[1991] HCA 54
Coshott Family Pty Ltd v Lyons [2022] NSWCA 216
David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353
[1992] HCA 48
Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544
Source
Original judgment source is linked above.
Catchwords
[2012] HCA 30
Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435
Banque Commerciale SA (in liq) v Akhil Holdings Ltd (1990) 169 CLR 279[1982] HCA 24
Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64[1991] HCA 54
Coshott Family Pty Ltd v Lyons [2022] NSWCA 216
David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353[1992] HCA 48
Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544[2017] HCA 12
Electricity Generation Corp v Woodside Energy LtdWoodside Energy Ltd v Electricity Generation Corp (2014) 251 CLR 640[1983] HCA 11
Melbournehomes.com Pty Ltd (In Liq), Re [2020] VSC 854
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104[2015] HCA 37
Paciocco v Australia and New Zealand Banking Group Ltd (2016) 258 CLR 525[2016] HCA 28
Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 196 ALR 257(2003) 77 ALJR 768[2003] HCA 10
Sargent v ASL Developments Ltd[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
Judgment (23 paragraphs)
[1]
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
[2]
Solicitors:
tps&co, Solicitors for the Plaintiff/Cross Defendant
Norton White, Solicitors for the Defendant/Cross Claimant
File Number(s): 2020/00236136
[3]
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]
[4]
PLEADINGS
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.
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.
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.
The parties contest the construction of the Contract with most focus upon construction of Attachment 2 to the Statement of Engagement to the Contract.
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).
[5]
FACTS
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".
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.
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.
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.
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].
[6]
CONSTRUCTION OF CONTRACT
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.
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.
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.
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.
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.
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
[7]
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."
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.
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.
[8]
The Parties Positions on Contractual Construction
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.
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.
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."
[9]
WFM's Claim in Context
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.
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."
[10]
Does Schedule 1 - General Terms and Conditions, Clause 8.9 Describe When Payment for a Shortfall was due
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."
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 …"
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.
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]).
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.
[11]
Did WFM Have to Claim Within 120 Days?
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."
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."
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.
[12]
Does Schedule 1 - General Terms and Conditions, Clause 13.5 Exclude Toll's Liability
The short answer is no. Clause 13.5 deals with liability of the Subcontractor to Third Parties which is not the situation here.
[13]
Application of Variation Deed, Clause 2
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".
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.
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."
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."
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).
[14]
WFM'S DEBT CLAIM
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)."
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])."
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."
[15]
BREACH - PLEADING - CONDUCT OF CASE - WFM'S FORENSIC ELECTION
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.
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.
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.
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.
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.
[16]
ASSESSMENT IN THE EVENT I AM WRONG
In case I am wrong, and for completeness, I provide the following discernment of WFM's claims for damages.
[17]
WFM's Claim for Liquidated Damages
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.
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.
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.
[18]
WFM's Claim for Damages for Breach of Contract
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.
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."
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.
[19]
Damages for Breach of Contract - as Construed by WFM - Assessment
In the event I am again wrong, and Toll did breach the Contract as WFM alleges, I now assess damages.
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]).
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.
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.
[20]
TOLL'S CROSS-CLAIM
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).
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.
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.
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.
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.
[21]
CONCLUSIONS
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.
[22]
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.
[23]
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
The Defendant's denial of the construction of Contract pleaded by the Plaintiff, is found in D3FASOC at [7]. The Defendant's primary case is that Attachment 2 is to be construed to mean that the Plaintiff would be entitled to the fee of $3,200 per Trip when 120 or more Trips were achieved in a quarter but that in the event that the minimum quarterly volumes were not reached, the fee of $3,200 per Trip would continue to be the specified fee for the next quarter, if the Plaintiff so agreed. The Defendant offered no submission explaining how the Contract would operate in the event of a shortfall of Trips in a quarter and the Plaintiff not agreeing to the fee of $3,200 per Trip in the next quarter (see T 182. 15 - 20; T 183. 15).
The Defendant pleads pursuant to Part B - Agreement Acknowledgement, Condition 8 of the Contract that the minimum hours of work and minimum income level that the Defendant promised to provide to the Plaintiff was nil: D3FASOC at [7] (e)-(g), (h)-(i). In short, the Defendant says that the only right which accrued to the Plaintiff in the event that the number of Trips in a quarter did not reach the minimum quarterly volumes was to refuse to agree to a continuation of the fee of $3,200 per round Trip in the next quarter: D3FASOC at [11].
It is common ground that during the term of the Contract the parties did not communicate regarding adjustment of the Trip fee of $3,200. Indeed, it is common ground that whilst the Contract provided that the Defendant could review the fee on seven days prior notice to the Plaintiff and that the Defendant would review the fee at least annually (Contract, Part B - Agreement Acknowledgement, Condition 6) during the term of the Contract no such review was communicated between the parties.
The Defendant relied on Part B - Agreement Acknowledgement, Condition 8 and Schedule 1 - General Terms and Conditions, Clauses 8.5 and 17 specifically, and the terms of the Contract generally, to deny that it bore any obligation, or gave any guarantee or assurance as to any volume of services for which it would engage the Plaintiff: D3FASOC at [7]; Closing Written Submissions MFI 10 at [15]-[16]. In addition, the Defendant raised a limitation defence. It put that the Contract (Schedule 1 - General Terms and Conditions, Clause 8.10) provided that it bore no obligation to pay the Plaintiff for part or all of the claimed shortfall because it did not receive the overall tax invoice accompanied by all required supporting documentation, and the Plaintiff made no claim to be entitled to payment in respect of any alleged shortfall of Trips until February 2020 which was more than the 120 days (being the period specified in the Contract) from the date on which the services were completed for every quarter up to and including July 2019 to September 2019: D3FASOC at [7] (j)-(k); Closing Written Submissions MFI 10 at [15]-[16]. The Defendant says that the Contract (Schedule 1 - General Terms and Conditions, Clause 13.5) relieved it of any liability to the Plaintiff for indirect or consequential damages, loss of profits, loss of revenue, loss of contract, loss of goodwill, loss of opportunity, lease payments or damage suffered as a result of claims by any person arising out of the Contract, liability in tort or other non-contractual cause of action: D3FASOC at [7] (l); Closing Written Submissions MFI 10 [15]-[16].
In Closing Written Submissions (MFI 10) the Defendant put the following further arguments in opposition to the Plaintiff's case:
1. "Further, Toll disputes the alleged entitlement to the contract price for each shortfall trip if WFM could establish a breach of contract. The attempt by WFM to equate the contract price with the quantum of damages, particularly where WFM has made no attempt to adduce any evidence of loss or damage, highlights a fundamental flaw in WFM's case. Accordingly, if WFM, were otherwise successful, it could never be entitled to anything more than nominal damages": MFI 10 at [8];
2. With reference to its written offer of 70 trips made on 5 June 2020 (Exhibit H in the hearing) the Defendant points to the Plaintiff's claim of shortfall of 44 Trips and says that regardless of the construction of the Contract found, there was no breach of the alleged obligation to provide the minimum quarterly volumes of Trips over the term of the Contract;
3. The failure of the Plaintiff to take up the offer of 70 trips in June 2020 which would have completed the alleged shortfall, was a failure by the Plaintiff to complete the Contract, not a failure by the Defendant and in those circumstances, there was no breach of Contract by the Defendant: MFI 10 at [39];
4. The Plaintiff's claim for recovery of the full Trip fee of $3,200 for each trip not performed, either as a "debt" or as liquidated damages for breach of contract, is unenforceable because it is a claim for recovery of penalty, there being no clear express wording in the Contract justifying such recovery of "debt" or that the amount represents a true pre-estimate of the Plaintiff's loss: MFI 10 at [41]-[43]; and
5. The wording of the Contract does not express an agreement that the Defendant would, in the case of a shortfall in any quarter, pay the full cost of every Trip not performed. "There are no words whatsoever that expressly refer to the making of any payment in respect of a shortfall": MFI 10 at [43].
During the taking of evidence, the case was conducted on the basis that the parties did not communicate quarterly regarding shortfalls of Trips below the minimum quarterly volumes, or regarding rolling over of any shortfall volume of Trips. This is because until well after the close of evidence and on Day 8 of the hearing, the case was conducted by the Plaintiff on the basis that it did not agree to rollovers. This changed with 3FASOC at [9]. During earlier evidence, the Plaintiff's General Manager, Mr. Peters, gave limited and vague evidence of shortfalls being raised between managers. It is common ground that the Plaintiff, by its Solicitor's email dated 20 February 2020 to the Defendant, during the currency of the third (the final) year of the Contract, claimed that quarterly shortfalls calculated to a total of 70 Trips. By that email the Plaintiff demanded that the Defendant compensate it. The letter (Exhibit G) provided in part:
"WFM is also seeking compensation for the 70 trips shortfall of the agreed volume in the Contract from January 2018 to February 2020. This would amount to $224,000 plus GST ($3,200 x 70)".
In response to the Plaintiff's Solicitor's email, on 5 June 2020, the Defendant wrote on a "without prejudice save as to costs" basis (Exhibit H) in part:
"Toll offers (without any admission of liability) to provide WFM with 70 additional round trip runs."
On 23 June 2020, the Plaintiff's solicitor replied by email (Exhibit J) to the Defendant questioning whether the offer of 70 additional round Trips was clear of a separate claim by the Plaintiff expressed in its solicitor's email of 20 February 2020 for $36,732.50 compensation on account of cut runs. Cut runs were single direction runs when the truck returned empty to its WFM departure depot: T 317. 25 - 37; T 332. 8 - 11. In each of those emails the authors debated construction of the Contract whilst disputing the question of entitlement of the Plaintiff.
Attached to the Plaintiff's Closing Written Submission (MFI 9) is a schedule of Trips purporting to total quarterly shortfalls without crediting Trips exceeding 120 in a quarter, meaning the schedule does not provide calculation over the term of the Contract of the shortfall of Trips below the total of 120 x 12 quarters; i.e. 1440. The calculation is made up of loaded single directions runs or trips.
On that basis of calculating shortfalls per quarter, the Plaintiff submitted for the first time on Day 7 of the hearing, a total shortfall of Trips at 83. During closing oral submissions on Day 7, the Plaintiff indicated that it proposed to amend what was then the Second Further Amended Statement of Claim, to plead, in the alternative, a construction of the Contract by which shortfall Trips would be calculated quarterly and the total number of Trips below the minimum volume over the term of the Contract was 83 Trips in accordance with the schedule forming part of MFI 9 (T 275. 1 - 13) and that the alternative claim calculated to $265,600. The Plaintiff ultimately did not proceed with that proposed amendment. The Plaintiff's election not to proceed with that application to amend is considered further under the following subheading BREACH - PLEADING - CONDUCT OF CASE - WFM'S FORENSIC ELECTION in these reasons.
On Day 8 of the hearing, I sought assistance from the parties as to the agreed meaning of shortfall Trips the subject of the Plaintiff's claim. I addressed the inconsistent statements made by counsel as to what a shortfall Trip was and the difficulty of relating those descriptions to tables of trips in Exhibit 3 and the schedule submitted by the Plaintiff with MFI 9 (see T 314. 37 - T 316. 34; T 318. 7 - T 319. 15). Counsel for the parties then informed the Court of the following agreement:
1. The Plaintiff's claim of 44 Trips shortfall represents the total number of return loaded and paid for trips, less than 120 Trips per quarter over 36 months (the term of the Contract was 3 years or 12 quarters) (T 316. 48 - T 317.4); and
2. There was a separate arrangement reached in January 2018, during the course of the Contract, whereby the Defendant agreed to pay the Plaintiff for some trips where there was no return load, also known as "cut runs" and the Plaintiff makes no claim in relation to them (T 317. 25 - 38).
[Note: Counsel for the Plaintiff then added that cut runs were only relevant in the Plaintiff's case because the Defendant in its cross-claim says it overpaid for some of them (T 318. 1 - 3). Whilst that was not an agreed statement, I have understood it to mean that no cut runs are amongst the claimed shortfall Trips.]
Under the Contract, the minimum quarterly volumes of 120 Trips was expressed to include other trips (Schedule 1 - General Terms and Conditions, "Services" definition). Differentiation between other trips actually run and the Sydney/Melbourne Lane runs is only involved in the mathematics and not a matter of significance in the determination of the issues in dispute.
Exhibit 3 is a schedule of Trips conducted in each quarter during the term of the Contract (5 December 2017 to 4 December 2020). It shows rises and falls in the volume of Trips completed. For instance, in the first quarter, 5 December 2017 to 4 March 2018, there were 122 Sydney to Melbourne runs, 117 Melbourne to Sydney runs and 9 other trips. In the final quarter, 5 September 2020 to 4 December 2020, there were 125 Sydney to Melbourne runs, 124 Melbourne to Sydney runs and no other trips. Exhibit 3 shows how the parties calculated Trips, defined in the Contract to be return runs, on the basis of single direction runs.
It is important, in order to understand the case as run, to observe that the Plaintiff claimed as a debt approximately $140,800 calculated by multiplying the Trip Fee of $3,200 x 44 being the shortfall of Trips it alleged. The Plaintiff proceeded primarily for that sum as a debt, in the alternative as liquidated damages in the same sum, or in further alternative for damages flowing from breach of the Contract by the Defendant. The Plaintiff says that in the event it is unsuccessful in its action for debt and that it fails to prove assessable damages, then it is entitled to nominal damages on account of the Defendant's breach of Contract. At an early point in the hearing, the parties did agree that arithmetically, over the term of the Contract, the Plaintiff performed 44 Trips less than the numerical total of the minimum quarterly volumes of 120 multiplied by 12 quarters: Exhibit B; MFI 10 at [9]-[10].
The final adjustment of the Plaintiff's claim appears in its Closing Written Submissions (MFI 9 at [47]-[49]) where it conceded an adjustment for two erroneous Trip payments made to it by the Defendant in the total sum of $2,898.11, resulting in a claimed value of the shortfall of Trips in the sum of $137,901.89 exclusive of GST. It is convenient to take up that admission when dealing with the cross-claim.
In his email, Mr. Trikash reminded Mr. Kidner that no contractual or legal relationship or commitment would exist until the parties had signed "the Agreement and the SOE" which was a reference to the Contract incorporating the Statement of Engagement within which was Attachment 2, the construction of which is a central issue disputed by the parties. This was confirmed by Mr. Kidner in his response email on 5 October 2017. About one half hour later, Mr. Trikash emailed Mr. Kidner to inform him that the Contract and Statement of Engagement had been forwarded by Express Post on 4 October 2017. On 9 October 2017 at 11:07am, Mr. Kidner emailed Mr. Trikash seeking confirmation that the term of the Statement of Engagement was to be 3 years. In response, Mr. Trikash wrote on 10 October 2017 advising:
"The contract is for a 3 year term but the volumes and rates are fixed for 12 months and will be reviewed every 12 months.
If this is not clear in the contract or Statement of Engagement, we will amend to reflect the above."
The evidence does not permit me to determine whether or not Mr. Kidner's email on 9 October 2017, was received before or after the Contract was made. But neither party suggested a significance in that fact.
As will be seen, in my opinion, this is not a case where communications in the course of negotiation before the Contract, conflict with what I consider to be the plain meaning of the wording of the Contract or with the commercial character of the bargain struck in the Contract.
Mr. Peters had some awareness of WFM's negotiating with Toll through Toll's RFQ portal. The entries were made not by him, but by WFM's CEO, Mr. Kidner. The RFQ was available to Mr. Peters on a monitor in the boardroom. He said that he was aware that there were "lots of costs" involved in performing the Contract, but there is no evidence that WFM's costs were declared or stated to Toll: T 111.
Mr. Peters explained in his affidavit evidence, that in order to meet its obligation to perform Trips ordered by Toll, WFM would station two line haul drivers in the Sydney depot (the Sydney drivers) and two line haul drivers at its Melbourne depot at Altona (the Melbourne drivers). The Sydney and Melbourne drivers would carry out nightly journeys from their originating depot in either Sydney or Melbourne and then return the same day to their originating depots having been reloaded in Melbourne (for Sydney based drivers) and Sydney (for Melbourne based drivers).
When bidding under the RFQ process, internally WFM considered the cost of drivers, maintenance of trucks and trailers, fuel costs, downtime in waiting for goods to be loaded and finance costs for the purchase of the trucks and trailers necessary to perform what was required under the Contract. This evidence admitted as of Mr. Peters' thinking at the time, appears at [16] of his affidavit.
Evidence in the hearing does not include precise or detailed information concerning those obvious heads of cost to WFM. In cross-examination, Mr. Peters said that whilst WFM did directly employ some drivers, drivers performing the work the subject of the Contract were contracted through a company and were not direct employees. The driver supplying contracted company charged WFM for each day that a driver did work at the request of WFM. The cost paid to the driver contracting company was based on a trip rate plus an hourly rate when the driver had to wait or was held up: T 116. 30 - T 122. 14. The cost of fuel was also contemplated by WFM to be included in the agreed fee of $3,200. Mr. Peters explained that cost as follows: "… It's done on the form of a base rate and it's so much a litre and I don't know what it was at the time. And then the fuel surcharge goes on top of that and fuel levy goes on top of that". He identified the fuel surcharge as a government surcharge. He explained that the cost of drivers included them waiting whilst Toll loaded or unloaded the trailers. WFM did not load or unload. Mr. Peters' understanding was that the truck would arrive at the Sydney or Melbourne destination depot at around 9:30pm and might be ready to leave for the return trip with trailer loaded at around 12:20am - 1:00am and that the cost of driver waiting time was contemplated by WFM when bidding for the ultimately agreed fee of $3,200.
In Mr. Peters' above evidence, he confirmed the existence of what one would reasonably have expected to be overheads of WFM in the performance of Trips, but he did not give and nor is there elsewhere in the evidence the amounts of those costs.
WFM purchased four new trucks and four B-double trailer sets for the purpose of performance of the Contract. WFM incorporated a capital expenditure assessment in its consideration of its $3,200 Trip fee. The finance was by chattel mortgage. Mr. Peters understood that the trucks were acquired by a form of hire purchase and actually became an asset of the company ultimately. All factors of cost of finance and contemplation of the value of the asset acquired were factored into WFM's internal tender process: Mr. Peters at T 123.10 - T 124. 20.
It was in cross-examination that Mr. Peters was asked of his understanding of the Contract, to which he answered (T 129. 1 - 4):
"Q. And you knew on your construction of the contract that you'd get a certain number of trips over a three-year period at a certain price?
A. Yes."
The evidence during cross-examination of Mr. Peters which appears at T 116 concerning WFM's denial of having agreed to rollover of any shortfall Trips below the minimum committed quarterly volumes to subsequent quarters, at 2FASOC [9], was given on Day 3, before WFM changed its case by amendment with consent on Day 8 to that WFM did agree to rollover any shortfall of Trips below the minimum quarterly volumes to subsequent quarters: 3FASOC at [9].
I set out below a passage from Mr. Peters' evidence. The effect of his evidence was that WFM did request rollovers of shortfalls "right to the end of the contract", that WFM complained to Toll regarding rollover of shortfall of Trips. He also, without going into more detail, spoke of discussions between the parties' managers concerning shortfalls. When Mr. Peters gave the following evidence, WFM by 2FASOC at [9] denied that it agreed to rollover of shortfalls (T 116. 10 - T 117. 4):
"Q. Would you go to the next page please, paragraph 9 [note: this is a reference to 2FASOC [9]]. You'll see it says there, "The plaintiff did not agree to roll over any shortfall of trips below the minimum volume to subsequent quarters." Do you see that?
A. Yes.
Q. That was an instruction that you gave to your lawyers when you first started this case, wasn't it.
A. Yes.
Q. And that was the truth, wasn't it, that is that WFM did not agree to roll over any shortfall of trips below the minimum volume to subsequent quarters.
A. No.
Q. I want to put this a proposition to you and you can agree or disagree. What I want to put to you is that WFM never made a request during the course of the contractual period that any shortfall be rolled over into the next quarter, did it.
A. Yes - yes.
Q. How then do you explain what appears in paragraph 9 of court book page 13?
A. We did put - sorry I - I misunderstood the question. But we did request the rollover of things right to the end of the contract.
Q. How did you do that?
A. Through their line haul department and management.
Q. When you say through their line haul department, what do you mean by that answer? Did you--
A. Their managers.
Q. Sorry?
A. Their managers.
Q. Did you have a conversation with a manager?
A. Yes.
Q. You've not referred to that in your affidavit, have you.
A. No.
Q. So, if you had a conversation with a manager about rolling it over, why did you give you a solicitor instructions that WFM did not agree to roll over any shortfall of trips below the minimum volume to subsequent quarters?
A. On seeing that I don't - I don't agree because it was always agreed that we'd be doing 120 a quarter and it would be rolled over right to the end of the contract."
Mr. Peters explained that a run would be "cut" if Toll did not have the payload to be loaded or the time at which the load could be loaded was outside of the window for departure of the driver in order that the driver complete the return journey in the necessary time to comply with the rules and regulations of the Heavy Vehicle National Law ensuring drivers did not drive while fatigued. After the truck arrived at its destination point somewhere around 9:00pm - 9:30pm, the driver would perform checks of the truck and trailer combinations in preparation for departure on the return journey to either Sydney or Melbourne. If the truck could not be loaded and the pre-departure checks carried out by the driver by 10:30pm, the driver in order to comply with those national laws and in order for WFM to have the truck ready at its departure depot for the next Trip required under the Contract, was required to leave.
Mr. Peters described what he assessed as a problem developing with cut runs after about the first 12 months of the term of the Contract. He said that by 10:30pm at night, WFM was unable to source loads from other freight forwarding entities to fill the empty trailers for the return run from the destination depot to the departure depot (either Sydney or Melbourne). In about January 2018, he met with Toll representatives including Toll's National Transport Manager in Melbourne. He was accompanied by Mr. Kidner, WFM's CEO. Mr. Peters proposed that the parties agree a reduced rate for the homeward return run with an empty trailer. He said that WFM needed to be paid for that cut run otherwise it was not viable: Affidavit at [35]. He deposed at [36] "We discussed a reduced rate for a return trip with an (sic) empty trailers would be charged to Toll at $800 plus GST, and Fuel Rebate, this charge is 50% of the full contract rate of $1,600 plus GST and Fuel Rebate (the Agreed Reduced Rate for Return Trip Empty Loads). I said, WFM needs to cover its costs of a driver and fuel and other costs which are still incurred when there is an empty load or a cut load. The base costs are $800 (plus GST) and plus the Fuel Rebate." Mr. Peters deposed that Mr. Trikash for Toll responded, "that seems to be a fair cost. Toll will pay that reduced rate." This agreement was not recorded in writing.
After that meeting and until July 2019, WFM submitted tax invoices for cut runs and they were paid by Toll: T 133. 50 - T 134. 3. Those tax invoices issued by WFM to Toll for cut runs fell outside of the normal billing arrangements: T 134. 5 - 7; T 138 - T 140.
During cross-examination Mr. Peters was challenged on the basis that WFM was claiming a shortfall of 44 Trips during the term of the Contract, but in June 2020 (Exhibit H) Toll offered "to provide WFM with 70 additional round trip runs.". Mr. Peters gave the following evidence in cross-examination (T 148. 26 - 33):
"Q. Mr Peters, you understood that an offer was made in June 2020 of performing a further 70 trips in addition to those under the contract to make up any shortfall. Isn't that right?
A. I - I understood the offer between solicitors, yes.
Q. And you didn't give instructions to accept that offer. Is that a fair statement?
A. It never happened."
An assistant accountant at WFM, Ms. Gonzaga made an affidavit on 1 July 2022. She was not required for cross-examination and did not give oral evidence. Ms. Gonzaga was one of six people in the accounts team at WFM since 2006. Her duties included assisting with the preparation of the financial accounts of the company, account keeping, receivables, payables, and payrolls. During the term of the Contract, she observed the documentary process and account keeping for WFM's dealings with Toll. It is common ground that Toll would provide the driver of the WFM truck and trailer set with a document called an "LSD". On arrival at WFM's depot the driver would deliver the LSD to the accounts team and Ms. Gonzaga or one of her team colleagues would then enter the LSD information into the accounting system operated by WFM. WFM used a transport and logistics software program called Translogix to record all of its line haul and freight pickups. On occasions when Toll did not give the driver an LSD, WFM would request a copy from Toll and Toll would forward it to WFM by email. Every week or so WFM would receive payment into its bank account from Toll for trucking carriage runs covered by the LSDs during the previous period. It was part of Ms. Gonzaga's employment role to check to see that the payments made by Toll matched the LSDs received by WFM.
Toll would also send a Remittance Advice to WFM via email shortly after it made a payment for the LSDs. WFM's Translogix system required it to generate an invoice so that when payment was received from Toll it could be allocated against an invoice in the WFM accounting system. This cross-checking was performed by Ms. Gonzaga. Ms. Gonzaga deposed:
"[17] When the contract with Toll the subject of these proceedings started, Toll would send, in addition to the LSDs, Receipt Created Tax Invoices to Western Freight in the mail, generally on a weekly basis. When these were received Toll would usually already have already (sic) paid Western Freight for the trips referred to in the RCTIs.
[18] Toll stopped sending RCTIs in February 2019."
Part B - Agreement Acknowledgement, Condition 6(a) provided that fees payable to WFM for performing the Services were as specified in the Statement of Engagement. Condition 6 otherwise provided for Toll's right to review fees at any time on seven days' notice and at least annually, but it is common ground that during the term of the Contract, Toll did not review the fees payable in this case.
Part B - Agreement Acknowledgement, Condition 8 is of significance for determination of the parties' submissions concerning the construction of the Statement of Engagement. Condition 8 provided as follows:
"No Guarantee
It shall be at the absolute discretion of Toll … to source Services from the Subcontractor. Unless agreed otherwise in a Statement of Engagement, Toll … do not guarantee or make any assurance that any Services or any particular volume of Services will be sourced from the Subcontractor under this Agreement."
Schedule 1 - General Terms and Conditions, Condition 8 further limited Toll's obligations under the Contract. Condition 8.5 provided:
"Unless stated otherwise in a Statement of Engagement, Toll must provide the Subcontractor with the following:
8.5.1 Minimum number of hours of work - nil; and
8.5.2 Minimum income level - nil."
General Terms and Conditions, Condition 17.2 was of similar affect. Headed "Subcontractor Status", Condition 17.2 provided that "… except as stated in Paragraph 8 of Part B of this" Contract, ["Paragraph 8 of Part B" is Condition 8, quoted above] Toll has not given the Subcontractor any guarantee or warranty (considering the charges that Toll will pay under the subcontract) as to the Subcontractor's earning capacity, the minimum amount of Services to be provided by the Subcontractor or the minimum level of revenue the Subcontractor may earn under the Contract
In my opinion, the above referred to provisions plainly stated the parties' contractual intention to be that Toll did not warrant or guarantee to provide Trips, income, work or revenue except as prescribed in the Schedule 2 - Statement of Engagement.
Schedule 1 - General Terms and Conditions defined "Services" to mean the whole of the operations and services required by Toll for the Goods, which may be further particularised in a Statement of Engagement. "Goods" was defined to mean "goods and all loads referred to on the STO as accepted by the Subcontractor from Toll …". "STO" was defined to mean the transportation instruction or other work instruction given to the Subcontractor (such as a consignment note or a manifest) prior to or as part of each job/consignment/journey, as the case may be.
Schedule 2 - Statement of Engagement, Item 2 adopted the above referred to definition of Services and detailed the Services to be "Road Linehaul Services". Neither party submitted that "Road Linehaul Services" were other than as prescribed in the above Schedule 1 definitions.
Attachment 2 to the Statement of Engagement was set out and provided as follows (Court Book page 306):
Attachment 2 to Statement of Engagement
Fees
Please note that Toll reserves the right to apply the below rates if volume increases. In the event that minimum committed quarterly volumes are not achieved, these will be rolled into the next quarter with agreement from Western Freight Management Pty Ltd.
These rates are effective for the term of the Statement of Engagement as specified in item 1a of the Statement of engagement (12 months) and are exclusive of GST.
Lanes RFQ Bid Minimum Committed Quarterly Volumes
MEL-SYD B-double-Full-rig Round Trip $3,200.00 120
It is plain from the content of Attachment 2 to the Statement of Engagement, the definition of "Services" in the General Terms and Conditions and the Statement of Engagement detailing the Services to be Road Linehaul Services, that the whole of the engagement provided for in Attachment 2 was for Melbourne-Sydney-Full-rig Round Trip Road Linehaul Services for Goods and all loads instructed by Toll ("STO"). A "Round Trip" (adopting the schedule wording) was a Trip within the terminology I have adopted in these reasons.
There was no contractual wording in the Contract from which I would find that the purpose of and provision by Attachment 2 was a promise of revenue in a sum certain of revenue per quarter or during the term of the Contract. That construction would be inconsistent with Part B - Agreement Acknowledgement, Condition 8 and Schedule 1 - General Terms and Conditions, Clauses 8.5 and 17.2. This is consistent with construing the contractual intention in accordance with the priority amongst provisions of the Contract set out in Part B - Agreement Acknowledgement, Condition 7 and Schedule 2 - Statement of Engagement, Clause 1.
In my opinion, by the Contract, Toll promised no further or other provision to WFM than was prescribed in Attachment 2; Part B - Agreement Acknowledgement, Conditions 5(b) and 5(g); Condition 8; Schedule 1 - General Terms and Conditions, Clauses 8.5 and 17.2. This construction of the Contract is consistent with a reading of the Contract as a whole. In particular, the provisions for documentation entitling WFM to payment from Toll were related to completed road line haulage services required by Toll for loads accepted by WFM: Schedule 1 - General Terms and Conditions, Clauses 2, 4, 8 and 11, and Schedule 2 - Statement of Engagement, Item 3.
The heading for Attachment 2 of "Fees" provides no distraction from my analysis that Attachment 2, provided for an engagement between the parties only in relation to line haulage Trips. This is because in Schedule 1 - General Terms and Conditions, "Fees" was defined to mean rates or pricing for the Services particularised in the Statement of Engagement. Therefore, Attachment 2 included the agreed rate or price for a Trip achieved as instructed by Toll.
Returning to the second sentence of Attachment 2 to the Statement of Engagement. The word "committed" means devoted, wholeheartedly engaged, characterised by commitment, a committed relationship: Macquarie Online Dictionary 2022. The second sentence provided that in the event that Toll and WFM did not achieve their "devoted" engagement for 120 Trips, the shortfall would be rolled into the next quarter if WFM agreed. A shortfall below 120 Trips in a quarter was the subject of the sentence identified by the words "are" and "these". Those words refer to the volume of a shortfall of Trips. The word "will", in my opinion, was used in the imperative sense. The shortfall volume was to be rolled into the next quarter. The sentence provided that a shortfall volume below 120 Trips in a quarter must be rolled into the next quarter on the condition that WFM agreed.
In my opinion, the above construction meets with business efficacy because it prescribes the parties' intention to engage in the Service, whilst within the boundaries of the Terms and Conditions of the Contract which confined Toll's promise to that prescription. Attachment 2 prescribed that contractual engagement as follows:
1. The expected minimum volume of Trips per quarter was 120;
2. The fee per Trip was $3,200;
3. The Service was not limited to a ceiling of 120 Trips per quarter and in the event of an increase in that volume Toll retained the right to apply the Trip fee of $3,200;
4. In the event of a shortfall below 120 Trips in a quarter, Toll had to roll that shortfall volume into the next quarter; and
5. In the event of a shortfall of Trips below 120 in a quarter, Toll's obligation to roll the shortfall volume into the next quarter was contingent upon agreement of WFM to the rollover.
The business efficacy of rollover of Trips being conditional upon WFM's agreement was that it avoided the otherwise risk of an onerous obligation on WFM. This might, hypothetically, occur such as in the event that in a quarter Toll instructed no Services and in the next quarter expected WFM to service trucks, trailers, and drivers for 240 or more Trips which might have been beyond WFM's then capacity to meet.
It is significant that these commercial parties chose to engage in a commercial endeavour which was of their regular business activity of line haulage of loads, the genesis of the transaction was the Request For Quotation process which disclosed the terms of the Contract to be made (Exhibit A), in the course of which WFM selected the Melbourne-Sydney/Sydney-Melbourne B-double-full-rig Lane and through negotiation under that process, its bid was ultimately accepted: Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 at [46]-[49]. This observation supports finding the commercial terms of engagement in the express language of the Contract, at which I have arrived.
WFM put in its Closing Written Submission (MFI 9 at [14]) and with reference to circumstances surrounding WFM's pre-contractual bid:
"Mr Peters was looking for a "guarantee" (T110. 40) in order that the Contract would be viable for the Plaintiff (Peters [14]-[17]: CB139). He gave some evidence under cross examination of his understanding of the Contract (T112. 7-40), which involved the rolling over of the trips (not the rates) into subsequent quarters, which is admissible as to the true construction of the Contract to the extent that it goes to its commercial purpose: if the Plaintiff were to commit resources to the routes it bid for at the bid price, it was a commercial imperative that it received agreed minimum volumes for those routes." (emphasis added)
To the extent that Mr. Peters' hoped for contractual intention might be relevant in consideration of surrounding circumstances at the making of the Contract; in my opinion, the fact of his subjective understanding is of particularly little persuasion in this case because by email on 24 August 2017, Toll informed WFM during the bidding process that the revenue of $384,000 per quarter in contemplation of 120 Trips was a "potential spend" but not a finite commitment (see [24] of these reasons above).
Throughout the hearing I invited the parties to explain what work the words "will be rolled into the next quarter" (emphasis added) in the second sentence of Attachment 2 had to do on either of the constructions for which they contested: see T 38. 36 - T 40. 24; T 44. 15 - 39; T 85. 4 - 35; T 182. 35 - T 183. 31; and T 186. 10 - T 187. 9. During oral closing submissions (Day 7 of the Transcript but in reality, Day 8), I invited the parties (T 296. 47 - 49):
" … but whilst you're both at lunch, can I draw your attention to this? Neither of you dealt with the work to do [of] the words, next quarter, … in attachment 2 schedule 2."
Plainly the construction of the Contract prescribing the engagement the subject of the dispute between the parties in Attachment 2 to which I arrived at [66] above in these reasons does not fit with WFM's case of accumulation of shortfalls of Trips across the term of the Contract, or Toll's primary submission that it did not contractually promise its participation in the achievement of the minimum committed quarterly volumes and that in the event of a shortfall, it was only the Trip rate of $3,200 which was to be rolled into the next quarter conditional upon WFM's agreement.
During closing oral submissions, counsel for Toll accepted that my construction of Attachment 2 set out at [66] above was available on the evidence (T 349. 33 - T 350. 32) but it was not within his instructions to concede an obligation to rollover any shortfall into the next quarter: T 367. 28. Toll maintained its primary position that in the event of a shortfall in the minimum committed quarterly volumes, the fee of $3,200 would continue to apply to the rollover Trips, on condition of WFM's agreement. Counsel for the parties put their cases as follows (T 311. 37 - T 312 - 2):
"HIS HONOUR: Firstly, is it agreed or disputed that the words in attachment 2 to schedule 2 of the statement of engagement, these will be rolled into the next quarter, agreed to mean cumulatively, is that agree or not agreed?
YOUNG: It is agreed by the plaintiff.
HIS HONOUR: I mean between the parties.
YOUNG: I'm sorry, your Honour. I can't speak for my friend, but
HIS HONOUR: In your alternative case of if it's referring to volumes of trips.
STANTON: Yes, in the alternative case, the submission that I put to your Honour yesterday and I'll maintain today, is that they are rolled into the next quarter, but if they're not used in that quarter, they don't accumulate beyond to the next quarter."
Counsel for WFM said its case remained "… That the contract provided that we were entitled to 120 trips per quarter over 36 months, and they didn't provide it, we are entitled to that money as a debt." Or in the alternative in damages: T 386. 38 - 44.
For WFM to succeed in such a claim for debt, the Contract would have to be construed to mean that the parties agreed that over the three year term of the Schedule 2 - Statement of Engagement, Toll would book 1440 Trips with WFM (120 x 12 quarters) at the fee of $3,200. Again, in my opinion, that construction of the Contract would leave the words "rolled into the next quarter" in Attachment 2, prescribing what was to happen in the event of a quarterly shortfall of Trips, with no work to do.
Counsel for WFM put its case in oral closing submissions: "… the proposition that the parties would agree minimum volumes without minimum revenue is a separation of two concepts which makes no commercial sense to either party and is an uncommercial construction of the contract": T 383. 28 - 31.
WFM pressed that the reality of a shortfall in the achievement of volumes of Trips below the minimum committed engagement of 120 per quarter, if the Contract were to be construed as I set out at [66] above, would be to deliver to WFM a consequence that its trucks, trailers and drivers would be on standby incurring costs to WFM without revenue. WFM's position was that by the Contract the parties contemplated that WFM would have trucks, trailers and drivers at each of the Melbourne and Sydney depots at all times prepared to take Trips booked by Toll.
That Mr. Peters was looking for a "guarantee" of revenue under the Contract in order to protect, as he saw it, WFM in its commitment of resources to the Lanes for which it bid (WFM's Closing Written Submission MFI 9 at [14]; see [72] above) cannot be decisive of the contractual intention because it is not consistent with the contractual intention expressed in the wording of the Contract read objectively by a reasonable business person in the position of the parties: Laundy Hotels (Quarry) Pty Ltd v Dyco Hotels Pty Ltd [2023] HCA 6 at [27]; Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544 at 551; [2017] HCA 12 at [16], citing Electricity Generation Corp v Woodside Energy Ltd; Woodside Energy Ltd v Electricity Generation Corp (2014) 251 CLR 640 at 656-657; [2014] HCA 7 at [35]. The surrounding circumstances are not admissible to contradict the language of the Contract, in the way WFM proposes. As was said by Mason J in Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 at 352; [1982] HCA 24 of expressed pre-contractual intentions and expectations:
"… so far as they consist of statements and actions of the parties which are reflective of their actual intentions and expectations they are not receivable. The point is that such statements and actions reveal the terms of the contract which the parties intended or hoped to make. They are superseded by, and merged in, the contract itself. The object of the parol evidence rule is to exclude them …"
See also Ye v Chen [2022] NSWCA 219 at [40]-[41] per Macfarlan JA (Meagher and Mitchelmore JJA agreeing).
They are the principles to be applied here. The construction to which I arrived at [66] above is not absurd, nor on the evidence, was it shown to provide an absurd result for the parties.
An additional observation is that the implied condition of reasonable performance and cooperation would prevent Toll varying the volumes of Trips quarter by quarter in a way which was onerous. The implied duty to cooperate within commercial contracts may be summarised as "… a general rule applicable to every contract that each party agrees, by implication, to do all such things as are necessary on his part to enable the other party to have the benefit of the contract.": Butt v M'Donald (1896) 7 QLJ 68 at 70-1 per Griffith CJ endorsed by the High Court in Secured Income Real Estate (Aust) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 at 607; [1979] HCA 51 per Mason J. However, the implied duty to cooperate will not necessarily extend to "acts … not essential to the performance of that party's obligations and … not fundamental to the contract": Secured Income at 607.
If Toll failed to offer to provide rollover of a quarterly shortfall into the next quarter, it was in breach of its obligation prescribed by Attachment 2 - Schedule 2 of the Contract. Part B - Agreement Acknowledgement, Condition 8 and Schedule 1 - General Terms and Conditions, Clauses 8.5, 13 and 17.2 cannot be read so as to be inconsistent with or defeat that "agreed otherwise" (Part B, Condition 8 wording) prescription in Attachment 2. This follows from the priority of the Part B conditions when construing the Contract. In the event that Toll offered the rollover of a quarterly shortfall of Trips into the next quarter, and they were not taken up by WFM, Toll had satisfied its obligation in relation to that shortfall of Trips.
None of these scenarios were the subject of evidence because the case was conducted on the factual basis that the parties did not attend to the question of shortfall and did not communicate in relation to it on a quarterly basis. Shortfall of Trips achieved was addressed between the parties near the end of the Contract, by the correspondence Exhibit G and Exhibit H (in the 32nd and 33rd quarters of the contractual term), from which - as Mr. Peters put it - nothing occurred. This feature of how the hearing was run on evidence whilst WFM maintained its pleading 2FASOC, before its amendment to plead 3FASOC, is a significant issue dealt with separately later in these reasons: see following subheading BREACH - PLEADING - CONDUCT OF CASE - WFM'S FORENSIC ELECTION.
The Contract prohibits an expansive construction of Attachment 2 and makes it unavailable for WFM to claim an amount owing for a performance not prescribed. A claim for an amount owing on account of trucks, trailers and perhaps drivers standing by, pending Toll booking Trips, is a claim not based on that contractual prescription. It is a claim based on a performance not found within the Attachment 2 prescription of the engagement. Again, Attachment 2 prescribed the obligation of Toll in the event of a shortfall in the achievement of the minimum committed quarterly volumes within a quarter, to be that Toll rolled over into the next quarter that volume shortfall with WFM's agreement. The Contract did not provide any promise of a liability beyond that prescription in the event of such shortfalls. WFM was entitled not to agree to the engagement of taking up the shortfall in the next quarter. Whether WFM took up the shortfall or did not do so, the contractual prescription of Toll's obligation and of WFM's entitlement to the benefit of the shortfall so offered expired. Toll's obligation to rollover a shortfall in the next quarter was contingent on WFM's agreement. In this way, WFM had a choice between alternative remedies or rights open to it. The choice was to accept the shortfall rolled over when offered in the next quarter or to reject it without there being a breach of the Contract by Toll or WFM: Sargent v ASL Developments Ltd; Turnbull v ASL Developments Ltd (1974) 131 CLR 634 per Mason J at 654 - 656.
In the present case there is no evidence that WFM did not agree to the rollover of a shortfall of Trips offered by Toll or in any other way, at any point, rejected the offer of Trips in a subsequent quarter in excess of the minimum committed quarterly volumes of 120 for that quarter. I say this noting that as the hearing was conducted by WFM, except as stated by Mr. Peters as set out at [37] of these reasons, there was no evidence on this topic and Toll was not required to go into evidence on it.
Upon the construction of the Contract at which I have arrived, it did not provide for a payment as if on account of revenue lost to WFM, to be made by Toll to WFM on account of or in the event of the minimum committed quarterly volumes of Trips not being achieved in a quarter.
It is my opinion that WFM's claim for shortfall loss equal to a total of revenue below a promised $384,000 per quarter x 12 quarters is not proved on the evidence. There was no contractual wording obliging Toll to pay the $3,200 Trip rate on account of non-achievement of the minimum committed quarterly volumes generally and specifically when a shortfall was not rolled over to the next quarter. The evidence does not even permit a finding that the $3,200 Trip rate could have formed a reasonable pre-estimate of damage; or is presently a reasonable estimate of the damage. WFM's submission in relation to liquidated damages calculated on that basis, appears to be, as the case was run, not more than a repeat of its debt claim whilst cloaked in terminology of damages.
The evidence in the case does not explain what the booking system for Trips was. The evidence does not permit me to observe that Toll booked Trips with WFM, for instance, days before or a week before the date the freight was to be forwarded or at some other time. The evidence does not permit me to know of the arrangement between WFM and the company from which it contracted the drivers for the Trips such that I can ascertain whether they were engaged specifically for a Trip or for a day of work. Mr. Peters evidence in cross-examination that a driver contracting company was paid a trip rate and an hourly rate for time drivers were held up, was not evidence which I understood to mean that with "flick of fingers" immediacy, WFM could and did acquire drivers through that contracting company when Toll booked a Trip. Indeed, Mr. Peters also said that WFM did not contract drivers for a particular job: T 120. 20. Mr. Peters' evidence confirmed that drivers were engaged for a day, but his evidence did not describe the arrangement such that I could know whether the contracted company required advance notice of hours, days, or weeks or whether it could provide drivers instantly. In closing oral submissions, Toll conceded this state of the evidence against its written submission: T 348. 18 - T 349. 17.
Mr. Peters' evidence that trucks had to depart by about 10:30pm from the destination depot empty when Toll had not provided a load because it was too late in the day to find a load elsewhere, inferred that there was potential for WFM to find other work for its trucks, trailers, and drivers, even on the Sydney-Melbourne Lane, until some earlier time in the day of a run. In cross-examination, Mr. Peters confirmed that WFM employed its trucks, trailers, and drivers in other work. For Toll, WFM's trucks went to Clayton in Melbourne, destinations in Queensland, other parts of Sydney and to Adelaide: T 131 - T 132. No evidence was given of other work as it might or might not have been available to WFM from other freight forwarding companies.
Mr. Peters gave some scant evidence of the size of the WFM business. He said that in 2017 WFM employed about 170 drivers (T 118), some of whom were direct employees and some of whom were contracted from another company (T 119. 35 - T 120. 9). He said that a truck and trailer would be unavailable for other work if it was booked: T 122. 49 - T 123. 01.
That the Contract obliged WFM to service Trips Toll booked, in my opinion, does not on the scant evidence available, easily equate either contractually or practically to an obligation for trucks, trailers and/or contracted drivers standing idle.
Accordingly, Schedule 1 - General Terms and Conditions, Clauses 2.17 and 8.9 may have the effect that in the absence of WFM having complied with those requirements for provision of documentation, the monies claimed as a debt by WFM would not have fallen due: Melbournehomes.com Pty Ltd (In Liq), Re [2020] VSC 854 at [85]; Workman, Clark & Co Ltd v Lloyd Brazileno [1908] 1 KB 968 at 971 and 977 per Lord Alverstone CJ. However, according to my findings, just repeated, Clause 2.17 expressly states that it refers only to "paperwork associated with the completion of the Services", which means that compliance with Clauses 2.17 and 8.9 has no application in regard to WFM's claim based upon shortfall volumes, being Trips not run.
For the same reasons as above in my consideration of Clause 8.9, my opinion is that Clause 8.10 is focused on Services, meaning Trips completed by WFM at the instruction of Toll. For that reason, I reject Toll's argument that WFM's claim in these proceedings for compensation for shortfall in the volumes of Trips is contractually barred as having been brought out of time.
In closing oral submissions (T 384. 33 - 49), WFM responded to Toll's argument by putting that Schedule 1 - General Terms and Conditions, Clause 12 and Clause 2 of the Variation Deed respond to the situation of early termination of Contract, which did not occur here. Counsel for WFM extrapolated that proposition to put that those clauses are consistent with a contemplation that WFM would, in the circumstances here, receive compensation for its loss of revenue of $3,200 per Trip, being an unavoidable cost directly incurred by it as a result of Toll's failure to satisfy it for the minimum committed quarterly volumes of Trips. It is inherent in WFM's argument that it be assumed that the unavoidable cost to it was that loss of the full fee because trucks, trailers and perhaps drivers were standing by for the purposes of satisfying its side of that commitment by provision of Trips at the direction of Toll.
In my view, neither Contractual provision is of much assistance. Those provisions do not meet with the proposition of action in debt as WFM ran its case. As to the alternative claims and damages, the Variation Deed, Clause 2 does not describe, qualify or limit WFM's rights for recovery of damages for breach of contract during the term of the Contract and is otherwise consistent with general principles for recovery of damages consequent of breach of contract.
Whilst describing WFM's claim for compensation for shortfall in the volumes of Trips as a debt, in circumstances analogous to the facts in the Boral case, counsel for WFM identified it's executed performance of the Contract entitling it to sue in a sum certain calculated on the basis of the fee value of 44 shortfall Trips multiplied by $3,200; as it "made the trucks available, and whether we got the trips or not is not to the point when it comes to payment in accordance with the contract …" (T 246. 21 - 23).
In my opinion the following statement of principle by Dixon J (as his Honour then was) in Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435 at 463 - 464 provides helpful explanatory coverage of the question of when an action for the debt (as opposed to an action for breach of contract) would be available here:
"In certain forms of executory contract, where the promise of one party is to pay the other money in consideration of his transferring property, of his doing work, of his serving the former as his master, and, perhaps, of his providing other tangible things or definite services, the money to be paid is regarded as the price of or reward for the property or service when and so often as the transfer of the one or the performance of the other affords an executed consideration. In these contracts the promise to pay the price or reward is not construed as a simple obligation to pay a sum or sums at a future date, supported solely by a consideration consisting in the corresponding promise to transfer the property, do the work, serve, or provide the things or services by the other party, so that a mere readiness and willingness on the one side of the latter to perform his part is enough to entitle him to the payments, notwithstanding that, whether, owing to the fault of the former or without fault on either side, the property is not transferred, the work is not done, the relation of master and servant ceases, or the things or services are not provided."
The question, in this case is whether the Contract had been so far executed by WFM that nothing remained to be done but payment of the money which may be recovered: Schwarstein v Watson (1985) 3 NSWLR 134 at 147 - 149 per Priestley JA with whom McHugh JA as his Honour then was, agreed.
Whereas here, WFM identifies its standby readiness performance to be the complete execution on the basis of which it says the debt is due, I have found that the Contract did not prescribe an obligation to standby. Pursuant to the Contract, the execution for which the $3,200 fee was payable, was completion of a Trip of line haul freight load by WFM as it was required by Toll to do. That is the Service, described in the Contract and Attachment 2.
The parties here were not engaged as if in a hire contract as were the facts in Boral Resources (NSW) Pty Limited v Douglas John Challinor t/as Bedgebury Products & Services [2018] NSWSC 329 at [37]. In that case, Mr. Challinor was successful in suing in debt for a sum certain, being the fee to be paid for his equipment which pursuant to the contract had to remain on site at that fee for a definite period and could be removed only with the permission of Boral.
Here, nothing in the Contract describes an engagement whereby Toll was required to pay for WFM standing by with its trucks, trailers, and drivers.
The "sum certain for an executed consideration" (Young v Queensland Trustees Ltd (1956) 99 CLR 560 per Dixon CJ, McTiernan and Taylor JJ) in this case was $3,200 for a completed Trip of line haul freight load. It was not agreed that Toll would pay WFM that fee for a Trip not performed.
As these reasons earlier explained, I reach this meaning of the Contract mindful of Part B, Agreement Acknowledgement, Condition 8 which provided "… Unless agreed otherwise in a Statement of Engagement, Toll … [does] not guarantee or make any assurances that any particular volume of services will be secured from the Subcontractor under this Agreement." I observed that a reading of the whole Contract, and in particular Schedule 1 - General Terms and Conditions, Clauses 8.5 and 17.2, was of the same effect.
For the above stated reasons, in my opinion, WFM's action for debt, separate from its claims for damages for breach of contract, must be rejected.
At the opening of the case, WFM sought to amend the schedule of trips performed as set out in 2FASOC at [8]. Questions concerning Trips achieved, which questions involved analysis of the voluminous haulage documentation, resulted on Day 2 of the hearing in my order for referral under the Uniform Civil Procedure Rules, r 20.14 to a referee for analysis of that documentation and report. It was contemplated that the report would include elucidation of Trips achieved including by reference to date and departure/arrival points toward an answer as to whether or not all Trips were included in the calculation contained in WFM's Statement of Issues on Shortfall (MFI 4) and what that shortfall was: Exhibit B. In fact, the parties chose not to proceed by that Reference and tendered Agreed Answers to Questions (also in Exhibit B), including at (d):
"The total trips performed were 2792. Using the calculations for which [WFM] contends and which is set out in MFI 4, this would give rise to a shortfall of 44 round trips". (Trips).
After conclusion of evidence in WFM's case conducted on the basis of 2FASOC, Toll did not read or call evidence except for its tender of correspondence of request and provision of further and better particulars, and a schedule entitled "Trips Conducted In Each Quarter …" which document had in fact been prepared by WFM: Exhibit 3. Toll tendered evidence in its cross-claim, being invoices contained in Exhibit 4.
The total of Trips in Exhibit 3 is that agreed to by the parties in the above quoted passage from Exhibit B. Exhibit 3 was tendered during WFM conducting the case on the basis of 2FASOC. Exhibit 3 itemised trips between Sydney and Melbourne and Melbourne and Sydney (single direction runs), as well as other trips. Exhibit 3 was tendered and admitted without objection on Day 6 (wrongly entitled Day 5 in the Transcript): T 229. 45. Counsel for Toll explained the purpose of the tender as follows (T 230. 6 - 11):
"… The tender is because it identifies those quarters where, if the contract provided for the return trips as contended by the plaintiff, there was a shortfall …".
On the morning of Day 7 of the hearing (wrongly entitled Day 6 in the Transcript), whilst WFM still conducted the case on the basis of 2FASOC, the parties moved on their Closing Written Submissions. For WFM, this was MFI 9, dated 8 February 2023 and for Toll it was MFI 10, dated 7 February 2023.
By its Closing Written Submission, Counsel for WFM submitted that the "proper measure of damages is, of course, the loss of the profit that could have been earned by [WFM] on the Contract by reason of [WFM] being deprived of 44 trips, such profit, of course, being revenue net of costs.": MFI 9 at [50]. At [51], the loss of revenue was described as that "over the term of the contract" in the value of 44 Trips at $3,200 equalling $140,800 exclusive of GST.
Next WFM put that it received no cost savings on shortfall Trips because it "was required to have, and 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]; T 242. 20 - 48. At T 246. 21, counsel put that WFM had trucks available and whether WFM was booked for and achieved Trips or not "is not to the point when it comes to payment in accordance with the contract". In those circumstances, "lost revenue equates to lost profits and, therefore, to extend the claim is to be characterised as a claim for lost profits, [WFM's] claim is equivalent to its claim in debt or for liquidated damages.": Closing Written Submission MFI 9 at [53].
In the alternative, WFM sought damages as the Court might otherwise assess: Closing Written Submission MFI 9 at [54]. In this regard, WFM relied on Mr. Peters' evidence of his conversation with Mr. Trikash, earlier quoted from [36] of his affidavit. Mr. Peters was not challenged in cross-examination on that paragraph. WFM says that evidence "identified" the loss of profit per single direction Lane run between Sydney and Melbourne to be $800 plus GST; the premise being, that "base costs" were agreed in that conversation: Closing Written Submission MFI 9 at [54]. Counsel for WFM submitted, on that basis, damages in the alternative for the claimed 44 Trips shortfall calculated to $67,501.89 excluding GST: Closing Written Submission MFI 9 at [55]. Toll denied this.
WFM's above description of shortfall Trips to include its trucks, trailers and drivers travelling on the Lane between Sydney and Melbourne, brought a protest from Toll.
Counsel for Toll responded that runs on the Sydney-Melbourne Lane where trucks were empty to the depot of origin were included in the calculation of cut runs: T 278. 50 - T 279. 4. Then, and contrary to what had been put by counsel for WFM, concerning empty runs, he stated (T 282. 8 - 16):
"STANTON: "By Toll", on Mr Peters' evidence. Now, your Honour, the cut run claim for that period of time, July 2019 to December 2020, was a claim originally pleaded and a claim that was abandoned. So that is not, with respect, the case that is advanced for the shortfall; it can't be. The shortfall represents a claim where during a particular quarter, there was not the allocation of jobs to the tune of 120 return trips. So the error that concerned me, your Honour, is that my friend seems to be suggesting these trucks are running up and down at great expense to WFM, but there's no evidence of that at all."
I drew the parties attention to the rises and falls in quarterly Trips achieved as shown in Exhibit 3 and questioned why 117 Trips, having been achieved during the quarter 5 June 2018 to 4 September 2018 followed by 131 Trips having been achieved in the quarter 5 September 2018 to 4 December 2018, would not have been performance in accordance with Schedule 2 - Statement of Engagement, Attachment 2 of the Contract. Counsel for WFM confirmed that the only way WFM put its case was that the shortfall "is dealt with accumulatively over the life of the contract". He then added: "we could have put our case differently and our loss would be double that, but the fact is Mr Peters' evidence was to the effect that it accumulated": T 273. 23 - 25. And at T 274. 37 - T 275. 15:
"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: "36 trips" was an obvious misspeak for 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.
[Note: the document was the schedule which was then added to and incorporated in WFM's Closing Written Submissions MFI 9]
HIS HONOUR: Thank you.
YOUNG: So, when one looks at that relative to exhibit 3, your Honour sees that in the final column, we've included the quarters where there was a shortfall. If we just add those shortfall items, then the total shortfall is 83 trips and our claim would be nearly double. Now, we concede because of the way the case is pleaded and the way the evidence has come out, that the rolling over accumulates to the end of the contract, which leaves a shortfall of 82.
HIS HONOUR: So, the meaning of the numbers on this page is, as I said, if we go to exhibit 3, we find there were more than 120 provided in some months, but that's not the approach which the plaintiff has taken. The plaintiff has taken an accumulative approach. If one were to identify as actionable, a shortfall in any quarter, then totalling those shortfalls without giving any credit in excess of 120 provided in other quarters, the total shortfalls would be 83. [Note: again I misspoke "months" for "quarters".]
YOUNG: Yes, your Honour."
In its Closing Written Submission MFI 10 at [36], Toll put that on WFM's case as then pleaded (i.e. WFM did not agree to rollover of Trips): "WFM has failed to prove that there was ever an agreement to roll over any shortfalls and Toll's submission is that in the absence of any agreement to roll over the shortfall, any shortfall lapsed at the conclusion of the quarter in which it fell." At [37] Toll submitted, in the alternative, that if WFM did request that any shortfall should be rolled over to the end of the Contract, "The Court is being asked to elevate the oral evidence of Mr Peters to indicate a contractual requirement has been complied with. It should not do so in the absence of clear and unequivocal evidence proving the contractual pre-condition."
In short, Toll put both that it was meeting WFM's case as pleaded, that WFM did not advance evidence of agreement to rollover any shortfalls, and that Mr. Peters understanding that shortfalls accumulated was not of contractual consequence.
Counsel confirmed Toll's case to be that the fact of Trips achieved in excess of 120 in some quarters, as shown in Exhibit 3, does not infer that the excess was provided in order to satisfy an obligation in regard to rollover of shortfall in Trips: T 276. 41 - T 277. 1. Counsel for Toll subsequently referred to that as "swings and roundabouts" in the achievement of Trips: T 277. 7. He added, in the event that I found a construction that the shortfall was to be rolled over into the next quarter (as in these reasons I have done at [66]); then, likewise, that WFM did not agree to rollover as it pleaded in 2FASOC [9], meant that any entitlement WFM might have had in relation to the shortfall then expired: T 277. 46 - 48.
The above referred to submissions of counsel show that at a late stage and during closing submissions, Toll held WFM to the case it had pleaded and conducted, being its First Case. At that stage, WFM continued to proceed by way of its 2FASOC which at [9] denied that WFM agreed to rollover of the shortfall of Trips and that quarterly shortfalls rolled over "into subsequent quarters".
Counsel for Toll then submitted that the construction of Contract at which I have now arrived, "… Fits comfortably with clause 8.10" of the Contract: T 278. 9 - 10. Counsel for Toll referred to this alternative as it's "third leg" argument that, in the event of a quarterly shortfall of Trips, it was to be rolled over into the next quarter and Toll's obligation under the Contract for that shortfall would expire at the end of that next quarter: T 278. 5 - 6.
I addressed counsel for the parties on the inconsistency in their description of a shortfall Trip, the subject of WFM's contested claim. After a short adjournment, the resolution in the following quoted terms clarified that empty runs of the Sydney-Melbourne Lane were not included in in WFM's claim for shortfall Trips (T 316. 43 - T 317. 37):
"YOUNG: The parties agree--
…
YOUNG: --that the plaintiff's claim of 44 trips shortfall represents the total number of return loaded and paid for trips.
HIS HONOUR: Return loaded and paid for.
YOUNG: Trips. Less than 120 trips per quarter over 36 months…
…
HIS HONOUR: Is there anything else to say? Where do cut runs fit in that?
…
HIS HONOUR: Is there agreed position on that?
…
YOUNG: There was a separate arrangement reached later on during the course of the contract where Toll agreed to pay WFM for some trips where there was no return load.
HIS HONOUR: Yes.
YOUNG: Also known as cut runs. And WFM makes no claim in relation to them. That's the extent of the agreement…"
At that late stage of the hearing, during closing oral submissions, counsel for WFM proposed to put an alternative case by which it would bring its claim for damages for a shortfall of 83 Trips. This is the very case it had just confirmed in the above quoted passage (at [140]), "… 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 …", that it did not put. Counsel for WFM relied on the schedule incorporated into WFM's Closing Written Submission MFI 9. That schedule, which has been earlier referred to in these reasons, was entitled "TRIPS calculating only months of shortfall (i.e. no rollover)" (plainly "months" should read "quarters"). That schedule submits, by quarter, Trips totalling in excess of 120 and of less than 120. It also submits other Trips by quarter. The arithmetic total of 83 is made up of the shortfalls only without credit for Trips in excess of 120 achieved in some quarters.
Counsel for WFM then handed up a proposed amendment to 2FASOC (T 298. 6 - 8). It was marked MFI 11. It read:
Plaintiff's Proposed Amendment 9 February 2023
10A. Alternatively to 10, on a true construction of the Contract, the total number of trips below the Minimum Volume was 83 Trips in accordance with the Schedule forming part of MFI 9.
11. After "$150,400" insert "alternatively 265,600
It is convenient for present purposes to refer to that proposal as WFM's "Proposed Second Case".
WFM's Proposed Second Case was a proposal to bring a different case to that pleaded. It was also contrary to the agreed fact that the claimed total shortfall was 44 Trips: Exhibit B. Not surprisingly, counsel for Toll responded as follows (T 297. 16 - 18):
"… So, what my friend is attempting to do in submissions, is change the very case that was pleaded in those paragraphs [of the 2FASOC] to enlarge it to 83 trips."
Counsel for Toll opposed the late amendment proposed. He referred to the "countless amendments" by WFM of its claim brought in the proceedings which had been commenced in 2020, the last of which having been at the commencement of the hearing. When I enquired as to whether the proposed amendment would prejudice Toll, he responded that he would require to get instructions: T 299. 33. He properly described the application by WFM to be an attempt to bring "a different case to that" pleaded in its 2FASOC and to nearly double the arithmetically agreed shortfall of 44 Trips in Exhibit B (T 300. 20 - 25).
Had WFM not agreed to rollover of shortfalls in the quarterly committed minimum volumes of Trips, as pleaded in 2FASOC [9], then Toll's obligation for the shortfall was satisfied. WFM sought amendment to plead not just a difference in the number of Trips in the shortfall to be the subject of WFM's claim in damages; but rather, a proposal of a very different factual case in which what happened quarterly between the parties in relation to rollover of any shortfall, would become a purposeful enquiry. That enquiry was not necessary to be made when WFM brought its First Case on the contract term cumulative basis. On WFM's Propose Second Case, Mr. Peters' evidence quoted at [37] of these reasons provides clear reason for Toll to investigate, including with personnel within its Linehaul Department and with its managers as to how the parties did deal with each other and if WFM did raise the topic of rollovers of Trips when there were shortfalls in the minimum committed quarterly volumes.
As counsel for Toll pointed out, WFM's case as conducted (WFM's First Case) allowed a credit in the calculation of shortfall for those Trips in a quarter in excess of the minimum committed quarterly volumes of 120, but the proposed amendment (WFM's Proposed Second Case) did not allow that credit: T 300. 41.
After the opportunity to obtain instructions over the luncheon adjournment, counsel for Toll informed the Court that should WFM be permitted to amend its proceedings further, as counsel for WFM had proposed; then, Toll would seek an adjournment in order to meet the new case on the new factual issues: T 300. 20 - 21.
The next day, the parties agreed to proceed without adjournment on the basis of 3FASOC and D3FASOC. 3FASOC at [9] pleads that WFM did agree to rollovers. It is convenient to described 3FASOC as WFM's "Third Case" in the hearing.
WFM's Third Case did not claim the 83 Trip shortfall of WFM's Proposed Second Case. It returned to the claim of total cumulative shortfall of 44 Trips. Counsel for WFM returned to, as in WFM's First Case, that the words in Schedule 2 - Statement of Engagement, Attachment 2, "these will be rolled into the next quarter…" should be construed to mean cumulatively; i.e. across subsequent quarters for the term of the Contract: T 311. 37 - 41. Counsel for Toll confirmed, in the alternative, his "third leg" submission that any quarterly shortfall rolled into the next quarter: T 311. 49 - 50.
An accurate summary of the above events in WFM's conduct of the case, to which I have gone in detail, is that:
WFM elected not to further amend its Statement of Claim so as to plead as an available construction of the Contract, the construction which I have found that in the event of a shortfall in the minimum committed quarterly volumes of Trips, Toll's obligation was to rollover the shortfall into the next quarter with WFM's agreement;
WFM elected not to advance its claim on the basis of an entitlement arising on the event of each quarterly shortfall;
In this way, WFM elected to conduct its case in a way that evidence of whether or not Toll offered and WFM agreed quarterly to rollovers of any shortfalls was not in play;
WFM elected to proceed on the basis of a construction of the Contract that the words "these will be rolled over into the next quarter with agreement from [WFM]" in Attachment 2 should be construed to mean rollover cumulatively across the term of the Contract;
WFM elected to identify the breach of Contract on which it would sue for damages as a breach by Toll to provide in the achievement of 1440 Trips over the three-year term of the Statement of Engagement to the Contract; and
WFM elected to continue to claim a cumulative total shortfall of 44 Trips without Toll's case exposing, against the manner in which it was prosecuted by WFM, what if anything occurred quarterly between the parties in relation to shortfalls of Trips below the minimum committed quarterly volumes.
Pleadings are required to state with sufficient clarity the case that must be met; including the material facts making clear the causal nexus between the allegations of breach and the losses that are claimed: Stellar Vision Operations Pty Ltd v Hills Health Solutions Pty Ltd [2022] NSWSC 144 per Ward CJ at [290]; Banque Commerciale SA (in liq) v Akhil Holdings Ltd (1990) 169 CLR 279; [1990] HCA 11 at 286; Harris v Harris [2021] NSWCA 329. The case may be decided on a basis different from that disclosed by the pleadings where the parties have deliberately chosen some different basis for the determination of their respective rights and liabilities: Banque Commerciale at 287. Unlike the facts in that case, here WFM, on notice that Toll would seek an adjournment should WFM amend its pleading to claim damages on the basis of quarterly breach, elected to proceed strictly on its pleading in 3FASOC.
Given that WFM elected to continue in the hearing and not to permit Toll's legal representatives an adjournment to investigate the facts; Toll's concession, based on the evidence as the case was conducted at the prosecution of WFM, that the parties did not engage quarterly in regard to rollovers, cannot be taken as an admission by Toll of that fact, had WFM so amended its pleaded case. Toll does not admit 3FASOC at [9]: D3FASOC at [9].
Exhibit 3 cannot be taken at its face value, to be evidence of what, if anything, was communicated between haulage managers of the parties quarterly, concerning the availability of trips and loads because that document of schedule was tendered by Toll at a time when WFM prosecuted its First Case on the basis of the 2FASOC at [9] which both denied WFM's agreement to rollovers and claimed accumulation of shortfall across the term of the Contractual engagement. The tender preceded WFM's proposal on Day 8 of the hearing (entitled "Day 7" in the Transcript) to amend to plead a case of quarterly breaches by Toll (WFM's Proposed Second Case).
In my opinion, WFM is to be strictly held to its case as pleaded in its 3FASOC. WFM has failed in its case for the construction of the Contract for accumulation of shortfalls of Trips over the term of the Contract and has failed in its case for Toll's breach of that term. It follows that I cannot find that WFM is entitled to damages consequent of a breach not pleaded and not to be found as it prosecuted its case.
It follows that WFM must fail in its action for debt and for breach of contract.
Exhibits G and H were tendered by WFM. No objection was taken to the cross-examination of Mr. Peters in relation to Exhibit G and Exhibit H. As referred to above, his evidence was to the effect of his being aware of Toll's offer of 70 Trips and of it having been made in correspondence between solicitors. He then said that nothing happened.
S 131(1) of the Evidence Act 1995 prohibits the adducing of evidence of communications between parties in dispute, in connection with an attempt to negotiate a settlement of the dispute. Counsel for WFM referred to that statutory prohibition and subsequently acknowledged that WFM having tendered the correspondence and in accordance with s 131(2), it was admissible. In my opinion, that the Exhibits G and H had been tendered by WFM, the s 131(1) prohibition does not apply. The evidence was not tendered with any application for restriction of its use. In any event, s 131(2) provides for when that exclusion from evidence would not apply. S 131(2)(a), (b) provides for the circumstance which occurred here; that is, the evidence was tendered by consent. Further, the substance of Exhibit H was disclosed during the cross-examination by counsel for Toll of Mr. Peters. That cross-examination proceeded without objection. That course indicated an express or implied consent of WFM, and full disclosure of the evidence is reasonably necessary to enable a proper understanding of the other evidence, in accordance with the exception to the prohibition pursuant to s 131(2)(c).
In Closing Written Submissions (MFI 10) at [39] Toll put:
"The alleged shortfall is 44 trips and the claims for other unpaid amounts have been abandoned. In these circumstances, and regardless of the construction adopted, there was no breach of the alleged obligation to provide a minimum number of trips. The failure by WFM to take up the offer of completing any alleged shortfall is a failure by WFM to complete the agreement, not a failure by Toll. In these circumstances, there was no breach of the agreement by Toll."
In that submission, Toll put that even on the construction of Contract pressed by WFM, Toll's offer of 70 Trips with two quarters remaining in the Contract and in the terms of Exhibit H, to extend the Statement of Engagement if necessary, more than satisfied Toll's obligation under the Contract argued for by WFM.
Indeed, on the case as conducted, Toll did not have to offer an average of 35 extra Trips in each of those quarters. In order to achieve the number of 1440 Trips which WFM submitted was the contracted performance required of Toll, satisfaction required only 22 Trips per quarter.
In Closing Written Submissions (MFI 9 at [36]), counsel for WFM put that the offer of 70 Trips was queried by WFM (Exhibit J) and no response was received from Toll (Exhibits K and L). WFM submits that Toll cannot make any submission adverse to WFM in relation to the offer, as Toll did not put the terms of the offer to Mr. Peters in cross-examination, nor did they adduce evidence in response to the Exhibit J queries (Closing Written Submissions MFI 9 at [37]-[39]).
In fact, counsel for Toll put to Mr. Peters in cross-examination that he "understood than an offer was made … of performing a further 70 trips … to make up any shortfall …": T 148. 26 - 28. Mr. Peters responded that he "understood the offer between the solicitors" but that "It never happened": T 148. 29 - 33.
Exhibit J was WFM's solicitors correspondence advancing other contractual arguments before concluding with a question seeking confirmation that Toll's Exhibit H offer of 70 Trips was clear of a separate dispute which related to cut runs. But Mr. Peters' evidence was that he understood Toll's offer of 70 Trips to have been received. It was an offer communicated by Toll to WFM. Mr. Peters evidence that "nothing happened" was not further examined including by way of re-examination. I understood him to mean that the offer which he understood to have been made by Toll was not taken up by WFM. I did not understand his evidence to be that the offer was not taken up because he understood lawyers were communicating so it was not an offer available to be accepted. It was never put to Mr. Peters in re-examination that the offer was not taken up by WFM for that reason. Specifically, it was not put to Mr. Peters in re-examination that that was his meaning when he answered, "it never happened".
Nor was the offer of 70 Trips (Exhibit H) somehow buried in WFM's claim for $36,750 made by its solicitor on 23 February 2020 (Exhibit G). That was a separate claim. It concerned cut runs: Exhibits G, H and J; counsel for WFM at T 312. 31 - 33; T 314. 28 - 35. According to the understanding of counsel, in some way that claim for unpaid cut runs overstated the number of Trips claimed as a shortfall: T 314. 39 - T 315. 7.
Counsel for WFM then said that the offer contained in Exhibit H was "something extra - contractual", "not a contractual offer", an offer of a "separate contract" being a "potentially different contract": T 287 - 289.
I do not accept the submission that the Exhibit H offer proposed a separate or a different contract. The Contract by Part B - Agreement Acknowledgement, Conditions 4 and 5B and the offer at [10] both provided for extension of the term of the Statement of Engagement to meet contractual performance beyond the 4 December 2020 planned end of the contractual term. In my opinion, an available observation is that WFM's case that shortfalls accumulated over the term of the Contract, assumed a significant potential for run on beyond the planned and agreed term of 4 December 2020: see T 312. 1 - 19.
Ultimately, by its 5 June 2020 email, Toll refused to pay monetary compensation for a shortfall of Trips as if a debt, as claimed by WFM's solicitor (Exhibits G and J), and without admission, offered performance of 70 Trips. That is the offer which was not taken up by WFM.
That failure by WFM to take up the offer of completing any alleged shortfall was a failure by WFM to complete the agreement, not a failure by Toll to perform the provision of Trips. I agree with Toll's submission quoted above that in these circumstances, there was no breach of the agreement by Toll.
In closing oral submissions, counsel for WFM described Toll's submission as one of causation of loss. I have, and these reasons, employed my preferred characterisation of the issue in which this evidence was tendered by WFM as the question of whether or not Toll had performed its contractual obligations.
In my opinion, if I am wrong in my construction of the Contract and WFM's argument is correct that the agreement was for shortfalls in the minimum committed quarterly volumes to accumulate over the whole term of the Contract; even then, Toll's offer made in made on 5 June 2020 (Exhibit H) satisfied that performance. Had WFM accepted that offer, it's claim of shortfall and loss would have been expunged.
For the above reasons, WFM would not be entitled to damages on account of breach by Toll of the Contract, as claimed.
Toll submitted (Closing Written Submission MFI 10 at [46]-[51]) that the court will not estimate damages "as best it can" because Toll has deliberately or inadvertently not adduced evidence of damage which was available to it on reasonable enquiry. Toll also pointed to Mr. Peters evidence, to which I earlier referred, which strongly inferred that to some extent WFM could source other work when its trucks were not booked by Toll under the Contract: Closing Written Submission MFI 10 at [53]. The evidence does not permit an assessment of any accuracy to be made of the success of WFM obtaining other work for its trucks and trailers in the event that they were not booked by Toll. Mr. Peters evidence inferred that approaches for the obtaining of other work were worth making until late evening, by which time it was not possible to organise the loading of trailers and trucks to perform other work within the time permitted by Government regulations for safe haulage driving.
In Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 196 ALR 257; (2003) 77 ALJR 768; [2003] HCA 10, Hayne J (Gleeson CJ, McHugh and Kirby JJ agreeing) said at [38]:
"It may be that, in at least some cases, it is necessary or desirable to distinguish between a case where a plaintiff cannot adduce precise evidence of what has been lost and a case where, although apparently able to do so, the plaintiff has not adduced such evidence. In the former kind of case it may be that estimation, if not guesswork, may be necessary in assessing the damages to be allowed. References to mere difficulty in estimating damages not relieving a court from the responsibility of estimating them as best it can may find their most apt application in cases of the former rather than the latter kind …"
(Italics as appear in his Honour's judgment)
In that passage, Hayne J referred to authorities including the Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at CLR 83 per Mason CJ and Dawson J, at 138 per Toohey J. At 83 in Amann Aviation, Mason CJ and Dawson J, after approving a passage from Jones v Schiffmann (1971) 124 CLR 303 in the judgment of Menzies J, reasoned that assessment of damages does sometimes of necessity involve what is guesswork rather than estimation, and continued "Where precise evidence is not available the court must do the best it can … And uncertainty as to the profits to be derived from a business by reason of contingencies is not a reason for a court refusing to assess damages."
In this case, not only does WFM claim damages as compensation to it on the hypothetical basis of as if the Contract had been performed by the achievement of 44 Trips, but Toll concedes that the Trip fee of $3,200 included an element of profit: Closing Written Submission MFI 10 at [51].
It is, in my opinion, obvious that the contingencies and standard costs expenses involved in a Trip which I have found pursuant to the Contract to be a loaded return run between Sydney and Melbourne or vice versa, would far exceed a single direction run with empty trailers. Contingencies would, for instance, include wear and tear on tyres and the vehicle, fuel cost and costs associated with pulling the loaded vehicle, accelerating, breaking and cornering it over such a large distance. Another contingency would be the cost of waiting time for a driver in the event that there was some delay in loading. Mr. Peters referred to paying drivers for waiting time in addition to the standard contracted Trip fee. For these considerations, costs of $800 for a single Lane empty trip is inadequate for a return loaded Trip. Doing the best that I can on the evidence, and employing common sense, I am persuaded that WFM's performance of a Trip was a relatively high overhead and low profit margin activity. I would allow a profit of $400 per Trip for 44 Trips as damages suffered by WFM consequent of loss of performance of the Contract as claimed by it. This amounts to $17,600.
WFM pointed to what it described as the lack of evidence in Toll's case of the fact of mistake.
The facts concerning the issue of the impugned invoices can be found in the evidence of Mr. Peters and the Exhibit 4 invoices and are to be considered in the context of the surrounding circumstances of the transaction.
It will be remembered that in January 2018 the parties agreed on the cut run rate of $800. Mr. Peters' evidence was that that informal agreement came about because WFM was not paid anything for cut runs. Pursuant to the Contract, the parties engaged in the RCTI system, to which documentary process, Toll provided the driver of the WFM truck and trailer set with the LSD document. On arrival at WFM's depot, the driver delivered that LSD document to the accounts team, and it formed the basis of WFM and Toll accounting between them payments which were due from Toll to WFM. For instance, as was the evidence of Ms. Gonzaga, on occasions when Toll did not give the driver an LSD document, WFM would request a copy from Toll and Toll would forward it to WFM by email. By this system, every week or so, WFM received payment into its bank account from Toll for loaded trucking carriage runs covered by the LSDs. Toll would also send a Remittance Advice to WFM via email shortly after it made payment for the LSDs. Toll would send to WFM the Receipt Created Tax Invoices weekly, but generally when WFM would have already received payment from Toll for the Trips covered in the RCTIs. In February 2019 Toll stopped sending RCTIs.
In my opinion, a significant observation is that in what must have been a relatively low margin and high overhead enterprise, performance under the Contract contemplated such swift payment. Except in this part of the evidence, concerning the informal agreement for payment for cut runs, there is no evidence of extended payment delays.
I have observed that whilst the Contractual agreement according to Statement of Engagement - Attachment 2, prescribed a fee for a Trip of $3,200, being a loaded (return) Lane Trip fee, the parties by the above accounting process and as shown in Exhibit B and Exhibit 3, in practice, dealt with each other on a single Lane direction trip accounting basis.
The parties did not approach the issues on the cross-claim with reference to the definition of "Services". At [61] of these reasons, I determined Services to which Attachment 2 applied to be the Melbourne-Sydney-Full-rig Round Trip Road Linehaul for Services for Goods and all loads instructed by Toll ("STO"). Without dealing with that definition further, in the absence of submissions requiring me to do so, I confirm that cut runs did not include carriage of "Goods" (see paragraph [55] and [146] above). In any event, during the hearing the parties mutually approached the January 2018 informal agreement for the payment of $800 for cut runs, which were empty single direction Lane trips, as an arrangement outside of those fee provisions pursuant to the Contract. That is the basis upon which it is appropriate to approach determination of Toll's cross-claim.
The following two observations can plainly be made:
1. the parties were in the routine practise of quick accounting for and payment of single direction Lane trips (one half of a Trip fee - $1,600); and
2. a delay in payment of five months, was exceptional.
Mr. Peters evidence appears at T 133 - 141. The effect of it was as follows:
Until 2019, Toll did pay for cut runs at the rate of $800; however, despite the January 2018 agreement to pay the reduced rate, in July 2019 Toll "reneged" from paying for cut runs: Mr. Peters Affidavit [39]; T 133. 45 - T 134. 4.
Nevertheless, the invoices the subject of the cross-claim, from WFM to Toll, were in the sum of $1,600 and Mr. Peters was cross-examined in some detail concerning the invoice of 28 February 2019 for a cut run on 8 February 2019 from Melbourne to Sydney. Mr. Peters said, and there is no evidence to the contrary:
That whilst he could not be sure of what was occurring in February 2019, the fact that the invoice was in the sum of $1,600 may have been because for some months prior to July 2019, WFM had been invoicing at the reduced $800 rate but Toll had not been making payment. It was that delay which caused Mr. Peters "unilaterally" to decide to bill $1,600 for cut runs, as he put it, being the full Contract rate for a single direction trip even though the trailers were empty. He took the view that, on the basis of Toll's delay in payment, Toll had "reneged" on the informal Contract that cut runs would be paid in the sum of $800: T 135.15; T 136. 15 - 30; T 139. 45 - T 140. 20.
Although neither party pointed to it, in my opinion, a relevant fact in that described circumstance of Toll not paying WFM cut run invoices is that the invoices the subject of the cross-claim which spanned the period 12 December 2018 to 28 February 2019 were in fact paid.
In my opinion, Toll's submission that it paid invoices in the sum of $1,600 for an empty single direction Lane trip being a cut run, that being the standard Contract fee for a loaded trip, by mistake on its part, is readily acceptable. There is no basis for considering this to have been the result of mutual mistake because Mr. Peters' evidence was that he deliberately and unilaterally caused the invoices to be submitted for these empty cut runs in the sum of the standard Contract rate of $1,600. Toll relied on the decision in Taylor v Johnson (1983) 57 ALJR 197, but that decision concerns the making of a formal contract on mistaken terms, even if one party knows or should know that the other party was contracting on the basis of mistake and relief which might be available in such circumstances. In the present case, there was no mistake as to the terms of the informal cut run reduced rate agreement. The issuing by WFM of claims for cut runs at the usual loaded rate of $1,600, as I have said, is easily understood to have been processed mistakenly by Toll as if legitimately issued, resulting in payment in the greater sum of $1,600.
In Coshott Family Pty Ltd v Lyons [2022] NSWCA 216, Kirk JA (Meagher JA and Griffiths AJA agreeing) explained the principal, for application here, that Toll's obligation to succeed in its cross-claim was to establish prima facie it's mistake as a vitiating factor giving rise to WFM's obligation to make restitution. His Honour extracted the following passage from David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353; [1992] HCA 48 which I repeat and adopt for application here:
"… it is not legitimate to determine whether an enrichment is unjust by reference to some subjective evaluation of what is fair or unconscionable. Instead, recovery depends upon the existence of a qualifying or vitiating factor such as mistake, duress or illegality. As this Court stated in Westpac Banking Corporation:
'In other words, receipt of a payment which has been made under a fundamental mistake is one of the categories of case in which the facts give rise to a prima facie obligation to make restitution, in the sense of compensation for the benefit of unjust enrichment, to the person who has sustained the countervailing detriment.' …
The respondent's submission that the appellants must independently prove 'unjustness' over and above the mistake cannot therefore be sustained. The fact that the payment has been caused by a mistake is sufficient to give rise to a prima facie obligation on the part of the respondent to make restitution. Before that prima facie liability is displaced, the respondent must point to circumstances which the law recognizes would make an order for restitution unjust."
At [22], his Honour stated that the vitiating factor goes to establish that money [WFM has] received is held to the use of [WFM] so as to found a claim to restitution.
In my opinion, the unilateral decision of Mr. Peters to issue itemised empty cut run invoices at the regular loaded trip rate of $1,600 and the mistake made by Toll in the surrounding circumstance of its quick processing of payments for loaded Trips, was such a vitiating factor prima facie entitling Toll to restitution in the form of recovery of the amounts overpaid.
Turning to WFM's second point that the informal agreement had been repudiated by Toll's failure to pay, Mr. Peters' opinion that Toll had "reneged" on the cut run reduced rate agreement, is qualified by the fact that Toll did pay the invoices which were for cut runs. It is inferred from the evidence of invoices and payment that had WFM invoiced Toll at the agreed rate fee of $800 that's what would have been paid. When taken to the detail of the 28 February 2019 invoice as an example, Mr. Peters conceded that it identified the Melbourne to Sydney run as an empty run and gave other details including identification of the driver and of the truck (P150) and trailers (AT21 and BT21). Mr. Peters conceded that detail within the invoice, being a paid invoice, did describe the subject trips as a cut run.
It was not put on behalf of WFM, or suggested in the evidence of Mr. Peters, that the payment of invoices describing themselves to be for empty runs, was an acceptance by Toll that the informal agreement made 16 January 2018 for payment of cut runs in the sum of $800 was agreed by it to have terminated.
In the end, there was a delay of the payment for cut runs by Toll, but in the circumstances of invoices in fact being paid for cut runs, that delay does not, in my opinion, amount to unfair conduct or conduct rendering the arrangement unviable, in the surrounding circumstance of ongoing performance pursuant to the Contract. In my opinion, it cannot be said that according to the informal agreement for cut runs, prompt payment went to the root of the informal agreement such that there was a breach of a fundamental term that payment be made promptly, on the facts of this case: Shevill v Builders Licensing Board (1982) 149 CLR 620; [1982] HCA 47 at [6].
For the above reasons, Toll is entitled to succeed in its cross-claim in the sum of $10,586 on account of overpayment for those cut runs. WFM concedes a separate overpayment of $2,898. On that basis, Toll is entitled to judgment on the cross-claim in the sum of $13,384.