Forklift Engineering Australia Pty Ltd v Powerlift

Forklift Engineering Australia Pty Ltd v Powerlift - [2000] VSC 443 - VSC 2000 case summary — Zoe

[36]

Arising from the alleged breaches Powerlift claimed that Forklift repudiated the Nissan and Raymond dealership agreements and it accepted that repudiation. Further, Powerlift alleged an implied term in each of the Nissan and Raymond dealership agreements that Forklift would act in good faith in its dealings with Powerlift. It alleged that Forklift deliberately made late payments for parts supplied, failed to agree to budgets under both dealership agreements, made excessive and exaggerated warranty claims and purchased forklifts at special prices for the express use of the rental fleet of Adapt-A-Lift and then on-sold some of those forklifts without accounting to Powerlift for price differences. Powerlift alleged that each of these and other matters breached the obligation of good faith owed by Forklift to Powerlift. As a consequence, it counterclaimed damages in the total sum of $2,568.81. Powerlift sought, also, declarations that it was entitled to terminate each of the Nissan and Raymond dealerships as a result of the notices of termination and the repudation. Forklift replied to the defence and counterclaim by denying the breaches alleged, including those contained in the second notices of breach dated 30 May 2000 save for some sums of money that it admitted were unpaid but alleged that those were disputed sums. Forklift claimed, also, that Powerlift did not complain about the timeliness of the provision of monthly activity reports and sales details and had thereby waived such obligations under both dealership agreements or was estopped from alleging the same. Forklift alleged that the second notices of demand dated 30 May 2000 were invalid because they did not relate to a material breach, alternatively, included claims for amounts that were not due or were ineffective because Powerlift had determined to terminate both dealership agreements in any event. Forklift alleged, also, that Powerlift breached a duty of good faith owed under the agreements by dealing with major account customers of Forklift, by seeking to terminate the agreements so as to expand Powerlift's own market and by discriminating in pricing against Forklift compared with arrangements for other dealers.

[51]

Forklift contended that part of the monies claimed were not owed because some of the spare parts for which it was invoiced were not "applicable products" under the two dealership agreements. The agreements defined applicable products as "All Nissan [Raymond] industrial machinery products which includes internal combustion engine forklifts and battery-electrical forklifts". On the evidence it was apparent that some spare parts fell within the category of applicable products and some not, Cunial, the managing director of Forklift and Boothroyd, the former general manager of Powerlift called by Forklift considered that some spare parts were covered by the dealer agreements. I was satisfied on the balance of probablities that at least part of the sums of $105,907.63 [under the Nissan dealership] and $64,096.08 [under the Raymond dealership] were due and owing at the time of service of the notices on 14 April 2000 because of the concessions made by Forklift's own witnesses that monies were owed. However, on the basis of the admission by Powell some of the amounts referred to in the notices of 14 April 2000 were not paid within the 14 day period stipulated in the notice. I consider that Powerlift was entitled to serve the notices of 14 April 2000, so far as they related to monies claimed for outstanding invoices. So far as the notices of breach of 30 May 2000 were concerned demands were made for the amount of $40,042.05 in relation to Nissan and $38,662.38 in relation to Raymond. Some part of those monies were owing at the time the second notices were served on 30 May 2000. So much was conceded by Powell for Forklift. The monies were not paid as demanded in the notices of 30 May 2000 within the 14 day period stipulated in the notice. I conclude subject to the question of material breach, that Powerlift was entitled to terminate the Nissan and Raymond dealerships on the basis of both the 14 April and 30 May notices pursuant to the termination clause in each of the dealership agreements.

[54]

The "Dealer Obligations" clauses of both agreements imposed an obligation on Forklift to provide a monthly activity report to Powerlift by the second working day of the next month. Failure to provide such reports constituted part of the grounds for the first notices of breach dated 14 April 2000. There was a bundle of activity reports tendered in evidence on behalf of Forklift for the period from April 1998 to March 2000. In the course of cross-examination Ackland, the general manager of Powerlift acknowledged that monthly activity statements were provided by Forklift trading as Adapt-A-Lift. However, he said that there were deficiencies in the details provided. The evidence for Forklift was that the information constituting the monthly activity reports was provided albeit not necessarily on time in accordance with the terms of the dealership agreements but that there was never any complaint by Powerlift about the lack of timeliness. Ackland said that he sent an e-mail to Powerlift probably in about November 1999 raising the fact that the activity reports provided were incomplete and unsatisfactory. The e-mail was never produced. Forklift alleged that as no complaint was made there was a waiver alternatively an estoppel of the right to rely on the lack of provision of information in the monthly activity reports. However, no estoppel was properly pleaded. Further, there was no evidence of the usual criteria of inducement, reliance and detriment: see Waltons Stores (Interstate) Limited v Maher [1988] HCA 7; (1988) 164 CLR 387, 428-429; Commonwealth v Verwayen (1990) 170 CLR 394, 413. If anything, therefore, the course of conduct of the defendants could constitute no more than waiver. The case put on behalf of the plaintiffs did not identify whether the waiver constituted waiver in the sense of estoppel, by way of election or in the sense of variation of a contract. On balance it appeared that the type of waiver relied upon by Forklift was really waiver in the sense of election. That is to say, Forklift claimed that the Powerlift elected not to pursue their rights or remedies promptly after the expiration of the second working day of the next month when monthly activity reports were not provided or were inadequately provided. Ultimately, I was satisfied that on the whole monthly activity statements were provided by the plaintiff and in so far as there were deficiencies in the timeliness and content of the statements or indeed in so far as there was failure to provide such statements there was no complaint on the part of Powerlift. In this respect I find that Powerlift made an election in relation to the provision of the monthly activity reports.

[78]

The matters relied upon by Forklift were numerous. It was asserted that on a comparative basis its sales figures were no worse than other dealers in any event. In my view this is not a matter of any consequence as either there was a contractual obligation to sell a certain number of units or there was not. I have found that the agreed number of units were not sold. It was said by Forklift that the market share of Nissan dropped across Australia during the relevant period. Again, I consider this to be of no relevance but in the event that it may have been I accept the evidence of Puddy that during the year 2000 Nissan was the market leader in its field. Next it was said on behalf of Forklift that fluctuations in the exchange rate affected the Australian dollar that in turn affected the market. This is a further irrelevant matter but even so fluctuations in the exchange rate affected the entire forklift market not merely the Nissan market, hence, its competitors would have been equally affected. It was said further on behalf of Forklift that mechanical problems encountered with the Nissan model affected its market. This was a reference in particular to the forklift vehicle known as "GNO1". Again I consider the matter to be irrelevant but in any event I accept the evidence of Puddy that sales of the particular "GNO1" unit were insignificant in the overall scheme of things. In addition it was said by Forklift that there was a fear in the market of a takeover of the Nissan company in Japan that in turn impact on the marketplace. I do not accept this matter as being relevant but even if it was there was no evidence before me at all of any sale lost for this reason or of a customer commenting upon the subject. Next it was complained that there was price discrimination favouring some dealers, in particular a Western Australian dealer known as "WAFT" that had the net effect in turn of discriminating against Forklift. In my view the arrangements between Nissan and the Western Australian dealer known as WAFT was as a result of an inducement to persuade that dealer to change from a longstanding association with another manufacturer to Nissan and Raymond products. There was insufficient evidence before me of the pricing arrangements in relation to the Western Australian dealer to support a finding of price discrimination.

[108]

Powerlift alleged that even if the Nissan and Raymond agreements were not breached as asserted in the notices of termination, nevertheless, Forklift had repudiated both agreements. Powerlift relied upon a number of actions and events to support a finding of repudiation. It purported to accept the repudiation. First, Powerlift asserted that Forklift failed to pay for parts in breach of the trading terms and for extensive periods including one example where parts were not paid for a period of 150 days. I have found the facts proven that are relied upon to support this allegation. Second, Powerlift asserted that Forklift failed to pay invoices in accordance with trading terms. I have found the facts proven that are relied upon to support this assertion. Thirdly, Powerlift asserted that Forklift did not agree to budget targets. For the reasons already stated I have found that there was in fact agreement by Forklift to budgets under both agreements. It follows that this assertion cannot be relied upon to support an allegation of repudiation. Fourthly, Powerlift relied upon the fact of failing to meet budget targets. For the reasons already stated I have found the facts proven that are relied upon to support this assertion. Fifthly, Powerlift asserted that Forklift failed to promote the sale of Powerlift products by employing suitably qualified and experienced personnel. I have found the facts proven that are relied upon to support this assertion. Sixthly, Powerlift complained initially that Forklift failed to return forklifts to Powerlift. There was evidence that Powerlift demanded that 20 forklift vehicles be returned by Forklift but the demands were refused. So much was admitted by Powell. Ultimately, the forklift vehicles were returned or offered to be returned by Forklift. However, the return or offer of return of the vehicles occurred only after the service of the notice of default by Powerlift. For the purposes of alleging repudiation Powerlift relied upon late return of forklifts. There was no dispute by Forklift that this occurred. I find, therefore, that late return of vehicles (for the purposes of repudiation) was made out.

[109]

Seventh, Powerlift complained that it supplied six forklift vehicles to Forklift at a special price for the express purpose of being used in the Adapt-A-Lift rental fleet but that the vehicles were sold in the usual way by retail sale. Powerlift complained that this was done without its permission and, further, that Forklift did not account to Powerlift for the difference between the special price at which the vehicles were supplied and the price at which the vehicles would normally have been supplied for retail sale. So much was acknowledged by Powell and Cunial. Furthermore, there was one episode of Davin of Powerlift approving a sale of a vehicle supplied at the special price for a normal retail sale. I was satisfied that Forklift sold forklift vehicles supplied to it at a special price for rental purposes without the knowledge and consent of Powerlift. Eighth, Powerlift complained that Forklift stripped parts from stock supplied on consignment that remained the property of Powerlift without its permission. These matters were acknowledged by Powell, Whiffen and Poller. Powell went so far as to acknowledge that he, on behalf of Forklift, was prepared to strip parts from consignment stock without the consent of Powerlift at any time. I was satisfied that Forklift stripped parts from consignment stock without the permission of Powerlift. Ninth, Powerlift complained that Forklift made an excessive number of warranty claims over and above those made by other dealers. On balance I find that Powerlift carried the burden of proving this allegation as it was made in the counterclaim as a basis for seeking a declaration that the agreements were terminated. On the evidence it was apparent that Forklift made a substantial number of warranty claims and more than other dealers. However, that of itself did not establish excess or exaggeration. Furthermore, the allegation carried an overtone of fraud. I was not satisfied on a sufficient basis that the allegation was proven. Tenth, Powerlift relied upon the alleged failure to provide monthly activity reports and sales details. I have found previously that the allegation is not made out.

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Judgment (125 paragraphs)

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Cases Cited (21)