31 On 26 November 1998 Mr Prestia met Mr Hallam, Mr Griffin and Ms Hamilton-Bate to discuss the rejection of produce supplied by Holdings. This was followed the next day by a meeting at Franklins's head office. On 23 December 1998 Mr Hallam faxed Mr Prestia as follows:
'I refer to the various meetings you have had with Franklins during the last few weeks and confirm the following:
1. On 26 November 1998 you met with Marcus Griffin, Clare Hamilton-Bate and myself at the Flemington Warehouse. Franklins advised you that in accordance with clause 3 of Franklins letter to you of 6 October 1998, a copy of which you signed and returned, (the "Agreement") Franklins was terminating the Agreement, effective as at 5.00 pm 29 November 1998. The grounds for termination were explained and were that the supply of the produce had failed to meet Franklins written specifications and quality standards on numerous occasions, all of which had previously been advised and explained to you.
2. On 27 November 1998 you met with Greg Foran, Robert Vogel and myself. During this meeting the overall relationship between Franklins and Nationwide was discussed. Franklins has continually experienced problems in the relationship and in mid September 1998 you had a discussion with Tony Cassone where it was agreed that the current lines you supplied to Franklins would be immediately reduced by 50% and that this arrangement would in any event cease as at 31 December 1998. The terms of the agreement were set out in the Agreement.
3. Although Franklins had given notice of its intention to terminate the Agreement on 26 November 1998 Franklins allowed the Agreement to continue until the previously agreed expiry date of 31 December 1998. Naturally, Franklins reserves all other rights arising from Nationwide's continual breaches of the Agreement.
4. It was agreed at the 27 November 1998 meeting that Franklins would consider a submission by Nationwide in relation to allowing a further period of time beyond 31 December 1998. In the absence of any express new agreement to extend the relationship, it was made clear that 31 December 1998 would mark the end of Nationwide's relationship with Franklins. Any submission was to be made to Franklins by 15 December 1998. Franklins has received no such submission and accordingly any possibility of an extension of Franklins' relationship with Nationwide beyond 31 December 1998 is now extinguished.
I re-affirm Franklins' position that the Agreement will expire on 31 December 1998 and that there will be no extension of any period of time.'
32 On 29 December 1998 Mr Russo faxed Mr Prestia informing him that 'as of Thursday, December 31, 1998, Franklins will cease all trading with Nationwide.' No further orders were placed with Holdings.
33 I turn now to the disputed conversations between Mr Prestia and Mr Cassone. These conversations occurred, according to Mr Prestia, in March 1995, July 1995, September 1996 and on several occasions in the first half of 1997. In essence, he says that Mr Cassone constantly assured him that the supply arrangements with his company were 'long term' and that he would get an agreement to that effect. Mr Cassone, on the other hand, denies ever giving an assurance that he would organize such an agreement. There is no point in setting out the alleged terms of these conversations deposed to in affidavits settled and in oral evidence given years after the events in question. In the end, counsel for Holdings accepted that Mr Prestia's overtures for a long term contract were rejected. That is, of course, the inescapable inference to be drawn from the terms of correspondence that I have set out in extenso above. However, I should state that, with one possible exception, wherever there is a conflict between the evidence of these two witnesses, I accept the evidence of Mr Cassone. He gave carefully considered answers to all questions in his cross-examination and exhibited not the slightest partisanship towards his former employer. The one exception is an alleged conversation with Mr Prestia on 14 August 1998 when he claims that he told Mr Prestia of Franklins's decision to terminate supplies from his company at the end of the year. I attach little significance to the fact that Mr Prestia claims not to recall such a conversation. I have no doubt that Mr Cassone and Mr Prestia had a number of strained conversations about this time. I am also satisfied that he spoke to Mr Prestia on 14 August 1998 in the company of one of Franklins's buyers, Fred Palazzolo. However, his subsequent note to Mr Hallam about this conversation is expressed in strangely convoluted language. I am not prepared to find that on 14 August 1998 he informed Mr Prestia in no uncertain terms that all purchase orders from Franklins would cease after the end of the year. In any event, nothing turns on this conversation because the topic was subsequently dealt with in the letter dated 6 October 1998 drafted by Mr Hallam.
34 In its further amended statement of claim Holdings pleads causes of action for contraventions of s 52, s 51AC and s 51AA of the Trade Practices Act 1974, for economic duress and for breach of contract. The statutory counts were never formally abandoned, but they were not addressed in the final submissions on behalf of Holdings. This is hardly surprising. The s 52 claim depended on an allegation that Holdings was led to believe that it would supply Franklins with fruit and vegetable produce 'up to at least 2001'. There was not the slightest evidence of any representation by anyone at Franklins to that effect.
35 By itself, my acceptance of Mr Cassone's version of what was said in his discussions with Mr Prestia admits of the possibility of honest mistakes in the latter's recollection (although it is striking that, in the affidavit Mr Prestia made on 24 June 1996 in support of his application to annul his bankruptcy, Mr Prestia was content to rely simply on the letters from Mr Cassone reproduced at [7] and [10] above and to make no mention of any oral assurances.) However, in giving his evidence on other topics, Mr Prestia was deliberately untruthful. He said that after April 1996 Holdings carried on the business of supplying fruit and vegetables to Franklins and that Nationwide was only involved with the stands at Flemington Markets. He also said that in April 1996 the ANZ Bank extended an overdraft facility to Holdings. Mr Prestia must have known that this evidence was false as the events I have outlined at [12]-[24] above demonstrate. (There is no evidence from ASIC's national database of the period during which Mr Prestia was a director of Nationwide, but I am satisfied that all times prior to 16 June 1998 Nationwide was under his effective control.) The evidence establishes that Holdings did not begin to supply Franklins until the very end of 1997 or the beginning of 1998. It is not clear how Holdings funded its purchases from growers in the first half of 1998, although Mr Prestia had sought financing from the Bank of New Zealand. (The documents used during the second half of 1997 to seek such financing were prepared by Mr Houlahan. They incorporated sales projections for Nationwide based on planned store openings by Franklins. Mr Prestia insisted, quite absurdly, in his evidence that some of these documents emanated from Franklins and were given to him by Mr Cassone. This claim was denied by Mr Cassone and, unsurprisingly, that denial was not challenged in cross-examination.) The true position during 1997 was acknowledged towards the end of any relationship with Franklins at a time when Mr Prestia was in high dudgeon about the rejection of produce supplied by Holdings. On 7 October 1998 Mr Houlahan wrote as a director of Multifacet Accounting, informing Franklins that his firm had been retained to review its claim for underpayment of rebates by Nationwide 'for the year ended 31 December 1997'. By the time Holdings began to trade, Mr Prestia had been thoroughly disabused of any hope or expectation that Franklins would enter into a supply contract for a fixed term. Any reliance case under s 82 of the Trade Practices Act was plainly hopeless.
36 Counsel for Holdings focused their submissions on an alleged contract with Franklins for the supply of fruit and vegetables that antedated the letter dated 6 October 1998 signed by Mr Cassone and Mr Prestia on behalf of the parties. This contract was said to contain two important terms: (1) a right of first refusal for Holdings to supply Franklins's requirements of such produce and (2) a right to terminate the contract on reasonable notice. The first of those terms was said to be partly express and to flow from various assurances that Nationwide was to be the 'preferred supplier' of Franklins. The second term was to be implied because the right of first refusal was said to be of indefinite duration, and it was this term that was allegedly breached by Franklins. Counsel for Holdings accepted that, in order to rely on such a term, it would be necessary to impugn the letter of 6 October 1998. The doctrine of economic duress was invoked for that purpose, but I shall leave that issue aside for the moment.
37 There was evidence that from time to time Mr Cassone used the expression 'preferred supplier' to describe the position of Mr Prestia's companies. There was not, however, the slightest evidence that such an expression was a term of art or that it had acquired in the fruit and vegetable trade any particular meaning such as that contended for by Holdings. The types of products and the quantities of any such products purchased by Franklins from Mr Prestia varied all the time. The fact that Mr Prestia was required to quote firm product prices for a week is beside the point. Once an order was placed by Franklins, it had to be filled. There was nothing indefinite about the duration of those contracts. Orders were to be filled the next day. The notion that either party would have the right to terminate such a contract would never have occurred to either party. The suggested right of termination is posited upon an arrangement for a right of first refusal, which simply did not exist. It is instructive that at the time Mr Prestia never claimed that such an arrangement existed and that in his letter of 15 November 1998 he merely sought to be considered 'as a preferred supplier of a defined range of fresh produce'. There never was a contract such as that alleged by Holdings.
38 In any event, Mr Prestia signed the letter dated 6 October 1998. Unless that letter can be set aside, Holdings accepts that the arrangement between the parties put into place pursuant to that agreement expired on 31 December 1998. The alleged duress relates to terms of Franklins's offer contained in clause 9 of the letter. Mr Cassone confirms that the letter was presented to Mr Prestia on a 'take it or leave it' basis. The law relating to duress was laid down in the dissenting advice of Lord Wilberforce and Lord Simon of Glaisdale in Barton v Armstrong [1976] AC 104 in observations (at 121), which McHugh JA adopted in Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40 at 46. Counsel for Franklins prudently adverted also to the question whether Mr Cassone's ultimatum amounted to unconscionable conduct on the part of Franklins for the purposes of Pt IVA of the Trade Practices Act. In my opinion, there was nothing in the slightest degree improper or unconscionable about the way in which Franklins procured Mr Prestia's agreement to the terms of its offer. Holdings gained something it did not possess, namely, a firm contract for specified portions of Franklins's requirements of certain products for a finite period. Once that is appreciated, it can be seen that the acceptance by Mr Prestia represented an obviously self-interested exercise of his business judgment. Franklins did not engage in 'unconscionable conduct' for the purposes of Pt IVA, as that expression was explained in Australia Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd (2003) 214 CLR 51. Relationships between vertical participants in the retail grocery industry supply chain do not stand in a different position.
39 The proceeding will be dismissed with costs.