Selective Trade Pty Limited v Ferngrove Pharmaceuticals Australia Pty Ltd & Anor

Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR (NSW) 632 Troulis v Vamvoukakis [1998] NSWCA 237 Whitfeld v De Lauret & Co Ltd (1920) 29 CLR 71; [1920] HCA 75 Texts Cited: N/A Category: Principal judgment Parties: Selective Trade Pty Limited (Plaintiff) Ferngrove Pharmaceuticals Australia Pty Ltd (First Defendant) Wei Tang (Second Defendant) Representation: Counsel: Mr D Parish (Plaintiff) Mr S Burchett (First & Second Defendants)

Solicitors: H & H Lawyers (Plaintiff) Juris Cor Legal (First & Second Defendants) File Number(s): 2020/136755 Publication restriction: N/A

Background

1. These proceedings arise from a dispute about an agreement, or several agreements according to the defendants, for the purchase and distribution by the plaintiff, Selective Trade Pty Limited ("Selective Trade"), of various "mother care" products manufactured by the first defendant, Ferngrove Pharmaceuticals Australia Pty Ltd ("Ferngrove").
2. Selective Trade pursues claims for statutory and/or common law damages arising out of the agreement. It seeks damages for what it says were actual and expectation losses caused by the repudiatory conduct of Ferngrove. It also seeks damages caused by Ferngrove failing to deliver goods pursuant to s 53 of the Sale of Goods Act 1923 (NSW) (SOGA), and also damages from both Ferngrove and the second defendant (and director of Ferngrove), Mr Wei Tang ("Mr Tang"), for misleading and deceptive conduct under s 236 of the Australian Consumer Law (ACL). Those claims allege misleading and deceptive conduct in representing that Ferngrove would manufacture and deliver the products within a reasonable time and perform its obligations in accordance with the contract, and also against Mr Tang for further misrepresentations in respect of the ownership of the NTSA brand.
3. This matter first came before me on Friday, 10 September 2021, at which time I heard a motion filed by Ferngrove and Mr Tang on 3 September 2021. Ferngrove and Mr Tang were then granted leave to file and serve a Further Amended Defence, which was later filed on 13 September 2021. Selective Trade then filed a Reply to that Further Amended Defence and additional affidavit evidence on 15 September 2021. In addition, the parties were both ordered to and provided written opening submissions and outlines of objections on 15 September 2021.
4. The substantive hearing then commenced before me on Monday, 20 September 2021. There were many issues in this case. All of them were hard fought. There was virtually no common ground. No agreed facts were tendered during the course of the hearing and initially, the parties could not even identify a list of issues in dispute. They had to be ordered to prepare and provide one. That list, when provided and somewhat ironically entitled "Agreed Issues in Dispute", highlighted the fact that everything of substance in the case was in issue between the parties.
5. The hearing concluded with oral submissions on 7 October 2021 and final written submissions on 22 October 2021.
6. Selective Trade claimed damages of approximately $1.31 million (not including interest). The jurisdiction of this Court is $750,000 (see s 4 of the District Court Act 1973 (NSW)). When this issue was raised with Mr Parish of Counsel for Selective Trade, the Court was told that his client had elected to take the availability of a hearing date over the possibility of the award of significantly more damages (should it be successful): T23.49‑T24.06. Thus, Selective Trade accepts that the maximum damages it can be awarded is $750,000.
7. That election, however, as it turns out was optimistic. By reason of evidential rulings made by me during the hearing and referred to in more detail below, Selective Trade has no evidence of any expectation/loss of opportunity loss or damage suffered by it causally related to the conduct it says Ferngrove engaged in. As can be seen from the reasons below, I have found that Ferngrove did repudiate the contract between it and Selective Trade. However, apart from a very small amount of shipping costs, because there is no evidence of any loss, and despite its submissions to the contrary, Selective Trade will recover only nominal damages for the contractual remedies and no other damages. It has not been successful on its other claims. Even if it had been successful on those claims, it would not have been able to recover damages as it has placed no evidence before the Court by which those damages could be assessed.
8. Thus, the following examination of not uncomplicated facts from a hearing lasting over two weeks with a multitude of contested issues is, in essence and rather frustratingly, proverbially for almost nothing.
9. Having said that, the parties are entitled to pursue their dispute for a resolution by the court and a decision as to their rights and obligations under their contractual arrangement. Below are my findings in that regard.

The Plaintiff

1. By Amended Statement of Claim filed 16 November 2020 the plaintiff alleges that in about August 2018 it entered into an agreement with FPA for the manufacture and supply to it of various health supplements and milk powder products. These products incorporated the brands FPA, NTSA and some other brand names. The agreement was alleged to be for the plaintiff to exclusively distribute those products to retailers in China. The plaintiff alleged that this agreement was oral and made at a meeting between the second defendant, Mr Tang who was the sole director, secretary and shareholder of FPA Mr Liang Wang. In oral submissions it was said that Selective Trade did not rely on this agreement and it was pleaded only as a background matter. All of the matters in that agreement were said to have been superseded by the later written agreement.
2. It was pleaded that, at all material times, Ferngrove was aware that Selective Trade would be buying the product to on sell them to sub-buyers or retailers in China for distribution and sale in the Chinese consumer market.
3. It is alleged that on or about 1 November 2018 Selective Trade and Ferngrove entered into a written contract, with a term of three years, for the sale of the products and granting Selective Trade an exclusive right to distribute those products in mainland China. Various express terms of the agreement were pleaded, including that Ferngrove would deliver the products within 60 days after receipt of a deposit. Further it was said the agreement provided that Selective Trade would complete sales of 125,000 units within six months from the date of receipt of the first batch of products. Ferngrove was not to transfer the exclusive right to distribution of the products in China to any other person or company during the term.
4. Selective Trade says that it ordered certain products from Ferngrove on 15 November 2018 which constituted the First Order. An invoice was issued on 8 January 2019 stating that a 30% deposit was to be paid, being $104,400 prior to the order being processed.
5. Selective Trade pleads that on 29 January 2019 on 12 April 2019 it made payment of sums of $50,000 and $54,400 respectively which constituted the 30% deposit for the First Order.
6. It was pleaded that there was a Second Order made on 27 February 2019. During the hearing, Mr Parish said that no claim is made as a result of this Second Order. Later, the pleading asserts a Third Order, but again, no claim is made in relation to the Third Order.

The Defence

1. The defendants deny that the August 2018 oral agreement was made as alleged by Selective Trade. At [4] of their Further Amended Defence, filed 13 September 2021, the defendants plead that Selective Trade was advised in or about August 2018 that Ferngrove already had an association with Xiamen as its distributor in China, through its parent company, FPA Group Limited ("FPA Group"). It further pleads that Selective Trade was then advised that the existing distributor was associated with the distribution of the "Slaite" brand of products in China.
2. The defendants' version is that the August 2018 agreement was that if Selective Trade was granted an exclusive distributorship of any of its products, then it could only sell those products in China through a "special" or "closed" channel of direct marketing. It would not be able to sell or market those products in any way so as to adversely affect, or compete with, the marketing of other brands by Ferngrove's existing distributors. The defendants argue that this condition was a collateral agreement to the substantive written agreement ("the Collateral Contract"). The defendants plead that they were unaware that Selective Trade intended on re‑selling the products to "sub‑buyers" outside of any such closed channel. They further argue that by selling the NTSA products outside of a "closed" channel of direct marketing, Selective Trade did not comply with the Collateral Contract.
3. The defendants say that Selective Trade was required to comply with its standard terms of sale of goods, as contained in both the written contract and in a "New Account Application" form executed by Selective Trade contemporaneously with the written contact.
4. The defendants argue that it was an implied term of the agreement that Selective Trade was to pay the deposit on any order within a reasonable time after placing the order and prior to the delivery date specified for the order. They say that this deposit was to include GST. They say that Selective Trade did not comply with that implied term when making the First Order. They say the $104,400 paid by way of deposit for the First Order did not include any payment of GST. Accordingly, the defendants say that Selective Trade never paid the full deposit as required by the agreement, which would have been an additional 10% for GST; being a total of $114,400. It is alleged that Mr Zhou advised Mr Wang on 12 April 2019 and 13 May 2019 that the deposit paid for the First Order was short of GST. The defendants deny that Mr Zhou ever told Mr Wang that GST was not payable if a bill of lading was provided to Ferngrove.

The Reply

1. In its reply to the Further Amended Defence, the plaintiff pleads that by reason of an agreement made in late December 2018 or early January 2019, no GST was payable on the 30% deposit required on the purchase price of the goods.
2. It is alleged that relying on that agreement it did not pay GST on the 30% deposit it otherwise paid for the First Order. It says that at no time did Ferngrove say that GST was payable on the deposit, nor demand payment of it.
3. It says that Ferngrove is estopped from resiling form the agreement with respect to GST and the deposit, or otherwise asserting that GST was payable on the deposit and that Selective Trade is in breach of the contract by its failure to pay that GST.
4. Alternatively, it is alleged that the failure of Ferngrove to inform it that the deposit was payable was misleading and deceptive conduct in contravention of the ACL.

List of Issues in Dispute

1. As I have mentioned, prior to the hearing commencing, and only after some encouragement by the Court, the parties set out a list of Agreed Issues in Dispute. They are: 1. Which documents/oral conversations comprise the Contract between the parties (accepting it includes the Agency Agreement and the Account Application)? This requires resolution of the following sub-issues: 1. Was an oral or collateral agreement concluded in August 2018 and if so: 1. Was it agreed to grant an immediate right of distributorship of the NTSA brand? 2. Did the plaintiff agree to, or represent that it would, limit the use of any distributorship to be granted to the sale of the goods through a "special" or "closed channel" and not in competition with FPA's existing distribution agency and its mother-child retail network in China? 1. What were the terms/obligations under the Contract/Collateral Contract (if it is found to form part of or constitute a separate legal agreement) and in particular: 1. What was the nature and extent of the exclusive distribution? Was it agreed to grant an immediate right of distributorship of the NTSA brand? Did the plaintiff agree to or represent that it would limit the use of any distributorship to be granted to the sale of goods through "special" or "closed channel" and not in competition with FPA's existing distributor agency and its mother-child retail network in China? 2. Was the purchase price to be GST free or exclusive? 3. Was it required to pre-pay 30% of each order on or within a reasonable time and pay the balance on or [within] a reasonable time before delivery and before property would pass to it? 4. Was it required to "complete the purchase" of a min. 125,000 units in six months? 5. Was the first defendant required to deliver within 60 days of order or only ready for shipping and in either case, was the obligation subject to receipt of payment? 6. Was FPA entitled to terminate the order (as) and resell the manufactured goods for failure to pay for them or otherwise to comply with those terms/obligations? 1. What awareness, conversations or communications do the parties have before entry into the contracts, which are relevant to their construction, including: 1. Was the first defendant aware beforehand, that the plaintiff would be on selling to retailers for distribution and sale to consumers in China? 2. Did the plaintiff only seek authority from the first defendant to distribute through an "special" or "closed channel" and was it aware beforehand of the existing "open channel" distribution of first defendant goods through Slaite? 3. Was there a conversation between Mr Wang and Mr Zhou shortly before execution or delivery of the written Agency Agreement on 1 November 2018 and what was its relevant effect? 1. In respect of the 30% deposit issue on the First Order : 1. Did Mr Wang and Mr Zhou have a conversation in late December 2018-early January 2019 in which it was agreed that the deposit of 30% was to be GST free? 2. If so, what is the effect of that agreement? 3. Did the conduct of the first defendant lead it to being estopped from denying that the deposit paid by the plaintiff was sufficient to engage its delivery obligations? 1. Was there an obligation to deliver the First Order within 60 working days? And if so, had that obligation been engaged and when? 2. Did the first defendant have any obligations in respect of the Second and Third Orders? In particular: 1. Was the "Second Order" merely a request for advanced delivery of an instalment of the "First Order", with which FPA complied in its discretion by the delivery of 24 April 2019? 2. What was the effect of that delivery without payment of the full price upon the obligation of the Plaintiff to pay for the deposit or full price of the "First Order"? 3. Was the "Third Order" made in breach of the contracts, never accepted and of no or any effect? 1. In respect of the Sale of Goods Act 1923 (NSW): 1. Was the first defendant under an obligation to deliver the goods within a reasonable time and what time was reasonable? 2. Was a relevant warranty under s 17 of the Sale of Goods Act implied in the circumstances of the Contract(s) and breach by the first defendant by reason of complaints of Slaite advised to the plaintiff on or about 5 May 2019? 1. Did the first defendant repudiate the Contract? 2. Did the plaintiff accept the repudiation of the first defendant and validly terminate the Contract? 3. Was the plaintiff in breach or engaged in repudiating conduct of the Contract/Collateral Contract and if so what was the effect of that, including was the plaintiff entitled to terminate? 4. Did the first defendant validly terminate the Contract/Collateral Contract for default or repudiation by the plaintiff? 5. Did the first defendant engage in misleading and deceptive conduct in breach of s 18 of the Australian Consumer Law in: 1. Misrepresenting that the goods would be manufactured within a reasonable time; and 2. That it would perform its obligations in accordance with the Contract? 1. Did the second defendant engage in misleading and deceptive conduct in breach of s 18 of the Australian Consumer Law in: 1. Misrepresenting that the goods would be manufactured within a reasonable time; and 2. That it would perform its obligations in accordance with the contract; and 3. That he did not own the NTSA brand when he had full control and ownership through his companies. 1. Were the representations allegedly made by the plaintiff as terms of the Collateral Agreement as to future matters misleading or deceptive in breach of s 18 of the Australian Consumer Law? 2. Did any breaches of the contract, repudiating conduct, breach of the Sale of Goods Act or breaches of the Australian Consumer Law by the first defendant cause the plaintiff loss or damage? 3. Did or will any breaches of the contract, repudiating conduct, breaches of the Sale of Goods Act or breaches of the Australian consumer Law by the plaintiff cause the first defendant loss or damage? 4. What is the quantum of any such loss or damage? 5. Costs.

Materials, Witnesses & Evidence

1. The parties prepared a Court Book ("CB") which contained the pleadings, affidavits and documentary evidence. It comprised 3 volumes and there were supplementary tender bundles from each of the parties containing additional documents deployed in cross-examination or otherwise relied upon.
2. The Court also received Plaintiff's Closing Submissions filed 6 October 2021 ("PCS"), Defendants' Final Submissions filed 6 October 2021 ("DFS), Defendants' Submissions in Reply filed 21 October 2021 and Plaintiff's Amended Submissions in Reply filed 22 October 2021 ("PASR"). The Court is grateful to the parties for these cogent and thorough submissions.

The Plaintiff's Witnesses

1. The plaintiff read affidavits of Mr Liang ("Nathan") Wang. Mr Wang had, for two decades, worked in the logistics industry and identified that there were opportunities to market and sell Australian made health supplements and milk powders in China.
2. He gave evidence that Selective Trade was incorporated on 31 July 2018. Mr Wang is the sole director of Selective Trade.
3. From about 17 August 2018, Mr Wang had discussions primarily with an employee of Ferngrove, Mr Terry Zhou, and with Mr Tang with a view to reaching an agreement to buy a pre‑existing range of products produced by Ferngrove (the NTSA brand of products) and for it to sell those products in mainland China. There is a dispute about whether any substantive agreement was concluded at this time or whether, if one was, it survived a later written agreement. I will return in more detail to the events of this day and the different versions and the effect of what occurred below.
4. Mr Wang describes how on or about 1 October 2018, Selective Trade entered into an "Exclusive Distribution Agreement" with the Beijing Company, to distribute infant and child nutrition products in China.
5. He gave evidence as to the signing of the Agreement on 1 November 2018 with Ferngrove and the signing of the New Account form on that day.
6. In order to facilitate the payment of currency into Australia by the Beijing Company (who had an obligation under the Exclusive Distribution Agreement to pay in advance "according to the product demanding plan"), it was necessary to use custom clearance companies. To that end, on 5 January 2019, Selective Trade retained Shen Zhen Daichful Union Supply Chain Co Ltd ("SDU Supply Chain") and Guangzhou Zhangmoshi International Trading Co Ltd ("GZ International") for the purpose of shipping orders to China and meeting currency requirements.
7. Mr Wang deposed to an oral agreement he said he had made with Mr Terry Zhou of Ferngrove, in December 2018, that if the plaintiff provided the defendant with a bill of lading for the export of the products, no GST was payable by the plaintiff to the defendant on the purchase of the products. Mr Wang said that by reason of this agreement he did not pay any GST on the 30% deposit of the First Order. He said that the GST on that deposit was never demanded by Mr Tang or Mr Zhou.

The Defendants' Witnesses

1. The defendant read affidavits from Mr Tang and Mr Zhou.
2. Mr Tang is the sole director of the first defendant, Ferngrove. He has been in the field of pharmaceuticals since 1990. He established the first defendant in 2011 and has acted as director and secretary of the company since that time.
3. Ferngrove specialises in health supplements and milk powder processing and its business comprises: 1. Original equipment manufacturing (that is processing other client's own formulas and turning them into final products and packaging in them); 2. Original design manufacturing (that is researching and designing and developing a client's own brand together with raw materials purchasing on the processing and packaging); and 3. Original brand manufacturing (that is establishing Ferngrove's own brands and product plans and manufacturing the final products for clients to sell).
4. He gives evidence that in 2015 he founded FPA Group for investment purposes and with the prospects of an initial public offering (IPO).
5. He says that in 2015 Xiamen became a client of Ferngrove. In 2017, owing to what he saw as the potential of that company, on behalf of FPA Group he invested in it. Xiamen's brand "Slaite" became FPA Group's first direct brand.
6. Mr Tang gives evidence of the first meeting in August 2018 with Mr Wang who was introduced to him by his friend Lao Fei. During the meeting, Mr Zhou joined them. It was at this meeting that the defendant says the Collateral Contract was reached. I will return to it in more detail below.
7. Mr Tang says that he left the day-to-day management of the relationship between Ferngrove and Selective Trade to Mr Zhou.
8. Mr Tang then gives evidence of complaints by Mr Song, the Chinese director of Xiamen, in 2019 about the promotion by the Beijing Company of the NTSA brands in China. His evidence was to the effect that on or about 24 April 2019, the director of Xiamen, a company affiliated with Ferngrove in China and selling a rival brand of milk powder named "Slaite", complained about Selective Trade's agent in China marketing directly in competition with the Slaite brand's existing market sales channel.
9. He said that on or about 5 May 2019, Ferngrove informed Selective Trade that it was having difficulty in meeting its obligations under the contract because Xiamen had complained that the products being provided to Selective Trade were too similar to other goods that were supplied by Ferngrove to Xiamen for distribution in China. Selective Trade alleges that, at all material times, the defendants did not disclose to it that: 1. Ferngrove may not have the right to sell the products which were the subject of the contract; 2. Selective Trade may not be able to enjoy quiet possession of those products; and 3. The products may be subject to a charge or encumbrance in favour of a third party before or at the time the contract was entered into.

Issue 1

1. This issue relates to a resolution of what documents made up the contract between the parties. It is, essentially, accepted by both sides that the Product Exclusive Agency Agreement ("PEAA") signed on 1 November 2018 (CB 93-98) and the New Account Application ("NAA") (CB 1006-1010) (together the Contract), which contains the standard terms and conditions of sales by Ferngrove and which was also entered into on 1 November 2018, applied to govern the relationship of the parties. Of course, there are questions as to the construction and interplay of these two documents having regard to the events which happened and the claims now made arising out of the relationship between the two parties. This will be considered further in issue 2.
2. The real question to be resolved for this issue (described as a sub-issue in the List of Agreed Issues in Dispute) is whether or not there was an oral agreement, either standalone or collateral to the contract, entered into on 17 August 2018.
3. As I have mentioned above, the plaintiff pleads at [4] of the FASOC that an oral agreement was entered into on 17 August 2018. It pleads that this agreement was that Ferngrove would manufacture and supply the products to Selective Trade who would exclusively distribute them in China. It particularised the agreement as having been made by discussions between Mr Tang and Mr Wang.
4. This agreement, the plaintiff said, preceded the contract and was "overtaken" by it. Mr Parish, in opening, said that the plaintiff did not "rely on… anything that was agreed before the execution of the agreement on 1 November 2018." (T 4.3).
5. The defendant, on the other hand, submits that the agreement made in August 2018 was to the effect, that if the plaintiff was granted an exclusive distributorship of any of Ferngrove's products (as it later was in the PEAA) then it was required to sell those products in China only through a "special" or "closed" channel. This restriction was that sales could only be through direct marketing. The sales were not to adversely affect, or compete with, the marketing of other brands by the existing distributors of the first defendant and its related entities in China (see [6] DFS).
6. The defendant also submits that the plaintiff cannot now resile from its pleaded case that there was a binding oral agreement entered into in August 2018. There is force in this submission. For example, at [34] PCS, it is said that the evidence of Mr Tang does not support a finding of offer and acceptance and that the evidence of Mr Zhou, as to what Mr Wang said, does not arise to a concluded contract. That submission does not sit with the plaintiff's pleaded case.

The Evidence

1. In order to determine whether or not the defendants' submissions as to the Collateral Contract should be accepted, it is necessary to review the evidence as to the events of that period.
2. Mr Wang says that from about early 2018 he was looking for an Australian company that manufactured health supplements and milk powder products to distribute them in China. He says that in about March 2018 he came in contact with Mr Feng Guo, the director of the Beijing Company.
3. In July 2018 he said he first became aware of Ferngrove and Mr Tang through one of his friends, a Mr Chen. He understood Ferngrove was in the business of manufacturing and supplying the types of products he wanted to sell in China. On 31 July 2018 he incorporated Selective Trade. He gave one of the shares in that company to Mr Chen as a gesture of appreciation for introducing him to Mr Tang.
4. On 17 August 2018 he says that he went to FPA's premises with Mr Chen to meet Mr Zhou and Mr Tang. He said that he had a conversation with Mr Tang as follows: "Me: We do not have our own brand currently, we wish your company could provide us with the brand. We could be the China Mainland general agent Tang: I agreed to give you the NTSA brand, which is our own brand. You can talk to Terry for details. Me: Thank you. Please give me Terry's contact information. Tang: You can add Terry on We chat."
5. Mr Wang says that either at the meeting on 17 August 2018, or shortly thereafter, he told Mr Zhou about the Beijing Company and said that he knew the director of the company. He said that the company was to be his business partner in China to distribute the NTSA products. He said that he told Mr Zhou that the Beijing Company already had "an established distribution channel so it would be good for business".
6. Mr Wang also put in evidence WeChat conversations between he and Mr Zhou. These included one on 17 August 2018 after the meeting earlier that day (CB 81). This message corroborates Mr Wang's version of him discussing the Beijing Company at the meeting. In the message he says that he had "communicated with people in China this afternoon". Those people (the Beijing Company) required certain information. The message confirmed that the NTSA brand would be the brand of products Ferngrove was willing to supply to Selective Trade.
7. In any event, it does not appear to be in real dispute that the Beijing Company was discussed. In cross-examination (T 89) it was put to Mr Wang that, at the meeting on 17 August 2018, he told Mr Tang that the Beijing Company in China had an established distribution network in direct marketing, not in retail stores. Mr Wang denied this. He said that he told Mr Tang that he intended to sell the products he obtained from the plaintiff in mother and child health care shops (T 90.8). Mr Wang denied that he was told by Mr Tang that if he was offered a distributorship from Ferngrove, it would have to be one which did not directly compete with any of the existing Ferngrove brand sales channels. (T 93.1-5).

Submissions

1. The plaintiff submits that no Collateral Contract of the type suggested by the defendants was reached at the meeting on 17 August 2018. It submits that the Court should reject the versions given by the defendants' witnesses ([34] PCS). It submits even if the versions of Mr Tang and Mr Zhou are accepted, their evidence does not rise high enough to establish either an oral contract (at least one that survived the written terms of the contract subsequently entered into) or a Collateral Contract of the type submitted by the defendant.
2. The plaintiff submits that, at its highest, from the defendants point of view, all that was discussed was if Selective Trade was given a distributorship of Ferngrove products there may be certain conditions as to how those products were distributed. It was, in effect, an early discussion or negotiation between the parties about what might happen if they agreed on a relationship. However, the plaintiff observes (accurately), that no such term found its way into the PEAA executed on 1 November 2018. It submits that the PEAA reflects the final result of the negotiations. As such, it submits that the earlier negotiations are subsumed in, and overtaken by, the written contract.
3. The plaintiff submits that even if a Collateral Contract was entered into on that day, the collateral contract cannot impinge or alter the provisions of the main contract or the rights created by it: Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd (2016) 260 CLR 1; [2016] HCA 26 ('Crown Melbourne'). Thus, it submits, even if there was a Collateral Contract, it cannot stand with the primary contract if the court finds, on a proper construction of that primary contract, that the rights to distribute products were not restricted to closed or specified channels.
4. Further, it submits that the contract overtook or subsumed any oral contract that may have been agreed on 17 August. It says that a party executing a written agreement is bound by the terms of that agreement and the court will not find that they intended to ignore or modify those terms in favour of some prior oral agreement: Equuscorp Pty Ltd v Glengallen Investments Pty Ltd (2004) 218 CLR 471; [2004] HCA 55
5. The defendant submits that the versions given by Mr Tang and Mr Zhou should be accepted. It submits that Mr Chen who attended the 17 August meeting was not called and that a Jones v Dunkel (1959) 101 CLR 298 inference should be drawn that anything he said could not have assisted the plaintiff.

Consideration

1. In my opinion the submissions of the plaintiff should be preferred. I do not accept that any agreement of the type suggested by the defendant, which could stand alone as a collateral agreement to the subsequently agreed PEAA, was reached on 17 August 2018. In my opinion what occurred at that time was simply initial discussions as to the prospects of there being a distributorship in China through the Beijing company. I do not accept that Mr Tang said that any distributorship was conditional upon sales only being in a limited closed markets.
2. I accept that Mr Wang mentioned that he intended to sell in the infant-child-mother retail market. That Mr Wang was interested in the mother-child infant formula market was accepted by the defendant's witnesses. Mr Zhou deposed to telling Mr Tang that Mr Wang wanted to do "general trade" ([15] Zhou affidavit). This is not consistent with sales in a closed market of the type suggested by the defendant. His effort to explain this in cross-examination (T 426.11- 427.47) was not convincing and I do not accept it.
3. I do not accept that any inference should be drawn by the failure of the plaintiff to call Mr Chen. The relevant witness of the plaintiff responsible for the negotiations and entry into any distributor agreement was Mr Wang. Mr Chen appeared merely to be an intermediary who introduced Mr Wang to Mr Tang. A Jones v Dunkel inference is an inference that nothing the witness could have said would have assisted the party who didn't call them. It is not an inference that the evidence would have been adverse to that party: Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361; [2011] HCA 11 at [64].
4. Additionally, in the WeChats between Mr Wang and Mr Zhou following the meeting, there was no reference to a restriction on the markets in which any products the subject of a distribution agreement would be sold. That is so in the WeChat of 17 August 2018 immediately following the meeting (CB 81) and on 31 August 2018 (CB 82 and CB 908). The latter WeChat followed discussions which took place between Mr Wang and Mr Zhou as to the possibility of an exclusive distributorship. It included what Mr Zhou said would be the requirements of any such exclusive distributorship and was as follows: "Terry: hello, we can give you exclusive right. But there are two requirements. Please talk to your clients in Beijing see if they can accept them. 1. For each exclusive item, 50,000 bottles minimum per year, but you need to pay a 30% deposit of 50,000 bottles first, and pay the corresponding balance before each delivery. By the end of one year, if there are remaining quotas that have not been purchased, the deposit will not be refunded. 2. If our Shanghai team wants to sell your exclusive products, you will purchase each bottle of product from you at your net cost (factory product price + shipping fee + tariff) +1 Australian dollar.…"(emphasis added)

Issue 2

1. This issue requires resolution of what the terms/obligations under the Contract were, in particular the nature and extent of the distributorship granted to the plaintiff.

Nature and Extent of the Exclusive Distributorship

1. As this sub-issue is framed, I have already resolved the questions referable to the Collateral Contract. Thus, the only part of this sub-issue to be resolved is the "nature and extent of the exclusive distribution".
2. In so far as answering this question (or other questions below) concerns a construction or interpretation of the Contract, I approach that task having in mind the relevant principles of contractual construction. Those principles include the necessity to construe the contract objectively by reference to what a reasonable person in the position of the contracting parties would have understood to be the meaning of its language when read in light of the document as a whole and the surrounding circumstances known to the parties at the time of the transaction: see, for example Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451; [2004] HCA 35; Toll (F GCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; [2004] HCA 52; Electricity Generation Corporation (T/as Verve Energy) v Woodside energy Limited (2014) 251 CLR 640; [2014] HCA 7; Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37.
3. It should also be observed at this point, that it is apparent that the parties did not avail themselves of legal advice for the purposes of drafting the PEAA or, arguably, the NAA. The PEAA is a poorly drafted document. It contains both the Mandarin language and English language versions of the relevant clauses. It was not suggested during the hearing that the translation into English of the document in evidence was inaccurate.
4. With respect to poorly drafted documents, in Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 343 ALR 58; [2017] HCA 12, Nettle J said at [97] and following: [97]… The precept that commercial contracts be construed as it is thought an honest and reasonable businessperson would construe them will stretch only so far. As Lord Mustill observed in Charter Reinsurance Co Ltd V Fagan [1996] 3 All ER 46 at 54; [1997] AC 313 at 388: "There comes a point at which the court should remind itself that task is to discover what the parties meant from what they have said, and that to force upon the words a meeting which they cannot fairly bear is to substitute for the bargain actually made one which the court believes could better have been made. This is an illegitimate role for the court" [98] Poor drafting may justify a court in being more ready to depart from the natural and ordinary meaning of the terms of a contract, and no doubt, the poorer the drafting, the less willing a Court would be to be "driven by semantic niceties to a tribute to the parties and improbable and un-businesslike intention". But poor drafting provides "no reason to depart from the fundamental rule of construction of contractual documents that the intention of the parties must be ascertained from the language they have used interpreted in light of the relevant factual situation in which the contract was made". Where there is ambiguity which permits of two alternative and semantically not improbable interpretations, construction in accordance with what it may be supposed would be the approach of honest and reasonable businesspersons may assist in choosing one such alternative over the other. But where… the language and surrounding circumstances of a commercial contract presented choice between the one hand, a plain, ordinary and commercially not a rational meaning of a clause and, on the other, a meaning which is significantly removed from the natural and ordinary meaning of the terms of the clause, which accords with other provisions of the agreement, and which in the end produces an outcome that is more commercially acceptable from one of the parties' point of view only, the precept runs out of application. Unless the Anglo-Australian objective theory of contract is now to be cast aside, the commercial approach to construction is not a licence to alter the meaning of a term that is quite clear and fairly susceptible of one meeting only" to achieve the result that the court may think to be reasonable. The court is not authorised under the guise of construction to make a new contract for the parties at odds with the contract which they have agreed. Where… all things considered, the words of a clause a fairly susceptible of only one meaning, they must be given that effect" (references omitted)

Was the purchase price to be GST free or exclusive?

1. The PEAA is silent with respect to the application of GST to any purchases by Selective Trade. That agreement does state in Article 5 that: "Buyer shall repay a certain proportion of the purchase price in accordance with the contract as a deposit for the sale of "NTSA" series products in mainland China. After receiving the deposit from Buyer, Seller shall produce a full quantity of products within the specified time in accordance with the sales order provided by the Buyer. After Seller receives all the payment from Buyer (except for the deposit), Seller shall transfer the ownership of the goods to Buyer in time. Buyer is responsible for product transportation and customs clearance matters…"
2. I pause to note at this stage, that the PEAA does not define the words "contract" nor "sales order". I accept the defendants' submissions at [61]-[63] of DFS as to the interplay between the PEAA and the NAA with respect to this matter. As was submitted, it was contemplated by the parties that there would be individual orders by Selective Trade and acceptances of them by Ferngrove constituting separate contracts under the PEAA. That agreement was not intended to, and did not, include all of the terms upon which the products were sold by Ferngrove to Selective Trade, but dealt generally with the conferral of any exclusive distribution on Selective Trade of the NTSA series goods to be sold in mainland China. The NAA contained the standard terms and conditions of sale which applied to each sale.
3. In respect to the deposit, the parties are agreed that the deposit to be paid by Selective Trade was 30% of the purchase price. There is a dispute as to whether or not the deposit was GST inclusive or exclusive, to which I will return. There is also a question as to whether the deposit was to be paid only on the First Order, or on all orders. However, in the circumstances of the trial, and the resolution of the issues raised, it is not necessary to determine that question.
4. The Standard Terms and Conditions of Sales contained in the New Account Application contain the following relevant definitions: "Invoice" means the document (including statements) that may be provided to the Customer on or after delivery of the Goods describing those Goods, their price and that may contain these Sales conditions. "Purchase Price" means the price to be paid for the Goods as shown in the Invoice calculated by reference to Ferngrove's current price list for the Customer and such other terms as may be agreed by the Customer and Ferngrove from time to time, subject to condition two. The purchase Price is inclusive of GST.(emphasis added) "Taxable supply" has the meaning given in the A New Tax System (Goods and Services Tax) Act 1999 (Cth) (the "GST Act").

Was Selective Trade required to pre-pay 30% of each order on or within a reasonable time and pay the balance on or within a reasonable time before delivery and before property would pass?

1. As I have recorded above, in closing submissions Mr Parish said that no claims were pursued by Selective Trade with respect to the Second Order and the Third Order. As such, the question posed by this sub-issue relates only to the First Order.
2. As I've concluded that the 30% deposit (including GST) was paid by the plaintiff, the last payment being made on 12 April 2019, the question is what obligations fell upon Ferngrove from the date of payment of the full amount of the deposit? I answer this question below.

Was the plaintiff required to "complete the purchase" of a minimum of 125,000 units in six months?

1. The plaintiff does not dispute that it was required to complete a purchase of a minimum of 125,000 units by 24 October 2019. That follows upon the delivery of the first 1500 units of Lactoferrin on 24 April 2019 thus triggering this six-month time limit in article 5.5 of the PEAA (CB 95). I note that these 1500 units were agreed as being part of the First Order.
2. By reason of events which occurred as described below, this question is somewhat academic.

Was the first defendant required to deliver within 60 days of order or only ready for shipping and, in either case, was the obligation subject to receipt of payment?

1. Article 4.4 of the PEAA (CB 95) states that : "Seller should ready of the product for shipping within 60 working day after receiving the deposit. If the overdue, Seller should compensate the loss of Buyer according to the purchase amount of 0.5%"
2. Article 5.2 of the PEAA (CB 95) states that: "After receiving the deposit from Buyer, Seller shall produce a full quantity of products within the specified time in accordance with the sales order provided by Buyer."
3. Thus, from 12 April 2019 Ferngrove was to have the First Order ready for shipping within 60 working days. That is 9 July 2019.
4. In terms of the delivery date, I do not accept that the order confirmation documents (CB 143-147) which state a delivery dated 29 March 2019 override the terms and conditions of the PEAA. Clause 3.1 of the NAA provides that those order confirmations are acceptance by Ferngrove that a contract exists between it and Selective Trade. Those documents do not set out the terms and conditions of the contract; the terms and conditions are found in the PEAA and NAA. There is no evidence of any independent agreement between the parties that 29 March 2019 was to be the delivery date.
5. I do not accept the defendants' submissions ([78] DFS) that the delivery date specified in the order confirmations was the confirmed delivery date under clause 3.1 of the NAA. That clause, as I have said, states that a contract exists on the sending of the order confirmation to Selective Trade; it does not speak of confirmed delivery date. Nor do I accept the submission that the date in the order confirmation forms is the "specified time in accordance with the sales order" as referred to in clause 5.2 of the PEAA. The quote omits the words "..by the Buyer". That is, in full, the clause reads: "After receiving the deposit from Buyer, Seller shall produce a full quantity of products within the specified time in accordance with the sales order provided by the Buyer." I read the reference to the "specified time" there to mean any time specified by the Buyer when the order for the products is made. There is, as I have said, no evidence that Selective Trade specified 29 March 2019 as the date for delivery.

Was Ferngrove entitled to terminate the orders and resell the goods by reason of Selective Trade's failure to pay for them?

1. In order to address this issue, it is also necessary to consider matters raised in subsequent issues, in particular, whether either of the parties was in breach of their respective obligations under the Contract at the time of the payment of the last tranche of the deposit for the First Order. Each alleges the other was.
2. Selective Trade alleges that Ferngrove had engaged in conduct by which it had evinced an intention not to be bound by the Contract. It says Ferngrove was not willing to abide by the exclusive distribution rights granted to Selective Trade and it refused to deliver the balance of the goods the subject of the First Order.
3. Ferngrove alleges that Selective Trade was in breach as it had not paid the deposit for the First Order in a reasonable time and had not paid for the 1,500 units of Lactoferrin it had collected as part of the First Order. It also says Selective Trade was not in a position to fulfill its obligations as it could not pay for the balance of the First Order.
4. A question also arises as to the order in which the parties were required to perform their obligations under the contractual arrangement. In this case, a proper construction of the arrangements is that: 1. Selective Trade would make its order. 2. Ferngrove would issue the order confirmation confirming the formation of the contract. 3. Selective Trade was required to pay 30% of the purchase price (GST inclusive) by way of deposit. 4. Ferngrove was required to have the goods the subject of the order ready for shipment within 60 days of payment of the deposit. 5. Ferngrove was to deliver the goods to Selective Trade at its Australian Warehouse, or some other place in Australia, unless arrangements had been made for Selective Trade to collect the goods; and 6. Selective Trade was to pay COD for the balance of the purchase price.
5. The defendants say that a fundamental question arises as to whether each party was ready willing and able to perform their obligations under the contractual arrangements. That is, was Ferngrove ready, willing and able to deliver the goods and was Selective Trade able perform its obligation of payment.
6. Looking at the order of events as I have construed them in [191] above, co-operation of the parties was required. Ferngrove had to make delivery of the goods to require Selective Trade to pay for them. Failure to deliver the goods meant that Selective Trade was necessarily prevented and absolved from its performance of payment so long as delivery was withheld Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR (NSW) 632 at [645] per Jordan CJ.

Issue 3

1. I have dealt with the matters raised by this issue in issue 1 above. There I concluded that from the pre-contractual discussions between the parties, that Ferngrove was aware that Selective Trade was to distribute in China. There was no restriction on the channels in which it could distribute, including a restriction on retail channels. Selective Trade did not seek authority only to distribute through special or closed channels.

Issue 4

1. Again, I have already dealt with the matters raised under this issue. I do not accept there was a conversation between Mr Wang and Mr Zhou in which it was agreed that the deposit of 30% was to be GST free. Because of my conclusions about the obligations under the contract, it seems to me unnecessary to determine whether or not the conduct of Ferngrove lead to it being estopped from denying that the deposit paid by the plaintiff was sufficient to engage its delivery obligations.

Issue 5

1. I have already determined that the obligation to deliver the balance of First Order (apart from the 1500 units collected by Mr Wang) was 60 days after the payment of the final tranche of the deposit. Thus, the obligation was to deliver by 9 July 2019.

Issue 6

1. As I've referred to above, in closing submissions Mr Parish said that no claims were pressed with respect to the Second and Third Orders.

Was Ferngrove under an obligation to deliver the goods within a reasonable time and what time was reasonable?

1. In respect to delivery, s 32 of the SOGA relevantly provides as follows: 32 Rules as to delivery (1) Whether it is for the buyer to take possession of the goods, or for the seller to send them to the buyer, is a question depending in each case on the contract express or implied between the parties. Apart from any such contract express or implied, the place of delivery is the seller's place of business if the seller has one, and if not, the seller's residence: Provided that if the contract be for the sale of specific goods which to the knowledge of the parties when the contract is made are in some other place, then that place is the place of delivery. (2) Where under the contract of sale the seller is bound to send the goods to the buyer, but no time for sending them is fixed, the seller is bound to send them within a reasonable time.,,,,
2. In this case Article 4.4 of the EPAA provides that within 60 days after the payment of the deposit, the goods must be ready for shipping.
3. The NAA provides for delivery to be to the Australian warehouse of Selective Trade or some other place in Australia unless it has been agreed that Selective Trade will collect the goods. There is no evidence that Selective Trade made arrangements for collection of the balance of the First Order.
4. I repeat my finding, therefore, that delivery was to be made by the 60th day after the receipt of the whole of the deposit.

Was a warranty under section 17 SOGA implied and breached by Ferngrove by reason of the complaints of Slaite?

1. I do not accept that s 17 SOGA applies in this case. The complaints by Slaite with respect to the distribution of the NTSA products in China by the Beijing Company as Selective Trade's agent, if justified, appear to have arisen from some contractual arrangement between the FPA Group (not Ferngrove) and Xiamen. The purported restriction on Selective Trade in being able to market NTSA products in the manner set out in the EPAA gives rise to a breach of that agreement not reliant upon any such implied statutory condition or warranty.

Did Ferngrove repudiate the contract?

1. The conduct of Ferngrove through Mr Tang following the complaints by Mr Song, that I've referred to above, in my opinion convey objectively to a reasonable person in the position of Selective Trade that Ferngrove had renunciated either the contract as a whole, or the fundamental obligation under it to appoint Selective Trade as the exclusive distributor of NTSA products in China: Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115; [2007] HCA 61 at [44]. I accept the plaintiff's submission that this conduct had nothing to do with the delay in payment of the full deposit by Selective Trade. It was conduct brought about because of the issues Ferngrove and its associated entities, including the FPA Group, were confronting in China by reason of the complaints of Mr Song with respect to the Slaite brand and the apparent "unauthorised" advertising of NTSA products by the Beijing company on behalf of Selective Trade.
2. I do not accept the defendants' submission that Mr Tang's message of 16 July 2019 was simply an offer to return the deposit because of breaches of contract by Selective Trade. The offer to return the deposit and the comment that "if there is a chance in the future, we may cooperate again" was the endpoint of the discussions between the parties and the FPA Group and Mr Song about the complaints made with respect to the operation of Selective Trade through the Beijing Company and the NTSA products in China. In my opinion, there was a clear intention on behalf of Ferngrove not to continue with its obligations under the PEAA unless and until Selective Trade and/or Beijing company complied with its requirements embodied in the "supplemental agreement".
3. I find that Ferngrove repudiated the contract.

Issue 9

1. The letter from Selective Trade's solicitors to Ferngrove dated 30 August 2019 and previously referred to, accepted the repudiation by Ferngrove and validly terminated the contract.

Issue 10 and 11

1. For the reasons I've given above, I do not accept that Selective Trade was in breach of any of its obligations under the contractual arrangements. I do not therefore think it engaged in repudiatory conduct.
2. I've also found that there was no Collateral Contract of the sort pleaded by the defendants.
3. Accordingly, any purported termination of the contract by the defendants, coming after the valid termination by Selective Trade was invalid.

Did Ferngrove engage in misleading and deceptive conduct in misrepresenting that the goods would be manufactured within a reasonable time and that it would perform its obligations in accordance with the contract?

1. The plaintiff alleges that Ferngrove misrepresented to it that the products would be manufactured and delivered within a reasonable time and that it would perform its obligations in accordance with the terms of the contract. It is not pleaded that the representations were as to future matters.
2. The particulars given of the representations in the Amended Statement of Claim refer to WeChat messages of 3 June 2019 and correspondence from the plaintiff's solicitors in November 2019. However, in correspondence between the parties giving further particulars, these particulars were said to be an error (Ex D1 p 26). What was relied upon as particulars of the representations were paragraphs [4]-[29] of the Amended Statement of Claim. Those paragraphs simply plead the matters with respect to the terms and conditions of the contract, the First Order and the alleged non-delivery of the goods. It is not clear how any of these matters amount to representations which would have the effect of the pleading in [36] of the Amended Statement of Claim.
3. I accept the submissions of the defendants that no representations as pleaded were made. Further, the execution of a contract by the parties is nothing more than a statement that the parties agree to be bound by the terms of the contract and, if they are not, that they would be liable to the extent of any legal remedy arising from any breach of the contract. I do not accept, at least in this case, that the mere entry into the contract which provided mechanisms for the order and delivery of goods, including as to time of delivery, amounts to any representation over and above the contractual promises themselves. No additional representation that the goods would be manufactured and delivered in a reasonable time (which representation is on one view at odds with the express term I have found which required delivery within 60 days of the payment of the deposit) arises simply from the entry into the contract. No other oral or written representation is alleged by the plaintiff.
4. Further, I do not accept that the entry into the contract is of itself a representation actionable under the ACL if one or more of the terms of the contract is breached.

Did Mr Tang engage in misleading and deceptive conduct by the above-mentioned representations or, additionally, by misrepresenting that he did not own the NTSA brand when he had full ownership and control through his companies?

1. The pleaded representations against Mr Tang can be found in [41]-[42] of the Amended Statement of Claim. In addition to the alleged representation that Ferngrove would manufacture and deliver the products within a reasonable time and that Mr Tang would cause Ferngrove to perform its obligations in accordance with the terms of the contract, the plaintiff says that Mr Tang further misrepresented that he did not own the NTSA brand. In fact, it is said, he was the sole director and shareholder of a company known as Natural Therapy Sciences Pty Ltd and had full control and ownership of NTSA.
2. The pleading particularises the representations as being WeChats on 3 June 2019 and also correspondence from the plaintiff's solicitors. Once again, correspondence after the pleading providing further particulars indicates that those pleaded particulars are typographical errors and should not be relied upon. Instead, the particulars are said to be paragraphs [4] - [36] of the Amended Statement of Claim.
3. I accept the defendants' submissions that there are no proper particulars of how Mr Tang is alleged to have made the representations pleaded. It is singularly unhelpful when a request for further and better particulars of the representations was made, in the context of the pleaded representations being in error, to simply refer back to the balance of the pleading which do not plead any representations.
4. In any event, as the defendants submit, it was Mr Zhou (not Mr Tang) who signed the PEAA and was most significantly involved in the negotiations with Mr Wang with respect to its terms and finalisation. True it is, as the defendants accept, Mr Tang can be taken to have been aware of the terms of that agreement and it was executed by Mr Zhou with his authority, however, that does not form a basis for a finding of the representations as pleaded by the plaintiff. As I've said above, I do not accept that the mere entry into the agreement represents the matters alleged by the plaintiff.
5. In respect to the representation that Mr Tang is said to have made with respect to the ownership of the NTSA brand, the plaintiff has not pointed to any evidence upon which a finding could be based that Mr Tang made the representation as pleaded. I do not accept the plaintiff's submissions at PCS [147]-[153].

Issue 14

1. Having regard to my finding that there was no Collateral Contract as alleged by the defendants, this issue does not arise.

Did any of the breaches of contract, repudiate conduct, breach of the Soga cause the plaintiff loss or damage?

1. I accept the general statements of principle with respect to contractual damages contained in [155]-[157] of the PCS. Selective Trade is entitled to be put into the position it would have been had the contract been performed by Ferngrove. I accept this encompasses damages which fairly and reasonably can be considered to arise naturally in the ordinary course of dealings and damages that may reasonably be supposed to have been in the contemplation of the parties at the time they made the contract as the probable result of any breach of it: Hadley v Baxendale (1854) 156 ER 145.
2. As it is claiming a loss from the breach of contract, Selective Trade must, however, prove on the balance of probabilities that it lost something of value and the extent of that loss: Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd (1938) 61 CLR 286.
3. In this case, Selective Trade says that it had entered into a three-year agreement with Ferngrove to distribute the NTSA products in China. As discussed in more detail below, it says that it entered into agreements with third parties to assist in that distribution. By reason of Ferngrove's repudiation of the contract, Selective Trade says it has lost the opportunity to make profits it expected from the sale and distribution of the NTSA products in China over the three-year term.
4. In a situation such as this, in order to discharge its onus on the issue of causation of loss, Selective Trade must establish on the balance of probabilities that had there been no breach by Ferngrove, the steps it would have taken and that the opportunity to gain a financial benefit was thereby lost: Daniels (formerly practising as Deloitte Haskins & Sells) v Anderson (AWA Case) (1995) 37 NSWLR 438 at 529.
5. As I have described above, evidential rulings made by me during the course of the trial rejected the evidence that Selective Trade sought to adduce on the question of damages, namely the evidence of Mr William Wang and the expert report of Mr Nguyen. As a result, apart from establishing actual loss of $964.37 for shipping expenses (CB 166), Selective Trade has to seek to rely on other evidence before the Court to discharge its onus with respect to loss and damage.
6. Relevant to this issue is the agreement entered into between Selective Trade and the Beijing Company (CB 84-89). Selective Trade says that it also entered into an oral profit share agreement with the Beijing Company for the sale of the NTSA products in China. Alternatively, it says that it lost the chance to partake in the business opportunity for the sale of those products with the Beijing Company, which chance was lost by reason of the breach of the Contract by Ferngrove.

Summary of Conclusions and Orders

1. For convenience, I set out a summary of my main conclusions on the claims made by Selective Trade and relevant matters raised the defendants: 1. There was no Collateral Contract entered into on 18 August 2018 as alleged by the defendants; 2. On a proper construction of the PEAA and NAA read together as the contractual documents, Selective Trade was granted a right of exclusive distributorship of the NTSA products in China for a period of three years from 1 November 2018; 3. A deposit of 30% of the Purchase Price was to be paid by Selective Trade before Ferngrove had an obligation to process the order. 4. The Purchase Price (and deposit) was GST inclusive; 5. On payment of the full amount of the 30% deposit, Ferngrove was obliged to manfuacture the products ordered and have them packaged and delivered to Selective Trade's Australian warehouse (or some other place in Australia nominated by selective trade) or ready for collection by Selective Trade if otherwise arranged within 60 days from the payment of the full amount of the deposit. 6. Selective Trade was not in breach of its obligations under the contractual arrangements. 7. The final tranche of the deposit for the First Order was paid by Selective Trade on 12 April 2019. Accordingly, Ferngrove was obliged to have ready for delivery, and deliver, the balance of the first order (apart from the 1500 units of lactoferrin already collected by Selective Trade) by 9 July 2019. 8. Ferngrove failed to deliver the balance of the First Order by that time and was thus in breach of contract. 9. The conduct of Ferngrove through Mr Tang and Mr Zhou relating to the complaints by Mr Song, together with the failure to deliver the products as referred to above constituted a repudiation of the contract by Ferngrove. 10. Selective Trade accepted the repudiation and validly terminated the contractual arrangements. 11. Neither Ferngrove nor Mr Tang engaged in any misleading or deceptive conduct in contravention of the Australian Consumer Law. 12. Selective Trade has failed to adduce any evidence on which expectation damages or loss of opportunity damages could be assessed and is entitled to nominal damages only (in addition to the $964.37 for its actual loss).

Costs

1. In respect of costs, Selective Trade has established its claim with respect to the Contract. This includes it establishing what it says were the terms of the contractual arrangements and Ferngrove's repudiation of them. It has not had any success in proving the nature or extent of its loss. Nor has it established any entitlement to remedies under the ACL.
2. As I've said in the opening paragraphs of this judgment, every issue in this litigation was hard fought. That included the defendants challenging every aspect of the plaintiff's claim, including the allegations that Ferngrove was in breach of its obligations under the contractual arrangements.
3. However, ultimately Selective Trade has failed to establish anything other than an entitlement to nominal damages. It cannot be seen to have succeeded in the proceedings. The entitlement to nominal damages cannot be the "peg" upon which Selective Trade hangs an entitlement to its costs: New South Wales v Stevens (2012) 82 NSWLR 106; [2012] NSWCA 415 at [22] per McColl JA.
4. In my opinion the appropriate order with respect to cost should be that Selective Trade pays Ferngrove's costs of the proceedings. As Selective Trade failed in its claims against Mr Tang, it will also be ordered to pay his costs of the proceedings.

Orders

1. I made orders as follows: 1. Judgment for the plaintiff against the first defendant on the amended statement of claim in the sum of $1064.37. 2. Judgment for the second defendant on the amended statement of claim. 3. The Plaintiff is to pay the defendants' costs of the proceedings as agreed or assessed.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 29 April 2022