Torc Solutions Pty Ltd v Unex Corporation doing business as Hytorc [2025] FCA 1124

Torc Solutions Pty Ltd v Unex Corporation doing business as Hytorc [2025] FCA 1124 | Case summary | Zoe

[21]

Torc Solutions further alleged that at the Teleconference, Torc LLC and Hytorc represented that Hytorc would supply Torc Solutions branded products after the transition period on fundamentally the same terms and conditions as the Distributor Agreement. Torc Solutions alleged that the representations were false in that Hytorc and Torc LLC never intended to make Torc Solutions branded tools. Alternatively, Torc Solutions alleged that Hytorc devised and implemented a strategy to end the trading relationship and avoid its obligations under the Hytorc Agreement, which Torc Solutions said was a 'forever' agreement, to enable Hytorc to sell the remaining Torc LLC branded products to Torc Solutions and, once they were sold, thereafter terminate the Hytorc Agreement (Termination Strategy).
Torc Solutions alleged that Hytorc's purported termination of the Branded Product Distribution Agreement was ineffective because the Branded Product Distribution Agreement was unenforceable and/or void or voidable because Torc Solutions was induced to enter into the Branded Product Distribution Agreement as a result of economic duress, alternatively, Torc LLC and Hytorc's misleading and deceptive conduct and/or unconscionable conduct and/or misrepresentations. Torc Solutions contended that the Hytorc Agreement remained operative, under which Hytorc was obliged to supply Torc Solutions branded products. Torc Solutions contended that Hytorc refused to supply Torc LLC products and Torc Solutions branded products, and thereby repudiated the Hytorc Agreement, which repudiation Torc Solutions accepted, and the Hytorc Agreement has been rescinded.
Torc Solutions sought damages by way of loss of business due to Torc Solutions' repudiation of the Hytorc Agreement, alternatively, Torc LLC and Hytorc's misleading or deceptive conduct, unconscionable conduct and/or misrepresentations at common law or under the Misrepresentation Act 1972 (SA). Torc Solutions abandoned its claim for exemplary damages.
Torc Solutions' claim in relation to frustration of the Branded Product Distribution Agreement was abandoned. Further, Torc Solutions' claim against Torc LLC in relation to breach of the exclusivity obligations under the Distributor Agreement, and Torc LLC's set-off claim against Torc Solutions, were resolved.
Torc LLC and Hytorc denied that an agreement in relation to the ongoing supply of Torc LLC products or home branded products was formed at the Teleconference or by the parties' subsequent conduct. They contended that, after the Teleconference, the only binding contractual obligation to supply Torc LLC products arose where Torc LLC or Hytorc accepted a purchase order submitted by Torc Solutions and that Hytorc's obligations in relation to the supply of home branded products arose under the Branded Product Distribution Agreement. They denied any representations to the effect pleaded by Torc Solutions and denied the allegations of economic duress, misleading or deceptive conduct, unconscionable conduct and misrepresentation. Torc LLC and Hytorc said that at the time the parties entered into the Branded Product Distribution Agreement, Hytorc was committed to supplying home branded tools to Torc Solutions. However, the home branded arrangement was not working out as intended and was not viable for Hytorc. Accordingly, on 1 March 2022, Hytorc terminated the Branded Product Distribution Agreement. As already mentioned, Torc Solutions does not contend that the termination was wrongful.
The proceeding was commenced in December 2022. In May 2023, the proceeding was listed for trial in March 2024, on an estimate of 10 days. The statement of claim was amended six times, including once shortly before the first part of the trial, which necessitated an adjournment of the trial. The trial was scheduled to resume in July 2024 but, due to unfortunate circumstances, was unable to proceed at that time and alternative dates were required to accommodate the availability of Counsel, who have been involved in the proceeding for some time. The trial resumed and was concluded in March 2025. However, before the trial resumed, the statement of claim was amended for the sixth time. Despite the number of amendments to the statement of claim, the pleading was prolix and difficult to follow, to put it neutrally.
For the reasons that follow, I was not satisfied that Torc Solutions had established any of its claims against Torc LLC or Hytorc. Accordingly, the application should be dismissed.

[24]

The strategy of establishing Torc LLC to counter second tier tooling infiltrating the premium torc market was devised by John Junkers. According to Adrian Case, sales representatives of Hytorc did not embrace the strategy because they were concerned about the impact that competition from second tier tooling, sold at lower prices, would have on their commission.
In 2014, John Junkers died unexpectedly. After John's death, his son Mr Eric Junkers, President of Hytorc since 2009, continued to push John's strategy to develop Torc LLC.
In late 2015, Adrian Case put a proposal to Mr Junkers that Hytorc South Pacific become a distributorship and that he (Adrian) take over Hytorc South Pacific. Mr Junkers rejected the proposal. However, a short while later, Mr Junkers counter-offered that Adrian become the master distributor for Torc LLC tools throughout Australia.
Adrian discussed the idea with his nephew, Andrew Case, and a former colleague, Rachel Duff.
In February 2016, Adrian and Andrew Case flew to Hytorc's Head Office in New Jersey, USA, to put forward a business proposal to Mr Brian Gershenoff, the General Manager of Torc LLC. They presented a proposed distributor agreement to Mr Gershenoff, which Andrew had drafted.
On 22 March 2016, Torc Solutions and Torc LLC entered into the Distributor Agreement, under which Torc Solutions was granted sole rights to sell and distribute Torc LLC's products in Australia, New Zealand, parts of Asia and the South Pacific region.
The Distributor Agreement provided that Torc LLC had two business days to accept (or reject for a legitimate business reason) any order made with Torc LLC by Torc Solutions. If Torc LLC failed to accept or reject an order in a timely fashion, the order was deemed to be accepted and was binding on Torc LLC. The Distributor Agreement contained terms that Hytorc and Torc LLC said they did not have with any other distributors, such as 180 day credit terms. Torc LLC also arranged for Torc Solutions to have an order of Torc LLC tools on consignment, which was not something it had to do for other distributors.
From about April 2016, Torc Solutions commenced placing orders for Torc LLC tools, through the provision of purchase orders, and Torc LLC issued invoices to Torc Solutions for tools or other products once they were shipped to Torc Solutions.
After the Distributor Agreement was executed, Adrian Case continued as a Hytorc South Pacific sales representative. As a sales representative for Hytorc South Pacific, he could not be involved in the Torc Solutions business, because Torc LLC's products were similar and sold in competition with Hytorc.
Andrew Case was responsible for the day-to-day operations of the Torc Solutions business, with the assistance of Ms Rachael Duff, as the Administration Manager. Ms Duff was responsible for day-to-day administration, issuing purchase orders on behalf of Torc Solutions and paying invoices, among other things.
Most of Torc Solutions' customers were resellers, who on-sold the tools with their own mark up to end customers.
During the Distributor Agreement, Mr Gershenoff was the primary point of contact on behalf of Torc LLC. Following Torc LLC's closure, Mr Gershenoff became Hytorc's Director of Global Business Development, although he had general oversight of the transition of Torc LLC distributors. Mr Gershenoff was the representative of Torc LLC and Hytorc who had the primary relationship and communications with Torc Solutions.
In July 2019, Adrian resigned as a sales representative for Hytorc South Pacific to work at Torc Solutions on a full-time basis.

[26]

On 29 January 2020, Adrian and Andrew Case attended the Teleconference, which was held by Skype with Eric Junkers, Brian Gershenoff and David Ricca also in attendance.
Before the Teleconference, Adrian and Andrew had had dealings with Mr Gershenoff and Mr Junkers, to a lesser extent. Mr David Ricca was the General Manager of Hytorc and had not had any dealings with Torc Solutions prior to the Teleconference, although he knew Adrian Case from the time he was a sales representative for Hytorc South Pacific. Mr Ricca said he was asked to attend the Teleconference because of his involvement in the Hytorc business and he was asked to be prepared to address how customer service was managed at Hytorc and what Hytorc could do for Torc Solutions if they were interested in becoming a private label customer.
According to Adrian and Andrew Case, at the outset of the Teleconference, Mr Junkers said they were going to start manufacturing home branded tools for Torc Solutions. At this point, Adrian and Andrew decided to record the Teleconference, which Adrian did on his mobile phone. There was no dispute in relation to the accuracy of the transcript of the recording, and the following summary of the matters discussed during the Teleconference is based on the transcript.
At the commencement of the recording of the Teleconference, reference was made to the fact that home branding (or private label / own branding) had been presented to Torc Solutions by Mr Gershenoff prior to the Teleconference, but not the detail of what was said by Mr Gershenoff. There was some criticism as to how the closure of Torc LLC had been raised with Torc Solutions, which Mr Junkers accepted and said he wanted to address.
After a brief discussion about how to communicate the decision to close down the Torc LLC business, the discussion turned to a timeframe to phase out Torc LLC products and convert customers to Torc Solutions' own brand. Mr Junkers said "this is the year we're phasing out Torc, but it doesn't mean that we're phasing out Torc Solutions", to which Adrian Case said a strategy had to be worked through, of phasing out Torc LLC while phasing in a home branded line.
Mr Gershenoff replied:

[29]

... I thin[k] guys you got off the point here. I mean we're talking about a private label agreement with locked in prices and now we're getting granular ... Those things I can certainly work with Brian on, can figure out. I do all the pricing for Hytorc so you'll have me at your disposal. Adrian knows me well. He knows how I operate. I, you know, I've always supported him when he was a Hytorc rep and I always will and I'll support you guys when you're a [Hytorc] customer that just get private label tools hopefully in the very near future. This is not something that we're pulling the plug on this week. This is something that is being phased out. This is something that we would love to see you to work closely with Brian, who's your friend, to come up with an agreement that can be put in front [sic] Eric. I'll be happy to work with Brian on the backend to ensure the agreement is fair, its consistent, what we're offering other people. We'll lock in the pricing. We'll try to improve on the operation, I think that's going to happen naturally by cutting out all these middlemen and then you guys being treated as a Hytorc customer rather than a Torc distributor or sales agent and I think we should focus on building a positive relationship here rather than you know, going back and looking at what happened under the Torc helm or under the Hytorc/Torc relationship. I haven't really been involved with the Torc sort of operations, I'm not involved in any of that so I'm not privy to any of this ... but I can assure you that when you become a Hytorc customer, under the private label agreement, you will have my support and I will work to make sure that you guys are satisfied. I mean listen, it's in my best interests if you guys sell the ... out of the product, wherever in South East Asia, in Australia, in Indonesia and you Papua New Guinea, in New Zealand. I don't give a ... where. I mean it's in my best interests to see you guys sell 500 tools a year so, I'm going to work to make sure that Adrian and yourself are in a position to do that.

[39]

Mr Gershenoff said that transitioning or phasing out the approximately 76 Torc LLC distributors was a big task. Arrangements began in March 2020 to coordinate the phase out or transition of Torc LLC distributors to Hytorc or private label arrangements. Mr Bender commenced work on drafting a template private label agreement, however, it took longer than expected.
Andrew Case negotiated the Branded Product Distribution Agreement on behalf of Torc Solutions, although he received legal advice in relation to the draft agreement in the earlier stages of the negotiations.
Following the Teleconference, between 28 May 2020 and 6 May 2021, Torc Solutions and Hytorc exchanged several drafts of the Branded Product Distribution Agreement. The following emails and drafts were exchanged, although the dates of emails may vary depending on the time zone in which the email was sent or received.
On 28 May 2020, Mr Gershenoff sent Andrew Case an email which attached a draft Branded Product Distribution Agreement. The draft agreement included a clause that permitted either party to terminate "at will" by giving written notice.
On 13 July 2020, Andrew Case sent Mr Gershenoff an email which stated: "[t]his Agreement appears to be a Frankensteined collation of shelf documents to create an agreement that needs considerable work". Mr Case said that Torc Solutions' lawyer was seeking further details on five points, which were listed in the email and included a price list, colour options and a manual, and said that there was likely to be a further request for information in the foreseeable future.
On 27 August 2020, Mr Gershenoff sent Andrew Case, via email, a revised copy of the Branded Product Distribution Agreement.
On 2 October 2020, Andrew Case sent Mr Gershenoff an email (copied to Adrian Case) which noted that they had had someone take a look at the draft agreement, and he made comments on the draft agreement, seeking Hytorc's response.
On 21 October 2020, Mr Gershenoff sent Andrew Case a revised agreement for review.
On 4 November 2020, Andrew Case sent Mr Gershenoff an email with a number of comments on the draft agreement and a revised version of the Branded Product Distribution Agreement.
On 17 November 2020, Mr Gershenoff responded to the email with comments (it is not clear from whom) indicating whether Hytorc agreed to Torc Solutions' requested changes or Hytorc's position on the changes requested, some of which were more favourable to Torc Solutions than Hytorc's previous position.
On 24 February 2021, Andrew Case sent Mr Gershenoff an email which stated "[p]lease see attached mark up with some minor amendments. It looks like we are just about there now." Torc Solutions' proposed amendments included changes to amend the termination clause to provide that the Branded Product Distribution Agreement could be terminated by either party by giving six months' written notice.
Also on 24 February 2021, Andrew Case sent Mr Gershenoff a separate email advising that Torc Solutions' insurance broker, Gallagher, was opposed to Hytorc's request to be noted as an "Additional Insured" under Torc Solutions' general liability, workers' compensation and employer liability insurance policies, and that their insurer, QBE, might not agree to the indemnification clause, which was a 'hold harmless' clause.
On 17 March 2021, Mr Gershenoff sent Andrew Case a further revised version of the Branded Product Distribution Agreement, which accepted Torc Solutions' changes to the termination clause and included further amendments to the insurance clause, to require Hytorc to be noted as an "Interested Party" on Torc Solutions' insurance policies.
On 22 March 2021, Andrew Case sent Mr Gershenoff an email advising that Torc Solutions' insurer would not agree to the indemnification clause or to waive its right of subrogation.
On 28 March 2021, Andrew Case sent Mr Gershenoff a further email advising that the insurer would not agree to the 'hold harmless' clause, but if that could be removed, Hytorc could be added as an "Interested Party".
On 30 March 2021, Mr Bender sent an email to Andrew and Adrian Case (copied to Mr Gershenoff) noting that Hytorc also wished to resolve "this last issue", which was the 'hold harmless' clause.
On 6 April 2021, Andrew Case sent an email to Mr Bender (copied to Adrian Case and Mr Gershenoff) with an endorsement to be added to Torc Solutions' insurance policy, which endorsement was to amend the definition of "Principal". It appears that this was intended to address Hytorc's request to be named as an "Interested Party" under Torc Solutions' insurance policy.
On 9 April 2021, Mr Bender replied:

[58]

Torc Solutions called three lay witnesses, Andrew Case, Adrian Case and Ms Duff. Further, Torc Solutions called and relied on the evidence of two experts in relation to loss and damage: Mr Justin Ganly, the Managing Director of Deep End Services, an economic research and property consulting firm, and Mr John Irving, with professional experience in accounting and finance.
Torc LLC and Hytorc called four lay witnesses, Mr Gershenoff, Mr Ricca, Mr Junkers and Mr Bender. In addition, Torc LLC and Hytorc called Mr Clifford Francis, formerly the Growth Manager of Hytorc South Pacific and currently a commission-based sales agent for Hytorc South Pacific based in Victoria and Tasmania. Finally, Torc LLC and Hytorc relied on an expert report of Mr Euan Morton, an Economist, in relation to Torc Solutions' loss and damage.
All of the witnesses were required for cross-examination.
Torc Solutions submitted that its lay witnesses were forthright witnesses, whose evidence was congruous with contemporaneous records, and who were responsive to questions in cross examination. On the other hand, Torc Solutions submitted, the evidence of the witnesses called by Hytorc and Torc LLC should be treated with caution.
More specifically, Torc Solutions submitted that Mr Gershenoff was dishonest in his dealings with Torc Solutions, that his evidence was carefully constructed and self-serving and, at times, obfuscatory or untrue. Torc Solutions was critical of Mr Gershenoff's involvement in the provision of some late discovery, being documents which were discovered after the first part of the trial was adjourned, and submitted that the Court should be sceptical of Mr Gershenoff's explanation for the late discovery.
In relation to Mr Junkers, Torc Solutions submitted that his evidence shed little light on material matters and was, in many instances, self-serving. On the other hand, Torc Solutions submitted that Mr Ricca presented as a more reliable witness, whose evidence resembled "the truth of things". No specific issues were raised in relation to Mr Bender's evidence. Torc Solutions' objections to the evidence of Mr Francis and Mr Morton are dealt with below, in the section on Loss and Damage.
Torc LLC and Hytorc conceded that Andrew Case was an honest witness who gave frank evidence and made numerous appropriate concessions. They submitted, however, that Andrew Case was not a disinterested witness and his evidence sought to convey the narrative that he considered best advanced Torc Solutions' case. Similarly, Torc LLC and Hytorc accepted that Adrian Case was an honest witness, but he was reliant on Andrew Case to a large degree in relation to Torc Solutions' dealings with Torc LLC and Hytorc. Finally, Torc LLC and Hytorc acknowledged that Ms Duff presented as an honest, direct and helpful witness, with strong attention to detail.
In my assessment, each of the witnesses who gave evidence did so the best of their recollection. Having listened to and observed the witnesses, I consider that each of the witnesses was truthful and honest. Some of the witnesses were forthright in their evidence, but I reject that any of the witnesses were dishonest or deliberately obfuscatory. The key issues that fall for determination concern the proper construction of the Distributor Agreement, which is in writing, and whether the matters that were discussed at the Teleconference, which was recorded and transcribed, gave rise to a binding agreement or conveyed misleading or deceptive statements. The resolution of those matters do not require me to accept the evidence of one witness over another. However, Torc Solutions also submitted that the evidence of Torc LLC and Hytorc's witnesses in relation to certain matters, such as the Termination Strategy and "Hytorc's Conditions" (as defined in paragraph 133 below), should not be accepted.
Senior counsel for Torc LLC and Hytorc frankly conceded that the respondents were guilty of two matters, first, closing Torc LLC and, secondly, being slow to implement the Branded Product Distribution Agreement after it was executed. It is fair to say that Torc Solutions was disappointed on hearing the news about Torc LLC's closure and because of the way in which they discovered the news. Before the closure of Torc LLC, Torc Solutions had been one of several distributors of Torc LLC products and Torc LLC manufactured enough product to ensure it could meet demand across the globe. Torc Solutions was no doubt frustrated by the manner in which Hytorc went about implementing the Branded Product Distribution Agreement. However, Torc Solutions behaved with a sense of entitlement, having had a favourable experience with Torc LLC under the Distributor Agreement, and was a "high maintenance account", to use Mr Junker's description. For the reasons set out below, I accept that Hytorc was committed to the Branded Product Distribution Agreement and to supplying home branded tools to Torc Solutions, and I accept the evidence of Hytorc's witnesses on those matters. However, matters ultimately did not progress as Hytorc had hoped or intended, and it eventually decided to terminate the Branded Product Distribution Agreement.

[77]

Torc Solutions rightly conceded that the Hytorc Agreement was not formed at the Teleconference. As the respondents submitted, the discussion that occurred at the Teleconference in relation to home branded tools fell within the third class of case identified in Masters v Cameron (1954) 91 CLR 353; [1954] HCA 72 at 360-361 (Dixon CJ, McTiernan and Kitto JJ). That is, the parties did not intend to make a binding arrangement in relation to Torc Solutions branded tools until a formed agreement was executed.
As to the parties subsequent conduct, Torc Solutions relied on the fact that, after the Teleconference, Torc Solutions sent purchase orders, initially to Torc LLC and later to Hytorc, which stated "Terms and conditions as per Distribution Agreement dated 22nd March 2016." Prior to the Teleconference, Ms Duff had set up a template purchase order with the words, "Terms and conditions as per the Distribution Agreement dated 22nd March 2016." Ms Duff said that, after the Teleconference, she continued to issue purchase orders to Torc LLC and every purchase order included those words, until the Branded Product Distribution Agreement came into effect. However, Torc Solutions did not lead any evidence to suggest that Ms Duff was directed to do so for a particular reason. Rather, she merely continued on as she had before the Teleconference.
In addition, Torc Solutions relied on a series of facts, which were admitted by Torc LLC and Hytorc in their Defence, regarding the supply of tools to Torc Solutions. The admissions included that Torc Solutions placed purchase orders to Torc LLC until March 2020 and thereafter placed purchase orders with Hytorc. Further, that Torc LLC issued tax invoices to Torc Solutions until March 2020 and Hytorc issued tax invoices to Torc Solutions thereafter. Finally, that Torc Solutions liaised with Hytorc representatives in relation to pricing and account-related issues and that Torc Solutions made payments (at Hytorc's request and direction) to Hytorc. Torc Solutions submitted that there necessarily, and logically, had to have been an ongoing contractual relationship between Torc Solutions and Hytorc.
In my assessment, the conduct of the parties after the Teleconference does not evidence an agreement between the parties in relation to the supply of Torc Solutions branded tools. The overall facts do not evidence a tacit understanding between the parties capable of proving all the essential elements of an agreement, such as pricing and applicable discounts. The conduct relied upon reflected the reality of the situation, that Torc LLC was closing down and everything had to transition to Hytorc, until the parties executed the Branded Product Distribution Agreement. After the Teleconference, Torc Solutions submitted purchase orders for Torc LLC stock to Torc LLC and then to Hytorc, which orders were filled by Torc LLC or Hytorc. Hytorc took over issuing invoices to Torc Solutions and directed Torc Solutions to make payment to a Hytorc bank account.
Furthermore, I do not accept that the Variation Agreement, as pleaded by Torc Solutions, was formed at the Teleconference. At the Teleconference, Torc Solutions was told about the closure of Torc LLC globally and Torc LLC and Hytorc said that they did not want to leave Torc Solutions high and dry. Apart from the discussion about the private label arrangement, a great deal of the Teleconference involved Torc Solutions venting their frustrations about Torc LLC, and Hytorc's representatives trying to placate them. The discussion about phasing out Torc LLC was limited and there was no detail about what it would involve. There was no discussion at the Teleconference regarding the terms and conditions of any arrangement going forward, and certainly none capable of giving rise to a binding agreement between the parties.
After the Teleconference, Torc Solutions submitted purchase orders for Torc LLC stock to Torc LLC and then to Hytorc. Hytorc took over issuing invoices to Torc Solutions and directed that Torc Solutions make payment to a Hytorc bank account. Orders were filled by Torc LLC or Hytorc. I accept the respondents' submission that a binding contractual arrangement arose when Torc Solutions submitted a purchase order and Torc LLC or Hytorc accepted the order by issuing a sales invoice. However, there was no ongoing contractual obligation to supply.
Contrary to Torc Solutions' submissions, the conduct of the parties cannot be construed as the parties adopting or agreeing that the terms of the Distributor Agreement would continue to apply to the arrangements between the parties. Torc Solutions submitted that the operation of the Distributor Agreement continued exactly as before, because Torc Solutions continued to order tools as it had under the Distributor Agreement and the parties continued their relationship and behaviour entirely as before the Teleconference. The Distributor Agreement was between Torc Solutions and Torc LLC. Torc Solutions did not explain how the terms of an agreement could be incorporated simply by a unilateral reference to them on purchase orders (see paragraph 113 above). Torc Solutions did not identify any particular conduct of Hytorc by which it said that Hytorc adopted the Distributor Agreement, save for an email from Mr Gershenoff on 6 April 2020, which I come to next. Torc Solutions merely submitted that the only available terms of contract were that of the Distributor Agreement and, it followed that the terms of the Distributor Agreement were incorporated into the new agreements.
On 6 April 2020, Ms Duff sent an email to Mr Gershenoff in relation to pricing, which stated:

[85]

When Torc Solutions was told about the closure of Torc LLC globally, a Hytorc distributorship was not on the table. Hytorc already had a presence in Australia - Hytorc South Pacific. A private label agreement was the only option on the table for an ongoing distributor relationship with Hytorc.
By late April 2021, the negotiations in relation to the Branded Product Distribution Agreement had been ongoing for nearly 12 months. Hytorc took longer than expected to circulate the first draft of the Branded Product Distribution Agreement (four months, instead of two weeks). The progress of the negotiations of the agreement was slow on both sides, with drafts going back and forth and weeks passing in between. However, by mid-April 2021, as Torc Solutions acknowledged, the process was nearly complete, and the parties were close to reaching an agreement.
As Andrew Case acknowledged, at the time of Hytorc's Threat, Torc Solutions was managing to fulfil most orders with Torc LLC stock or by Hytorc reworking Torc LLC stock. However, Torc Solutions had been waiting to communicate with resellers in relation to the closure of Torc LLC and it said the resellers were getting anxious, and Torc LLC was starting to run out of stock.
As Beach J observed in AHG WA, at 3365, "people often lack some freedom of choice in commercial situations. But economic duress requires a different assessment". The tactic used by Mr Gershenoff in the negotiations with Torc Solutions was legitimate commercial pressure. There was nothing untoward in Mr Gershenoff saying that Hytorc would not commence supply of home branded products until the agreement was signed. He did not say that Torc Solutions had to sign a particular draft, or an agreement with a particular clause, but that the agreement had to be signed. By that time, the negotiations had been dragging on and no agreement had been signed. Andrew and Adrian Case said that they felt they had no alternative but to execute the Branded Product Distribution Agreement. In my assessment, they did so out of commercial necessity. Torc Solutions failed to establish their claim of economic duress.

[96]

[14] In determining whether there has been a contravention of s 52 of the Trade Practices Act, it is necessary to determine "whether in the light of all relevant circumstances constituted by acts, omissions, statements or silence, there has been conduct which is or is likely to be misleading or deceptive". The term "conduct" is to be understood according to its definition in s 4(2)(a) and (b) of the Trade Practices Act, which includes a reference to "refusing to do any act". That, in turn, includes a reference to "refraining (otherwise than inadvertently) from doing that act".

[15] For conduct to be misleading or deceptive it is not necessary that it convey express or implied representations. It suffices that it leads or is likely to lead into error. ...

[16] The circumstances in which silence or non-disclosure of information can be misleading or deceptive are various. The understanding of the place of silence or non-disclosure in the characterisation of conduct as misleading or deceptive was affected, in early decisions on s 52, by the view that the section was concerned with misrepresentations that would have been actionable under the general law. That view was linked to the proposition, expressed in Taco Co of Australia Inc v Taco Bell Pty Ltd, that conduct could not be misleading or deceptive for the purposes of s 52 unless it conveyed a misrepresentation. It was also linked to the proposition that at general law "mere silence, with regard to a material fact, which there is no legal obligation to divulge, will not avoid a contract, although it operate as an injury to the party from whom it is concealed". In the early development of the law about misleading or deceptive conduct, there were rather cautiously expressed views about the role of silence, albeit the importance of the statutory words was acknowledged.

[17] The 1992 decision of the Full Court of the Federal Court in Demagogue Pty Ltd v Ramensky represented what has been described accurately as "an emphatic acknowledgement ... of the unique nature of the statutory prohibition". The Full Court upheld the decision of the primary judge that a vendor of land had created a clear but erroneous impression in the purchasers that there was nothing unusual concerning access to the land and, in particular, had been silent as to the necessity of a grant of a licence by a statutory authority to enable such access.

[18] Gummow J, who wrote the leading judgment and with whom Black CJ and Cooper J agreed, said:

[108]

I reject the allegation that, at the Teleconference or by their subsequent conduct, Hytorc or Torc LLC represented that, following the closure of Torc LLC, there would be a private label arrangement between Hytorc and Torc Solutions under which Hytorc would supply Torc Solutions branded tools.
At the Teleconference, the representatives of Hytorc and Torc LLC conveyed that a private label arrangement was an option, but any arrangement had to be put in writing and agreed between the parties. The parties negotiated and entered into the Branded Product Distribution Agreement. The parties' subsequent conduct in relation to Torc Solutions branded products has to be seen in the context of that agreement. It may be accepted that Hytorc represented that it intended to comply with its obligations under the Branded Product Distribution Agreement. However, Torc Solutions did not explain how steps taken by Hytorc to comply with its obligations under that written agreement were capable of constituting a separate representation that there would be a private label arrangement between Hytorc and Torc Solutions. There was nothing in the surrounding circumstances that would have led a reasonable person in Torc Solutions' position to believe that Hytorc or Torc LLC represented that there would be a private label arrangement between Hytorc and Torc Solutions under which Hytorc would supply Torc Solutions branded tools.
I also reject the allegation that, at the Teleconference or by their subsequent conduct, Hytorc or Torc LLC represented that there would be the Transition Arrangements whereby Hytorc would continue to supply Torc Solutions with Torc LLC branded products as the parties transitioned across to home branded tooling. Before the Teleconference, Torc Solutions had been told about the closure of Torc LLC globally. At the Teleconference, Torc LLC and Hytorc said that they did not want to leave Torc Solutions high and dry. The discussion about the interim period or any arrangement while they transitioned to a private label arrangement was limited. The parties must have appreciated that Torc LLC stock would eventually run out. After the Teleconference, Torc Solutions submitted purchase orders for Torc LLC stock to Torc LLC and then to Hytorc, which orders were filled by Torc LLC or Hytorc. Hytorc took over issuing invoices to Torc Solutions and directed payment to be made to a Hytorc bank account. There was no ongoing contractual obligation to supply. Any contractual obligation to supply arose under individual purchase orders and invoices, which set out the terms as to pricing and applicable discounts, and must have been subject to Torc LLC stock availability. There was nothing in the surrounding circumstances that would have led a reasonable person in Torc Solutions' position to believe that Hytorc or Torc LLC represented that Hytorc would supply Torc Solutions with Torc LLC branded products as the parties transitioned across to home branded tooling.

[110]

Torc Solutions contended that, at the Teleconference and by their subsequent conduct, Hytorc and Torc LLC represented that Torc Solutions would be one of a number of distributors with whom Hytorc would enter into private label arrangements. Torc Solutions pleaded that the representation was not made on reasonable grounds because, at the time of the representation was made, neither Hytorc nor Torc LLC knew how the private label arrangements were going to work or which or how many Torc LLC distributors would enter into those arrangements. Torc Solutions submitted that, at the time of the Teleconference or any time thereafter, the private label arrangements were just an idea that Hytorc had formulated. Torc Solutions submitted that Hytorc had not undertaken a feasibility or viability analysis, and had no firm program or idea on how it would work in mind.
Torc Solutions further pleaded that, at the time of or any time before the execution of the Branded Product Distribution Agreement, Hytorc and Torc LLC did not inform Torc Solutions that: (a) throughout January-July 2020, Mr Gershenoff had discussed the planned closure of Torc LLC with most Torc LLC distributors; (b) at the start of April 2020, only 30 out of 76 distributors were identified as suitable to be offered private label arrangements; (c) as at 25 August 2020, Mr Gershenoff had only identified eight distributors he considered suitable for a private label arrangement; and (d) immediately prior to the presentation of the Branded Product Distribution Agreement, only one distributor other than Torc Solutions was willing to go forward with a private label arrangement.
By late March 2020, Hytorc had prepared a list of Torc LLC distributors, which it had divided into distributors who were going to be phased out, distributors who would become a Hytorc customer and distributors who would be offered a private label arrangement. The list was updated from time to time. By July 2020, Mr Gershenoff had discussed the private label option with most of the Torc LLC distributors that were earmarked for a private label option. However, by the time of a meeting with Mr Junkers on or around 25 August 2020, Mr Gershenoff and Mr Ricca were of the view that many of the distributors were not "warming" to the idea of a private label option. They did not know why, but they suspected that it was because the distributors liked the casual arrangements that they had had with Torc LLC and were not prepared to commit to Hytorc's expectations, which were that they would pursue leads and generate sales to drive the brand.
Following the meeting on or around 25 August 2020, Hytorc decided to be more strategic in their approach and, rather than a blanket approach of offering the private label option to all of the Torc LLC distributors, they identified eight other Torc LLC distributors with strong sales ability to focus on. The more strategic approach was confirmed in an email that Mr Junkers sent to Mr Gershenoff and Mr Ricca on 26 August 2020 which confirmed Hytorc's commitment to the private label option at that time.
Of the eight Torc LLC distributors that had been identified under the more strategic approach, two distributors already had an existing private label arrangement with Torc LLC, which was undocumented, and their arrangement with Hytorc continued as it had under Torc LLC. One other Torc LLC distributor executed a private label agreement. In the result, in addition to Torc Solutions, three Torc LLC distributors had entered into a private label arrangement with Hytorc, albeit that a formal agreement was only executed by Torc Solutions and one other distributor.
The statements made at the Teleconference that Torc Solutions relied on were, first, a statement made by Mr Junkers that Torc Solutions was "not going to ... be the only ones that we make this arrangement with". Secondly, a statement made by Mr Ricca that "I'll be happy to work with Brian on the backend to ensure the agreement is fair, it's consistent with what we're offering other people".
I reject the allegation that, at the Teleconference and by their subsequent conduct, Hytorc and Torc LLC represented that Torc Solutions would be one of a number of distributors with whom Hytorc would enter into private label arrangements. Prior to the Teleconference, Torc Solutions had been told that Torc LLC was closing globally. A reasonable person in Torc Solutions' position would not have believed that the statements made at the Teleconference, which occurred a short while later, were a representation that there definitely would be a number of private label arrangements. For one thing, Mr Ricca referred to Hytorc making offers to other Torc LLC distributors, which a reasonable person would assume may or may not result in a binding arrangement.
I reject Torc Solutions' submission that, in all of the circumstances, there was a reasonable expectation that Hytorc would disclose the status of its negotiations with the other Torc LLC distributors to Torc Solutions. One would expect such matters to be commercially sensitive, to all concerned, and to remain confidential. A potential distributor and Hytorc would each expect the other to maintain confidentiality in relation to their negotiations, for fear that other potential distributors might use the information to try to negotiate more favourable terms or undercut other distributors. Torc Solutions did not suggest that they had intimated to Hytorc that they were proceeding on the basis that there would be a number of private label arrangements and would not have gone ahead otherwise.
Hytorc's witnesses said, and I accept, that Hytorc was committed to and believed the private label option would work. Mr Junkers said that Hytorc was fully invested in the private label concept and he believed that it presented great opportunities, including for Torc Solutions. Hytorc already had a private label arrangement with two other distributors, which had been on foot since approximately 2008 and were on foot at the time of the trial. Torc LLC also had private label arrangements with three other distributors, two without any written contract. Although Hytorc eventually realised that it was not going to work with Torc Solutions, that was for different reasons, which are addressed below.
Hytorc had not prepared an analysis on the viability of the private label option, but as Mr Junkers said, it was not a formal company and did not generally prepare return on investment analyses and the like. Hytorc had a "feel" that it would work and they were prepared to try it. Mr Gershenoff frankly conceded that he was the sort of person to dive in and he just "went for it". Mr Junkers said that, while there was a change to a more strategic approach in August 2020, he did not consider that it changed his view about the prospects of success of the private label option.
I am satisfied that Hytorc was committed to the private label option with Torc Solutions and wanted it to be a success. Mr Junkers owned the business and had an interest in making it a success. Mr Ricca had an interest in making the private label option a success, because Hytorc's success was one of his responsibilities and key performance indicators. Mr Gershenoff also had an interest in making it a success - the Torc LLC business which he had helped to build was being closed down, and the private label option was a way to fold part of that business into the Hytorc business and secure his future at Hytorc.

[114]

In February 2020, Mr Ricca had discussions with the Hytorc engineering team about the conversion of the Hytorc Versa and Edge tools for private label by having a pocket engineered into the tools to enable a heavy duty sticker to be applied.
By 15 May 2020, Hytorc's engineering department had on their docket to produce blank Versa and Edge tools, but not blank MXT and XLCT tools. The conversion of the Hytorc Versa and Edge tools was given priority, but required a whole new design to have an inbuilt pocket to house a private label sticker. The MXT and XLCT designs already had a pocket. The discussions at this time revolved around the idea of labelling blank TTS/MXT and TTL/XLCT tools with customised engraving or a sticker, so that a redesign of the TTS/MXT and TTL/XLCT tools was not required. The engineering team were waiting for the 'go ahead' to proceed.
By April 2021, the engineering team confirmed that everything was ready, from the engineering side, for the conversion of the Versa and Edge tools to private label. In addition, the artwork for the stickers was being reviewed before the vendor was asked to run product samples.
In relation to TTS/TSS tools, Ms Cindy Norona, Hytorc's International Customer Support Manager, who was allocated to Torc Solutions' account, confirmed in an email that there had been a meeting, in about August 2021, in which the engineering team had been told that they needed to do the shop drawings for the TTS-3 tools. There was no evidence that the shop drawings were completed.
Mr Gershenoff, who had primary responsibility for the Torc LLC phase out and private label arrangements with Torc LLC distributors, said that he was having ongoing discussions and receiving updates from the engineering team throughout 2020 and into 2021 with respect to mainly the Versa and Edge conversion. There was no evidence about specific steps that had been taken in relation to MXT and XLCT tools, although as already mentioned, there had been discussions about labelling blank TTS/MXT and TTL/XLCT tools with customised engraving or a sticker.
In response to Andrew Case's email of 14 April 2021 regarding the naming conventions (see paragraph 74 above), Mr Gershenoff sent the following email to Mr Junkers and Mr Ricca, copying Hytorc's engineering and artwork departments regarding labels:

[122]

And so, prior to the execution of the Branded Product Distribution Agreement, Mr Junkers had expressed a preference to prioritise the depletion of redundant TORC LLC tools and Mr Gershenoff agreed that Hytorc could push out having Torc Solutions branded inventory ready while they depleted the existing Torc LLC stock. As will be seen, when Torc Solutions enquired about lead times and stock availability for private label tools, Hytorc responded by providing details of Torc LLC or Hytorc equivalent tools that would be reworked and supplied as unbranded tools with the Torc Solutions model number engraved on the side or to which a private label sticker could be applied. The majority of stock ordered by Torc Solutions between May and December 2021 was for Torc LLC stock which, as Andrew Case explained, was driven by orders from Torc Solutions' resellers.
In relation to specific orders for Torc Solutions branded products, the first enquiry was made on 5 May 2021, around the time Torc Solutions executed the Branded Product Distribution Agreement, and was about the "lead time" for the "#4 size tool", being the private label equivalent of Hytorc's Versa tool. Mr Gershenoff advised Ms Duff that the lead time would probably be around four weeks, that he would put together a list of inventory for Torc Solutions, and that the tool would have a pocket to allow for stickers. Mr Gershenoff also confirmed in response to an email from Andrew Case that he already had the art department working on the manuals.
On 6 May 2021, Ms Duff emailed Ms Norona to ask if Torc Solutions could offer a TSZ option and, on 8 May 2021, Mr Gershenoff confirmed that they could.
On 7 May 2021, Torc Solutions submitted purchase order TS00002040 for three TSZ-4 tools and associated links. This was the first purchase order for Torc Solutions branded products.
Also on 7 May 2021, Mr Gershenoff advised Torc Solutions that his next step was working with Hytorc's product development and procurement team to have everything needed to support Torc Solutions and asked Torc Solutions to provide a three year forecast of tool sales to ensure Hytorc had everything required with minimal or no delay. Mr Gershenoff's email to Andrew and Adrian Case and Ms Duff said:

[130]

Mr Gershenoff confirmed that the TSZ-4's were coming at the end of the week or beginning of the next week and the TSZ-8's were due "next week", but that they did not yet have the stickers.
On 7 June 2021, Ms Duff had also sought an update on the first purchase order, for the three TSZ-4 tools (the rebadged Versa tools). Ms Norona replied that she believed that they were getting some "in two weeks", but she had to check if they were going to be the private label version because the stickers were three or so weeks away. Ms Duff replied to Ms Norona to say Torc Solutions was happy to receive the tools as blanks, without labels, as they needed them as soon as possible as the customer was "chasing hard".
Ms Norona sought and obtained Mr Gershenoff's approval to have the tools engraved with the Torc Solutions model number because, as Mr Gershenoff had already noted, the stickers were not ready. From this point, Hytorc engraved the tools, with the Torc Solutions model number, before they were shipped because the stickers were not ready. Torc Solutions did not object at the time, because they wanted the stock and they had their own labels which they could place over the engraving. Engraving was only meant as an interim solution and, as will be seen, Mr Gershenoff put a stop to it in late 2021 because he wanted all private label tools to have stickers.
On 23 June 2021, Ms Duff enquired about a backorder of six TTS size 3 tools, stating that she assumed they would be coming through as TSS-3's given there were no TTS-3s, and she also enquired about the lead time on a TSS-SA3, which was a Hytorc 3MXT-SA equivalent. Ms Norona responded, on 8 July 2021, to advise that Hytorc was reworking the MXT tools (the TTS functional equivalent) for Torc Solutions and the six TTS size 3 tools on backorder were about five weeks away. Ms Duff confirmed that Torc Solutions was content for the tools to be either TTS-3 or TSS-3, whichever was faster. The re-worked MXT tools were shipped to Torc Solutions in early August 2021.
On 24 June 2021, Torc Solutions had submitted purchase order TS0002128 for a TSZ size 8 Tool, which Ms Duff confirmed was to be the new TSZ branded tool and not the TTZ tool. This was the second purchase order for a Torc Solutions home branded tool. On 26 June 2021, Ms Norona had advised that the TSZ size 8 tool was not in stock and she would talk to "the team" about the new names and part numbers. On 2 July 2021, Ms Duff had sought an update on purchase order TS00002128 saying they were "[h]appy to have it sent with no marking/sticker and engraving if that helps".

[134]

In October 2021, Ms Norona left Hytorc and Torc Solutions experienced further delays in dealings with Hytorc. For example, following an enquiry on 20 October 2021, Ms Duff was initially told there was no TTS size 3 tools in stock, only to be told by Mr Michael Fried a few days later that Hytorc had 51 units of the TTS-3 available after Andrew Case escalated the issue with Mr Gershenoff. Mr Fried was a senior Hytorc employee who had moved to the Customer Service team in October 2021 to assist the team, which was understaffed. Mr Gershenoff put this error down to the fact that there was a gap in experience in the sales team at the time, following Ms Norona's departure.
On 26 October 2021, Mr Fried raised with Mr Gershenoff that Torc Solutions had a TTL-2 on backorder and asked if Hytorc was filling the order as there was none in Hytorc's inventory. Mr Gershenoff confirmed that the order needed to be filled and raised the alternative of stripping and re-anodising Hytorc's XLCT, which was the functional equivalent of the TTL-2. Mr Gershenoff then found out that Hytorc's Procurement team was waiting for an order of 15 TTLs. Mr Gershenoff advised the Sales and Procurement team to use a TTL that had been returned by a customer to fill Torc Solutions' backorder and that the new order for 15 TTLs that Hytorc was awaiting should be left unbranded for the placement of a Torc Solutions branded sticker.
By December 2021, Torc Solutions had placed a handful of purchase orders and back orders for Torc Solutions branded tools, but each order was for one, two or three units of tools at a time. In addition, the lead time to re-work Hytorc tools was prolonged because, by this time, Mr Gershenoff said he did not want the tools to be engraved with Torc Solutions' model number, he wanted a Torc Solutions sticker or label to be affixed to the tools. Ms Norona's suggestion to engrave the tools was acceptable an interim solution, but Mr Gershenoff said he wanted all private label tools to have stickers, unless Torc Solutions wanted to save time and confirmed that they were content for Hytorc to engrave the tools.

[139]

Mr Ricca wanted Torc Solutions to be a "stocking distributor", meaning that Torc Solutions would hold enough product to meet orders directly from their own stock. As far as Mr Ricca was concerned, it was up to Torc Solutions as to how much stock they chose to have, but he wanted to see a commitment from Torc Solutions, and he thought that that would also assist them to better manage lead times with their customers.
After Mr Ricca was provided with Torc Solutions' 3 year forecast, which had already been provided by Torc Solutions and was forwarded on to Mr Ricca, he sent a further email to Mr Gershenoff, on 18 December 2021, repeating that he wanted to see a stocking commitment. Mr Ricca explained that he wanted a stocking commitment for Torc Solutions to show that they were committed and were not expecting Hytorc to take all of the risk of carrying stock.
Mr Gershenoff said he raised the need for a minimum order (which he also called a "demand report") with Torc Solutions on several occasions. On each occasion, Andrew Case's response would be that Hytorc should produce the tools and hold them at Hytorc's expense. Andrew Case denied ever being asked to put in a "demand report" and said that, had he been asked to do so, he would have resisted it. He explained that minimum orders were not required under the Branded Product Distribution Agreement and it would not have been viable for Torc Solutions.
In late 2021 and early 2022, there were internal discussions within Hytorc, between Mr Gershenoff, Mr Ricca, Mr Junkers and Mr Bender, in relation to the Torc Solutions branded product arrangement and home branding more broadly. Hytorc was aware that Torc Solutions were not prepared to put in a demand report or commit to a minimum order. However, dealing with ad hoc private label orders, as they had been doing, was not sustainable for Hytorc.
In mid-February, Hytorc decided to terminate the relationship with Torc Solutions. On 1 March 2022, Hytorc sent the letter by way of Notice of Termination (see paragraph 89) purporting to terminate the Branded Product Distribution Agreement for Torc Solutions' failure to comply with its insurance obligations under clause 4.5.
After the Notice of Termination, Hytorc agreed to supply Torc Solutions with tools for six months. However, Hytorc ceased to supply tools to Torc Solutions after 10 June 2022, when it received a letter from Torc Solutions' solicitors foreshadowing litigation.

[143]

From 5 May 2021 to February 2022, the purchase orders and back orders submitted by Torc Solutions for home branded tools were for one, two or three units at a time. By February 2022, a total of 32 private label tools had been ordered. Ms Duff accepted that all but one of the orders placed were filled, albeit as blank tools which were engraved or to which a private label sticker could be affixed.
In the same period, from 5 May 2021 to February 2022, Torc Solutions placed approximately 93 purchase orders for roughly over 100 Torc LLC tools and over 1000 accessories. Adrian Case said that, in most instances, Torc Solutions ordered Torc LLC stock because that was all Hytorc could make available.
However, Torc Solutions' orders in that period were driven by customer and reseller demand and, as Ms Duff explained, the orders were time-sensitive. The supply of the unbranded or blank tools engraved with the Torc Solutions model number was initially meant to be a work around solution, and no complaint was made at the time. Torc Solutions explained that it agreed to allow orders for Torc Solutions branded products to be filled in this way to obtain the tools quickly. Hytorc and Torc LLC pleaded that Torc Solutions voluntarily elected to forego orders for home branded tools, and ordered unbranded tools or tools with Hytorc's or Torc LLC's branding which were in stock and could be shipped immediately. That is putting it too highly. As Torc Solutions said, it was prepared to accept blank or unbranded tools to which a sticker could be affixed because the orders were time sensitive.
Ultimately, Hytorc, by Mr Junkers, decided to adopt a blank tooling approach for the supply Torc Solutions branded tools, whereby Hytorc would produce blank tools with a pocket where a branded sticker could be affixed to the tools. Hytorc's position evidently was that it could meet its obligations to furnish home branded tools under the Branded Product Distribution Agreement by manufacturing a tool from scratch or supplying a blank or re-worked tool which Hytorc had manufactured with Torc Solutions' name or model number marked or shown on the tool. Torc Solutions did not put forward a cogent reason why that would not have complied with the Branded Product Distribution Agreement.
While Hytorc sought to comply with the Branded Product Distribution Agreement by providing blank or re-worked tools with Torc Solutions' name engraved or to which a sticker could be affixed, I am satisfied that Hytorc was otherwise taking steps which were consistent with placing itself in a position to supply Torc Solutions branded products under the Branded Product Distribution Agreement. I accept Torc Solutions' submission that, immediately before the execution of the Branded Product Distribution Agreement, Hytorc had not decided whether it intended to meet performance of the impending Branded Product Distribution Agreement by re-labelling existing inventory, or by producing blank tools and using stickers (or possibly, engraving). By late 2021, Hytorc had not produced Torc Solutions branded products or stickers for any of the Torc LLC distributors that had come across under a branded product distribution agreement. However, I reject the allegation that Hytorc did not intend to create and supply Torc Solutions branded tools for the following reasons.
Hytorc had instructed the engineering team to prepare drawings for at least some of the tools. By April 2021, the engineering department had confirmed that everything was ready, from the engineering side, for the conversion of the Versa and Edge tools to private label. Further, the art department had been instructed to prepare artwork for stickers and manuals for at least some of the tools. Unlike the arrangements with the other Torc LLC distributors, clause 6.2 of the Branded Product Distribution Agreement required Hytorc to provide manuals for each tool. In August 2021, Hytorc provided a template of the TSX operations manual which referred to Torc LLC and included, on its cover, a picture of a redundant Torc LLC tool. Torc Solutions, rightly, regarded this as unsatisfactory. Mr Gershenoff referred to work that was being undertaken to prepare manuals, but ultimately the art department was waiting for pictures of the tools which were never produced, and he accepted that manuals were not completed.
While this state of affairs was less than satisfactory, I am satisfied that Hytorc was taking genuine, albeit slow, steps towards the production of Torc Solutions branded tools, stickers and manuals, which contradicted Torc Solutions' submission that Hytorc did not intend to create and supply Torc Solutions branded tools. Torc Solutions was, justifiably, critical of the fact that Hytorc was slow, and had not done more, sooner. Mr Gershenoff acknowledged that the conversion of the tools was taking a long time, but he said it required a lot of work on the part of the engineering and artwork teams. He conceded that he did not press or chase the work, but said that was because there was an abundance of Torc LLC stock which they wanted to deplete first.
Before the Branded Product Distribution Agreement was executed, Hytorc had decided to push out having Torc Solutions branded inventory ready while Torc LLC stock was depleted. The evidence of Mr Junkers, Mr Gershenoff and Mr Ricca, which I accept, was that Hytorc was committed to the private label arrangement at the time the Branded Product Distribution Agreement was executed and throughout 2021. Hytorc's preference and strategy to sell down Torc LLC stock, of itself or in conjunction with other facts, does not negate the fact that Hytorc intended to create and supply Torc Solutions branded tools and was working towards that.
Indeed, Torc Solutions' email to resellers shortly after the Branded Product Distribution Agreement was executed suggests they were more understanding and onboard with the strategy to deplete Torc LLC stock. In an email to resellers on 28 May 2021, updating them on the transition to Torc Solutions branded products, Torc Solutions said (emphasis added):

[145]

I also reject the allegation that Hytorc "resolved" that it would not commence to make home branded tools, and did not intend to make home branded tools, until Hytorc's Conditions were satisfied. Torc Solutions did not identify a specific "resolution" to the effect alleged. Torc Solutions did not identify a date on or specific manner by which, they said, Mr Gershenoff, Mr Ricca or Mr Junkers had "resolved" that Hytorc would not commence to make home branded tools for Torc Solutions until Hytorc's Conditions were satisfied. Mr Gershenoff denied that, from Hytorc's point of view, it was ever a condition of the private label arrangement, at the Teleconference or at any time before the signing of the Branded Product Distribution Agreement, that Torc Solutions had to submit a bulk order or minimum order for private label tools. Mr Gershenoff said that minimum order requirements had come up in internal discussions, but they decided against it and thought they would be able to meet requests without the need for minimum orders. At the Teleconference, Mr Ricca raised a plan to have minimum stock levels of certain tools and noted that the "unusual sized" tools, a term used by Andrew and Adrian Case during the Teleconference, would have a six to eight week lead time. This was telling because there was a trade-off between stock levels and lead times, which was behind Mr Ricca's subsequent desire to see a stocking commitment from Torc Solutions. This requires explanation.
When there were multiple Torc LLC distributors, inventory and lead times were not an issue. Torc LLC was able to manufacture and hold large inventories, because there was sufficient demand across a large distribution network to warrant it. However, small orders were uneconomic and there were also long lead times involved in manufacturing new products. According to Mr Gershenoff, he explained to Andrew and Adrian Case on multiple occasions that they should place minimum orders (of at least 15 or so tools) which would be more efficient and easier to get into production. Andrew Case rejected that, saying that Hytorc should produce the tools and hold them in stock at Hytorc's expense.
The Branded Product Distribution Agreement was silent on minimum stock orders and inventory. Mr Ricca explained in his evidence that, in December 2021 when he suggested that Torc Solutions should be a stocking distributor, he put forward that suggestion because he understood Torc Solutions' complaints were about lead times and a stocking commitment would assist Torc Solutions to manage its customers. It would also have assisted Hytorc's customer service team, whom Mr Ricca knew had been dealing with ongoing complaints from Torc Solutions. This was what Mr Gershenoff was attempting to explain when he said in his evidence that minimum orders were not an absolute requirement, but was "almost a requirement" to enabling Torc Solutions to get the tools, faster.
As time went on, Hytorc realised that a private label arrangement was more complicated than they had anticipated. Mr Gershenoff also explained that the initial excitement of the private label arrangements had turned into reluctance and hesitation, which meant that they spent a lot of time chasing issues with little conversion of tools.
Torc Solutions was critical of the fact that Hytorc did not have a formal plan to address the consequences of the closure of the 76 Torc LLC distributorships. As Mr Junkers said, it was not the sort of business that prepared return on investment analyses and the like. Hytorc had a "feel" that it would work and they were prepared to give it a try. As Mr Gershenoff said, he was the kind of person to dive in, and he "went for it".
Torc Solutions contended that Hytorc had not committed to making Torc Solutions branded tools until the making of home branded tools for all distributors, not only for Torc Solutions, was financially viable for Hytorc. It may be accepted that any business embarking on a commercial venture does so in the expectation that it will be financially viable. Mr Gershenoff accepted that financial viability is inherent in all business decisions. However, Mr Gershenoff said that there was no expectation or requirement that it would be financially viable from the start, but he expected that would happen in time.
Hytorc is a successful, global business. It had other private label arrangements with distributors, dating back to 2015, that were undocumented. It believed the Torc Solutions branded products would be viable, because it had other private label arrangements that had been viable, although admittedly they were different arrangements to the arrangement with Torc Solutions. By early 2022, Mr Gershenoff realised it was not going to be a viable business option without a stocking commitment or minimum orders from Torc Solutions. Until then, Hytorc was committed to the private label option and to making it a success. Further, Mr Gershenoff said, and I accept, that as at late 2021, Hytorc was prepared to supply blank or unbranded tools to which Torc Solutions' name could be added to the tools, even without a minimum order, but Torc Solutions would have had to expect lengthy lead times.
For completeness, Torc Solutions submitted that, without other private label arrangements, the representation that Hytorc intended to create and supply home branded tools to Torc Solutions, to the extent it was with respect to a future matter, was not made on reasonable grounds. This submission was related to the alleged representation that Torc Solutions would be one of a number of distributors with whom Hytorc would enter into private label arrangements, dealt with above. As mentioned above, the private label arrangement with Torc Solutions was not dependent on Hytorc having similar private label arrangements with other distributors. Hytorc was committed to the private label arrangement with Torc Solutions until they realised it was no longer financially viable.
Finally, Hytorc and Torc LLC pleaded that performance of the Branded Product Distribution Agreement was stifled, in the sense of being put on hold and therefore delayed, when Torc Solutions sought from July 2021 to renegotiate the terms of the agreement. Although it is strictly unnecessary to address this argument, it is rejected. In July 2021, Andrew Case proposed amendments to the insurance clauses (clauses 4.5 and 4.6) of the Branded Product Distribution Agreement, following which various emails and drafts were exchanged. Those communications did not suggest that the performance of the agreement was put on hold or was not required. Furthermore, the communications dealt with a discrete issue and did not "stifle" the performance of the agreement.
For the foregoing reasons, Torc Solutions has not established that any representation that Hytorc intended to create and supply home branded tools was false or that such supply of home branded tools was subject to Hytorc's Conditions.

[161]

Torc Solutions contended that, by the Termination Strategy, Hytorc devised and implemented a strategy to end the extant trading relationship between Torc Solutions and Hytorc and thereby avoid the obligations under the Hytorc Agreement, which was a 'forever agreement', to enable them to sell the remaining Torc LLC branded products to Torc Solutions and once Torc LLC branded products were sold to Torc Solutions, to assess the viability of creating and supplying Torc Solutions branded products and afford itself the option to terminate its trading relationship with Torc Solutions if it was not viable for Hytorc.
Torc Submissions' written closing submissions suggested that it "may be" that Hytorc's management "were not specifically concerned with just the 'forever' clause". Torc Solutions referred to a number of emails that suggested that Hytorc and Torc LLC were concerned about Torc Solutions filing a law suit against Torc LLC over the closure of Torc LLC. Torc Solutions submitted that this concern led Mr Bender to insert a clause into the Branded Product Distribution Agreement to make it clear that the previous agreement with Torc LLC was terminated and that neither party had any liability arising out of the previous agreement, although the agreement was misdescribed (see paragraph 122). This allegation was not pleaded. It was not clear what the Court was meant to make of this matter. In any event, there is nothing unusual about the clause inserted into the Branded Product Distribution Agreement.
Essentially, Torc Solutions' case was that it was imperative for Torc LLC and Hytorc to make a new arrangement with Torc Solutions (in substitution for the arrangements in the Distributor Agreement, the Variation Agreement and the Hytorc Agreement) which did not contain a 'forever' covenant and that would allow Torc LLC and Hytorc to terminate the new arrangement "at will" on short notice. However, as Torc LLC and Hytorc submitted, Torc Solutions asked for the termination clause in the Branded Product Distribution Agreement to be amended from an "at will" termination clause to a clause that provided that either party could terminate by giving six months' written notice.
Putting that to one side for the moment, Torc Solutions submitted that the Termination Strategy consisted of ensuring that Hytorc's dealings with Torc Solutions did not contain a 'forever' covenant and was on new terms, acceptable to Hytorc, to enable it to sell the redundant Torc LLC stock and give Hytorc an opportunity to see whether a private label arrangement with Torc Solutions would be viable for Hytorc and, if not, terminate the new arrangement.
The Termination Strategy is constructed on a false premise, namely, that the existing arrangement with Torc Solutions contained a 'forever' covenant. Mr Gershenoff, Mr Ricca, Mr Junkers and Mr Bender each gave evidence that they did not consider that the Distributor Agreement was a 'forever' agreement, meaning an agreement which Torc LLC could be held to 'forever'. Exiting the extant arrangement with Torc Solutions for that reason was not a decisive factor in Hytorc's decision making process.
The Torc LLC global business was closing down. A private distributorship with Hytorc was not on the table. A private label arrangement was the only option for Torc Solutions to have an ongoing relationship with Hytorc. If a new agreement could not be negotiated, the Distributor Agreement would come to an end and Hytorc (which was not a party to a written contract with Torc Solutions) would have no obligations to Torc Solutions. The parties set about to negotiate the terms of a new arrangement and entered into the Branded Product Distribution Agreement. Hytorc was committed to the private label option and believed that it could work.
For those reasons, Torc Solutions failed to establish that Hytorc devised and implemented the alleged Termination Strategy. Further, Torc Solutions failed to establish that Torc LLC or Hytorc engaged in conduct that was misleading or deceptive, contrary to s 18 of the ACL.

[183]

(a) The relevant standard is a statutory standard, which it is not limited by equitable doctrine: s 21(4)(a);

(b) The statutory conception of unconscionability is more broad-ranging than the equitable principles: Australian Securities and Investments Commission v Kobelt (2019) 267 CLR 1; [2019] HCA 18 at [83], [87]-[89] (Gageler J, as his Honour then was), [144] (Nettle and Gordon JJ), [295] (Edelman J);

(c) The determination of whether conduct is, in all the circumstances, unconscionable is required by s 22 to be informed by the numerous considerations specified in that section, each of which has the potential to bear positively or negatively on the characterisation of conduct as conduct that is or is not unconscionable, and each of which must be taken into account if and to the extent that it is applicable in all the circumstances: Kobelt at [83] (Gageler J); Productivity Partners Pty Ltd (t/as Captain Cook College) v Australian Competition and Consumer Commission (2024) 419 ALR 30; [2024] HCA 27 at [53] (footnote 21) (Gageler CJ and Jagot J);

(d) The s 22 factors are non-exhaustive. They provide "express guidance as to the norms and values that are relevant" to, and inform the meaning of, "unconscionable" in s 21(1) and its practical operation. These norms and values include "certainty in commercial transactions, honesty, the absence of trickery or sharp practice, fairness when dealing with customers, the faithful performance of bargains and promises freely made" and the protection of the vulnerable: Productivity Partners at [100] (Gordon J, with whom Steward J (at [282]), Gleeson J (at [314]) and Beech-Jones J (at [340]) agreed);

(e) The s 22 factors "assist in 'setting a framework for the values that lie behind the notion of conscience identified in [s 21]'". The s 22 factors "assist in evaluating whether the conduct in question is 'outside societal norms of acceptable commercial behaviour [so] as to warrant condemnation as conduct that is offensive to conscience'": Productivity Partners at [101] (Gordon J, referring to Stubbings v Jams 2 Pty Ltd (2022) 276 CLR 1; [2022] HCA 6, at [57]);

(f) The evaluation of the conduct in all the circumstances first requires close consideration of the facts: Kobelt at [217] (Nettle and Gordon JJ); Productivity Partners at [60] (Gageler CJ and Jagot J);

(g) Once the relevant facts have been identified and ascertained, assessing whether conduct in all the circumstances is to be characterised as unconscionable involves an evaluative judgment: Kobelt [47] (Kiefel CJ and Bell J) and [120], [122] (Keane J); Productivity Partners at [105] (Gordon J).

[184]

The crux of Torc Solutions' unconscionable conduct claim was that it effectively was forced to enter into the Branded Product Distribution Agreement, because of Hytorc's Threat and when Hytorc had Hytorc's Intention, against a background that made entering into the Branded Product Distribution Agreement, in all the circumstances, unconscionable. Torc Solutions relied upon the following factors by way of context to the claim that entering into the Branded Product Distribution Agreement was, in all the circumstances, unconscionable.
First, Torc Solutions alleged that Hytorc was in a dominant bargaining position because it supplied Torc LLC tools which were essential to the viability of its business. The Torc LLC business was being closed globally. It may be accepted that locating an alternative supplier was essential to the continuity of Torc Solutions' business. Torc Solutions led evidence that it had no alternative supplier to Hytorc, which Hytorc challenged. I accept that Hytorc was in a dominant bargaining position to the extent that it was a supplier of tools that were vital to the continuation of Torc Solutions' business because Torc Solutions did not have a viable alternative supplier.
Secondly, Torc Solutions alleged that the pressure that was applied by Hytorc's Threat was exerted and used against Torc Solutions, as a customer of Hytorc, as an unfair tactic. As I have already found, the pressure that was applied towards Torc Solutions in relation to the execution of the Branded Product Distribution Agreement was legitimate commercial pressure. I reject that it was an unfair tactic.
Thirdly, Torc Solutions alleged it could not have acquired identical or equivalent goods or services other than from Hytorc, which I have accepted.
Fourthly, Torc Solutions alleged that, at the time of the unconscionable conduct, there was a contract between Hytorc as supplier and Torc Solutions as customer for the supply of goods, namely, the Variation Agreement and the Hytorc Agreement. I have rejected that allegation. Relevantly, before the Branded Product Distribution Agreement was executed, Hytorc was under no contractual obligation to supply tools to Torc Solutions.
Fifthly, Torc Solutions alleged that Hytorc was not willing to negotiate the terms and conditions regarding Hytorc's right to terminate the supply arrangements and Torc Solutions in substance had no choice as to provisions within the Branded Product Distribution Agreement about that right. I reject that allegation. As previously mentioned, Torc Solutions requested an amendment to the Branded Product Distribution Agreement, to allow either party to terminate the agreement on six months' written notice. Hytorc agreed to that amendment, as well as other amendments requested by Torc Solutions in the course of the negotiations, which took place over a number of months and during which Torc Solutions had sought legal advice in the earlier stages of the negotiations.
Sixthly, Torc Solutions alleged that the effect of the Branded Product Distribution Agreement was that, instead of the Hytorc Agreement which contained the 'forever' covenant, Hytorc had the contractual right to terminate the Branded Product Distribution Agreement upon six months' written notice without cause and introduced an insurance requirement, which was not a requirement of the Hytorc Agreement. I have rejected the allegations that the Hytorc Agreement existed and that the Distributor Agreement contained a 'forever' covenant. I accept that the Branded Product Distribution Agreement included insurance clauses which did not exist under the Distributor Agreement. However, I am not satisfied that the clauses were unusual or onerous. As already mentioned, Torc Solutions led evidence that its insurer, QBE, had agreed to name Hytorc as an "Interested Party" on the policy and had also agreed to the terms of the Branded Product Distribution Agreement
Seventhly, Torc Solutions alleged that Hytorc had Hytorc's Intention, and did not supply Torc Solutions with Torc Solutions branded products as contemplated by the Hytorc Agreement, and acted in bad faith. I reject the allegation regarding Hytorc's Intention, that is, that Hytorc did not intend to supply Torc Solutions branded products for reasons previously given. Although Hytorc did not supply Torc Solutions branded products after the Branded Product Distribution Agreement, I have found that it took steps and intended to comply with its obligations to supply home branded products under the Branded Product Distribution Agreement.
Accordingly, the context relevant to the unconscionable conduct claim was that Hytorc was in a dominant bargaining position because it was the only viable supplier of tools that were essential to the continuation of Torc Solutions' business. However, I do not accept that it used its superior bargaining position to procure an outcome or position that was unfair to Torc Solutions. That circumstance and the legitimate commercial pressure that was exerted on Torc Solutions to execute the Branded Product Distribution Agreement, was not unfair or uncommercial conduct that offended societal norms of commercial dealing and constituted unconscionable conduct within the meaning of s 21 of the ACL. For those reasons, the unconscionable conduct claim fails.

[188]

(a) Mr Ganly classified Torc Solutions' historic customers as direct customers or resellers.

(b) Mr Ganly classified Torc Solutions' historic sales to direct customers and reseller customers according to the customer's main industry of operation using Australian and New Zealand Standard Industrial Classification (ANZSIC) codes and their main State of operation. ANZSIC, which is produced jointly between the Australian Bureau of Statistics and Stats New Zealand, is a hierarchical classification under which individual businesses are assigned to an industry based on its predominant activity. A business can only have one ANZSIC code.

(c) Mr Ganly prepared a table identifying Torc Solutions' historic sales to direct customers and reseller customers by ANZSIC code and his own "DES [Deep End Services] Industry" classification.

(d) Mr Ganly classified Torc Solutions' historic sales to direct customers and reseller customers into his own four "DES [Deep End Services] Industry" categories, being "Other", "Other Machinery and Equipment Repair and Maintenance", "Hardware and Building Supplies Retailing" and "Electricity Generation", in order of the number of customers in each category.

(e) Mr Ganly made specified adjustments and reconciliations to Torc Solutions' annual sales to direct customers from 2016/17-2022/23.

(f) Mr Ganly assumed the dollar value of reseller sales to individual customers within each industry group (including the "Other" group) bore a consistent ratio to the average dollar value of direct sales Torc Solutions made to customers within the same industry group (including the "Other" group) and assigned sales dollar values per customer per year to reseller customer lists, for which such data was not available.

(g) Mr Ganly used sales data for three years from 2017/18-2019/20, which years were chosen "as the business was starting to mature", and aggregated sales by his own four DES Industry groups, two of which he described as "Major Industry" groups, with an additional row provided for "International" sales, and assigned a ratio to compare the other industry groups ("Electricity Generation" and "Other") to the "Major Industry" groups.

(h) Mr Ganly aggregated sales to Australian customers in the "Major Industry" groups between 2017/18-2019/20 by State and used data from the Australian Bureau of Statistics to identify the number of businesses per state in the "Major Industry" groups to calculate "average Major Industry sales per business by state" values.

(i) Mr Ganly took Western Australia, being the state in which Torc Solutions had reached the highest historical "sales rate per business" within the "Major Industry" groups, and assumed that that "rate per business" in those groups in Western Australia represented a "mature sales level" which Torc Solutions would be able to achieve across other states and territories, had it continued to trade. Mr Ganly also considered how far behind Torc Solutions was in other States, compared to the "mature sales level" in Western Australia, to make an assumption as to the number of years in would take to reach the "mature sales level" in the other States.

(j) Mr Ganly forecast linear growth in "sales rates per business" to "Major Industry" businesses in each State and Territory until the assumed "mature sales level" was reached, and ongoing growth in line with CPI forecasts thereafter until 2033.

(k) Mr Ganly then took the forecast sales rates per "Major Industry" business and multiplied this by the forecast number of "Major Industry" businesses to arrive at Torc Solutions "Major Industry" forecast sales by State from 2020/21-2032/33.

(l) The final step in the process was to "gross up" the "Major Industry" sales forecasts to take into account sales to Australian customers not operating in the "Major Industry" groups and allow for sales to international customers, either direct or via resellers, by adopting the ratio of sales to "Non-Major Industry" and international customers relative to sales to "Major Industry" customers from 2017/18-2019/20.

[190]

(a) The process Mr Ganly used to assign direct customers to industry groups according to ANZSIC industry codes was based on Torc Solutions' direct customer lists and undisclosed internet research undertaken by Mr Ganly's associate. It is trite that, when providing an expert opinion to the Court, the expert must set out the facts and assumptions on which their opinion is based and the reasoning process deployed in arriving at their opinion: Makita v Sprowles (2001) 52 NSWLR 705; [2001] NSWCA 305 at [79] (Heydon JA, as his Honour then was, Priestley and Powell JJA agreeing at [1], [7] and [8], [22] respectively), referring to National Justice Compania Naviera SA v Prudential Assurance Co Ltd (The Ikarian Reefer) [1993] 2 Lloyd's Rep 68 at 81-82 (Creswell J). In Makita, at [59], Heydon JA cited with apparent approval Lord President Cooper's statement in David v The Lord Provost, Magistrates and Councillors of the City of Edinburgh (1953) SC 34 at 39-40 that the expert's duty is to furnish the Judge or jury with the necessary criteria for testing the accuracy of their conclusions, so as to enable the Judge or jury to form their own independent judgment by the application of these criteria to the facts proved in evidence: referred to with approval in Lang v The Queen (2023) 278 CLR 323; [2023] HCA 29 at [7] (Kiefel CJ and Gageler J). The failure to disclose the internet research and process by which customers were allocated an ANZSIC code prevented that evidence from being tested, enabling a proper evaluation of the validity Mr Ganly's conclusions. As mentioned, under the ANZSIC classification individual businesses are assigned to an industry code based on their predominant activity and can only be classified with one ANZSIC code. In the result, the failure to disclose the internet research and the process by which ANZSIC codes were assigned to Torc Solutions' customers and resellers prevented any analysis or testing of the subjective classification of the predominant activity of those customers, particularly larger customers with a number of business units.

(b) The process by which Mr Ganly classified Torc Solutions' historic, direct customers and resellers into his own four DES Industry categories was based on actual sales per direct customer for less than 25% of Torc Solutions' total historical sales by number of clients, and around 30% by sales volume, after 2016/2017. There was no sound basis for the assumption that data for direct customers could be used to profile and classify resellers. Mr Ganly did not explain why it was reasonable for him to use data for direct customers and apply it to profile and classify resellers (for which there was no data as to the resellers' end customers) according to his four DES Industry groups.

(c) Mr Ganly's subjective approach to classifying Torc Solutions' customers by category was at odds with Andrew Case's evidence in relation to the volume of direct customers he identified as participants in the mining industry. According to the ANZSIC classification process used by Mr Ganly, 16.1% of Torc Solutions' direct customers had a connection to the mining industry (e.g., mining and construction machinery manufacturing (6.6%), coal mining (4.3%), iron ore mining (3.3%), gold ore mining (1.9%)). However, Mr Ganly classified these customers under "Other", using Mr Ganly's "DES Industry" classification, and he assigned them to the "Non-Major Industry" group.

(d) Mr Ganly's adoption of the "Major Industry" groupings appeared to be a means by which to use the Australian Bureau of Statistics data regarding the size of identified "markets" for modelling purposes. As the respondents submitted, this modelling approach, applied at such a high level of abstraction, had a tendency to overinflate and generalise Torc Solutions' market or customer base and lacked any real or meaningful justification.

(e) Mr Ganly's approach resulted in forecast growth rates of 76.4% in the first year of Mr Ganly's analysis (2020/21), and 43.9% in the second year (2021/22), which seemed illogical and unrealistic, compared to Torc Solutions' actual sales figures for 2020/21 to 2021/22. Although that actual data was available to Mr Ganly, it was not used by Mr Ganly to cross-check his sales forecasts or at all.

(f) Mr Ganly was asked to prepare his sales forecasts for 2020/21-2032/33 on the assumption that Torc Solutions' sales performance was adversely impacted by supply issues from April 2020 until termination in June 2022. Although Torc Solutions was unable to access Torc Solutions branded products in that period, I am not persuaded that Torc Solutions established that its sales were materially affected, for example, by shortfalls of Torc LLC products. Below is a table showing Torc Solutions sales results, including for 2020/21 and 2021/22, as set out in Mr Ganly's report:

(g) I am not persuaded that there was a sound basis for the assumptions Mr Ganly was required to make regarding Torc Solutions' historical customer base and associated capacity for future growth, which made his forecasting process speculative and lacking in cogent explanation.

(h) I am not persuaded that there was a sound basis for Mr Ganly's assumptions regarding "mature sales levels" and when mature sales levels would be achieved in the various States. I am not persuaded that there was a sound basis for Mr Ganly's assumptions that "sales rate per business" in the "Major Industry" groups in Western Australia represented a "mature sales level" for Torc Solutions or that that same "mature sales level" could be extrapolated out to all other States and Territories, had it continued to trade. As the respondents submitted, Mr Ganly failed to make any allowance for the fact that the "mature sales levels" in Western Australia may have been unique to that State, which is well known for its large and profitable mining and resources sectors. There was no justification or explanation behind the assumption that the "matures sales level" in Western Australia was appropriate or achievable in other States and Territories.

[194]

Mr Morton is an Economist with expertise in cost benefit assessments, forecasting and forecasting approaches, among other things. He holds a Bachelor of Commerce, Bachelor of Law and Bachelor of Economics.
Mr Morton prepared four expert reports. Insofar as Mr Morton's reports respond to and critique the opinions expressed in Mr Ganly's and Mr Irving's reports, which have been excluded, it is unnecessary to say anything further about Mr Morton's reports. In addition, Mr Morton was instructed to make an assessment of reasonable predicted gross sales projections for Torc Solutions and the loss suffered by Torc Solutions as a result of the termination of the distribution arrangements. To that end, Mr Morton relevantly made an assessment of the total size of the relevant market.
For the purpose of providing his opinion, Mr Morton was provided with three affidavits of Mr Francis, who is a commission-based sales agent for Hytorc South Pacific in Victoria and Tasmania. Between 2017-2020, Mr Francis was the Growth Manager of Hytorc South Pacific covering Australia, New Zealand, Indonesia and Papua New Guinea. From 2014-2017, Mr Francis was the business development manager at Atlas Copco, a competitor of Hytorc's based in Sweden, that specialises in industrial torque wrench tools. Relevantly, Mr Francis' evidence primarily concerned identifying the size and share of the torque wrench tooling market as between different competitors (e.g., Hytorc, Enerpac, RAD, Norbar, Atlas Copco and other entry level suppliers). Mr Morton relied upon Mr Francis' initial and revised estimates and a memorandum authored by Mr Junkers dated 5 February 2024 to calculate his own estimation of the total market size, as contained in his expert reports.
Torc Solutions objected to aspects of Mr Francis' evidence on the basis that it was inadmissible opinion evidence, hearsay and/or speculation. The parties agreed that the objections would be dealt with in the final reasons. The torque wrench tooling market is a niche market. Mr Morton could not identify any publications or published market research about the relevant market. Although Mr Francis' evidence is quasi-opinion based on his observations of having worked in sales in the industry for over 25 years, I am satisfied that his first-hand experience in the torque wrench tooling market enables him to provide an opinion on the size and relative share of the market as between the different competitors. Among other things, Mr Francis had an interest in such matters given his roles as a commission-based sales agent and Growth Manager for Hytorc South Pacific. Furthermore, Mr Francis' interactions with customers would put him in a position to assess the market leaders and main competitors and aligned with Mr Junkers' evidence, which is mentioned below.
Torc Solutions, through Adrian Case, disputed matters of detail in Mr Francis' evidence. Relevantly for the purposes of Mr Morton's assessment, the main area of disagreement related to market share and opportunities for growth in the market. I have taken this into account when considering Mr Morton's alternative scenarios and in adopting the scenario most favourable to Torc Solutions.
For the purpose of providing his opinion, Mr Morton was also provided with a memorandum authored by Mr Junkers dated 5 February 2024 that including the following passage:

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