Western Freight Management Pty Ltd v Toll Transport Pty Ltd

Ltd; Turnbull v ASL Developments Ltd (1974) 131 CLR 634 Schwarstein v Watson (1985) 3 NSWLR 134 Secured Income Real Estate (Aust) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596; [1979] HCA 51 Shevill v Builders Licensing Board (1982) 149 CLR 620; [1982] HCA 47 Stellar Vision Operations Pty Ltd v Hills Health Solutions Pty Ltd [2022] NSWSC 144 Stern v McArthur (1988) 165 CLR 489 at 526; [1988] HCA 51 Taylor v Johnson (1983) 57 ALJR 197 Workman, Clark & Co Ltd v Lloyd Brazileno [1908] 1 KB 968 Ye v Chen [2022] NSWCA 219 Young v Queensland Trustees Ltd (1956) 99 CLR 560 Texts Cited: Macquarie Online Dictionary 2022 Category: Principal judgment Parties: Western Freight Management Pty Ltd, Plaintiff/Cross Defendant Toll Transport Pty Ltd, Defendant/Cross Claimant Representation: Counsel: Mr J Young, Counsel for the Plaintiff/Cross Defendant Mr Stanton, Counsel for the Defendant/Cross Claimant

Solicitors: tps&co, Solicitors for the Plaintiff/Cross Defendant Norton White, Solicitors for the Defendant/Cross Claimant File Number(s): 2020/00236136

JUDGMENT [Key to transcript references: The Reporting Services Branch issued a transcript correction for 8 February 2023, 9 February 2023, and 10 February 2023 (Days 6, 7 and 8) of the hearing. This judgment will utilise the updated transcript references]

PLEADINGS

1. The Plaintiff sues for recovery of a debt, or in the alternative damages for breach of contract alleged to be on account of a shortfall in payments for the provision of trucking services between Sydney and Melbourne due to it from the Defendant pursuant to a contract made on 9 October 2017. The Defendant denies the Plaintiff's claim and cross-claims on the basis of certain overpayments alleged to have been made by it.
2. After several reiterations of the Plaintiff case, on Day 8 of the hearing it filed with the consent of the Defendant the Third Further Amended Statement of Claim (hereafter referred to as "3FASOC"). The Defendant joins issue by Defence to Third Further Amended Statement of Claim (hereafter referred to "D3FASOC") also filed on Day 8 of the hearing. The Defendant proceeds by Amended First Cross-Claim to which the Plaintiff/Cross Defendant joins issue by First Cross-Claim Defence to Cross-Claim.
3. The parties agree that by contract made between them on 9 October 2017, as varied by Deed dated 19 October 2017 (hereafter referred to as the "Contract"), the Plaintiff agreed to provide return road freight line haul services between Sydney and Melbourne (hereafter referred to as the "Trips") between 5 December 2017 and 4 December 2020 and the Defendant agreed to pay for those services.
4. The parties contest the construction of the Contract with most focus upon construction of Attachment 2 to the Statement of Engagement to the Contract.
5. The Plaintiff claims that Attachment 2 of the Statement of Engagement to the Contract provided for a fee of $3,200 per Trip and for a minimum quarterly volume of 120 Trips per quarter to be provided by the Defendant to the Plaintiff: 3FASOC at [7], [8] and [9]. The Plaintiff's case is that in the event that the Defendant provided a shortfall in the minimum quarterly volumes of 120 Trips in a quarter, then Attachment 2 is to be construed to mean that the shortfall number of Trips would rollover into subsequent quarters accumulating over the term of the Contract, with the Plaintiff's agreement, which it did give. This structure of the Plaintiff's case is to be found by reading 3FASOC at [7], [8] and [9] together. It is the basis upon which the Plaintiff finally conducted its case. In particular, on Day 8 of the hearing, the Plaintiff amended its Second Further Amended Statement of Claim (hereafter referred to as "2FASOC") at [9] which pleaded that it did not agree to rollovers, to that it did agree 3FASOC at [9]. The Plaintiff claims that at the expiry of the Contract term, a shortfall of Trips at the promised rate of $3,200 per Trip accumulated to a debt for which the Plaintiff sues. This was the Plaintiff's primary case. In the alternative, the Plaintiff seeks damages for loss of profit consequent of the Defendant's breach of Contract, the breach being the Defendant's failure to meet the total of minimum quarterly volumes of Trips over the term of the Contract (see T 158. 20 - T 163. 35).

FACTS

1. From this point in the judgment, it is convenient to refer to the Plaintiff/Cross Defendant as "WFM" and to the Defendant/Cross Claimant as "Toll".
2. On 17 July 2017, Toll's Group Line Haul Specialist, Mr. Trikash, emailed line haul operators to advise that it was conducting a review of its national operation and initiating a Request For Quote ("RFQ") process to cover 40 key "Lanes" ("Lanes" was the industry term for trucking routes) which it operated. An identified purpose of its process was to "Define a sourcing process for Toll that drives volume specifically to a selected set of line haul suppliers, with purchases outside the group of selected subcontractors being an exception". The email informed WFM that it would be invited to participate in the RFQ process.
3. Exhibit A includes the RFQ document subsequently received by WFM, to which it responded. That document (at [12]) stated that the process would not form a contract but that if the carrier's response was accepted, the parties would execute "a definitive and binding contract". The document included bidding instructions.
4. On 24 August 2017, Mr. Trikash for Toll emailed Mr. Kidner, Chief Executive Officer of WFM, some additional requirements, but more importantly, set out in schedule form WFM's bid rates and Toll's target rates for Lanes for which WFM bid, including the only Lane with which these proceedings are concerned, being the Melbourne-Sydney B-double-full-rig return. The schedule recorded that WFM had bid $3,380, Toll's target price was $3,200, the maximum quarterly volume (described to mean Toll's maximum quarterly commitment) was 120 with a "Full potential spend" of $384,000 per quarter. It should be observed that when negotiating on the background of a volume of Trips in the contemplated engagement that reference to revenue of $384,000 (being the calculation of 120 quarterly trips at $3,200) was described as a "potential" but not a finite commitment.
5. As I understood the evidence of Mr. Peters, Managing Director of WFM, the Contract was signed on 9 October 2017 and the Statement of Engagement was signed and made on 5 December 2017. The Exhibit A documents show that on 4 October 2017, five days before the making of the Contract, Mr. Trikash for Toll emailed Mr. Kidner of WFM to inform that Toll would like to offer WFM the Melbourne-Sydney B-double-full-rig Round Trip Lane at a price of $3,200 with "Minimum Committed Quarterly Volumes" of 120 Trips (shown in a schedule). The email further conveyed that: At [2] "the committed quarterly volumes in the above table includes all volumes, whether it be current or additional work. This is the minimum amount Toll is committing to quarterly for the lane/configuration combination." At [3] "Toll reserves the right to apply the above rates if volumes increase. In the event that minimum committed quarterly volumes are not achieved, the outstanding volumes will be rolled into the next quarter with agreement from" WFM. [Note: Up to this point in these reasons for judgment, references to minimum quarterly volumes were references to the "minimum committed quarterly volumes" ultimately contracted].

CONSTRUCTION OF CONTRACT

1. Both the Contract and the Variation Deed stipulated the governing law to be the law of Victoria and that the parties submit to the non-exclusive jurisdiction of the Courts of Victoria. The parties agreed to conduct the litigation in the District Court of New South Wales and further that there exists no significant difference between the law of Victoria and the law of New South Wales for the purposes of determining the issues in this case. The matter so proceeded.
2. The Contract was signed on 9 October 2017 by Mr. Kidner, CEO of WFM and by persons under Power of Attorney for Toll. Schedule 2 - Statement of Engagement dated 5 December 2017 (at [1a]) stipulated the duration of the Statement of Engagement as 36 months commencing 5 December 2017.
3. The Contract was structured as follows: Part A - Road Freight Subcontractor Details; Part B - Agreement Acknowledgement; Schedule 1 - General Terms and Conditions; and Schedule 2 - Statement of Engagement.
4. Part B - Agreement Acknowledgement, Condition 7 stipulated the priority of provisions amongst those Parts and Schedules in the structure of the Contract in the following descending order (so far as required for present purposes): 1. Parts A and B; 2. Schedule 1 - General Terms and Conditions; 3. Schedule 2 - Statement of Engagement, inclusive of Services description and Fees; and 4. Attachments to Statement of Engagement, including business unit specific requirements.
5. That the provisions of the Statement of Engagement were governed by the Part B conditions and the Schedule 1 - General Terms and Conditions was repeated in the Part B - Agreement Acknowledgement, Condition 5 and in the Schedule 2 - Statement of Engagement, Clause 1. Part B, Condition 5(b) provided that whenever Toll desired the provision of Services, Toll would issue to the Subcontractor a Statement of Engagement. The Schedule 2 - Statement of Engagement, Clause 1 provided that in the event of any inconsistency between the Statement of Engagement and any other provisions of the Contract, the provisions of the Contract would prevail to the extent of any inconsistency.
6. Determination of the parties' dispute as to the construction of the Schedule 2 - Statement of Engagement, Attachment 2 must be approached bearing in mind that internal priority of provisions of the Contract. As observed early in these reasons, the prescription of the engagement of Toll and WFM in the business of the Sydney - Melbourne, Melbourne - Sydney haulage is to be found in Attachment 2

1. A first observation of Attachment 2 wording is that the plurality expressions "volumes", "are", and "these" are merely generic, because common to all of the negotiation correspondence, the bidding process and the Contract, is the background contemplation that Toll and a Subcontractor may be involved in other existing engagements. So it was, that when Mr. Trikash for Toll emailed Mr. Kidner of WFM on the morning of 4 October 2017 to inform that Toll would like to offer WFM the subject engagement, the email included a schedule of identical format and content to the schedule in Attachment 2 set out above and explained: "Please note the following: 1. There is no loss of any existing work. You will continue to be engaged by Toll performing your current tasks at the current rates for the foreseeable future. In other words, business as usual. … Toll has simply chosen not to formally commit volumes based on your RFQ submissions for this other existing work; 2. The committed quarterly volumes in the above table includes all volumes, whether it be current or additional work. This is the minimum amount Toll is committing to quarterly for the lane/configuration combination."
2. Neither party informed the Court of such existing or other work in this case. The case was conducted on the basis of their complete engagement for this "Lane" as being through the provision of Attachment 2.
3. In my opinion, the first and second sentences of Attachment 2 address different subjects. The first sentence provided for the event of a volume increase. The second sentence provided for the event when minimum committed quarterly volumes were not achieved. For that reason, the first sentence did not qualify or assist in construction of the second sentence, such that the second sentence was to be construed to provide for a rollover of the fee of $3,200 only. I reject the Defendant's submission of construction to that affect: Toll's Closing Written Submission MFI 10 at [24]. In my opinion, the first and second sentences recognised the commitment to the minimum quarterly volume of 120 Trips because they provided for what was to happen in the event of either alternative of an increase above 120 and a shortfall below 120. In my opinion, the plain grammatical meaning of "these" is the subject of the second sentence and more precisely the first clause of that sentence, that being the volumes (shortfall) of Trips, not, as Toll submitted, the Trip rate of $3,200.

The Parties Positions on Contractual Construction

1. Whereas WFM pleaded (3FASOC at [7(c)]) that by Attachment 2 to the Statement of Engagement, the Contract was to be construed as prescribing that "In the event the Minimum Volume is not achieved, the parties may agree to roll it into the next quarter" (emphasis added), WFM also pleaded (3FASOC at [9]) "the plaintiff agreed to roll over any shortfall of Trips below the Minimum volume to subsequent quarters" (emphasis added). Those two pleaded descriptions of the construction of the Contract are not plainly consistent because rollover of a shortfall into the next quarter is not the same as rollover of a shortfall across all subsequent quarters of the term of the Contract.
2. After I addressed counsel for WFM on this inconsistency, particularly (on what the Transcript identifies as Day 6, but which was in reality the Day 7) at T 264. 38 - 49, the next day when WFM was yet to amend 2FASOC [9] (which the Transcript identifies as occurring on Day 7, but in reality it was Day 8) counsel for WFM responded as follows (T 269. 48 - T 270. 2): "… We say this, the contract; and your Honour perhaps has been asking for this for some time. Attachment 2 means this, we will receive 120 trips per quarter, unless we agree to accumulate them we have a debt payable at the end of each quarter." Discrete in that response was what turned into a proposed and then abandoned change of calculation of shortfall Trips in the case as conducted by WFM: see below subheading BREACH - PLEADING - CONDUCT OF CASE - WFM'S FORENSIC ELECTION.
3. Counsel for WFM also said that it put its case, consistently with Mr. Peters' evidence, on that basis that the shortfall accumulated over the life of the Contract: T 273. 20 - 50. At T 274. 37 - 49, counsel for WFM confirmed that WFM's case was not that there was a calculable shortfall on the basis of quarterly shortfalls but rather an accumulation over the term of the Contract and demonstrated this by referencing (Exhibit 3) which showed the Sydney to Melbourne and Melbourne to Sydney runs as well as other trips completed in each quarter. WFM's Closing Written Submission (MFI 9) included a schedule of Trips calculating only quarters of shortfall (i.e. no rollover) which calculated to a total shortfall of 83 Trips. It will be recalled that WFM claims a debt equal to a shortfall of 44 Trips. Counsel for WFM explained its case and use of that MFI 9 schedule as follows (T 274. 37 - 49): "HIS HONOUR: … The bases in which you have put your case is not that there was such a finite calculable shortfall at the end of every month, but rather, an accumulating entitlement that at the end of the contract you had 120 times 36 trips. That's how the case has been put. [Note: This was plainly a misspeak on my part. I meant 120 times 12 quarters.] YOUNG: Yes, we accept that. And that's how we continue to put it, Your Honour. If we were to have put it the other way, which we can't, the number of trips that were short every quarter was almost doubled, but we don't put that case because, and perhaps your Honour, can I hand up this document to illustrate the point. It's based on exhibit 3, we've provided a copy to my friend. It's really a submission document, your Honour or an aid-memoire. HIS HONOUR: Thank you."

WFM's Claim in Context

1. I find WFM's case on contractual construction to be not available because it is contrary to the construction of the Contract at which I have arrived (at [66] above), against principle and not proved on the evidence. I deal with each of those findings now.
2. In my opinion, the business efficacy of the construction of Contract observed at [66] and [67] above is consistent with a plain reading of Contract in evidence. Neither party identified an ambiguity of expression in the Contract. Fundamentally, the submission by counsel for WFM, made with reference to the evidence of Mr. Peters, quoted above at [72], to the effect that the background to the Contract was that WFM intended and expected that the Attachment 2 minimum committed quarterly volumes prescription would provide a form of guarantee of revenue across the term of the Contract, and which I have found to be a construction not available on a reading of the Contract as a whole; is a submission which is inconsistent with the rule that generally speaking, the law will not remake the parties bargain simply because it transpires that as things have happened one party has made a bad bargain: Legione v Hateley (1983) 152 CLR 406 at 447; [1983] HCA 11; Stern v McArthur (1988) 165 CLR 489 at 526; [1988] HCA 51. A court will strive to construct the contract so as to give it business efficacy, albeit not at the expense of the express language of the contract: Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104 at 117; [2015] HCA 37. As application of the principle was put by Macfarlan JA in Jireh International Pty Ltd v Western Export Services Inc [2011] NSWCA 137 at [55]: "… So far as they are able, courts must of course give commercial agreements a commercial and business-like interpretation. However, their ability to do so is constrained by the language used by the parties. If after considering the contract as a whole and the background circumstances known to both parties, a court concludes that the language of a contract is unambiguous, the court must give effect to that language unless to do so would give the contract an absurd operation. In the case of absurdity, a court is able to conclude that the parties must have made a mistake in the language that they used and to correct that mistake. A court is not justified in disregarding unambiguous language simply because the contract would have a more commercial and businesslike operation if an interpretation different to that dictated by the language were adopted."

Does Schedule 1 - General Terms and Conditions, Clause 8.9 Describe When Payment for a Shortfall was due

1. Schedule 1 - General Terms and Conditions, Clause 8.9 provided as follows (Exhibit C, Court Book page 268): "The Subcontractor agrees that TOLL will be entitled to withhold payment of any monies owed to the Subcontractor until such time as the Subcontractor provides TOLL with the written confirmation that the Subcontractor's obligations have been met, if required under clause 2.17."
2. Schedule 1 - General Terms and Conditions, Clause 2.17 provided as follows: "Where required by TOLL pursuant to a Statement of Engagement, the Subcontractor must provide to TOLL, at the same time as providing TOLL with paperwork associated with the completion of the Services (such as consignment notes or run sheets or invoices), a written statement confirming that …"
3. Clause 2.17.1 - 2.17.4 set out various obligations including that all remuneration payable to employees for performance of the Services had been paid, all workers compensation insurance premiums had been paid, that the Subcontractor had complied with Pay-Roll Tax obligations and made all payments required by the Superannuation legislation.
4. In written (MFI 13) and oral submissions, Toll submitted that Clauses 8.9 and 2.17 read together are significant because the debt claimed by WFM could not be due and payable to WFM, given that WFM has failed to prove that it has produced the documentation required in Clause 2.17 in relation to the shortfall Trip volumes claimed. In written and oral submissions, WFM argued that the documents the subject of Clause 2.17 "cannot possibly" be provided as they are only capable of being provided in respect to Trips actually performed, not for Trips that were never performed (MFI 12 [4]).
5. In these reasons ([54]-[55]), I determined that "Services" when read with the definitions of "Goods" and "STO" meant, for the purposes of Attachment 2, goods and loads the subject of a transportation or other work instruction given by Toll to WFM in relation to each job/consignment/journey and as itemised in Schedule 2 - Statement of Engagement (Item 2) Road Linehaul Services. Generally, I determined (at [61]) that the whole of the engagement provided for in Attachment 2 was for those Road Linehaul Services being a Trip within the terminology I have adopted for these reasons.

Did WFM Have to Claim Within 120 Days?

1. Toll relies on Schedule 1 - General Terms and Conditions, Clause 8.10 to complain that WFM's claim is made out of time under the provisions of the Contract. Clause 8.10 provided as follows: "The Subcontractor agrees that TOLL will have no obligation to pay the Subcontractor for part of or all Services in question if: 8.10.1 The Subcontractor's vendor account with TOLL is established on the basis that TOLL will pay the Subcontractor utilising its Recipient Created Tax Invoice system and the Subcontractor does not return run sheets, consignment notes, proof of delivery documents and other paperwork relating to those Services within 120 days of the date the Services were completed; or 8.10.2 TOLL does not receive the Subcontractor's tax invoice accompanied by all required supporting documentation for those Services within 120 days of the date the Services were completed."
2. For the purpose of considering this point, I accept Toll's submission that there is no evidence that WFM submitted any invoices for any quarter during which it alleges there was a shortfall. In Closing Written Submissions (MFI 10) at [32], Toll put "The definition of services is sufficiently wide enough to include the very claim for shortfall the Plaintiff now seeks to advance." WFM submitted (as put in Closing Written Submission MFI 9 at [24]) "Clause 8.10 … does not have the effect of disentitling the Plaintiff to payment of the Shortfall. This clause refers to the services 'in question', being services for which run sheets, consignment notes, proof of delivery documents etc are created. Given that no such documents are capable of being created in relation to the trips the subject of the Shortfall as they were not performed, those trips are not the services 'in question' to which that clause relates."
3. Both parties rely on Schedule 2 - Statement of Engagement, Item 3 and the procedure for documents there set out being the RCTI (Recipient Created Tax Invoice System) method. Under that method, WFM was to provide Toll with all relevant records to enable Toll to calculate and verify the amount of the invoice including without limitation, all relevant signed proof of delivery documents under Clauses 2.15 and 4.4, Schedule 1 - General Terms and Conditions. Whilst I did raise it during the hearing, neither party embraced the proposition that the RCTI method and indeed contemplating the agreement for Toll to perform audits under Clause 11, contemplated a condition of a claim by WFM for shortfall in volumes of Trips to be included in its reporting under the RCTI method. Because neither party responded to that proposition, I put it from my consideration.

Does Schedule 1 - General Terms and Conditions, Clause 13.5 Exclude Toll's Liability

1. The short answer is no. Clause 13.5 deals with liability of the Subcontractor to Third Parties which is not the situation here.

Application of Variation Deed, Clause 2

1. Toll points to Clause 2 of the Variation Deed made 19 October 2017, to submit that WFM's claim of entitlement to recover the rate of $3,200 per shortfall Trip is opposite the agreed intention regarding compensation for Toll's failure to perform the Contract. Clause 2 of the Variation Deed provided as follows (Exhibit D, Court Book page 255): "With effect from the Variation Date, the parties agree that the Original Agreement is varied by the insertion of the following sentence at the end of Part 2, clause 12.2".
2. That is a reference to Schedule 1 - General Terms and Conditions, Clause 12.2 which provided, relevantly for present purposes, that in the event of Toll terminating a Statement of Engagement or the Contract in whole or in part for any reason at any time, it would give a Subcontractor 90 days written notice and pay the Subcontractor "for all Services performed and work done up to and including the date of termination" and that "Except where required by law, the Subcontractor shall not be entitled to any damages or other compensation with respect to anything arising out of TOLL's election to terminate" the Contract.
3. By the Variation Deed, Clause 2, those provisions in Clause 12.2 of the Contract were to be read as continuing to express that in the event that Toll terminated the agreement or the Statement of Engagement before the full term of 3 years had expired, "TOLL will further pay to the Subcontractor, its reasonable, unavoidable costs directly incurred as a result of the termination, providing the Subcontractor can provide documented evidence that it has undertaken commercially, reasonable steps to mitigate such costs."
4. Toll submitted (Closing Written Submission MFI 10 at [33]) "… Neither of these clauses are easily explained if the true construction of the Agreement was that the Plaintiff was entitled to recover a fixed price of $3,200 for 120 trips over 12 quarters in the absence of any agreement to rollover any shortfall."
5. Toll's submission (MFI 10) was made before the amendment of pleadings on Day 8 of the hearing. It will be remembered that the 3FASOC at [9] was a change of course during Closing Submissions by WFM, to plead that it did agree to rollover any shortfall of Trips below the minimum committed quarterly volumes "to subsequent quarters". Toll did not admit that reversed factual allegation (D3FASOC).

WFM'S DEBT CLAIM

1. WFM put its primary claim as an action in debt. WFM referred the court to a significant volume of case law but principally (see WFM Closing Written Submissions MFI 9 at [2]) put the principle on which it relies as that stated in Young v Queensland Trustees Ltd (1956) 99 CLR 560 and for illustration referred the court to the decision of Harrison AsJ in Boral Resources (NSW) Pty Limited v Douglas John Challinor t/as Bedgebury Products & Services [2018] NSWSC 329. That submission read: "2. A claim for 'indebtedness in a sum certain for an executed consideration [is not] a mere breach of contract: rather it is a detention of a sum of money …' (Young v Queensland Trustees Ltd (1956) 99 CLR 560 per Dixon CJ, McTiernan and Taylor JJ at 567; see also Boral Resources (NSW) Pty Limited v Douglas John Challinor t/as Bedgebury Products & Services [2018] NSWSC 329 per Harrison AsJ at [60]ff)."
2. WFM based its case on a factual proposition which I now quote from Closing Written Submission MFI 9 at [3] and [6]: "3. The Plaintiff's obligations pursuant to the Contract were to provide the linehaul services specified in the Contract required by the Defendant over its term and the Defendant's obligations were, relevantly, to provide minimum committed quarterly volumes of 120 round trips at $3,200 per trip. The Contract was fully performed by the Plaintiff providing the linehaul services required by the Defendant over the term of the Contract, and, in those circumstances, by reason of the Shortfall, the Defendant was indebted to the Plaintiff for a sum certain." "6. To the extent the debt claim were considered from the perspective of non-compliance with the contractual term to provide minimum quarterly volumes, the consequences of such non-compliance are readily quantifiable and are, therefore, to be characterised as a debt (Vimblue Pty Ltd v Toweel trading as Carpenters Core Building [2009] NSWSC 494 per Barrett J at [12] - [21] ; Hansmar Investments Pty Ltd v Perpetual Trustee Company Ltd [2007] NSWSC 103 per White J at [57] - [59])."
3. Toll's response to WFM's claim of entitlement by action in debt is that the Contract, on proper construction, does not avail WFM a basis for its claim of fully executed performance or the sum certain which must be found in order for an action in debt to be available. In Closing Written Submissions (MFI 13 at [2]) Toll put its argument as follows: "2. … Toll also contends that if the agreement did require a minimum number of trips per quarter the result would be that there had been a breach of contract for which the only remedy to which WFM would be entitled would be an action for damages for breach of contract. The Court is cognisant of the fact that there is no evidence of damage and to avoid the consequence that at best it would be entitled to nominal damages, WFM has contended that it is entitled to [the] sum of $3,200 per return shortfall trip as a debt."

BREACH - PLEADING - CONDUCT OF CASE - WFM'S FORENSIC ELECTION

1. WFM pleaded that the breach upon which it sues (in the alternative to its debt claim) was Toll's failure to provide a total of 1440 Trips over the three year term of the engagement under the Contract (120 Trips x 12 quarters = total 1440 Trips):

• 3FASOC at [9], [10], [11] and [14]; Exhibit B (2,792 single direction Lane runs ÷ 2 = 1396 Trips which = 44 Trips below the total);
• WFM's MFI 2 - Schedule of Issues and Damages;
• At 3FASOC [14] WFM pleaded the breach of the Contract upon which it sues for damages as follows: "In breach of the Contract, [Toll] has failed or refused to pay the Shortfall to [WFM] and [WFM] is entitled to the Shortfall as damages."
• The shortfall is defined in 3FASOC at [8]-[11] to mean the arithmetic total of 44 Trips over the full term of the Contract. For convenience, I will refer to this as "WFM's First Case" because these elements of its case were not amended by WFM during the hearing.

1. In D3FASOC at [8]-[14], Toll admitted the Trips performed as alleged in 3FASOC at [8] but denied each of WFM's allegations of any shortfall entitling WFM to payment and denied WFM's fundamental case allegation that it was agreed that any shortfall in the minimum committed quarterly volumes of Trips rolled over to subsequent quarters. Toll's Schedule of Damages (MFI 3) ascribed "Nil" to the value of WFM's case.
2. As already observed, the construction of the Contract at which I have arrived (at [66] above), that in the event of a shortfall below the minimum committed quarterly volume of Trips in a quarter, Toll was to rollover the shortfall volume into the next quarter with WFM's agreement, plainly does not fit with WFM's First Case.
3. I have found a breach of the Contract by Toll would occur in the event that Toll failed to rollover the shortfall in minimum committed quarterly volume of Trips into the next quarter unless WFM did not agree to the rollover. The breach pleaded by WFM in its First Case, obviously cannot be found on the construction of contract which I have determined.
4. WFM not only pleaded and opened its claim in the form of its First Case but took a forensic course in the conduct of the hearing which is of significance in my determination, and I turn to that history of the conduct of the case now. WFM's course of conduct of the hearing was not without confusion as to how it put the case Toll was to meet. I feel that it is required that I set out that course in some detail.

ASSESSMENT IN THE EVENT I AM WRONG

1. In case I am wrong, and for completeness, I provide the following discernment of WFM's claims for damages.

WFM's Claim for Liquidated Damages

1. To this point, I have found that nothing arising from the background, the genesis of the transaction, the wording of the Contract, or the assumption that the parties intended to produce a commercial result, is persuasive of construing the Contract such that Attachment 2 prescribed that Toll was to pay WFM $3,200 for each Trip so not achieved in the claimed shortfall.
2. In its argument, Toll accurately points to the absence of any contractual wording to the effect that $3,200 represented a true pre-estimate of WFM's loss on a shortfall of a Trip: MFI 10 at [41]-[43]. Indeed, in my opinion, the Contract at Attachment 2, provided for a fee of $3,200 per Trip achieved but not an estimate of damage in that sum in the event that the Trip was not performed. It was the fee for performance of the Service - see definition "Fees", Schedule 1 - General Terms and Conditions. Further, I have found by the Contract, the parties expressly did not engage in a promise of earnings: Part B, Condition 8 and Schedule 1 - General Terms and Conditions, Clauses 8.5 and 17.2. Those provisions in particular, are against WFM's proposition that the Fee of $3,200 was an amount payable as a pre-estimate of damage, for each Trip not achieved below the minimum committed quarterly volumes.
3. In Andrews v Australia and New Zealand Banking Group Ltd (2012) 247 CLR 205 at 219; [2012] HCA 30 and Paciocco v Australia and New Zealand Banking Group Ltd (2016) 258 CLR 525; [2016] HCA 28, the High Court held that equitable relief against penalties was not limited to cases arising out of breach of contract (see Kiefel J at [3] in Paciocco). As was explained by Gageler J in Paciocco at [158]-[166], the question is whether the contractual stipulation imposed some proper contractual purpose such as to protect that party's interest by insisting on such a stipulation or was to punish. I refer to those observations of principle in the Andrews and Paciocco cases because, in this case, Toll submitted that WFM's argument that Attachment 2 be construed so as to provide that the fee of $3,200 be paid for each Trip not achieved in such a shortfall, was an argument proposing a penalty. Toll did not plead a penalty defence. I have weighed its submission as an argument in illustration against the commerciality of WFM's claim for liquidated damages on that basis. In this case, it cannot be said that payment of $3,200 for each Trip not achieved in the event of a shortfall in the minimum committed quarterly volumes, would be commensurate with the interest of protecting the bargain. In my opinion, for the reasons given, the Contract provided otherwise.

WFM's Claim for Damages for Breach of Contract

1. Toll says that in answer to WFM's allegation of breach of Contract in the form that Toll failed to provide 1440 Trips over the term of the Contract, it is upon Exhibit G, H and J that particular focus is to be had.
2. Exhibit H is correspondence from Toll's in-house legal counsel to WFM's then solicitor. It is dated 5 June 2020. It is an offer to compromise made in response to the demand made by WFM's solicitor's letter of 20 February 2020 (Exhibit G). By that correspondence, WFM had demanded that Toll compensate it for a claimed shortfall of 70 Trips in the sum of $224,000. Exhibit H is headed "Without prejudice save as to costs" and concludes with a description of it being an offer made in accordance with the principles set out in Calderbank v Calderbank [1976] Fam 93, [1975] 3 All ER 333. Relevant to present purposes, Exhibit H provided as follows:

• At 1. c), "Toll offers (without any admission of liability) to provide WFM with 70 additional round trip runs.";
• At 7, that pursuant to the terms of the Contract, "WFM would only be entitled to seek additional runs from Toll, not any compensation."; and
• At 10, "Notwithstanding the above, Toll offers to provide WFM with 70 additional round trip runs at a rate of $3,200 (excluding GST plus and any applicable fuel levy). For the avoidance of doubt, in the event that the additional round trip runs are not provided prior to the expiry of the Agreement on 4 December 2020, the parties will extend the term of the Agreement and enter into a new Statement of Engagement in respect of the balance of the additional round trip runs."

1. At the date of the email Exhibit H, the three-year term of the Statement of Engagement pursuant to the Contract had two full quarters to run. Exhibit 3 shows that it was not uncommon for Trips to be achieved in excess of 120 in a quarter (employing the manner of calculation upon which the parties conducted the hearing, which was by reference to single Lane loaded runs in each direction between Sydney and Melbourne). In the quarter 5 March 2018 to 4 June 2018, 15 single Lane trips in excess of the 240 which would make up the minimum committed quarterly volumes, were achieved. In the quarter, 5 September 2018 two 4 December 2018, the excess was 21 single Lane trips. Accordingly, Exhibit H proposed achievement of "additional" Trips at an average of 35, in each of the two remaining quarters. Obviously, that would translate to 70 single Lane trips extra per quarter. Exhibit 3 shows that an excess of Trips of that dimension was not experienced at any time in the preceding 10 quarters. That said, there is no evidence before me upon which I am able to assess whether or not the offer of so many Trips in each of those two quarters would have been difficult for WFM to service and achieve. Considerations such as number of available trucks and drivers required to meet the demand were not investigated in the evidence. Then again, I have observed that the Contract provided for the continuance of the terms of the Statement of Engagement in circumstances where the term of the Statement of Engagement was overrun (Part B - Agreement Acknowledgement, Conditions 4 and 5B). Toll's email Exhibit H at [10], quoted above, included the offer to extend the term of the Statement of Engagement.

Damages for Breach of Contract - as Construed by WFM - Assessment

1. In the event I am again wrong, and Toll did breach the Contract as WFM alleges, I now assess damages.
2. WFM expressed its damages as the loss of profit that could have been earned by it hypothetically from performance of the Contract, i.e. by reason of it being deprived of 44 Trips, such profit, being revenue net of costs: Closing Written Submission MFI 9 at [50]. There can be no contest that the loss of revenue of 44 Trips would equate to $140,800 exclusive of GST. WFM initially in its Closing Submissions (as discussed at [134]-[137] above) put that there were no cost savings to it arising from it not having to actually perform the Trips of the shortfall because it had vehicles available "and travelling on the Sydney-Melbourne route, loaded or unloaded, whether or not [WFM] was in fact performing revenue-earning trips for [Toll], during the course of the contract": Closing Written Submission MFI 9 at [52]. As explained above in my review of the conduct of the hearing by WFM, that factual proposition of unladen trucks actually travelling the route was withdrawn by WFM in the course of oral closing argument (see above at [146]).
3. Ultimately therefore, WFM claims for the loss incurred by it of being deprived of 44 Trips, in consequence of which deprivation or breach, there were no actual running or operating costs of trucks. I have examined the evidence of drivers and I am not persuaded on the balance of probabilities of what, if any, cost of drivers was incurred in the event of a shortfall of Trips. It is simply not available to know whether or not a driver was contracted in the course of a shortfall. Whereas on the one hand WFM incurred the capital cost of the 4 extra trucks and trailer sets which it purchased in order to meet the performance required and revenue is expected from the Contract, the cost of that financial provision and the benefit of the acquisition of those assets is not described in the evidence such that it can be assessed. Plainly, there would not be any costs of fuel or wear and tear including to tyres and maintenance involved in the trucks not travelling the Lane. None of those costs are described in the evidence at all such that the quantum could be assessed.
4. WFM submitted (Closing Written Submission MFI 9 at [54]) "that mere difficulty in estimating damages does not relieve a court from the responsibility of estimating them as best it can" and then referred to Mr. Peters evidence (Affidavit at [36]) of the agreement struck between him and Mr. Trikash for Toll in January 2018, that the sum to cover the total cost of the driver, truck, trailers and fuel for a cut run was fairly estimated at $800. Given revenue to be earned from a one way loaded trip was $1,600 (Trip fee $3,200 ÷ 2), WFM put upon that basis that the agreement struck for cut runs was evidence of a profit margin of 50%, being $800 in a single direction. WFM, on that basis, submitted that a loss of profit per Trip in the sum of $1,600 is appropriate to be awarded.

TOLL'S CROSS-CLAIM

1. By amended First Cross-Claim Statement of Cross-Claim, Toll sued for what it claimed to be overpayment of WFM in relation to cut runs included amongst WFM's claims for single Lane empty trips in five invoices dated between 12 December 2018 and 28 February 2019: Exhibit 4. It is common ground that amongst the single Lane trips included in those WFM invoices, for which WFM was paid a total of $24,600, were empty single Lane trips, for which WFM invoiced and Toll paid $1,600 and that generally empty trips were the subject of the informal agreement reached between the parties in January 2018 which attracted a fee of $800 plus GST and plus Fuel Rebate (see [39] above).
2. The cross-claim includes an additional claim for recovery for overpayment by Toll of two WFM tax invoices in the total sum of $2,898. This claim was ultimately admitted by WFM. It is not necessary to deal with that.
3. In its First Cross-Claim Defence to Cross-Claim, WFM denied Toll's claim of overpayment but admitted the facts of the subject invoices and that WFM received payment of them from Toll. WFM (at [11]) denied that Toll paid the invoices in the mistaken belief that the invoices were payable under the Contract for loaded trips (a rate of $1,600) and that WFM is liable to refund the amounts paid by way of restitution.
4. The dispute surrounds whether WFM is entitled to retain these payments of $1,600 for cut runs, when WFM and Toll had entered into the informal arrangement in January 2018 upon the basis of which WFM was entitled to, and Toll would pay, $800 per cut run as an agreed fair price to cover WFM's costs.
5. In answer to Toll's submission that it paid the invoices in the full sum claimed under the mistaken belief that the invoices were issued by WFM for amounts it was entitled under the Contract to be paid: Closing Written Submission MFI 10 at [61]; WFM, in Closing Written Submissions:

• Firstly, denied that Toll was entitled to reclaim the monies on the basis of mistake or misapprehension because WFM had not induced that mistake: MFI 9 at [58]-[59]; and
• Secondly, that WFM was entitled to issue the invoices for a single direction Lane run in the sum of $1,600, because it was one half of the Contract round Trip fee of $3,200 and, at the time of the issue of the invoices, by its conduct of failing to pay according to the informal agreement of $800 per cut run, Toll had repudiated that informal agreement.

CONCLUSIONS

1. For the above stated reasons and in summary, I arrived at the following conclusions: 1. Performance pursuant to the Contract was the achievement of a Trip for which a Fee of $3,200 was due to be paid by Toll to WFM; 2. WFM's standing by because it expected Toll to provide Trips was not a performance under the Contract; 3. Under the Contract, Toll did not promise revenue to WFM other than by way of payment of the Fee on account of the achievement of a Trip; 4. Pursuant to the Contract, Toll promised WFM that it would participate in the achievement of 120 Trips per quarter and in the event that Toll failed in that provision; then the shortfall volume of Trips below 120 was to be rolled over into the next quarter contingent upon WFM's agreement that that occur; 5. In the event that Toll failed to provide WFM with a quarterly shortfall below 120 Trips in the next quarter; then Toll would have been in breach of the Contract; 6. In the event that the parties did not achieve in the next quarter the volume of the Trips in the shortfall in addition to the 120 Trips of that quarter; then, Toll was not in breach of the Contract if that failure to achieve the shortfall Trips occurred because WFM did not agree to the rollover of those Trips; 7. The effect of the preceding conclusions (d), (e) and (f) is that pursuant to the Contract, the parties' rights concerning any shortfall in the minimum committed quarterly volumes of 120 Trips merged in their performance during the next quarter such that Toll's obligation was to rollover the shortfall volume into that quarter, which obligation expired in the event that WFM did not agree to achieve the shortfall rollover; 8. WFM has failed in its case for breach of Contract based on Toll's failure to provide WFM with revenue equal to 1440 Trips at the Fee of $3,200 across the three-year term of the Statement of Engagement under the Contract because the Contract did not promise that; 9. WFM has failed in its primary action for debt because it was based on the revenue value of the shortfall of Trips but not on indebtedness in a sum certain for an executed performance as performance was prescribed under the Contract; 10. As WFM has failed to establish the breach of Contract upon which it conducted its case, WFM is not entitled to damages, even nominal damages; 11. WFM has failed in its case for liquidated damages because the terms of the Contract were against the proposition that the Fee of $3,200 was an amount payable as a pre-estimate of damage in the event of each Trip not achieved below the minimum committed quarterly volumes; 12. WFM has failed in its claim for contractual damages in terms of loss of profit on the hypothetical basis of placing it, so far as money can do, in the same position as it would have been had the Contract been performed, also because Toll offered on 5 June 2020 (Exhibit H) the provision of additional Trips equal to or in excess of the shortfall of Trips across the whole term of the Contract on an accumulative basis as was WFM's claim but WFM did not accept that performance; 13. In case I am wrong, I have assessed damages on the basis of the case conducted by WFM had it been successful, in the sum of $17,600; 14. Toll is entitled to recovery in the sum of $10,586 overpaid by it to WFM because Toll's mistake when making payment in excess of the informal agreement cut run rate was a vitiating factor obliging WFM to make restitution; and 15. Toll is entitled to restitution in the sum of $2,898 on account of other admitted overpayments by it to WFM.

ORDERS 1. Judgment for the Defendant/Cross Claimant, Toll in the proceedings against the Plaintiff/Cross Defendant, WFM in the sum of $13,484; 2. The Plaintiff/Cross Defendant, WFM is to pay interest to the Defendant/Cross Claimant, Toll in the sum of $2,232; and 3. The Plaintiff/Cross Defendant, WFM is to pay the Defendant/Cross Claimant, Toll's costs of the proceedings including pursuant to the orders of Gibson DCJ made 23 May 2022.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 31 May 2023