HEADNOTE
[This headnote is not to be read as part of the judgment]
The first appellant, URM, delivered bulked-up recyclable container waste to a material recovery facility in Somersby operated by the respondent, Par. The terms on which URM did so were governed by a contract between it and Par (the Somersby agreement). The contract specified the gate fees that Par could charge URM per tonne of waste received in that facility. It also provided that it terminated in the event that an earlier agreement between URM and a third party (the KES agreement) terminated.
On 13 October 2014, the KES agreement was replaced with another agreement (the KEE agreement) between the third party and URME, the third appellant and an entity related to URM. URM did not inform Par that the KES agreement had terminated, and that the result was that the Somersby agreement had also ended. The parties, not appreciating that was the position, continued to deal with each other until 30 June 2018 as if the Somersby agreement remained on foot.
On 9 January 2018, after the introduction of the NSW Government's Container Deposit Scheme (CDS), URM and Par entered into another agreement (the CDS Agreement), which provided that URM and Par would receive 40% and 60% of the CDS refunds received respectively, and that the gate fees payable by URM would increase from $70 to $100 per tonne from 1 December 2018.
In the underlying proceedings, Par claimed unpaid gate fees due under seven invoices covering the periods from July to September 2018 and March to June 2019. It also claimed repayment of the CDS refund share amounts paid to URM. By its cross-claim, URM sought damages for breach of contract and what it argued were amounts due under the CDS Agreement. Par made a second cross-claim, alleging that, but for the appellants' misleading or deceptive conduct in relation to the termination of the KES and Somersby agreements, it would have charged URM higher gate fees and would not have entered into the CDS Agreement. It claimed damages compensating for its losses in not being in that position.
The primary judge upheld Par's claim to the amounts due under the seven invoices and the second cross-claim insofar as it alleged Par would not have entered into the CDS Agreement and shared CDS revenue it would otherwise have kept for itself. Her Honour dismissed URM's cross-claim and rejected Par's cross-claim to the extent it claimed as damages higher gate fees which it alleged it would have charged URM if it had known that the Somersby agreement had terminated.
The appellants challenge the primary judge's conclusions, arguing that her Honour erred in finding that the implied agreement between URM and Par which arose after the termination of the Somersby agreement was terminable on reasonable notice; that the appellants engaged in misleading or deceptive conduct; and that, but for that misleading or deceptive conduct, Par would not have entered into the CDS Agreement.
By its cross-appeal, Par argues that the primary judge erred in finding that under the CDS Agreement URM was entitled to a 40% share of the CDS revenue received between 1 December 2017 and 30 June 2019 rather than between 1 February 2018 and 30 November 2018.
The principal issues in the appeal and cross-appeal are:
(i) whether the implied agreement between URM and Par was terminable on reasonable notice;
(ii) whether the URM parties had engaged in misleading or deceptive conduct;
(iii) if so, whether, but for that conduct, Par would not have entered into the CDS Agreement; and
(iv) whether under the CDS Agreement URM was only entitled to a 40% share of the CDS revenue on recyclable waste received between 1 February 2018 and 30 November 2018.
The Court (Meagher JA, Ward P and Gleeson JA agreeing) upheld the appeal and cross-appeal, holding:
As to issue (i)
- The conduct of URM and Par after 13 October 2014, reasonably understood, conveyed that their implied agreement was terminable on reasonable notice. Such a term would operate consistently with respect to each of the parties and was not likely to advantage one over the other. To impute to the parties a common intention that their implied agreement was to terminate on the termination of an agreement of which one party was not aware (the KEE Agreement) would be effectively to allow a unilateral amendment to the arrangement recorded in the Somersby agreement to the advantage of URM and in circumstances where the other party had no opportunity to consider whether such an amendment should be made: Ward P at [1]; Meagher JA at [37]-[44]; Gleeson JA at [109].
Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471; [2004] HCA 55; Crawford Fittings Co v Sydney Valve & Fittings Pty Ltd (1988) 14 NSWLR 438, referred to.
As to issue (ii)
- URM's failure to inform Par of the termination of the KES agreement and Somersby agreement, and URM's ongoing representation that the Somersby agreement was binding and remained in force, amounted to misleading or deceptive conduct. Par's failure to make enquiries about the KES agreement was not determinative. The disclosure by URM's managing director to Par that a fresh agreement had been reached did not in terms contradict the basis on which the parties were proceeding. In any event, it was followed by URM's subsequent assertions that the Somersby agreement continued to bind the parties, and accordingly was the reference point for the resolution of their differences: Ward P at [1]; Meagher JA at [45]-[61]; Gleeson JA at [109].
Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Limited (2010) 241 CLR 357; [2010] HCA 31; Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640; [2013] HCA 54, referred to.
- URM's comments did not merely convey that it was URM's reasonably held view that the Somersby agreement continued to bind the parties. Its comments were unqualified statements about the parties' legal rights and obligations and were not expressed in terms of an opinion or qualified as a matter only believed to be true: Ward P at [1]; Meagher JA at [51], [54]-[61]; Gleeson JA at [109].
Forrest v Australian Securities and Investments Commission (2012) 247 CLR 486; [2012] HCA 39; Ireland v WG Riverview Pty Ltd (2019) 101 NSWLR 658; [2019] NSWCA 307; Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82, referred to.
As to issue (iii)
- The primary judge erred in finding that, but for URM's misleading or deceptive conduct, Par would not have entered into the CDS Agreement. At the relevant time, the availability and sharing of CDS refunds would alter the amounts of the gate fees which URM would be willing to pay to Par and which Par would be willing to accept, and the opportunity to share in those refunds would continue to be available to Par only if it entered into a sharing agreement with the relevant local councils. In this context, the factual narrative and objective probabilities did not support her Honour's conclusion that Par only entered into the CDS Agreement to secure higher gate fees which Par did not think it could negotiate for itself whilst the Somersby agreement continued to apply. Rather, Par's immediate objective was to secure higher gate fees and a CDS sharing agreement with the councils so that it could benefit from the CDS, which Par could only achieve by entering into a CDS agreement with the councils. That the Somersby agreement had in fact terminated introduced no good reason for Par's departing from the terms proposed in the negotiations leading to the CDS Agreement: Ward P at [1]; Meagher JA at [62]-[89]; Gleeson JA at [109].
As to issue (iv)