me in attempting to understand tradespersons technical descriptions of tasks, parts and components of equipment and that I would have difficulty, in the absence of expert opinion evidence, assessing whether cost for the work fell under warranty or not. The parties maintained their positions not to rely on expert opinion evidence. Specifically, I raised with the parties that methods of cleaning of a restaurant and considerations such as whether or not a hose should be used and where, was not within my worldly experience but would be appropriately addressed by expert opinion evidence. Similarly, that the capacity of appliances such as dishwashers and ovens to continue to operate in the work load environment of a 500 seat restaurant was beyond my worldly experience and expertise. I observed that 500 seat capacity, is within my lay knowledge of Sydney, very large for a restaurant and that there was no evidence before me of the numbers of patrons served in order for me to appreciate the work load on the equipment. I disclosed to the parties that in excess of 40 years ago I had worked, in bars, using dishwashers and refrigerators, and that these were quite wet areas (see T 41. 10 - 35; 108. 14 - 109. 35; 115. 10 - 118 - 28; 116. 25 - 27; 117. 40 - 118. 04; 120. 4 - 127. 2; 136. 22 - 138. 5; 176. 20).
2. As I have said, in closing submissions, the parties presented their arguments regarding the Exhibit 1 evidence of works performed by tradesman in schedules. Exhibit B is the Schedule of Repair Works including those for which GFE claims payment and MFI 10 is the Schedule of Repair Invoices for which recovery of payment is claimed by Restaurant in its Cross-claim. Exhibit B and MFI 10, in columns, include GFE's position and Restaurant's position as to whether or not the work fell within warranty.
3. Later in these reasons, when I come to detailed consideration of Exhibit B, it will be seen that I have been required by the parties to do so in the absence of expert evidence explaining what the nature of parts were and the nature of the labour service tasks performed were. Particularly, in regard to my consideration of the invoices upon which Restaurant relies virtually solely upon for evidence of its submissions in MF1 10, it will be apparent that the evidence often has not identified not only the nature of parts and of labour performed, to my confident understanding but also to identify what the fault, cause or defect rectified was and what connection the work identified in the invoice had with the warranty.

EVIDENCE OF MISUSE DEPOSED TO BY GFE TECHNICIANS

1. Mr Charles Sammut, a First-Class Metal worker/Fitter, employed by GFE for 25 years assessing, diagnosing and repairing commercial kitchen equipment, made his affidavit on 14 October 2020. He was not cross examined. He attended the restaurant only twice. That was during mid-2018. He worked on the dishwasher. The TSM system identified the dates of those attendances as 22 May 2018 and 29 June 2018 and recorded that he found a guide bar broken off at the base and a guide bar out of shape, totally jammed up. He removed debris, found part of the metal ripped out and he welded it back in place. In his affidavit at [10] he recalled that the debris included large amounts of broken glass, crockery and plastics inside the dishwasher line. Weight of his opinion that "this type of equipment rarely has any debris of this type inside", can logically be known only with evidence of whether or not breakages had occurred soon before his attendance and whether or not the dishwasher had been cleaned before his attendance. There was no such evidence. Worldly experience, in my opinion, weights against the proposition that instances of breakage of glass and crockery in commercial kitchen dishwashers is not normal. I consider evaluation of relevance of broken guide bars to be beyond my expertise. I am unable to understand the reach of Mr Sammut's evidence as indicating a causal connection of misuse to the debris or of the contribution of the debris to any failure of the dishwasher. At [11] he deposed that of the metal breakages he worked on, "he had never seen broken on a dishwasher before". He did not in his affidavit depose to how many other Angelo Po dishwashers, if any, he had worked on. He did not depose to more about the breakages, except for his having not seen it before. I consider it beyond my expertise to make causal connections for breakages and guide bar distortion which I find missing from his affidavit evidence.
2. Mr Brett Bagnall, deposed by affidavit made 14 October 2020 that between August 2016 and December 2016 he was Acting Branch Service Manager of GFE in Sydney, during which period he received calls from GFE's technicians on several occasions and from "clients" to assist with managing the ongoing relationship between Restaurant and GFE. He spoke to Mr Marabani on several occasions. His affidavit does not add weight or substance to GFE's allegations of misuse.

DISCERNMENT - SALES CONTRACT (AND PREVENTATIVE MAINTENANCE SERVICE CONTRACT)

1. GFE's action for recovery of payment of its invoices (MD - 6) the subject of its detailed submissions in relation to the work billed (Exhibit B) is fundamentally premised on there being no legally enforceable contractual warranty between GFE and Restaurant contained in the terms of the Sales Contract made 10 May 2015. GFE's action is premised on the basis that the only contractual warranty was in the terms of the Preventative Maintenance and Service Contract made 19 July 2017. Throughout GFE's responses in MFI 10 to Restaurant's cross claim for payment of invoices (OM - 101) for recovery of cost of work under warranty, GFE relied on only that Preventative Maintenance Services Contract warranty. Restaurant's case is essentially based on the parties having validly made the Sales Contract warranty.
2. It is convenient to first deal with GFE's submissions challenging the legal effect of the 10 May 2015 Sales Contract warranty.
3. GFE's starting point (T 220. 40) is by reference to Mr Robertson in the early stages of negotiation of the Sales Contract having responded to Mr Krich's request for a 5 year warranty, having stated that GFE would not agree unless a percentage was added on top of the price of each appliance and Restaurant enter into a preventative maintenance service agreement with GFE's service division. I have already determined that evidence, as a matter of principle, to be of no assistance in determination of the construction of the Sales Contract. I make the following further observations:

• The essential condition of the value of the percentage on top of the otherwise price was never discussed.
• There is no evidence whatsoever that Restaurant agreed to conditions of contract of that nature.
• The stark observation is that Mr Robertson, when present on 10 May 2015 participated in the making of the Sales Contract and indeed made hand written amendments to the GFE Standard Terms which recorded the parties' agreement for a 5 year parts and labour warranty.
• In the Sales Contract neither GFE's printed document wording, nor the hand written amendments agreed between the parties made mention of the warranty being conditional upon the parties agreeing a preventative maintenance service agreement, or whatsoever of preventative maintenance.

PREVENTATIVE MAINTENANCE SERVICE CONTRACT

1. I now come to the separate issues concerning acceptance of the preventative maintenance service contract.
2. Restaurant submitted at the close of the hearing on 29 July 2022 the Mr Marabani's email to Mr O'Reilly on 19 July 2017 expressing Restaurant's acceptance of Option 1 for preventative maintenance service expressed in GFE's quotation (revised) dated 19 April 2017 was not an acceptance of the terms of that quotation including the terms of warranty; but rather, a specific acceptance of only the Option 1 work. In its written submission of 5 December 2022 Restaurant changed its position to make the following submission: 1. [6] "The parties approached the case on the basis that, if the Second Contract [preventative maintenance contract] were valid, it was likely a variation of the First Contract, in that the exclusions to the 5-year warranty granted under the [Sales Contract] had been amended and restated as the exclusions listed in the [preventative maintenance contract]." 2. [7] "However, [Restaurant] accepts (assuming qua non that the [preventative maintenance contract] was binding) that the two contracts could be construed as independent and consistent. That is: 1. The [Sales Contract] was a sale contract with a 5-year warranty which remained valid until the warranty period expired; and 2. the [preventative maintenance contract] was a preventative maintenance contract which carried its own, separate warranty which did not vary the 5-year warranty in the [Sales Contract] …"
3. Common ground is that on 10 May 2015 the parties made the Sale Contact. Having rejected GFE's submission to the contrary, I have found that the Sales Contract was certain and provided a parts and labour warranty for five years over the Angelo Po equipment sold amongst the total of equipment the subject of the contract. My further finding, which is inevitable from my reasons to this point, is that the Preventative Maintenance Service Contract finally accepted by Mr Marabani for Restaurant on 19 July 2017 was a stand alone contract. I have found that the provision for preventative maintenance service and rates for breakdown and reactive work do not conflict with the 5 year warranty under the Sales Contract covering the Angelo Po products, but provided for separate service and for labour rates for services not covered by the warranty. The provisions of the preventative maintenance warranty concerning provision of parts, likewise, applied only to services not covered by the Sales Contract warranty. I have identified inexhaustibly, the types of work and replacement parts involving the Angelo Po equipment, not covered by the Sales Contract warranty.

PLAINTIFF'S CLAIM ON INVOICES AND DEFENDANT'S CLAIM ON INVOICES

1. It is important that I make initial observations applicable to the evidence of invoices. Firstly, entries in GFE's invoices (MD - 6) referring to warranty cover such as "THIS JOB IS NOT WARRANTY because…" are of little persuasion because the evidence does not infer that the author was cognisant of the terms of the Sales Contract warranty. Indeed, the evidence is highly suggestive of GFE's contemplation of the Preventative Maintenance quote (19 April 2017) warranty terms, which I have determined to be not applicable to the Sales Contract terms of warranty cover. Secondly, whilst both parties say that the number of equipment failures, stoppages and call outs for service was abnormally high, whereas GFE says that fact infers the equipment was misused, Restaurant says it infers that the equipment was defective and/or not fit for purpose. On Mr Hill's evidence, there were 104 call outs in the period of approximately two and a half years. In my opinion, the inference for which each of them argued is not to be found on the evidence available. The evidence is not more supportive of either party's case than that of the other without expert opinion evidence assessing the equipment on its performance and assessing Restaurant's care and operation of the equipment in the working environment of the restaurant's kitchen including the workload and performance required of the equipment: Jones v Dunkel (1959) 101 CLR 298 per Dickson CJ at page 304. In my opinion assessment of those things is outside the knowledge of persons who have not by study or experience acquired an understanding of the subject matter of commercial kitchen equipment employed in a very large restaurant: Honeysett v R (2014) 253 CLR 122; [2014] HCA 29 at [23] - [24]. Put another way, the Court does not possess experience with that subject matter such as to be competent to understand the equipment and its components and functions nor the relevant operation of a commercial kitchen in order to choose between those principle contentions of the parties or to assess fault and cause of equipment and its componentry. In this approach I do bear in mind the distinction identified by Macfarlane JA in Yebdoo v Holmewood [2021] NSWCA 110 at [50] that just because expert opinion evidence might assist a Court, does not warrant a conclusion that it is necessary. In this case, in my opinion, expert opinion evidence was necessary. I find myself, without it, simply guessing on technical questions which I do not truly understand.

GFE's Claim on Invoices

1. Exhibit B presents reference to all invoices for GFE service work and identifies the selection of invoices which make up GFE's claim. The invoices themselves appear in MD - 6. Annexure A are invoices to GFE from its derivative business Cater Repair Group. GFE claims for payment of work which it says was not covered by warranty.
2. The parties' competing submissions contained in Exhibit B, ascribe to each of the invoices upon which the plaintiff claims a debt owing, a dispute including (and most often) as to whether or not the requirement for parts and labour on the service was caused by Restaurant's misuse of the equipment. Most commonly, the misuse identified by GFE was inadequate or improper cleaning or poor operation of equipment. GFE says this is to be found on the basis of its technician's comments in the TMS and from the corresponding invoice. GFE relies on the exclusion for misuse in the terms of the warranty. Misuse is excluded in both the terms of the Sales Contract warranty. This means that if the cause of the requirement for labour or parts identified in any of the subject invoices was caused or contributed to by Restaurant's failure to clean or reasonably operate the equipment, GFE was under no obligation under the terms of the warranty.
3. In Kodak (Australasia) Pty Ltd v Retail Traders Mutual Indemnity Insurance Association (1942) 42 SR (NSW) 231; (1942) 59 WN (NSW) 197 - per Jordan CJ at page 202 column 1 Jordan CJ commented that the party claiming under and indemnity to prove their reasonable precautions and conduct could rely on prima facie evidence of it "by proving that it employed for the purpose an efficient works manager." In the present case Restaurant provided evidence that:

• Professional oversight was employed by Chef Maher;
• Managerial oversight was by the presence of general manager Mr Marabani at meal service three evenings per week and at kitchen clean up about once per month as well as his presence at the restaurant during the day;
• The employed manpower of fifteen kitchen staff toward operation and cleaning of equipment; and
• The retaining of contract cleaners.

1. Neither party presented evidence of cleaning systems or protocols, and practices undertaken by Restaurant. Mr Marabani was not cross examined on cleaning systems, or the practices of operation of the equipment by staff. Evidence of GFE personnel provided some sparse opinion based observations but no detailed observation of operation of the equipment by restaurant staff or of cleaning of the equipment by restaurant staff. There was no onus on Restaurant to cross examine witnesses called for GFE of their observations beyond that contained in their affidavit evidence. It was GFE's onus to prove that the parts and labour for which GFE invoiced Restaurant fell within exclusions of warranty: Wallaby Grip Limited v QBE Insurance (Australia) Limited & another (2010) 240 CLR 444; [2010] HCA 9 at [25] (upon which case both parties relied). It was not for Restaurant to disprove it.

Restaurant's Cross Claim on Invoices

1. At [154] of his affidavit, Mr Marabani identified invoices for repair of works to the equipment within OM - 101. Restaurant's claim for recovery of payment for services which properly fell within the Sales Contract Warranty is only presented on the basis of the evidence of those invoices and from Mr Marabani's evidence of the frequency of equipment misfunctions and his complaints to GFE. The invoices are from several contractors other than GFE, retained by Restaurant to perform those services. No issue is raised as to whether or not the invoices were in fact paid. The first 18 identified invoices in MFI 10 are those upon which Restaurant sues in the Cross Claim. They span the period 13 June 2017 to 4 August 2020.
2. In response to item 1, an invoice dated 13 June 2017 from Cater Repair Group, GFE submits that Restaurant undertook itself to retain the external contractors directly when GFE had not refused to attend service calls. GFE points to the unchallenged evidence of Mr Hill that he only asked for Restaurant's account to be placed on hold on around 18 August 2018: affidavit Hill at [22]. GFE points also to the evidence referred to in its submission Exhibit B of GFE's provision of services within the period of the MFI 10 invoices. Mr Hill's evidence at [17] was that on 24 May 2018 GFE engaged a debt collection agency to pursue Restaurant for payment of outstanding invoices. His affidavit and the correspondence annexed (such as SH - 4) confirms that from November 2017, there was substantial disputation between the parties not just as to payment of invoices for GFE's services but also as to delay in repair and rectification of the equipment, particularly because GFE did not have parts available.
3. On the whole of the evidence, Restaurant's want for the equipment to function in order for it to continue to operate its business on the one hand, and GFE's issues with continuing to provide the services, had by some stage within the year 2017 become a live dispute of significance. GFE does not repeat that submission in relation to any other item in MFI 10. The parties did not contest whether or not it was a term of the Sales Contract warranty that only GFE perform the servicing. It was not put by GFE that Restaurant's retainer of subcontractors was a breach of contract. At [22] of his affidavit Mr Hill deposed that when GFE put Restaurant's account on hold, he believed that GFE had completed "all open jobs falling within the conditional warranty", but that begs the question as to whether or not there were jobs that had not been serviced, including because GFE was wrongly relying on the Preventative Maintenance Service Contract terms of warranty and not on the Sales Contract terms of warranty. Neither Mr Hill nor Mr Marabani were cross examined on these issues.

Note

1. Restaurant ran the case on the basis of the warranty commencing to run from the time of making the Sales Contract, 10 May 2015. In accordance with the party's supplementary written submissions, requested by me 2 December 2022 and received 5 December 2022, the term of the Sales Contract 5 year warranty should be construed as ending 5 years from the date of commission of the equipment. The equipment was commissioned between about December 2015 and February 2016, on the facts which I have above found. No claim is made by Restaurant under warranty beyond item 18 in MFI 10. Item 18 was work invoiced for August 2020. Accordingly, all work claimed in MFI 10 fell within the term of the Sales Contract warranty.

Consideration of MFI 10 (continued) (16) Item 16 - City Technicians Invoice 170320 - 17/3/2020 - replace 2 gas value control thermostats on flat plate. GFE's submission relies on an exclusion under the 2017 Preventative Maintenance Service Contract, which contract I have found to not apply to this warranty claim. But the number 5 of those exclusions referred to by GFE refers to gas regulators. From this, I understand GFE to state that "gas valve control thermostat" to be some sort of gas regulator which requires bi-annual checking (see preventative maintenance and service list of checks at MD - 1, page 24) which infers after 4 and a half years of operation that the gas valve control thermostat was potentially a generally consumable item within the terms of the Sales Contract warranty exclusion. The evidence does not explain to me what the part is. The evidence simply does not, on my lay understanding, prima facie identify the part replaced as falling within warranty. Again, recognising that it is GFE's onus to prove the part fell within an exclusion to the warranty, not for Restaurant to prove that it did not; nevertheless, the evidence does not satisfy me of a prima facie presumption that the part was within warranty. I simply do not understand, on the evidence, what it was. Worldly knowledge indicates that thermostats are often consumables. (17) Item 17 - A1 Catering Equipment Repairs Invoice 200720 - 20/7/2020 - replace drive unit for conveyor or dishwasher - stripped and reassembled. To my lay understanding, the item 17 work of substantial strip down and replacement of the drive unit for the dishwasher conveyor and reassembling follows only about 6 months after the work by City Technicians of similar description of major refitting of the drive unit to the dishwasher conveyor. To my lay understanding that infers that the item 17 work was a repair of the work of that other contractor, City Technicians. Nothing in the City Technicians invoice for item 14 or the A1 Catering Equipment Repairs Invoice in this item describes that the refitting employed GFE supplied parts. In fact, the item 14 invoice details shows that City Technicians used a door deal replacement which had to be cut to fit, inferring that City Technicians were not using original specification or GFE supplied parts. GFE submits that refitting of motors after 6 months infers misuse. There is no evidence of fault or cause for the service. On the evidence I am not satisfied of a prima facie presumption that the work fell within warranty. (18) Item 18 - Cater Repair Invoice 10921 - 4/8/2020 - hi limit fault of small flat top grill linked out - thermostat switching off and incorrect temperature requiring "new eurosit valve" - pasta boiler and pilot not holding - fitted new pilot and thermocouple - found gas pressure low requiring new regulator - large flat top grill needs new ignition starter - brat pan needs to be manually lit requiring full assessment. My first observation is that on the evidence I do not understand what the parts and work supplied were. The evidence does not identify or explain what a "hi limit faulty linked out" is. Again, my lay understand is that a thermostat can be a consumable item. The evidence does not permit me to identify or understand what a "eurosit valve" is. The inference is that eurosit is a brand other than a part GFE supplied. The cost of the thermocouple to the pasta boiler is not claimed by Restaurant, assumedly because it was a consumable. I note the "pilot" was not "holding" but there is no evidence of what that means or of the cause of the misfunction. GFE had not provided service to Restaurant for approximately 2 years preceding this work. Most of the cost is for labour and the narrative of the invoice suggests mainly that checks were performed. Parts charged for were the "pilot assembly" and the thermocouple. GFE submits that the evidence makes is unclear whether or not the works fell within warranty. On the evidence, I am not satisfied of the prima facie presumption that the work fell within warranty.

Restaurant's primary cross-claim case properly under warranty

1. In closing submissions, Restaurant described its claims for relief pursuant to the ACL and as an "alternative argument" (T 248. 16), its "primary case" being its claim for recovery of payment of invoices for services which Restaurant alleged were for warranty work (T 250. 38), as set out in its submission MFI 10 (T 250. 38). Neither party suggested there was any challenge as to whether or not those invoices had been paid.
2. Restaurant submits that on the evidence the equipment was not of "acceptable quality" within the meaning of ACL, s 54(2). The submission was not put forward on the basis that specific pieces of equipment themselves were to be considered separately as not of "acceptable quality".
3. Mr Marabani deposed that in February 2020 he arranged to have the oven door seals replaced for both ovens using an alternative manufacturer's parts and that those door seal remained intact for almost a year (Marabani affidavit at [149]). His evidence also was that in November 2020 one of the combi ovens completely stopped working and that the second combi oven was continuing to "give us a lot of trouble at the time" (the screen constantly failing, stopping in the middle of service, faulty washing cycle, does not reach temperature): Marabani affidavit at [150]. There was no evidence before me permitting me to identify whether or not the first oven ceased to work because of a defect and if so, what that defect was. There was no evidence before me permitting me to understand whether the problems Mr Marabani complained of in relation to the second combi oven were caused by a defect and if so what the nature of that defect was. The ovens had by then been serviced by contractors other than GFE for some time. Thereafter Mr Marabani deposed, and I comment, as follows: "[151] In December 2020 and January 2021 [Restaurant]…purchased two new ovens at a total cost of $59,222.10." Comment: There is no evidence before me identifying the specification for, capacity of and technical comparison of the replacement ovens for the ovens sold and supplied by GFE pursuant to the Sales Contract. The invoice annexed (OM - 99) does not, to my lay understanding, provide that information. There is no evidence as to the performance of those replacement ovens in comparison to the performance of the subject ovens over time. "[152] We considered selling the old ovens but decided against doing so to avoid creating ongoing problems for any new owner." Comment: There is no evidence before me as to the residual value of the ovens supplied by GFE. "[153] On September 2021 [Restaurant]…purchased a new dishwasher at a cost of $61,444.35" Comment: As for [151] above, there is no evidence before me by which I can compare the replacement with the GFE supplied dishwasher.

CONCLUSIONS

1. Each of the parties conducted their cases on the basis of multiple claimed avenues for recovery. GFE relied centrally on the Preventative Maintenance Service Contract but did so on the several alternative bases with which I have dealt. Restaurant relied on the Sales Contract claiming that the agreement made 19 July 2017 was for acceptance only of preventative maintenance work at the specification in Option 1 of the 19 April 2017 quotation, but ultimately conceded the force of the proposition that there was a separate Preventative Maintenance Service Contract. It was apparent during the hearing that the central motivating dispute between the parties was anchored in their opposed positions - for GFE that the equipment was misused and for Restaurant that the equipment was defective or not fit for purpose. That dispute arose from the volume of call outs for servicing of the equipment. Taking their opposed positions on that central issue is what gave rise to the parties' dispute in their countervailing claims for payment of invoices. At the end of these reasons, in the course of which I have endeavoured to deal with the multitude of arguments and alternative arguments advanced between the parties, I have determined that very modest recovery has been won by each of them and only on the invoice claims.
2. I list my summary of conclusions as follows: 1. On 10 May 2015 the parties entered into the Sales Contract pursuant to which all of the equipment was supplied. 2. The Sales Contract provided for the sale and supply of commercial kitchen equipment to the 500 seat capacity restaurant known as Armani operated by Restaurant. 3. Much of but not all of the equipment sold under the Sales Contract was of the premium brand Angelo Po. 4. The parties joined in the Sales Contract on the basis of GFE's representation that the high end Angelo Po equipment was fit for the purpose of use in the restaurant. 5. The 5 year parts and labour warranty on Angelo Po equipment provided for in the Sales Contract included the express exclusions appearing in the GFE printed documentation as amended in handwriting. 6. The parties did not enter into any contract or legally binding arrangement for preventative maintenance servicing of the equipment until on 19 July 2017, when Restaurant accepted GFE's (revised) quotation dated 19 April 2017 for the provision of that service and thus the Preventative Maintenance Service Contract was then made. 7. Even if I am wrong in (6) above; whether on 19 July 2017 Restaurant accepted the whole of the terms of GFE's quotation of 19 April 2017 or made a counter offer for Option 1 scope of servicing only which was accepted by GFE on the delivery of preventative maintenance service; it was a separate and stand-alone contract for that servicing. 8. The Sales Contract 5 year warranty continued unaffected by the Preventative Maintenance Service Contract made two years later. 9. The term "Generally Consumable" amongst the exclusions to the five year Sales Contract warranty is properly construed to exclude components objectively to be understood by these commercial parties to be of life service performance dictating that it was reasonable to expect their periodic replacement within the 5 year term. 10. In the absence of expert opinion evidence, I am not persuaded to the balance of probabilities that the abnormally high call out for services and repairs of the equipment was because it was defective in some way or, not of acceptable quality, not fit for purpose or other than as represented by GFE, that being high end products suitable for use in the restaurant. 11. In the absence of expert opinion evidence, I am not persuaded that Restaurant misused the equipment causing the high call out for services and repairs. 12. The competing claims based on invoices are, as I have endeavoured to do, to be determined on the basis of the Sales Contract 5 year warranty.

RESULT

1. I have determined that the parties are entitled to relief on their competing claims as follows: 1. For the plaintiff against the defendant in the sum of $1,108.82; and 2. For the defendant/cross-claimant against the plaintiff/cross-defendant on the cross-claim in the sum of $3,206.02.
2. Pursuant to Civil Procedure Act 2005 (NSW), s 90(2)(a), judgment for the balance only of the sums of money to which I have determined the parties are entitled on their respective claims, is appropriate.

ORDERS 1. Judgment for the defendant/cross-claimant against the plaintiff/cross-defendant in the balance sum of $2,097.20. 2. Costs reserved (as requested by the parties).

Amendments 17 February 2023 - Removed 7 February 2023 Hearing Date (originally added in error) DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 17 February 2023