Ford Motor Company of Australia Limited v Arrowcrest Group Pty Ltd

Federal Court of Australia (Full Court)|2003-12-22|Before: Jacobson JJ, Lander J, Lander JJ

REASONS FOR JUDGMENT Hill and Jacobson JJ 1 We agree with the reasons for judgment of Lander J and the orders proposed by him. I certify that the preceding paragraph is a true copy of the Reasons for Judgment herein of the Honourable Justices Hill and Jacobson.

REASONS FOR JUDGMENT Lander J The orders the subject of the Appeal 2 The second respondent (Tristar) is a subsidiary of the first respondent (Arrowcrest). Both respondents brought proceedings against the appellant (Ford) seeking damages. The appellant cross-claimed against both respondents. 3 Arrowcrest obtained judgment against Ford in the sum of $7,870,136 together with interest in the sum of $88,296.40. 4 Tristar obtained a judgment against Ford in the sum of $12,000,000 together with interest in the sum of $134,630.14. 5 Ford obtained judgment against Tristar in the sum of $778,419.38 together with interest in the sum of $78,900. 6 Ford also obtained a judgment against Arrowcrest in the sum of $161,029 together with interest of $1,812.22. 7 The trial judge ordered the judgments obtained by Ford against the respondents be set off against the respondents' judgments against Ford. 8 On this appeal Ford complains of the orders to which I have referred except the judgment in its favour against Tristar. The History 9 The appellant and the respondents have long standing commercial relationships. 10 Ford is a manufacturer of motor vehicles. Both respondents are manufacturers of motor vehicle component parts. For the purposes of these proceedings it is enough to observe that Arrowcrest manufactures motor vehicle wheels and Tristar manufactures motor vehicle steering gears. 11 Tristar was originally known as TRW Steering and Suspension Australia. In January 1998 Arrowcrest acquired 83% of its capital whilst Arrowcrest's Managing Director, Mr Cheng Hong, acquired the remaining capital. For ease of understanding only I shall refer to the second respondent as Tristar. 12 This appeal concerns two separate agreements; the 'Tristar Agreement' dated 3 December 2001 between Ford and Tristar for the five year supply of steering gears; and the 'Arrowcrest Agreement' dated 19 July 1999 between Ford and Arrowcrest for the supply of alloy wheels. 13 In 1995 Ford contemplated manufacturing the AU model Falcon (also known as the EA169 or 'Grizzly' model) and, by letter dated 14 December 1995, appointed Tristar as the supplier of steering gears. Ford contended at trial that the documents evidencing Tristar's appointment gave rise to a binding agreement that Tristar would supply steering wheels for the production life of the Grizzly model. That contention was rejected by the trial Judge. He found that Ford's letter of 14 December 1995 did not create any binding contractual obligations. Ford has not challenged that finding on this appeal. 14 Pursuant to that appointment, in September 1998, Ford and Tristar executed a Memorandum of Understanding (MOU) which was dated 27 January 1998. It is clear that the parties had intended to execute the MOU earlier but, for reasons which are unimportant, execution had been overlooked. The MOU provided for the supply by Tristar of steering gears to Ford until 2 August 2001. 15 A month earlier, and also pursuant to Tristar's appointment, and no doubt in contemplation of the execution of the MOU, Tristar executed a warranty agreement for the Grizzly model steering gears. (Grizzly steering gear warranty agreement). 16 At the time that Ford and Tristar entered into the MOU Ford contemplated that the Grizzly model would be in production for a period of about four years when it would be replaced by a new model. 17 It followed that Ford secured supply of the steering gears only for a period of three years. If, as contemplated, the Grizzly model remained in production for four years inevitably Ford would have to secure supply of steering gears from Tristar, by way of a separate agreement, or from some other component manufacturer. 18 In December 1998 Ford entered into a contract with Delphi for the supply of steering gears for the Barra model, which was to replace the Grizzly model, and which was to commence production in about August/September 2002. 19 By letter dated 2 December 1998 Ford informed Tristar that it would not be the supplier of steering gears for the Barra model. 20 Therefore as at December 1998 Ford expected and intended that it wouldproduce the Grizzly model until about the middle of 2002, when production would cease, and it would thereafter produce the Barra model. Tristar was contracted to supply steering gears for the Grizzly model until 2 August 2001. Tristar was not obliged under the MOU to supply steering gears for the last year of production of the Grizzly model. Tristar was not contracted to supply steering gears for the Barra model. Delphi was Ford's contractor of choice for that model. 21 Ford had thus left itself exposed in the event that Tristar was not prepared to supply steering gears for the Grizzly model after 2 August 2001, at least to the extent that, in that event, it would need to obtain an alternative supplier. 22 In its pleadings, and at trial, Ford contended that the MOU obliged Tristar to supply steering gears for the Grizzly model until the commencement of the Barra model in August 2002. The trial judge rejected that contention and that finding has not been challenged on this appeal. 23 Ford has thus recognised, on this appeal, that the MOU did not impose any contractual obligation on Tristar to provide steering gears to Ford after 2 August 2001. 24 Ford was right to abandon any argument that Tristar was obliged to supply steering gears for the Grizzly model after 2 August 2001. The argument is untenable. The MOU is quite clear in its terms. Moreover Mr Simpson, Ford's Vice President Purchasing, said in his evidence that Ford at all times treated the MOU as a three year agreement which expired in August 2001. There was contemporaneous documentary evidence consistent with Mr Simpson's evidence. 25 Ford knew at least as early as 8 November 2000 that Tristar's position was that the MOU did not oblige it to supply steering gears after 2 August 2001. 26 Ford's position was, at least as early as 8 November 2000, precarious. It needed steering gears for the Grizzly model until August 2002. It had only secured supply until August 2001. Its sole supplier was not to be the supplier of steering gears for the Barra model. Tristar itself therefore was under no commercial pressure to alleviate Ford's problem, unless being a subsidiary of Arrowcrest imposed such a pressure. 27 On 19 July 1999 Ford and Arrowcrest had entered into an agreement whereby Arrowcrest would supply alloy wheels for both the Grizzly and Barra models for a period of five years commencing on the date of the agreement and expiring on 19 July 2004. 28 Whilst then as at November 2000 Tristar had no immediate prospects of any ongoing commercial arrangement with Ford, its newly acquired parent Arrowcrest was contractually bound to supply alloy wheels for nearly a further four years. 29 During 1999 Tristar, after Arrowcrest and Mr Hong had acquired it, had refused to honour its warranty claims. Variations were made to the Grizzly steering gear warranty agreement which were reduced into writing in a letter from Ford to Tristar dated 25 February 2000. By a letter dated 22 March 2000 to Ford, Tristar acknowledged its obligation to honour warranty claims under the agreement as varied. In September 2000, notwithstanding the earlier correspondence, Tristar asserted that it had no warranty obligations in relation to the steering gears. 30 Tristar's refusal to honour its warranty obligations was the subject matter of Ford's successful cross claim against it. Shortly before trial Tristar abandoned its claim that it was not subject to warranty obligations and, at trial, Mr Hong, Tristar's Managing Director admitted that he had never had any basis for believing that Tristar was not bound to honour its warranty obligations. 31 It may be inferred that Tristar claimed that it had no warranty obligations to obtain a commercial advantage over Ford, but whilst Ford vigorously disputed Tristar's claims it did not take legal proceedings against Tristar to establish or protect its rights. Again it may be inferred that it did not do so, between September 2000 and the date of the execution of the Tristar Agreement (3 December 2001), because it did not wish to damage its relationship with Tristar, upon which it was dependent for the supply of steering gears after 2 August 2001, and until the introduction of the Barra model in August 2002. 32 The supply of steering gears requires a substantial lead time. A manufacturer would need to put in place the appropriate tooling. Evidence at the trial suggested that a manufacturer could not guarantee supply of these components without having 9 months notice. 33 Notwithstanding the need for a substantial lead time Ford did not take any steps to obtain supply from any other component maker until July 2001 when it made inquiries world wide to ascertain whether other component maker could supply steering gears which would be suitable for the Grizzly model. 34 As part of those enquiries Ford approached Delphi to obtain supply after 2 August 2001 but Delphi advised that it could not supply steering gears for the Grizzly model before April 2002. 35 If earlier in 2001 it became known to Tristar that Ford was wholly dependent upon it to supply steering gears after August 2001, Ford might be in an impossible bargaining position, particularly if Tristar adopted a hardline approach. Without steering gears the Grizzly model could not be manufactured. Ford would be without its Falcon model for 12 months. 36 The economic and commercial consequences to Ford, both immediate and long term, are self-evident. 37 It is in that setting that the conduct of the parties, after November 2000 and especially between 8 May 2001 and 3 December 2001, and later on 3 September 2002 when Ford terminated the Tristar agreement and the Arrowcrest Agreement, needs to be considered. 38 On 8 May 2001 and 8 June 2001, Mr Kong, Tristar's General Manager, wrote to Ford claiming that Ford had repudiated the MOU and claiming to be entitled to accept the repudiation. On the second occasion Mr Kong said that whilst Tristar was no longer contractually bound to Ford it would continue supply until 1 September 2001 but there would be a need to finalise an exit plan. 39 On 20 June 2001 Tristar wrote to Ford and made the following statements and representations. 1. Having provided Ford with several opportunities to discuss ongoing supply of steering gears post June 2001, and those discussions not having progressed, Tristar had made 'production plans which do not include Ford business after June 2001'.

Tristar had 'provided Ford a 3 months notice to exit the business, in accordance with normal business practice'.

Tristar was prepared 'to assist Ford for on-going supply post September 2001, and would require a long term commitment from Ford as [Tristar would] be required to commit further human resources and additional capital equipment investment'.

On-going supply of steering gears pursuant to a proposed five year supply agreement would be subject to increased prices from 1 July 2001 (prices specified in letter).

Six months from the date of signing the five year agreement, '[Tristar would] reduce the price of each gear by $20.00, which is the penalty incurred by [Tristar] through working overtime during the interim period without additional plant capacity'.

Tristar was 'prepared to commit its engineering resources to jointly fast track and develop the new Barra steering gears with the teams at Ford Australia in time for start of vehicle production in September 2002'.

Unless a long term agreement was signed by the end of June, Tristar would consider its exit plan to be in effect and that steering gears would not be required by Ford post-September 2001.

40 On 26 June 2001, Mr Simpson and Ms Keane represented Ford at a meeting with Tristar, which was represented by Mr Gary Reuter, Mr Cheng Hong, Mr Vincent Kong and Arrowcrest's chairman, Mr Andrew Gwinnet. At that meeting, there was discussion about an industrial dispute at Tristar. In an affidavit sworn on 27 September 2002, Mr Simpson deposed to the following conversation: 'Andrew Gwinnet asked me, 'you don't have the ability to back up supply through other suppliers?' and I responded 'the size of the industry means we've got to run very lean on our investments and our costs. Therefore we do not duplicate investment to provide back up within the supply chain.' 41 Mr Simpson did not say that there was no alternative supplier that could be approached. Indeed, it was not until July that enquiries (which extended world-wide) were made in search of alternative suppliers for the balance of the Grizzly model, and it was not until that time that Ford became aware that there was no available alternative supplier. 42 However, in circumstances where all parties understood that that a substantial lead time was required by a supplier to put in place the appropriate tooling for production of the steering gears, Mr Simpson's statement clearly put Tristar on notice that Ford had no alternative but to rely on Tristar for the provision of steering gears for the Grizzly model between at least September 2001 and early 2002. 43 It may be inferred that from at least 26 June 2001, Tristar considered itself to be in a very strong bargaining position in relation to steering gear supply. 44 On 2 July 2001 Tristar wrote to Ford and made the following statements and representations: 1. Tristar would 'submit justification for the new pricing contained in [their] letter of 26/6/01 by c.o.b. Friday 6/7/01'.

Tristar was not prepared to 'invest in new capital in the region of several million dollars' to allow it to continue supplying Ford post September 2001 unless Tristar could secure a long term supply agreement with Ford.

There would be an issue of 'labour over-hang' if Tristar were to supply Ford for only one year post September 2001. There would be 'great difficulty, cost and risks to the operation of [Tristar's] business resulting from shedding labour'.

Tristar has to 'embark on the exit program, given that Ford has stated clearly that it will not enter into a long term supply arrangement'.

Several issues remained outstanding between Tristar and Ford, including 'issues related to the aborted MOU such as productivity reduction'.

45 On 6 July 2001 Tristar wrote a third letter which included the following representations:

The cost breakdown for the main steering gear: Material $ 95.44 Labour $ 12.66 Others $ 91.75 Total $ 199.85 Premium surcharge $ 20.00 Selling price $ 219.85 2. The imposition of the $20.00 premium labour surcharge was 'due to the lack of capacity in plant and equipment'. 3. The breakdowns (sic) of the premium surcharge are: Changeover Labour and var overhead $ 3.78 Overtime premium cost Direct labour and on-cost $ 12.38 Indirect labour and on-cost $ 3.84 $ 20.00 46 Ford claimed that those representations were false. 47 Ford did not regard the justifications for the higher unit prices sought by Tristar as being adequate. 48 Ford continued to seek further justification for the proposed $20.00 surcharge and at the same time sought an agreement with Tristar for the supply of steering gears post-September 2001 on a short term basis. By email dated 10 July Ford sought a more detailed justification for proposed price increases. 49 By letter dated 11 July, Arrowcrest's Chairman Andrew Gwinnett reiterated Tristar's position that 'short term supply is not commercially viable, given the several million dollars of capital investment and the labour overhang after the short term supply'. 50 In a letter dated 12 July 2001, Tristar made the following representations relating to increases in steering gear unit prices independent of the $20.00 premium surcharge: 'The difference from the base price of $170.12 to $199.85 is mainly for recovery of manufacturing costs. The losses incurred by TRW in the last few years are a clear reflection of substantial under-recovery of manufacturing costs'. 51 In the same letter, Tristar claimed that: 'The on-cost referred to in relation to the premium cost of $20 are labour on-costs such as compulsory super, workers compensation and payroll tax. The premium cost is incurred as a result of working over-times due to lack in plant capacity, and the extra changeovers required to accommodate Ford's requirement. TSSA believes that it has provided adequate cost breakdown in accordance with industry standard.' Again, Ford claimed those representations were false. 52 By facsimile dated 24 July 2001, Mr Simpson told Mr Cheng Hong of Tristar that Ford intended to 'commence negotiation with Tristar Steering and Suspension Australia Limited for a long term supply agreement for Falcon steering gear'. Mr Simpson further indicated in that facsimile that Ford's intentions were 'based on the condition that Tristar will take all necessary actions to continue supply of Steering gears beyond September 2001 for the current model AUII Falcon'. 53 Mr Cheng Hong replied in a facsimile dated 31 July 2001 in which he said that Tristar would accept a payment of $330,000.00 in full satisfaction of a larger claim it had made against Ford in respect of productivity reductions made by Ford in its payments to Tristar under the 1998 MOU. The amounts constituting the "productivity reductions", which were intended to reflect and account for the benefit to Tristar in becoming more efficient and cost effective in the process of steering gear manufacture, were claimed to have been withheld from Tristar wrongfully. Tristar's position was that 'Ford had repudiated the MOU of 1998, and therefore no productivity discount was to be applied to prices of steering gears supplied during [the relevant] period'. 54 In the same facsimile, Tristar put further proposals relating to the pricing of steering gears and a long term agreement. 55 In a letter dated 9 August 2001, Ford reminded Tristar that an alternative supplier had been sourced for steering gears on the Barra model. Ford proposed a supply agreement extending from the date of the letter to 30 September 2002. Ford would agree to pay the per-unit steering gear price specified in Mr Hong's facsimile of 31 July. Further, Ford would pay the sum of $330,000.00 immediately and would pay a further lump sum of $1,250,000.00 on 30 September 2002. 56 On 28 September 2001, Mr Cheng Hong forwarded a copy of a long term agreement to Ford for execution by 5 October 2001. By letter dated 3 October 2001, Tristar threatened to cease supply of steering gears to Ford from 8 October if a long term agreement was not executed by 5 October. 57 Tristar contended at trial, and on appeal, that from 5 October 2001 Ford adopted a policy that it would terminate its contracts of supply between it and members of the Arrowcrest Group from the commencement of production of the Barra model. That is, as at October 2001, Ford consciously reached a decision that after the Barra model was in production, and production had ceased on the Grizzly model, that it would not honour the Arrowcrest Agreement for the supply of alloy wheels, or any long term agreement entered into with Tristar for the supply of steering gears. 58 In support of that submission, Tristar relied on an internal Ford document dated 4 October 2001, which records a "discussion point" in the following terms: 'Ford now has to make a decision whether to continue with the exit plan on wheels or to conduct business with ROH for Barra wheels. Purchasing recommends that all business with Arrowcrest be terminated. Arrowcrest management has displayed their business ethics. We cannot be assured that ROH will not display the same negotiating technique as Tristar in the future. We should not be exposed to a single source of supply when such management teams are in position.' 59 In his evidence at trial, Mr Simpson agreed that the policy had in fact been adopted by Ford: 'You have described in your affidavit a program which I think is described as a resource program in relation to Arrowcrest. Do you recall that?--- Correct. You said at paragraph 137 that this effectively started on 5 October 2001. Do you recall the substance of that?--- Yes, I do. It was part of that program, was it not, to terminate all of the contracts between Ford and any member of the Arrowcrest group as tier 1 suppliers at Job 1 Barra. Is that correct?--- Correct … In fact, it was predetermined at that time, was it not, to terminate both the Tristar and Arrowcrest contracts at Job 1 Barra at the same time?--- That is correct. That decision was made on the basis of the conduct of the Arrowcrest management and their willingness to disrupt supply, and we thought that we could not take the risk of them doing it to us on wheels.' 60 The evidence supports Tristar's contention that by early October 2001 Ford had adopted a policy whereby it did not intend to honour any contract of supply between itself and any member of the Arrowcrest group on or after September 2002. Specifically at that time Ford did not intend to honour the Arrowcrest Agreement after that date. The Tristar Agreement had not then been entered into. It also supports the respondent's further contention that Ford did not rely upon any representations made by Tristar to enter into the Tristar Agreement. 61 Because Ford continued to refuse to sign a long term supply agreement with Tristar, on 8 October 2001 Tristar stopped the supply of steering gears to Ford. On the same day, Ford wrote to Tristar advising that it considered the stop-supply 'unthinking and simply outrageous behaviour, it constitutes a breach of the agreement between Ford and Tristar as embodied in the current Ford Purchase Orders'. Ford advised that the stopping of supply 'will result in massive staff lay-offs, not only at Ford (which would amount to at least 4,000 workers) but throughout the entire automotive industry'. Ford said it would result in losses to Ford of approximately $10 million per day, and it would seek recovery of those losses from Tristar. It was not argued, at trial or on appeal, that that 'Purchase Orders' constituted an agreement of which Tristar was in breach. 62 On 9 October 2001, Ford wrote to Tristar and requested immediate recommencement of steering gear manufacture and supply. The letter purported to 'confirm our agreement that Ford Motor Company and Tristar will work together towards signing a Supply Agreement that is mutually acceptable to both parties by October 31, 2001'. 63 Mr Hong replied by letter of the same date agreeing to extend the time for execution of the 5 year agreement until 19 October 2001. Supply recommenced that day. 64 On 26 October 2001, an Arrowcrest employee emailed Ms Keane, of Ford, with a final draft of the agreement for long-term steering gear supply from Tristar to Ford. 65 In a facsimile to Gary Reuter and Cheng Hong dated 28 November 2001, Mr Simpson wrote that Tristar's 'demand to simply stop the negotiations and force us to agree to unreasonable conditions is unacceptable. Nor is it behaviour befitting the customer focussed company that you claim to be'. 66 On 3 December, Tristar again threatened to stop supply if an agreement was not signed that day. 67 The Tristar Agreement was finally signed on 3 December 2001. The Tristar agreement provided for supply by Tristar to Ford of steering gears for both the Grizzly and Barra models for a period of 5 years. The Tristar Agreement was entered into notwithstanding the policy adopted by Ford in early October 2001 that Ford did not intend to honour any contract with the Arrowcrest group after September 2002. 68 Ford purported to terminate both the Tristar Agreement and the ROH agreement by letter dated 3 September 2002. The Trial 69 The hearing of the action was accelerated because Tristar sought an injunction restraining Ford from acting in breach of the Tristar Agreement. Effectively Tristar sought an interim order requiring the Tristar Agreement to be specifically performed. The application was refused but an early trial was the result. 70 At trial the parties accepted the suggestion of the trial judge that they should formulate questions they wished him to answer and provide him with their suggested short form answers. 71 The judge's reasons for judgment therefore are unusual in that they consist of a series of questions which are shortly answered. The detailed reasons and findings, including an assessment of the witnesses and their evidence, which would usually accompany a decision of this kind, are lacking. 72 During the hearing of the appeal members of the Court expressed some concern about the course adopted at trial in so far as it impacted upon this Court's ability to consider the issues on appeal. 73 Ford sought to argue, on appeal, that the various representations to which I have referred were relied upon by Ford in entering into the Tristar Agreement. Alternatively, Ford's Counsel argued that the price justifications offered by Tristar induced Ford to enter into the agreement in circumstances even though Ford had not relied on the allegedly false representations. 74 At trial, the respondents denied that any of the representations were false. On appeal they continued to deny the representations were false although Mr Shavin QC, senior counsel for the respondents conceded that the representation relating to justification for the $20.00 premium surcharge during the period July 2001 to October 2001 might arguably be false. 75 The trial Judge did not decide whether the representations were false or otherwise. On the course which he adopted he did not need to do so. For the reasons which follow, it is unnecessary for this Court to make any findings as to the falsity or otherwise of the representations made.

The Course of the Trial 76 Some further comment should be made about the course adopted at trial, the reasons delivered by the trial Judge, and the conduct of this appeal. The parties agreed that the trial Judge should deliver his reasons in short-form. 77 On day 5 of the trial, the trial Judge put the following proposal to Counsel: 'Before we commence, I would like to say something. The parties understandably desire a speedy resolution of this case. Therefore, it is highly desirable that I produce a judgment as quickly as possible. For that reason, I have in mind delivering a judgment in short form. By that, I mean that I would simply answer the agreed issues raised by the parties in the document already directed to be lodged and give brief reasons for each of those answers. The judgment would not contain factual narrative or set out the text of relevant documents or legislative provisions. There would be little or no discussion or analysis of legal authorities. The judgment will not be destined for immortality in the law reports. In my opinion, a judgment in such a form would satisfy the minimum requirements for the giving of reasons that the law imposes on a trial judge. My intention is certainly not to limit or frustrate any appeal rights which may which parties may wish to exercise. I am not asking the parties to waive or modify such rights.' 78 Both Counsel sought instructions over the luncheon adjournment. Counsel for the respondents indicated in the afternoon that the respondents 'would embrace the course… proposed'. Counsel for Ford responded to the proposal by indicating that Ford was 'quite content for [his] Honour to take the course that was suggested.' 79 Reasons for judgment in the proposed form were delivered, and at a later hearing as to costs, counsel for the respondents noted the following: 'We are content. We simply wish to have it on the transcript that we have invited our learned friends to mention today if they have a concern in the event that it is their intention in any notice of appeal to raise that question. Because we don't want to be in a position in a year's time arguing before an appellate court whether or not the matter should go to a second trial if an appellate court contrary to our contentions was not satisfied with the form of your Honour's reasons.' 80 Ford did not respond to the respondents' Counsel's invitation. 81 It should be noted that the grounds of appeal did not, and could not, complain of the form of the reasons for judgment or their brevity. The parties had agreed that it was not inappropriate for the trial Judge to adopt his suggested course in preparing and delivering his reasons, as the parties desired a speedy resolution of the case. 82 Although the Notice of Appeal did not directly complain of the form of the reasons, Ford's written submissions sought to support the grounds of appeal by reference to the inadequacy of the short-form reasons given. Those submissions referred to contended errors which were said to have been 'symptomatic of the difficulties of the abbreviated approach taken in the judgment'. 83 Ford's written submissions complained: '43. The trial at first instance was conducted with urgency on the basis that Tristar and Arrowcrest sought specific performance of their respective agreements with Ford. This led to significant fast tracking of the pre-trial steps in order to preserve the status quo (Arrowcrest and Tristar having failed in their attempts to obtain an interlocutory injunction prior to trial). 44. The learned trial Judge indicated during the trial that he would be assisted by the preparation of a statement of issues to facilitate the expeditious delivery of judgment. The statement of issues set out the broad issues for judgment. It is submitted, however, that His Honour's general approach adopted by him in the judgment was significantly flawed by the failure adequately to set out reasons and findings upon which His Honour's answers to the various questions were based. Once specific performance had been ruled out of the question by His Honour, then the reason for urgency and haste in handing down His Honour's judgment evaporated.' 84 Effectively, Ford sought to resile from its agreement to the course ultimately adopted by the trial Judge. However, Ford's consent had not been made conditional upon the trial Judge taking a particular view as to the availability of certain remedies. Clearly, it was not contemplated that the trial Judge should revert to the usual form of reasons in the event that he took a particular view at any time as to the appropriate outcome in the case. 85 As mentioned, and for reasons which follow, this appeal has been decided on matters other than the adequacy or otherwise of the detail in the trial Judge's reasons. In my opinion, however, it was inappropriate for Ford to criticise the course adopted by the trial Judge which he had taken with Ford's consent and agreement. 86 Because the appeal can be disposed of on other grounds, and because the adequacy or otherwise of the trial Judge's reasons was not a ground of appeal, it is not necessary to consider whether Ford's conduct at trial disentitled it, in law, to complain of the trial Judge's reasons. The Arguments on Appeal 87 Five arguments were put by Ford in support of its appeal. (1) Misleading and deceptive conduct and causation of loss 88 In support of the first ground of appeal Ford argued that the representations made by Tristar justifying price increases and the representations that Tristar would need to inject capital investment and further human resources in order to continue steering gear supply on a short term basis were false, and constituted misleading and deceptive conduct on the part of Tristar. 89 The trial Judge found that the various representations were made. Indeed, he found that there was no dispute that the representations in par 54CA of Ford's amended defence and cross claim were made. The representations pleaded in that paragraph are the representations referred to in [38], [43], [44] and [49]. However, as already mentioned, he did not address the falsity of the representations. Rather his Honour addressed the following question which was posed to him by the parties: '2.2 If yes to question 21: (a) did Tristar mislead or deceive Ford contrary to the TPA; and (b) is Ford entitled to any, and if so what, relief: - (i) by way of damages; (ii) in equity; and/or (iii) pursuant to sections 80 or 87 of the TPA as a result of such misrepresentations?' 90 His Honour provided the following answer: 'As to (a), No. As already mentioned there was no reliance by Ford on the representations. Ford simply did not believe them. There was no loss caused to Ford "by" the conduct of Tristar within the meaning of s 82 of the TPA. [TJ para 66]' 91 The trial Judge found that 'Mr Simpson made it clear that Ford did not rely on any of the representations complained of concerning labour and other costs'. 92 Ford argued that the trial Judge erred in finding that Tristar's conduct did not constitute misleading and deceptive conduct for the purposes of establishing entitlement to relief under the Trade Practices Act 1974 (Cth) (TPA). In doing so, Ford urged this Court to make its own findings as to the falsity of the impugned representations. 93 During the hearing of the appeal, it was put to Counsel that, because of the way in which the trial proceeded, and in particular, because the trial Judge had not made any findings as to the falsity of any of the representations, it would be preferable to deal with the question of causation first. If causation was not established then the falsity of the representations did not need to be addressed. Counsel accepted that the hearing should proceed in that way. 94 The primary submission put by Ford on appeal was that the trial Judge's finding that that there was no reliance by Ford on Tristar's representations was in error. In the alternative, Ford contended that a 'common sense approach to causation' should be applied when considering a claim for relief under s 82 of the TPA: Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514 per Mason CJ, Dawson, Gaudron and McHugh JJ at 525. Ford argued that it was not necessary to establish 'direct reliance' by the party claiming damages for misleading and deceptive conduct. It was enough to establish that the misleading and deceptive conduct was a 'direct and immediate' cause of loss. It relied upon Janssen-Cilag Pty Ltd v Pfizer Pty Ltd (1992) 37 FCR 526; Hampic Pty Ltd v Adams (2000) ATPR 41 - 737; McCarthy v McIntyre [1999] FCA 805 at [48] and [49]; and Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494. Ford further contended that, in claims under s 52 of the TPA, the misleading and deceptive conduct need not be the sole or principal inducement for entry into a contract in order to be causative of loss. If there has been misleading and deceptive conduct and a party enters into a contract then generally an inference arises that the misleading and deceptive conduct caused the entering into of the contract. For that contention Ford relied upon Gould v Vaggelas (1985) 157 CLR 215 at 236. 95 It is convenient first to deal with the trial Judge's finding as to reliance. 96 Ford argued that the "no reliance" finding was based on Mr Simpson's evidence in cross-examination that the justifications provided for higher unit prices did not induce him to enter the Tristar supply agreement on behalf of Ford. Ford argued that Mr Simpson's evidence related only to the price increase justifications and not the other "inducing" representations that were alleged to have been false. 97 Counsel for Ford accepted that it was appropriate in considering reliance to proceed upon the basis that at the time of entering the Tristar agreement, Ford had no alternative option available for the supply of steering gears for the balance of the life of the Grizzly model. However, he submitted that, although Ford had to enter into an agreement of the kind to which it became a party, the terms of the agreement were moulded and fashioned by the false representations. The argument was that whilst the representations did not induce Ford to enter into an agreement as opposed to there being no agreement at all, the representations induced Ford to enter an agreement in the terms of the completed agreement. That is, the representations induced an agreement that was later said by Ford to be unfair. 98 In my opinion the argument denies the premise upon which the argument is based. Ford's counsel accepted that no supply of steering gears was the worst possible outcome for Ford, and that there had to be an agreement of some sort. Indeed, Ford had claimed in its letter of 8 October 2001 that cessation of supply could lead to the laying off of 4000 workers in the industry and might generate losses to Ford in the order of $10 million a day. If Ford had no other option, then it was under commercial pressure to accept terms that would not have been acceptable if alternative suppliers were readily available. Moreover Ford entered into the Tristar Agreement with the intention of breaching it at the first available opportunity. 99 In those circumstances, it is difficult to see how Ford can claim to have been induced to act by the representations made. As the trial Judge found, Ford simply did not believe what Tristar was telling it. The terms were dictated by Tristar because Ford found itself without an alternative source of supply. 100 Ford submitted that Tristar went to great lengths in order to convince Ford to agree to its demands. In a sense that is so. Tristar's representations were made in response to Ford's probing of Tristar's position. Ford's persistence in seeking justification by Tristar is an important factor which supports the finding that Ford did not believe the representations being made by Tristar, and that Tristar's representations did not operate as a causative inducement. 101 Ford did not rely on any representations made by Tristar. It entered into the Tristar Agreement so that it could continue production of the Grizzly model and for no other reason. When Ford entered into the Tristar Agreement, it intended not to honour that agreement, and indeed the Arrowcrest Agreement, after September 2002. 102 There is ample evidence from which to infer that there was no reliance. The case for reliance itself was based on nothing stronger than inference, because Mr Simpson never said in his evidence that he relied on the representations made by Tristar. Indeed the inference could not arise because, as the trial Judge found, Mr Simpson's positive evidence was that there was no reliance. 103 That finding was correct. Mr Simpson's evidence was: 'His Honour: Sorry, down which path? -- Going down the path of entering into a negotiation of a long-term agreement for five years. Mr Shavin: You ended up going down that path because it was not possible, in the events that had occurred, to persuade Tristar to give you supply for only the period of the gap? -- Tristar refused to move in terms of the situation of terms of the gap. Ultimately you forme dthe view that the only way you could get that supply was to go through the pretence of offering a long-term agreement? -- I concluded, after going through the process of agreeing to substantial price increases at $56, a lump sum payment, they refused outright and then I felt that I had no option but to enter into that long-term agreement. Though you did not, in fact, intend to give effect to it after Job 1 Barra? -- That is correct. At the time when Mr Kong claimed that he would have to undertake additional capital expenditure, you didn't believe the figures that he gave you, did you? -- No, we did not because - well, we didn't believe the figures, nor were we given detail of the numbers. So we had no substance to believe it or otherwise. So being given those figures was not an inducement to you entering into the agreement, was it? -- No. Similarly, you regarded, didn't you, the justifications for the higher unit prices sought by Tristar as being inadequate? -- Correct. And the fact of those justifications didn't induce you into entering into an agreement either, did they? -- No.' 104 The claim based on reliance had to fail. 105 Ford's alternative argument was that something less than reliance upon a representation or conduct might satisfy the causation requirements of ss 82 and 87 of the TPA. It was submitted that the representations complained of moulded the terms of the agreement and that the loss to Ford could be identified in the excessive prices imposed under the agreement. It was submitted that a practical or common-sense concept of causation should be applied. 106 Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 is authority for the proposition that a practical or common sense concept of causation should be applied in cases of this kind under the TPA. In that case Mason CJ, Dawson, Gaudron and McHugh JJ said at 525: '"By" is a curious word to use. One might have expected "by means of", "by reason of", "in consequence of" or "as a result of". But the word clearly expresses the notion of causation without defining or elucidating it. In this situation, s 82(1) should be understood as taking up the common law practical or common-sense concept of causation recently discussed by this Court in March v Stramare (E & M H) Pty Ltd, except in so far as that concept is modified or supplemented expressly or impliedly by the provisions of the Act. Had Parliament intended to say something else, it would have been natural and easy to have said so.' (footnotes omitted) 107 However the passage referred to is not authority for the proposition that an applicant does not need to establish reliance in a claim for damages under ss82 and 87 for breach of s52. It is authority for the proposition that when considering whether causation has been established a common sense or practical view should prevail. 108 The Court said further at 525: 'Here we are concerned with contraventions of s 52(1) in the form of misleading conduct constituted by misrepresentations. In this situation, as at common law, acts done by the representee in reliance upon the misrepresentation constitute a sufficient connexion to satisfy the concept of causation.' 109 Indeed the High Court there confirmed that causation in cases of the kind mentioned would be established by proof of reliance. 110 Ford submitted, and it may be accepted, that in a claim for damages under ss 82 and 87, for misleading and deceptive conduct, it is not necessary that the impugned conduct be the sole or principal inducement for a party entering into a contract: Gould v Vaggelas (1985) 157 CLR 215 at 236. But the corollary of that is not that the misleading and deceptive conduct need not be an inducement for a party entering into a contract. In Gould v Vaggelas (supra) Wilson J said at 236: 'The representation need not be the sole inducement. It is sufficient so long as it plays some part even if only a minor part in contributing to the formation of the contract.' 111 In McCarthy v McIntyre [1999] FCA 805, the Full Court said at [49]: 'It is well established that the misleading or deceptive conduct need not be the sole cause of the loss. However, causation must be established. So much emerges from the word "by" to be found in ss 82 and 87 of the Trade Practices Act (and their State equivalents).' 112 To say that the impugned conduct need not be the sole cause of the change does not assist in determining the appropriate test for causation. 113 Ford relied upon four authorities for its contention that it was unnecessary to prove reliance to show causation. 114 In Janssen-Cilag Pty Ltd v Pfizer Pty Ltd (1992) 37 FCR 526 the applicant and respondent were competitors in the pharmaceutical industry. The applicant claimed that it suffered loss or damage by reason of consumers relying upon the misleading and deceptive conduct of the respondent. In that case Lockhart J held that the applicant could establish causation for the purposes of s 82 of the TPA if it could prove that consumers relied upon the respondent's misleading and deceptive conduct to the detriment of the applicant's market share. 115 That case is not authority for the proposition that causation can be established without proof of reliance. It is authority for the proposition that the applicant need not establish that it relied upon the respondent's conduct, but can establish liability by proof that others did, as a result of which the applicant suffered loss. 116 That case is not authority for Ford's contention. Indeed if anything it supports the respondent's contention that reliance is a necessary element to establish causation when the conduct complained of is constituted by misrepresentations. The applicant could not have established its case in Janssen-Cilag Pty Ltd v Pfizer Pty Ltd without proof that there was reliance by the consumers. 117 In Hampic Pty Ltd v Adams (2000) ATPR 41 - 737 a cleaner contracted dermatitis by using a cleaning agent which did not carry an appropriate warning on the label. The cleaner had not seen the label so had not herself relied upon any information disclosed on the label. However the cleaner succeeded at first instance and on appeal (New South Wales Court of Appeal) because the respondent's supervisor had read the label and distributed the product to the cleaner in accordance with the label's instructions. 118 Again, this was not a case of no reliance, but a case of reliance on the conduct by a person apart from the applicant in circumstances where that reliance caused the applicant damage. The applicant only succeeded because there was reliance, albeit by someone apart from the applicant. 119 McCarthy v McIntyre [1999] FCA 805 is another case where the applicant established that a third party's reliance on the misrepresentation caused the applicant's damage. In that case a Bank relied on false trading figures in deciding to advance the applicants a loan which was used by the applicants to purchase a business from the respondent. 120 Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494, was a case where the appellants had relied upon the respondents' representations. Although the appellants established reliance they failed because they failed to establish that they had thereby suffered damage. Marks v GIO Australia Holdings Ltd was concerned with the measure of damages in claims under ss 82 and 87 of the TPA. In his reasons at 528 - 529 [101] Gummow J referred to Lockhart J's reasons in Janssen-Cilag Pty Ltd v Pfizer Pty Ltd (1992) 37 FCR 526 with approval and in particular Lockhart J's dicta that 'the cases … do not impose some general requirement that damage can be recovered only where the applicant himself relies upon the conduct of the respondent …'. 121 But that statement cannot be taken out of its context. Gummow J referred to Lockhart J's reasons for the proposition at [102]: 'These considerations, reflecting the apparent scope and purpose of the statute, militate against the presence of any legislative intention that before the court comes to assess the amount for which applicants are to be compensated under s 82 it first must identify any relevant general common law rules or analogies, understand the reasons that led to their development, and then seek to adapt or adopt them consistently with the scope and purpose of the legislation.' 122 Marks v GIO Australia Holdings Ltd is not an authority for the proposition that in a misrepresentation case the applicant need not establish that he or she was induced to act upon the misrepresentations and that the applicant can otherwise establish an entitlement to damages. 123 None of the cases relied upon support Ford's contention that causation can be established in a misrepresentation case without proof that the misrepresentations were relied upon. They support a different (but irrelevant proposition for the purpose of this case) that an applicant may establish causation in such a case by proving that a third party relied upon the misrepresentations and that party's reliance caused the applicant's damage. 124 This is not the case to attempt to better define (if any better definition is required) the practical or commonsense approach that is required in approaching the question of causation in cases where the misleading and deceptive conduct which is relied upon is a representation of existing fact. 125 In this case Ford could not establish loss without proving reliance upon the representations made by Tristar. 126 If Ford did not rely upon the misrepresentations it cannot be said that Ford suffered loss or damage 'by conduct of' Tristar. Ford was not induced by the misleading and deceptive conduct to do or to refrain from doing something which caused it damage. 127 For the reasons already given, Ford did not prove that it relied upon any representations made by Tristar. Indeed its case was that it did not rely upon any representations by Tristar. It entered into the Tristar Agreement as a matter of commercial necessity. 128 Because the representations did not operate as an inducement to enter into the contract in the terms of the contract or otherwise, it is unnecessary to make findings as to the falsity or otherwise of the representations made by Tristar. This ground of appeal must fail. 129 The respondent's counsel submitted that some representations said to have been relied upon by the appellant were not pleaded and not addressed by the respondent in its evidence. In those circumstances he argued the appellant should not be entitled to rely upon those representations on this appeal. Because the ground of appeal fails it is not necessary to determine this question.

(2) Tristar should not be able to benefit from its own wrongdoing 130 The second ground of appeal was that Tristar should not be allowed to benefit from its own wrongdoing. 131 Question 20(b) of the questions posed to the trial Judge was: 'Is any, and if so what, part of any loss or damage claimed by Tristar the product of its own wrongful conduct?' 132 The question was answered: 'As to (b), None. Tristar's loss and damage flows from Ford's breach of the Tristar agreement.' 133 Ford contended that Tristar's conduct (ie: misleading and deceptive conduct) disentitled it to damages at law or pursuant to s82 of the TPA because it would be contrary to public policy to reward it for its own wrongful conduct. 134 In the alternative, Ford submitted that 'at very least' the trial Judge should have 'discounted Tristar's damages to allow for the falsely justified price increase. Alternatively, given Ford's own damages claim under ss82 and 87 of the TPA, His Honour should have ordered Tristar to indemnify Ford in respect of any loss of profits claimed by Tristar'. 135 The respondents, of course, submitted that Tristar had not been guilty of any wrongful conduct but that in any event Ford's own conduct, in entering into the Tristar Agreement with the intention of breaching it, precludes Ford from relying upon any conduct of Tristar's. 136 Ford also sought to implicate Arrowcrest in Tristar's conduct but that contention will be addressed separately. 137 For this ground of appeal, it might be thought that the question of the falsity or otherwise of Tristar's representations needs to be addressed. Indeed, by raising the defence of ex turpi causa, the appellant puts Tristar's conduct directly in issue. As it happens, the finding that Ford did not rely upon the representations made by Tristar makes it unnecessary to make those further findings. 138 In support of its contention Ford relied upon Kerr L.J's statement of the law in Euro-Diam Ltd v Bathurst [1990] 1 Q.B. 1 at 35: 'In my view the relevant principles can be summarised as follows. (1) The ex turpi causa defence ultimately rests on a principle of public policy that the courts will not assist a plaintiff who has been guilty of illegal (or immoral) conduct of which the courts should take notice. It applies if in all the circumstances it would be an affront to the public conscience to grant the plaintiff the relief which he seeks because the court would thereby appear to assist or encourage the plaintiff in his illegal conduct or to encourage others in similar acts: see (2)(iii) below. The problem is not only to apply this principle, but also to respect its limits, in relation to the facts of particular cases in the light of the authorities. (2) The authorities show that in a number of situations the ex turpi causa defence will prima facie succeed. The main ones are: (i) where the plaintiff seeks to, or is forced to, found his claim on an illegal contract or to plead its illegality in order to support his claim: see e.g. Bowmakers Ltd. V. Barnet Instruments Ltd [1945] K.B. 65, 71. For that purpose it makes no difference whether the illegality is raised in the plaintiff's claim or by way of reply to a ground of defence: Taylor v Chester (1869) L.R. 4 Q.B. 309, as there cited. Other illustrations are Gascoigne v Gascoigne [1918] 1 K.B. 223 and In re Emery's Investments Trusts [1959] Ch. 410, approved by the Court of Appeal in Tinker v. Tinker [1970] P. 136. (ii) Where the grant of relief to the plaintiff would enable him to benefit from his criminal conduct: see e.g., Cleaver v. Mutual Reserve Fund Life Association [1892] 1 Q.B. 147, 156, per Fry L.J., In the Estate of Crippen [1911] P. 108; Beresford v. Royal Insurance Co. Ltd. [1938] A.C. 586 and Geismar v. Sun Alliance and London Insurance Ltd. [1978] Q.B. 383, to which I refer again later on. (iii) Where, even though neither (i) nor (ii) is applicable to the plaintiff's claim, the situation is nevertheless residually covered by the general principle summarised in (i) above. This is most recently illustrated by the judgment of Hutchison J, in Thackwell v Barlcays Bank Plc. [1986] 1 All E.R. 676, in particular at pp. 687, 689, as approved by this court in Saunders v. Edwards, [1987] 1 WLR 1116, 1127 and 1134 and in particular per Nicholls LJ at 1132. (3) However, the ex turpi causa defence must be approached pragmatically and with caution depending on the circumstances: see e.g. per Bingham L J in Saunders v Edwards at p. 1134. This applies in particular to cases which at first sight appear to fall within (2)(i) or (ii) above. Thus: (a) situations covered by (2)(i) must be distinguished from others where the plaintiff's claim is not founded on any illegal act, but where some reprehensible conduct on his part is disclosed in the course of the proceedings, whether by the plaintiff himself or otherwise: see e.g. Pye Ltd. V. B. G. Transport Service Ltd. [1966] 2 Lloyd's Rep. 300. (to which I refer again later); St. John Shipping Corporation v. Joseph Rank Ltd. [1957] 1 Q.B. 267 Belvoir Finance Co Ltd v Stapleton [1971] 1 QB 210 and Saunders v Edwards [1987] 1 W.L.R. 1116. In such cases the ex turpi causa defence will not succeed. Nor will it succeed where the defendant's conduct in participating in an illegal contract on which the plaintiff sues is reprehensible in comparison with that of the plaintiff that it would be wrong to allow the defendant to rely on it: see e.g., Shelley v. Paddock [1979] Q.B. 120. But where both parties are equally privy to the illegality the plaintiff's claim will fail, whether raised in contract or tort, for potior est condicio defendentis. Ashmore, Benson, Pease & Co. Ltd. v. A. V. Dawson Ltd [1973] 1 W.L.R. 828 is an illustration of such a situation.. And an action on a contract whose terms are falsely recorded in documents intended to conceal the true agreement between the parties may be defeated by the ex turpi causa defence: see e.g., Alexander v Rayson [1936] 1 K.B. 169. (b) In situations covered by (2)(i) and (ii) above the ex turpi causa defence will also fail if the plaintiff's claim is for the delivery up of his goods, or for damages for their wrongful conversion, and if he is able to assert a proprietary or possessory title to them even if this is derived from an illegal contract: see e.g., Bowmakers Ltd. v. Barnet Instruments Ltd. [1945] K.B. 65, Belvoir Finance Co. Ltd. v. Stapleton [1971] 1 Q.B. 210 and Singh v. Ali [1960] A.C. 167.' 139 In Yango Pastoral Company Pty Limited and Others v First Chicago Australia Ltd and Others (1978) 139 CLR 410, Nelson v Nelson (1995) 184 CLR 538 and Fitzgerald v F J Leonhardt Pty Ltd (1997) 189 CLR 215, the High Court has identified the principles applying in Australia. 140 In Australia when the illegal conduct is a result of a breach of a statute regard must be had to the statute to determine whether public policy dictates that the Court should decline to enforce the contract. In Fitzgerald v F J Leonhardt Pty Ltd (1997) 189 CLR 215 at 227 McHugh and Gummow JJ said: 'The question then becomes whether, as a matter of public policy, the court should decline to enforce the contract because of its association with the illegal activity of the owner in, if not causing, then at least suffering or permitting the construction and drilling of bores, within the meaning of s 56(1), without the grant to the owner of permits pursuant to s 57. The refusal of the courts in such a case to regard the contract as enforceable stems not from express or implied legislative prohibition but from the policy of the law, commonly called public policy. Regard is to be had primarily to the scope and purpose of the statute to consider whether the legislative purpose will be fulfilled without regarding the contract as void and unenforceable.' 141 A contravention of s 52 of the TPA does not result in a fine or any other criminal penalty: s 76 and s 79(1). If there has been a contravention of the section the party who has suffered loss or damage can seek the relief offered by ss 82 and 87. It is arguable the TPA contemplates that a party's liability for a contravention of s 52 will be limited to the relief provided for in the TPA itself and that the TPA itself contains all the relief that is available to a party to a contract who claims that the other party to the contract has contravened s 52. If that is so, public policy may not require the Courts to provide a remedy to a party where there has been a contravention of s 52 that does not entitle that party to a remedy under the Act itself. 142 In any event, Ford's argument must fail for the same reason that the TPA argument failed. Unless Ford can establish that it relied upon Tristar's conduct it cannot be said that Tristar profited or gained by its wrongful conduct. The finding that Ford did not rely upon any representations made by Tristar in entering into the Tristar Agreement precludes Ford claiming to be entitled to rely upon Tristar's conduct. 143 That Ford was not induced to enter the contract by Tristar's representations has already been discussed. In circumstances where Ford's entry into the contract cannot be said to have been caused or induced by any wrongful conduct on the part of Tristar, it is difficult to see how Ford could claim that Tristar's conduct was causative of its own loss. Ford breached a contract which it was not induced to enter into by any wrongdoing on the part of Tristar. In those circumstances, Tristar cannot be denied relief for breach of contract on the basis of any wrongdoing. 144 It is unnecessary, therefore, to consider Tristar's submission that when considering the propriety of Tristar's conduct, the Court must apply the same standards of propriety to Ford's conduct, specifically in Ford's conduct entering into the Tristar agreement with no intention of honouring it. Similarly, it is not necessary to make findings as to the falsity or otherwise of Tristar's representations. (3) Economic Duress 145 Ford next complaint was that the trial Judge should have held that the Tristar agreement was 'procured as a result of illegitimate pressure so as to make the Tristar agreement avoidable by Ford on the grounds of economic duress'. 146 It may seem surprising for a corporation of the size of Ford to complain that it was the victim of economic duress but nevertheless the complaint was vigorously pursued both before the trial Judge and on appeal. 147 The question posed to the trial Judge and his answer needs to be stated to understand this aspect of Ford's submissions: '14. Was the agreement dated 3 December, 2001 between Ford and Tristar ("the Tristar agreement") procured as a result of illegitimate and unconscionable conduct by Tristar so as to make the Tristar agreement avoidable by Ford on the grounds of: - (a) economic duress; (b) unconscionable conduct in equity; (c) unconscionable conduct contrary to Section 51AA of the Trade Practices Act 1974 ("the TPA"). Answer: As to (a), No. There was no question of the consent of Ford being vitiated: Westpac Banking Corporation v Cockerill (1998) 152 ALR 267. Any pressure on Ford was the result of the commercial predicament into which it had got itself. In reality Ford made a judgment that it was better to enter into the Tristar agreement, with no intention of keeping it, than to go along with the price for which Tristar was asking. The fact that Tristar was exploiting, ruthlessly no doubt, the advantageous position in which it found itself does not mean that Ford was acting under duress in any legal sense. It was just a matter of price. For Ford to say it "had no option but to sign the Tristar agreement" (Ford's outline par 78) is but a euphemism for a commercial decision that the price Tristar was asking was considered by Ford to be not in its economic interests. As to (b) and (c), No for the reasons already discussed.' 148 Ford relied, before the trial Judge and on this appeal, on Westpac Banking Corporation v Cockerill (1998) 152 ALR 267. In that case the Full Court of this Court was called upon to consider a claim of economic duress when the respondents agreed to release the appellant from any claims they may have had in circumstances where the appellant was threatening to appoint a receiver. That case discussed the circumstances whereby a party might make out a claim for economic duress. The Court (Northrop, Lindgren and Kiefel JJ) followed a decision of the New South Wales Court of Appeal in Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40. 149 Where a claim of economic duress is raised it is first necessary to determine whether the pressure which is complained of induced the party to enter into the contract. The pressure need not be the only reason for the party entering into the contract. In Westpac Banking Corporation v Cockerill (1998) 152 ALR 267 the Court left open the question whether the pressure needed to be a significant cause or merely one of the reasons (or a reason) for entering into the contract, because in that case the trial Judge had found the pressure to be a significant or substantial cause inducing the respondents to enter into the contract. 150 It is also not necessary in this case to address that question, because in this case, for the short reasons given by the trial Judge, the 'pressure' was not an inducement to enter into the Tristar Agreement and for that reason alone Ford's defence based on economic duress must fail. 151 However, in case this matter has to be reconsidered, it would be appropriate to consider the other element of the claim where a party is relying upon a claim of economic duress. The party must not only establish that the pressure induced the party to enter into the contract but also that the pressure was not legitimate. An unlawful threat would be illegitimate. So also would pressure that amounted to unconscionable conduct: Crescendo Management Pty Ltd v Westpac Banking Corporation at 45 - 46. 152 In its written submissions, Ford relied on a number of separate matters to establish its claim of economic duress. '(a) Tristar had known since December 1995 that it had been appointed as the supplier of steering gears for the AU model Falcon; (b) Tristar had known since December 1998, and Arrowcrest had known before it acquired Tristar in January 2000, that Tristar was not to be the supplier of steering gears for the Barra model; (c) the Respondents knew that Ford's 12 month forward production schedules continued to project Tristar supply of AU steering gears after August 2001 and into 2002; (d) the Respondents' conduct amounted to a contravention of Sections 51A and 52 of the TPA in relation to the various false statements and reasons advanced by them for the Tristar Agreement and the price increases; (e) the Respondents' demands were dishonest in the respects summarised in Paragraph 2 of the Notice of Appeal; (f) the Respondents' demands involved breaches of the terms of the 1998 MOU referred to above; (g) the Respondents' threats and demands involved knowing interference with Ford's contractual relationship with Delphi and it was irrelevant whether or not those arrangements were terminable upon 30 days or any other period; (h) the Respondents' threats involved joint conduct of Arrowcrest and Tristar so that each participated in the breach of the obligations of Arrowcrest under the alloy wheels agreement; and (i) the Respondents knew of the devastating consequences to Ford of cessation of supply.' 153 Those various matters were reduced to the claim that 'the Respondent's conduct as a whole leading up to 3 December 2001, including the cessation of supply on 8 October 2001, constituted pressure which was illegitimate and "unconscionable" within the principles pertaining to economic duress'. 154 Ford's counsel conceded that if all that was relied upon to support a claim of economic duress was the threat(s) to cease supply, Ford could not succeed on this ground of appeal. [TX 104] Counsel also conceded that the illegitimate pressure complained of would, in some way, have to be related back to the allegedly false representations made by Tristar in justifying the terms which it sought to impose. That follows from par (d) extracted above [151]. That is, the 'unconscionable dealing' giving rise to the illegitimacy of the pressure applied by Tristar would have to stem from the false representations alleged to have been made. 155 No claim was made that the conduct of Tristar was unlawful. There was a finding by the trial Judge that Tristar did not procure the Tristar agreement by engaging in conduct that was 'unconscionable conduct in equity' or 'unconscionable conduct contrary to section 51AA of the Trade Practices Act 1974 ("the TPA")'. Those findings were not challenged on appeal. 156 Whilst those findings stand the Ford's claim of economic duress is also bound to fail for a second reason. Ford did not establish that the pressure was illegitimate. It was not unlawful and nor was it unconscionable. In those circumstances Ford did not make out either of the elements necessary to establish the claim. 157 Mr Macaw QC, Ford's leading counsel, submitted that Westpac Banking Corporation v Cockerill (1998) 152 ALR 267 was authority for the proposition that, in relation to economic duress, the meaning of unconscionable conduct, as it informs the concept of 'illegitimacy' is different from the equitable meaning of unconscionability and the meaning of 'unconscionable' under s51AA of the TPA, and for that matter, the meaning of 'unconscionable' at common law. 158 In Westpac Banking Corporation v Cockerill (1998) 152 ALR 267 at 288, Kiefel J said, at 289: 'In Crescendo Management Pty Ltd v Westpac Banking Corp (1988) 19 NSWLR 40 McHugh JA, with whom Samuels and Mahoney JJA agreed, said (at 46B): Pressure will be illegitimate if it consists of unlawful threats or amounts to unconscionable conduct. But the categories are not closed. Even overwhelming pressure, not amounting to unconscionable or unlawful conduct, however, will not necessarily constitute economic duress. I do not think that his Honour was intending in this passage to refer to the equitable doctrine of unconscionable dealing which is recognised as affording an independent ground on which a court exercising equitable jurisdiction can relieve from a contract. The point of distinction which is relevant for present purposes is that duress, unlike undue influence, focuses upon the effect of pressure, upon the quality of the consent or assent of the pressured party, rather than the quality of the conduct against which relief is sought.' 159 It may be for the reasons given in Westpac Banking Corporation v Cockerill that the unconscionable conduct to which McHugh JA was referring is not conduct of the kind that would give rise to equitable relief under the equitable doctrine of unconscionable dealing. 160 It is unclear on the authorities precisely what conduct will constitute 'unconscionable conduct' amounting to illegitimate pressure in the doctrine of economic duress. Counsel did not urge any particular test other than to say that on the facts of any one case pressure, which is not unconscionable conduct at law or in equity, can amount to 'illegitimate pressure' for the purposes of establishing economic duress. 161 In my opinion, the matter which must be determined is the 'effect of pressure, upon the quality of the consent or assent of the pressured party, rather than the quality of the conduct of the party against which relief is sought': Westpac Corporation v Cockerill (1998) 152 ALR 267 at 289 per Keifel J. 162 In this case, it is unnecessary to articulate a test of illegitimate pressure because in the end result, however the illegitimate pressure is described, the pressure must be such that the will of the party to whom the pressure is applied is vitiated. 163 The illegitimate pressure must be such that it compelled the party, in the sense that the party's will was overborn, to whom it was applied to enter into the contract. However, economic duress is more than commercial pressure. In every day commerce parties are obliged for good and sufficient commercial reasons to enter into transactions which they would otherwise avoid. Whilst they might be unhappy to enter into the transactions, they do so in the end result because they have no commercial alternatives. 164 That is the case here. By December 2001 Ford had got itself in a position where it was vulnerable to commercial pressure. When Tristar took commercial advantage of Ford's vulnerability Ford had a choice. It did not have to enter into the Tristar Agreement. However, it did so because the Tristar Agreement was the least unpalatable alternative. That its will was not overborn is shown in that at the time it entered into the Tristar Agreement it intended to breach it at the first available opportunity. It intended to exert to economic muscle as soon as it was commercially protected by the availability of alternative suppliers. Fords will was not overborn. 165 The allegedly false representations, which must have been the operative conduct relied upon to establish illegitimate pressure, did not create any lack of choice. This argument must fail for three reasons. First the pressure was not illegitimate. Secondly the pressure did not induce Ford to enter into the Tristar Agreement. Thirdly when Ford did enter into the Tristar Agreement its will was not overborn. This ground of appeal must fail.

(4) Arrowcrest's Involvement in Misleading and Deceptive Conduct 166 I mentioned earlier Ford's argument that Arrowcrest was liable for Tristar's conduct. 167 That argument gave rise to the further ground of appeal that Arrowcrest 'caused, directed and procured the conduct of Tristar' and was therefore itself guilty of misleading and deceptive conduct. 168 Mr Macaw conceded that if the Court rejected his submission that Tristar was liable to Ford then this ground of appeal did not assist Arrowcrest. 169 Given the findings in relation to the failure by Ford to prove reliance on Tristar's representations and conduct, it is unnecessary to consider the facts said to support this ground or the ground itself.

(5) Implied term that Arrowcrest not derogate from the principal commercial aim of the Arrowcrest Agreement 170 The final argument pressed at the hearing of the appeal was that the trial Judge erred in failing to find an implied term in the Arrowcrest Agreement of 1999, and a breach by Arrowcrest of that implied term. The term that Ford contended was implied was pleaded in par 74B of its defence: 'Further, there was an implied term of the ROH agreement that Arrowcrest would not do anything: (a) to interfere with; (b) frustrate; or (c) derogate from the principal commercial objective of the ROH agreement which was to facilitate the production by Ford of Falcon motor vehicles. Particulars The term was to be implied at law in order to give ordinary business efficacy to the ROH agreement.' 171 The breach was said to be constituted by Arrowcrest's involvement in Tristar's conduct, which conduct threatened the supply of an essential component in the manufacture of motor vehicles, namely, steering gears. 172 The question posed to the trial Judge and his answer were in the following terms: 'Arrowcrest issues 27. Were there terms of the agreement dated 19th July, 1999 between Ford and Arrowcrest ("the ROH agreement") to the effect that: (a) Arrowcrest would not do anything: (i) to interfere with; (ii) frustrate; or (iii) derogate from the principal commercial objective of the ROH agreement which was to facilitate the production by Ford of Falcon motor vehicles; and/or … Answer: As to (a), No. The "principal common objective of the ROH agreement" was not to "facilitate the production by Ford of Falcon motor vehicles". If there was a common commercial objective, it was the sale of wheels by Arrowcrest to Ford at a specified price over a specified period. On entering into the agreement Arrowcrest and Ford each had its own commercial objective. Arrowcrest wanted to make as much profit as it could out of the manufacture and sale of wheels. Ford wanted to acquire wheels for as little as possible so as to maximise its profit on the sale of motor vehicles.' 173 The law relating to the implication of terms in commercial agreements is well settled. The principles were stated by the Privy Council in BP Refinery (Westernport) Pty Ltd v President, Councillors and Ratepayers of the Shire of Hastings (1977) 180 CLR 266 at 283: '[F]or a term to be implied, the following conditions (which may overlap) must be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term is implied if the contract is effective without it; (3) it must be so obvious that "it goes without saying"; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract.' 174 That decision was approved and applied by the High Court in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 and in many other cases. 175 Ford argued that the term sought to be implied 'arose by analogy on the basis of the reasoning in Mackay v Dick (1881) 6 App Cas 251 where the House of Lords held that there was an implied obligation to cooperate (or not to refuse to cooperate unreasonably or for improper purposes) as an incident of the implied term not to derogate from a grant'. Counsel relied upon News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410 at 507 where the Full Court said: 'The relevant principle was stated by Mason J (with whom Gibbs, Stephen and Aikin JJ agreed) in Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 at 607: "But it is common ground that the contract imposed an implied obligation on each party to do all that was reasonably necessary to secure performance of the contract. As Lord Blackburn said in Mackay v Dick (1881) 6 App Cas 251 at 263: 'as a general rule… where in a written contract it appears that both parties have agreed that something shall be done, which cannot effectually be done unless both concur in doing it, the construction of the contract is that each agrees to do all that is necessary to be done on his part for the carrying out of that thing, though there may be no express words to that effect.' It is not to be thought that this rule of construction is confined to the imposition of an obligation on one contracting party to co-operate in doing all that is necessary to be done for the performance by the other party of his obligations under the contract. As Griffith CJ said in Butt v M'Donald (1896) 7 QLJ 68 at 70-71: "It is a general rule applicable to every contract that each party agrees, by implication, to do all such things as are necessary on his part to enable the other party to have the benefit of the contract."' 176 That principle does not assist Ford. Ford does not seek to have a term implied that obliges both it and Arrowcrest to do all things necessary to carry out the contract. 177 The term pleaded assumes that the 'benefit of the contract' mentioned by Griffith CJ in Butt v M'Donald (1896) 7 QLJ 68 was the facilitating of the ultimate manufacture of motor vehicles. 178 The Arrowcrest agreement provided for the supply by Arrowcrest of wheels to Ford. Clearly, such supply was directed at facilitating the manufacture of motor vehicles which necessarily involves the use of many component parts. It could never be suggested, however, that a term is implied in all such contracts imposing an obligation on one component supplier 'to do all such things as are necessary on his part to enable the other party to have the benefit of the contract', being the ultimate manufacture motor vehicles. 179 The 'benefit of the contract' in the Arrowcrest Agreement was the supply of component parts (i.e. wheels) not the ultimate use to which the supply was to be put. A component supplier might contract with a manufacturer separately for the supply of several component parts. If one supply contract is in place, implication of a term such as that urged by Ford would deprive the component supplier of the ability to negotiate further supply contracts commercially. The component supplier might be unfairly deprived of the opportunity of taking legitimate advantage of prevailing circumstances when negotiating further contracts for the supply of other component parts. 180 The term should not be implied because none of the first three contentions in BP Refinery (Westernport) Pty Ltd (supra) are satisfied. The term sought to be implied would, on Ford's contention, cast obligations on Arrowcrest to ensure that Tristar acted in a particular way. Ford claims that Arrowcrest breached the implied term because of its involvement with Tristar which refused to supply steering gears thereby halting vehicle production. The breach occurred, so Ford argued, even though Tristar had no contractual obligation to supply. By reason of the implied term in the Arrowcrest agreement Arrowcrest would have to ensure that Tristar supplied steering gears to Ford even though Tristar had no contractual obligation to do so. 181 It could hardly be said that the term sought to be implied is reasonable and equitable; is necessary to give business efficacy to the contract; or must be so obvious it goes without saying. It is probably also not capable of clear expression. 182 The claim that the term pleaded in paragraph 74B of Ford's defence should be implied is rejected. 183 This ground of appeal also fails. 184 The appeal should be dismissed. I certify that the preceding one hundred and eighty-three (183) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lander.

Associate: Dated: 22 December 2003 Counsel for the Applicant: Mr D Shavin QC with Mr J P Moore

Counsel for the Respondent: Mr R C Macaw QC with Mr M A Robins

Solicitor for the Respondent: Allens Arthur Robinson

Trade Practices Act 1974(Cth)ss 51AA, 52, 76, 79(1), 82, 87

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Cases Cited (14)