AA Technical Services Pty Ltd v Diedler [No 2]

[2024] WASC 11

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CIVIL

CITATION:   AA TECHNICAL SERVICES PTY LTD -v- DIEDLER [No 2] [2024] WASC 11

CORAM:   STRK J

HEARD:   20 SEPTEMBER TO 1 OCTOBER 2021

DELIVERED          :   19 JANUARY 2024

FILE NO/S:   CIV 1653 of 2016

BETWEEN:   AA TECHNICAL SERVICES PTY LTD

Plaintiff

AND

JOACHIM GOTTFRIED DIEDLER

First Defendant

PAUL GREGORY MCKENZIE

Second Defendant

Catchwords:

Unconscionable conduct - Statutory unconscionable conduct - Australian Consumer Law - Lease of commercial premises - Plaintiff a tenant of commercial premises - Landlord now a deregistered company - Defendants the directors of the deregistered company - Landlord desire to redevelop - Redevelopment notice - Determination of lease - Comprehensive fact-specific analysis of all underlying circumstances surrounding the contention of statutory unconscionable conduct - Whether landlord in breach of the lease - Plaintiff locked-out of the leased premises and prevented from trading - Relative strengths of respective bargaining positions - Removal and damage to plaintiff's property - Destruction of business - Whether the conduct complained of was established - Whether the established conduct was unconscionable - Entire factual matrix - 'Involved in a contravention' - Damages - Whether plaintiff suffered damage because of the defendants - Assessment of damages - Remedial purpose of the statute - Lacuna of documentary evidence - Books and records lost or destroyed - A deliberate wrong caused the position of uncertainty and the difficulty of proof - Qualification of the general proposition that the plaintiff has the onus to prove damages

Legislation:

Competition and Consumer Act 2010 (Cth) sch 2 s 21, s 236
Supreme Court Act 1935 (WA)

Result:

Judgment for the plaintiff against the first and second defendant

First and second defendant to pay the plaintiff damages for the loss of property

Category:    B

Representation:

Counsel:

Plaintiff	:	G D Cobby SC
First Defendant	:	M Tolcon & H Vu
Second Defendant	:	In Person

Solicitors:

Plaintiff	:	Roe Legal Services
First Defendant	:	Forbes Kirby
Second Defendant	:	Not Applicable

Cases referred to in decision:

AA Technical Services Pty Ltd v Diedler [2021] WASC 336

Allianz Australia Insurance Ltd v GSF Australia Pty Ltd [2005] HCA 26; (2005) 221 CLR 568

Australian Competition and Consumer Commission v Geowash Pty Ltd (Subject to a Deed of Company Arrangement) (No 3) [2019] FCA 72, (2019) 368 ALR 441

Australian Competition and Consumer Commission v IMB Group Pty Ltd [2003] FCAFC 17; (2003) Aust Contract R 90-165

Australian Competition and Consumer Commission v Medibank Private Ltd [2018] FCAFC 235

Australian Competition and Consumer Commission v Online Dealz Pty Ltd [2016] FCA 732

Australian Competition and Consumer Commission v Quantum Housing Group Pty Ltd [2021] FCAFC 40; (2021) 388 ALR 577

Australian Securities and Investments Commission v Kobelt [2019] HCA 18; (2019) 267 CLR 1

Automasters Australia Pty Ltd v Bruness Pty Ltd [2002] WASC 286; (2003) ATPR (Digest) 46‑229

Berry v CCL Secure Pty Ltd (2020) 381 ALR 427

Berry v CCL Seizure Pty Ltd (2020) 271 CLR 151

Boland v Yates Property Corp Pty Ltd [1999] HCA 64; (1999) 167 ALR 575

Bradley v Voltex Group Holdings Pty Ltd [2016] FCA 1230

Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304

Collier v Howard (unreported, 23 April 1996, McLelland CJ in Eq)

Comcare v Martin [2016] HCA 43; (2016) 258 CLR 467

Curtin v Meadlow Holdings Pty Ltd (2001) Q ConR 54-552; [2001] QCA 145

D’Arcy v Burelli Investments Pty Ltd (1987) 8 NSWLR 317

Dialogue Consulting Pty Ltd v Instagram, Inc [2020] FCA 1846; (2020) 291 FCR 155

Director of Consumer Affairs Victoria v Scully (2013) 303 ALR 168

Doyle v Olby (Ironmongers) Ltd [1969] 2 QB 158

DW and JA Edwards Pty Ltd v Shih (1995) 7 BPR 14,405

Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7 [35], (2014) 251 CLR 640

Flogineering Pty Ltd v Blu Logistics SA Pty Ltd (No 3) [2019] FCA 1258

Flogineering Pty Ltd v Blu Logistics SA Pty Ltd (No 4) [2021] FCA 1219

G & M and MY Campbell v Cotton [1990] QSC 269

Generic Health Pty Ltd v Bayer Pharma Aktiengesellschaft [2018] FCAFC 183; (2018) 361 ALR 248

Glentham Pty Ltd v Luxer Holdings Pty Ltd [2002] WASC 80

Henville v Walker [2001] HCA 52; (2001) 206 CLR 459

Houghton v Immer (No 155) Pty Ltd [1997] NSWSC 608; 44 NSWLR 46

Hurley v McDonald's Australia Ltd [1999] FCA 1728

I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41; (2002) 210 CLR 109

Jasmin Solar Pty Ltd v Trina Solar Australia Pty Ltd [2020] FCA 1018

Juniper Property Holdings No. 15 Pty Ltd v Crewlodge Pty Ltd [2007] QSC 145

Kyiacou v Manakis [2006] NSWSC 804

La Trobe Financial Asset Management Ltd v Nikolyn Pty Ltd ACN 078 833 977 in its own right and as trustee for Nikolyn Unit Trust [2022] WASC 264; (2022) 166 ACSR 417

Malec v J C Hutton Pty Ltd (1990) 169 CLR 638

March v E & MH Stramere Pty Ltd [1991] HCA 12; (1991) 171 CLR 506

McMahon's (Transport) Pty Ltd v Ebbage [1999] 1 Qd R 185

Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37

Murphy v Overton Investments Pty Ltd [2004] HCA 3;(2004) 216 CLR 388; (2004) 204 ALR 26; (2004) ATPR 41-973

Official Assignee v Maxwell (1893) 11 NZLR 312

Paciocco v Australia & New Zealand Banking Group Ltd [2015] FCAFC 50; (2015) 321 ALR 584; (2015) 236 FCR 199

Paciocco v Australia & New Zealand Banking Group Ltd and Good Living Company Pty Ltd as trustee for the Warren Duncan Trust No 3 v Kingsmeade Pty Ltd [2021] FCAFC 33

Parker t/as on Grid off Grid Solar v Switchee Pty Ltd t/as Australian Solar Quotes (No 2) [2019] FCA 79; (2019) 134 ACSR 507

Penton v Robart (1802) 2 East 88, 89; 102 ER 302, 303

Pitcher Partners Consulting Pty Ltd v Neville's Bus Service Pty Ltd [2019] FCAFC 119

Pollock v Hicks [2015] NSWCA 122

Productivity Partners Pty Ltd v Australian Competition and Consumer Commission [2023] FCAFC 54; (2023) 297 FCR 180

QNI Resources Pty Ltd v Sino Iron Pty Ltd [2016] QSC 62

Rafferty v Madgwicks [2012] FCAFC 37; (2012) 287 ALR 437

Roberts and James v Huntington (1901) 3 WAR 33

Rural Press Ltd v Australian Competition and Consumer Commission [2003] HCA 75; (2003) 216 CLR 53

Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 15] [2023] WASC 56

Smith v City Petroleum [1940] 1 All ER 260

Stubbings v Jams 2 Pty Ltd [2022] HCA 6; (2022) 96 ALJR 271

Travel Compensation Fund v Tambree [2005] HCA 69; (2006) 224 CLR 627

Unique International College Pty Ltd v Australian Competition and Consumer Commission [2018] FCAFC 155; (2018) 362 ALR 66

Wardley Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 514

Yorke v Lucas [1985] HCA 65; (1985) 158 CLR 661

Young Investments Group Pty Ltd v Mann [2012] FCAFC 54

Table of Contents

Introduction

The law

AA Technical Services' claim

Overview and observations in relation to the evidence

Findings

Was the complained of conduct established?

Damages

Final orders

STRK J:

Introduction

1. AA Technical Services Pty Ltd as trustee for the Alan Dodd Family Trust claimed damages as against Joachim Gottfried Diedler and Paul Gregory McKenzie pursuant to the Australian Consumer Law (sch 2 of the Competition and Consumer Act 2010 (Cth)) s 236, together with interest on all sums awarded to AA Technical Services pursuant to the Supreme Court Act 1935 (WA) and costs. The damages claimed were said to arise from Mr Diedler and Mr McKenzie having been knowingly concerned in the statutory unconscionable conduct of AWD Diversified Pty Ltd, a now deregistered company, in relation to a lease of premises located at 100 Murray Street, Perth, that was entered into as between AWD Diversified as landlord and AA Technical Services as tenant. At all material times, Mr Diedler and Mr McKenzie were the directors of AWD Diversified.

2. In summary, it was AA Technical Services' case that AWD Diversified, by the conduct of Mr Diedler and Mr McKenzie, displayed a complete disregard for AA Technical Services' rights; and that conduct resulted in the unlawful termination of AA Technical Services' lease, AA Technical Services being impermissibly locked‑out of the leased premises and thereby prevented from trading, the subsequent removal of and damage to AA Technical Services' plant and equipment and, ultimately, the destruction of the business operated by AA Technical Services at the leased premises, a fitness centre known as CBD Health Spa. 

3. AA Technical Services contended that the conduct of AWD Diversified was unconscionable and contravened s 21 of the Australian Consumer Law; that Mr Diedler and Mr McKenzie were involved in, aided and abetted, were directly or indirectly knowingly concerned with, or were a party to the contraventions of s 21 of the Australian Consumer Law by AWD Diversified; and as a result of the conduct of AWD Diversified, and Mr Diedler and Mr McKenzie's conduct or involvement in contraventions of s 21 of the Australian Consumer Law, AA Technical Services suffered loss and damage.

4. The claim was defended by Mr Diedler and Mr McKenzie. In summary, it was Mr Diedler's position that at trial, AA Technical Services failed to establish that the conduct of AWD Diversified was unconscionable; that AWD Diversified's conduct caused AA Technical Services' loss; or that Mr Diedler was knowingly concerned in any unconscionable conduct of AWD Diversified. Mr Diedler invited the court to find that his conduct, when acting as a director of AWD Diversified, was honest, upfront and reasonable having regard to the commercial interests of AWD Diversified; was absent of mala fides, subterfuge, exploitation or any other unconscionable trait; and on an objective view, did not constitute unconscionable conduct in contravention of s 21 of the Australian Consumer Law, as was alleged by AA Technical Services.

5. AA Technical Services and Mr Diedler were represented at the trial of the action, whereas Mr McKenzie appeared in person. Both defendants defended the claim and Mr McKenzie adopted from time to time submissions made on behalf of Mr Diedler during the course of the trial, particularly submissions made as to the operation of the Australian Consumer Law. However, Mr Diedler and Mr McKenzie were not aligned on all matters as reflected in their respective pleaded defence.

6. In summary, it was Mr McKenzie's position that his actions and those of Mr Diedler were reasonable in all of the circumstances as he and Mr Diedler acted in the best interest of shareholders and to protect the assets of AWD Diversified. 

7. For the reasons which follow, I made the following findings.

   1.AWD Diversified by leasing commercial premises to AA Technical Services engaged in conduct in trade or commerce with the supply of services. 

   2.Certain conduct of AWD Diversified that AA Technical Services complained of was unconscionable and contravened s 21 of the Australian Consumer Law. Not all of the conduct complained of was established, and not all of the conduct complained of that was established, taken individually or as a whole, in the circumstances was unconscionable.

   3.Mr Diedler and Mr McKenzie were involved in the unconscionable conduct that was established, and were each involved in a contravention of the Australian Consumer Law.

   4.As a result of the unconscionable conduct of AWD Diversified that was established, and Mr Diedler and Mr McKenzie's conduct or involvement in a contravention of the Australian Consumer Law, AA Technical Services suffered loss and damage.

   5.AA Technical Services was entitled to damages against Mr Diedler and Mr McKenzie pursuant to the Australian Consumer Law s 236, together with interest and costs.

The law

Statutory unconscionable conduct - Australian Consumer Law

1. Section 21 of the Australian Consumer Law provides:

   (1) A person must not, in trade or commerce, in connection with:

   (a) the supply or possible supply of goods and services to a person; or

   (b) the acquisition or possible acquisition of goods or services for a person;

   engage in conduct that is, in all the circumstances, unconscionable.

2. Section 2 of the Australian Consumer Law defines 'trade or commerce' relevantly to mean trade or commerce within Australia and includes any business or professional activity (whether or not carried on for profit).

3. Conduct for the purposes of s 21 means the doing or refusing to do any act.[1] The prohibition only applies if the conduct is 'in connection with' acquisition or supply, or possible acquisition or supply, of goods or services. The leasing of commercial premises falls within the meaning 'services' in s 2 of the Australian Consumer Law.

   [1] Australian Consumer Law s 2(2)(a).

4. Section 21 is triggered by a person 'engaging in conduct' that is unconscionable. It is not directed at engaging in conduct generally. It is directed in engaging in conduct in connection with acquisition or supply, or possible acquisition or supply, of goods or services.

Unconscionable

1. Statutory unconscionability is not defined. The term 'unconscionable' in s 21 is not limited to the unwritten law relating to unconscionable conduct.[2]  It is not necessary to show that a person has a pre-existing disability, vulnerability or disadvantage of which advantage was taken or that any particular person has been disadvantaged by the conduct.[3]

   [2] Australian Consumer Law s 21(4)(a).

   [3] Australian Competition and Consumer Commission v Quantum Housing Group Pty Ltd [2021] FCAFC 40; (2021) 388 ALR 577 [78]; Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 15] [2023] WASC 56 [2162], [2175].

2. Whether or not conduct is unconscionable is a decision to be made on the facts, having regard to all relevant circumstances.[4]  That is, the court is to undertake a comprehensive fact-specific analysis of all underlying circumstances surrounding a contention of statutory unconscionable conduct.

   [4] Australian Consumer Law s 21(1).

3. Statutory unconscionability requires an objective evaluation of behaviour including the reasons for such behaviour and the effect or likely effect of that behaviour.  It does not focus on the alleged wrongdoers or their officers or employees' state of mind, actual intent or knowledge or what they ought to have known.[5]

   [5] Australian Securities and Investments Commission v Kobelt [2019] HCA 18; (2019) 267 CLR 1; Australian Competition and Consumer Commission v Medibank Private Ltd [2018] FCAFC 235.

4. In Australian Securities and Investments Commission v Kobelt, Gageler J at [92] stated that statutory unconscionable conduct involved conduct that is so far outside societal norms of acceptable commercial behaviour as to warrant condemnation as conduct that is offensive to conscience.  At [93], Gageler J further explained that:

   The judgment required of a court exercising jurisdiction in a matter arising under s 12CB [by analogy s 21 of the Australian Consumer Law] is a heavy one. For a court to pronounce conduct unconscionable is for the court to denounce that conduct as offensive to a conscience informed by a sense of what is right and proper according to values which can be recognised by the court to prevail within contemporary Australian society. Those values are not entirely confined to, or entirely removed from, the values which historically informed courts administering equity in the development of the unwritten law of unconscionable conduct. They include respect for the dignity and autonomy and equality of individuals. They include respect for the cultural diversity of communities.

5. Recently, the relevant question was described as being whether or not, on the facts, 'the conduct is so far outside societal norms of acceptable commercial behaviour as to warrant condemnation as conduct that is offensive to conscience … taking into account the factors in s 22 and informed by a sense of what is right and proper according to values which can be recognised by the court to prevail within contemporary Australian society'.[6]

   [6] Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 15] [2168].

6. In Australian Securities and Investments Commission v Kobelt, at [295] Edelman J acknowledged that there was no clear baseline moral standard as to what constitutes unconscionable conduct but observed that the standard must be lower than that developed in equity even though it may not be as low as 'unreasonableness' and 'unfairness'.

7. Smith J observed in La Trobe Financial Asset Management Ltd v Nikolyn Pty Ltd ACN 078 833 977 in its own right and as trustee for Nikolyn Unit Trust [2022] WASC 264; (2022) 166 ACSR 417, that a court should take the serious steps of denouncing conduct as unconscionable only when it is satisfied that the conduct is 'offensive to a conscience informed by a sense of what is right and proper according to values which can be recognised by the court to prevail in Australian society'.[7]

   [7]  La Trobe Financial Asset Management Ltd v Nikolyn Pty Ltd ACN 078 833 977 in its own right and as trustee for Nikolyn Unit Trust [494], citing Stubbings v Jams 2 Pty Ltd [2022] HCA 6; (2022) 96 ALJR 271 [57] ‑ [58], which in turn cited Australian Securities and Investments Commission v Kobelt [84] ‑ [87], [93], [120], [153] ‑ [155], [302] and [234].

8. I proceeded on the basis that the observations made by the High Court concerning statutory unconscionable conduct in Australian Securities and Investments Commission v Kobelt vis-à-vis the Australian Securities and Investments Commission Act 2001 (Cth) must be read as directly instructive to the like provisions of the Australian Consumer Law.[8]

   [8] Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 15] [2168].

9. In Australian Competition and Consumer Commission v Geowash Pty Ltd (Subject to a Deed of Company Arrangement) (No 3) [2019] FCA 72, (2019) 368 ALR 441, Colvin J observed that statutory unconscionable conduct is not established by proving any breach of the norms underpinning commercial laws or codes of conduct or prevailing business standards or establishing an element of hardship or unfairness to the other party.[9]  'Unconscionable conduct', his Honour said, 'is characterised by a substantial departure from that which is generally accepted commercial behaviour.  It is a departure that is so plainly or obviously contrary to the behaviour to be expected of those acting in good commercial conscience that it is offensive'.[10]

   [9] Australian Competition and Consumer Commission v Geowash Pty Ltd (Subject to a Deed of Company Arrangement) (No 3) [662].

   [10] Australian Competition and Consumer Commission v Geowash Pty Ltd (Subject to a Deed of Company Arrangement) (No 3) [662]. 

10. Conduct in breach of contract is not necessarily, for that reason alone, unconscionable conduct.[11]  However, both the terms of a contract, and the manner in which a contract is carried out, may be taken into account in considering whether conduct to which a contract relates to is unconscionable.[12]

    [11] Hurley v McDonald's Australia Ltd [1999] FCA 1728 [31].

    [12] Australian Consumer Law s 21(4).

11. Unconscionable conduct often involves 'dishonesty, predation, exploitation, sharp practice, unfairness of a significant order, a lack of good faith, or the exercise of economic power in a way worthy of criticism'.[13]  Whilst conduct in breach of a contract is not necessarily unconscionable conduct, behaviour which is unreasonable, unfair, bullying and thuggish or which shows no regard for conscience may constitute unconscionable conduct, as may acting unreasonably and capriciously, without regard for the legitimate interest a party has in the benefits of his or her contract.[14]

    [13] Unique International College Pty Ltd v Australian Competition and Consumer Commission [2018] FCAFC 155; (2018) 362 ALR 66 [155].

    [14] Automasters Australia Pty Ltd v Bruness Pty Ltd [2002] WASC 286; (2003) ATPR (Digest) 46‑229 [393].

12. Section 22(1) of the Australian Consumer Law sets out 12 matters to which the court may have regard in determining whether conduct in any particular case amounts to statutory unconscionable conduct on the part of the supplier. These matters are non-exhaustive and do not set the boundaries nor define or limit what constitutes statutory unconscionable conduct.[15] While the matters listed inform evaluations of conduct, ultimately the court is obliged to make an assessment considering all relevant circumstances. The whole conduct needs to be assessed. The presence of one or more matters contained in s 22(1) is not necessarily determinative.[16]  Some matters may not be relevant in a particular case and not all of the matters may point to the same conclusions.[17]

    [15] Dialogue Consulting Pty Ltd v Instagram, Inc [2020] FCA 1846; (2020) 291 FCR 155.

    [16] Director of Consumer Affairs Victoria v Scully (2013) 303 ALR 168 [41] ‑ [42].

    [17] Australian Competition and Consumer Commission v Geowash Pty Ltd (Subject to a Deed of Company Arrangement) (No 3).

1. On behalf of AA Technical Services, the following matters were suggested as being relevant in this case:

   (a)the relative strengths of the bargaining positions of the supplier and the customer: s 22(1)(a);

   (b)whether, as a result of the conduct engaged in by the supplier, the customer was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the supplier: s 22(1)(b);

   (c)whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the customer or a person acting on behalf of the customer by the supplier or a person acting on behalf of a supplier in relation to the supply or possible supply of the good or services: s 22(1)(d);

   (d)if there is a contract between the supplier and the customer for the supply of the goods or services, any conduct that the supplier or the customer engaged in, in connection with their commercial relationship, after they entered into the contract: s 22(1)(j)(iv); and

   (e)the extent to which the supplier and the customer acted in good faith: s 22(1)(l).

2. There are also other values and norms that must be taken into account, which include the value of certainty, justice and equity.[18]

Damages

[18] Paciocco v Australia & New Zealand Banking Group Ltd [2015] FCAFC 50; (2015) 321 ALR 584; (2015) 236 FCR 199.

1. Contravention of s 21 of the Australian Consumer Law can result in pecuniary penalties pursuant to s 224, and damages pursuant to s 236. Section 236 relevantly provides that if:

   (a)a person (the claimant) suffers loss or damage because of the conduct of another person; and

   (b)the conduct contravened a provision of Chapter 2 or 3;

   the claimant may recover the amount of the loss or damage by action against that other person, or against any person involved in the contravention.

2. In order to obtain relief pursuant to s 236 the claimant must prove that it suffered loss or damage because of the conduct of another person in breach of the Australian Consumer Law.

3. I proceeded on the basis that having regard to the text, context and purpose of the Competition and Consumer Act and the Australian Consumer Law, there was no reason to believe that the principles applicable to s 82 of the Competition and Consumer Act do not apply to s 236 of the Australian Consumer Law, notwithstanding that s 236 uses the phrase 'because of' rather than 'by conduct of'.[19]

   [19] Miller R, Miller's Australian Competition and Consumer Law Annotated (2023) [ACL.236.40], citing Flogineering Pty Ltd v Blu Logistics SA Pty Ltd (No 3) [2019] FCA 1258; Flogineering Pty Ltd v Blu Logistics SA Pty Ltd (No 4) [2021] FCA 1219.

4. The relevant question is whether or not there is sufficient connection between the conduct and the damage suffered for the latter to be regarded as 'because of' or 'by' the former.  References to reliance must not be permitted to obscure the need to identify contravening conduct and a causal connection between that conduct and the loss and damage allegedly suffered.[20]

   [20] Miller R, Miller's Australian Competition and Consumer Law Annotated (2023) [ACL.236.40], citing Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304.

5. When considering whether loss or damage was caused by conduct in contravention of the legislation, authority suggests that the common law practical or common-sense approach should be adopted, and the relevant test to be applied is therefore whether the conduct 'caused or materially contributed to' the claimant's loss.[21]

   [21] Wardley Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 514, 525; March v E & MH Stramere Pty Ltd [1991] HCA 12; (1991) 171 CLR 506.

6. Whether or not that connection exists is a question of fact to be determined by reference to experience and is one into which policy considerations and value judgments necessarily enter.[22]  The subject, scope and objects of the Competition and Consumer Act and the Australian Consumer Law must be considered.[23]

   [22] March v E & MH Stramere Pty Ltd; Henville v Walker [2001] HCA 52; (2001) 206 CLR 459 [136].

   [23] Flogineering Pty Ltd v Blu Logistics SA Pty Ltd (No 4) applying Travel Compensation Fund v Tambree [2005] HCA 69; (2006) 224 CLR 627; Allianz Australia Insurance Ltd v GSF Australia Pty Ltd [2005] HCA 26; (2005) 221 CLR 568; Comcare v Martin [2016] HCA 43; (2016) 258 CLR 467.

7. The conduct does not have to be the sole cause of damage, it must merely be a sufficient cause.[24]  As long as the breach materially contributed to the damage, a causal connection will ordinarily exist even though the breach without more would not have brought about the damage.

'Involved in a contravention'

[24]Henville v Walker [156].

1. Section 2 of the Australian Consumer Law provides that a person is involved, in a contravention of a provision of the Australian Consumer Law or in conduct that constitutes such a contravention, if the person:

   (a) has aided, abetted, counselled or procured the contravention; or

   (b) has induced, whether by threats or promises or otherwise, the contravention; or

   (c) has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention; or

   (d) has conspired with others to effect the contravention.

2. In order for a person to be 'knowingly concerned in, or party to, the contravention', such that they are civilly liable for the contravention, it must be established that they had actual, contemporaneous knowledge of the essential matters which go up to make the contravention, including the knowledge of the conduct and the circumstances which give the conduct its character; and that by act or omission, engaged in conduct that can properly be said to implicate them in the contravention or which shows a practical connection between them and the connection.[25]  It is not necessary to show that they knew the facts constituted a contravention.[26]

   [25] Yorke v Lucas [1985] HCA 65; (1985) 158 CLR 661, 667; Australian Competition and Consumer Commission v IMB Group Pty Ltd [2003] FCAFC 17; (2003) Aust Contract R 90-165; Young Investments Group Pty Ltd v Mann [2012] FCAFC 54.

   [26] Rural Press Ltd v Australian Competition and Consumer Commission [2003] HCA 75; (2003) 216 CLR 53 [48]. See also Rafferty v Madgwicks [2012] FCAFC 37; (2012) 287 ALR 437; Australian Competition and Consumer Commission v IMB Group Pty Ltd; Pollock v Hicks [2015] NSWCA 122; Australian Competition and Consumer Commission v Online Dealz Pty Ltd [2016] FCA 732; Jasmin Solar Pty Ltd v Trina Solar Australia Pty Ltd [2020] FCA 1018.

3. The relevant question as to whether there is a practical connection between the person said to be knowingly concerned and the contravention is, whether on the facts it can be reasonably said that the act shown to have been done by the defendant does in truth show a practical connection between them and the contravention.  A person who is in a position of authority and expressly or implicitly approves or assents to the unlawful conduct, is said to be knowingly involved.[27]

Assessment of damages

[27] Productivity Partners Pty Ltd v Australian Competition and Consumer Commission [2023] FCAFC 54; (2023) 297 FCR 180.

1. In assessing damages, principles of common law do not constrain or limit the section, and the court should select a measure of damages that conforms to the remedial purpose of the statute and to the justice and equity of the case.[28]

   [28] Murphy v Overton Investments Pty Ltd [2004] HCA 3;(2004) 216 CLR 388; (2004) 204 ALR 26; (2004) ATPR 41-973, applied, for instance, in Pitcher Partners Consulting Pty Ltd v Neville's Bus Service Pty Ltd [2019] FCAFC 119.

2. Whilst drawing analogies with the assessment of damages in tort and contract law may be informative, nothing in the language of s 236 suggests there is some sort of limitation on the kinds of loss or damage that may be recovered pursuant to the section.  However, where the cause is 'independent', 'extrinsic', 'supervening' or 'accidental' of that conduct, damages will not be awarded.[29]

   [29] Berry v CCL Secure Pty Ltd (2020) 381 ALR 427 [31].

3. In Wardley Australia Ltd v Western Australia, it was suggested that quantification of damages requires a comparison between the position in which the person who suffered loss or damage is in and the position that person would have been in had there been no contravention.[30]  Damages are available for consequential loss where such loss is a direct result of the conduct in question.[31]  However, damages are confined to the amount of loss or damage and do not include punitive damages.[32]

   [30] Wardley Australia Ltd v Western Australia (525 - 526).

   [31] Boland v Yates Property Corp Pty Ltd [1999] HCA 64; (1999) 167 ALR 575.

   [32] Wardley Australia Ltd v Western Australia.

4. In QNI Resources Pty Ltd v Sino Iron Pty Ltd [2016] QSC 62, Jackson J took the view that s 236 asks a question as to causation that is not answered solely by proving the factual connection between the alleged loss and the contravening conduct by such a causal chain, but rather, involves the attribution of a legal cause of the purposes of the operation of the section in its context in the statute.

5. Noting that the slight textual differences between s 236 of the Australian Consumer Law and former s 82 of the Trade Practices Act1974 (Cth) do not undermine the relevance of cases decided under s 82, Jackson J at [91] referred to the decision of Gleeson CJ in I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41; (2002) 210 CLR 109:

   The relationship between conduct of a person that is in contravention of the statute, and loss or damage suffered, expressed in the word 'by', is one of legal responsibility. Such responsibility is vindicated by an award of damages. When a court assesses an amount of loss or damage for the purpose of making an order under s 82, it is not merely engaged in the factual, or historical, exercise of explaining, and calculating the financial consequences of, a sequence of events, of which the contravention forms part. It is attributing legal responsibility; blame. This is not done in a conceptual vacuum. It is done in order to give effect to a statute with a discernible purpose; and that purpose provides a guide as to the requirements of justice and equity in the case. Those requirements are not determined by a visceral response on the part of the judge assessing damages, but by the judge's concept of principle and of the statutory purpose.

6. His Honour then observed:[33]

   [33] Footnotes omitted.

   [92]In the same vein, Gummow J said in Elna Australia Pty Ltd v International Computers (Aust) Pty Ltd (No 2):

   'Wrapped up within s 82 are … concepts the common law would describe by the terms "causation" and "remoteness" and "measure of damages" … [I]t would be an error to translate automatically to the particular statute what appeared the closest analogue from the common law "rules" as to causation. It is rather a question of statutory construction … Thus, in construing s 82 it is appropriate to bear in mind such matters as the scope and purpose of Pts IV and V [of the Trade Practices Act 1974 (Cth)] … the wide range of subject-matters dealt with in Pts IV and V but all linked to s 82 … the absence of any direct provision to apportion responsibility for loss or damage … and the apparent telescoping of what to the common law would be issues of causation, remoteness and measure of damages.'

   [93] Or as McHugh J put it in Henville v Walker:

   'Given the long history of the common law's recognition of the concept of remoteness in assessing damages in contract and tort and its relationship with the issue of causation, it seems proper to read the term "by" in s 82 as including the concept of remoteness. By remoteness, I mean that the loss or damage was not reasonably foreseeable even in a general way by the contravener.'

   [94] Further, in Finishing Services Pty Ltd v Lactos Fresh Pty Ltd it was said that:

   'The authorities accept that third party reliance may cause an applicant's loss … However the authorities require there to be a "sufficient and direct link" or a "requisite element of proximity" in order for the section to be satisfied.'

   [95] In saying this, I have not overlooked the statement in Marks v GIO Holdings Australia Ltd that:

   '… s 82 provides, in effect, that the loss or damage that may be recovered by action is the amount of the loss or damage suffered "by conduct of" another person that was done in contravention of Pt IV or Pt V. It contains no stated limitation of the kinds of loss or damage that may be recovered and contains no express indication that some kinds of loss or damage are to be regarded as too remote to be recovered.'

7. When quantifying damage, courts have also engaged with uncertain 'hypothetical situations of the past', including counterfactuals of what a business might have been during the relevant period but for the contravening conduct.[34]

   [34] Parker t/as on Grid off Grid Solar v Switchee Pty Ltd t/as Australian Solar Quotes (No 2) [2019] FCA 79; (2019) 134 ACSR 507 [28], referring to Generic Health Pty Ltd v Bayer Pharma Aktiengesellschaft [2018] FCAFC 183; (2018) 361 ALR 248 [181]; Malec v J C Hutton Pty Ltd (1990) 169 CLR 638, 639.

AA Technical Services' claim

1. On the pleadings there was little common ground as between AA Technical Services on the one hand and Mr Diedler and Mr McKenzie on the other. Furthermore, while both Mr Diedler and Mr McKenzie denied that AA Technical Services was entitled to relief pursuant to the Australian Consumer Law, they did not take the same position with respect to all of the conduct complained of.

2. It is not always necessary to separately set out in detail in reasons for decision a plaintiff's case as pleaded.  However, given how AA Technical Services put its case, it appeared helpful to do so on this occasion. 

3. I have not recorded here every aspect of AA Technical Services' pleaded case, or every aspect of Mr Diedler and Mr McKenzie's defence.  Where convenient I have summarised the controversy as between the parties.  Otherwise, the position of each of Mr Diedler and Mr McKenzie has been summarised when dealing with specific issues in the judgment.

4. AA Technical Services claimed that Mr Diedler and Mr McKenzie were at all material times directors of AWD Diversified, a now deregistered company, that owned Lot 4 on Diagram 31113 comprised on Certificate of Title Volume 1569 Folio 285, commonly known as 100 Murray Street, Perth in the State of Western Australia (defined in the pleadings and in these reasons as the Property). 

5. It was common ground that in 2011 AWD Diversified as landlord entered into a lease of part of the ground and first floors of the Property (defined in these reasons as the Leased Premises) with Delrise Pty Ltd as trustee for the Lena Family Trust, G.  House Nominees Pty Ltd and Sehat Pty Ltd, collectively as the tenant, and with Mr Santino Francesco Lena, Mr Nathan Gallagher and Mr Phillip Pope, collectively as the guarantor (defined in these reasons as the Lease).  The tenant operated a fitness centre known as CBD Health Spa (defined in these reasons as the CBD Health Spa Business) from the Leased Premises pursuant to the terms of the Lease. 

6. It was also common ground that in September 2011 AA Technical Services as trustee for the Alan Dodd Family Trust agreed to purchase the CBD Health Spa Business, and on 17 February 2012 the CBD Health Spa Business was transferred to AA Technical Services.  On the same day the Lease was assigned to AA Technical Services as the new tenant and with Mr Alan Edric Dodd and Ms Glenda Dawn Dodd as the new guarantors.  A bank guarantee was provided by AA Technical Services to secure its obligations under the Lease.

7. About six months after the CBD Health Spa Business was transferred to AA Technical Services and the Lease was assigned, AWD Diversified sought planning approval from the City of Perth for the refurbishment of, and the addition of another storey to, the building on the Property (defined in these reasons as the Building), which was granted to it in September 2012. 

8. In December 2012, AWD Diversified sought to market and sell the Property as a refurbished office and retail space on the basis that (among other things) refurbishment of the Building would be completed in 2014.  It found a potential buyer in Makmal Capital Sdn Bhd, and on 16 January 2013 AWD Diversified and Makmal Capital entered into an Option Deed, which annexed a contract for sale of the Property. 

9. Pursuant to the terms of the Option Deed, among other things, AWD Diversified was required to terminate all leases granted in respect of the Property before March 2013; secure no more than four new leases for the refurbished Building by 31 October 2013 with 'A‑Grade Tenants'; and enter into one or more building contracts by 30 April 2013.  By the proposed contract for sale of the Property, AWD Diversified was required to undertake, at its own cost, the refurbishment and use its best endeavours to achieve practical completion by 1 July 2014.  The refurbishment was to comprise the upgrade of the Building and addition of a floor to the Property.

10. The Lease contained a redevelopment clause.  It was AA Technical Services' case that in the event AWD Diversified desired to redevelop, remodel, renovate or demolish the whole or any part of the Property, including the Leased Premises, AWD Diversified was required under the Lease to:

    (a)give AA Technical Services no less than six months' notice of its intention to redevelop and determine the Lease;

    (b)offer to lease to AA Technical Services other premises in the Property, being of no more than 10% greater nor 10% lesser size than the Leased Premises, and of similar configuration and within similar trading potential within the Property (defined in the pleading and in these reasons as the Replacement Premises) for the balance of the term of the Lease; and

    (c)give AA Technical Services no less than two months from the termination of the Lease written details of the Replacement Premises, and written details of the terms and conditions upon which AWD Diversified was prepared to lease the Replacement Premises.

11. On 17 January 2013 AWD Diversified through Mr Diedler gave AA Technical Services notice of AWD Diversified's intention to redevelop the Property and the Leased Premises (defined in the pleadings and in these reasons the Redevelopment Notice).  The Redevelopment Notice provided six months' notice of AWD Diversified's intention to terminate the Lease, and redevelop the Property and the Leased Premises.

12. It was AA Technical Services' case that at all material times after 16 January 2013 (that is, after AWD Diversified entered into the Option Deed), AWD Diversified was in breach of the Lease because AWD Diversified was required to terminate the Lease; and/or AA Technical Services was not an 'A-Grade Tenant' and could not secure a new lease within the Property; and/or the refurbishment contemplated in the Option Deed meant that AWD Diversified was at all times after 16 January 2013 unable to offer Replacement Premises to AA Technical Services.

13. AA Technical Services also complained that at all material times the Redevelopment Notice was false and misleading (and that Mr Diedler and Mr McKenzie knew that it was false and misleading) in that it implied that:

    (a)AWD Diversified was able to offer to lease Replacement Premises to AA Technical Services when in fact, by reason of the terms of the Option Deed and the proposed contract for sale of the Property, it was never in a position to do so;

    (b)AWD Diversified was entitled to issue the Redevelopment Notice which obliged it to offer to lease Replacement Premises to AA Technical Services when in fact by reason of the terms of the Option Deed and the proposed contract for sale of the Property which was Annexure B to the Option Deed, it was never in a position to issue a redevelopment notice that obliged it to offer to lease Replacement Premises to AA Technical Services; and

    (c)the Lease had been validly terminated under the Lease when in fact it had not.

1. Mr Diedler and Mr McKenzie denied the same.  On the pleadings the parties did not agree as to whether the Redevelopment Notice was valid, and if valid, the effect of it, including whether AWD Diversified was under an obligation under the Lease to offer AA Technical Services Replacement Premises within the Building if the proposed redevelopment would not enable that.  There was also disagreement as to whether AA Technical Services was entitled to rely on the redevelopment clause in the Lease in light of its own performance under the Lease.  Among other things, Mr Diedler and Mr McKenzie contended that AA Technical Services was consistently in default of its payment obligations under the Lease and was impecunious.

2. AA Technical Services did not vacate the Leased Premises at the end of the six months' notice period given by the Redevelopment Notice.  It remained and continued to operate the CBD Health Spa Business from the Leased Premises while it investigated and pursued relocation to alternative premises.  It claimed that from late January 2013 it endeavoured to relocate and incurred costs doing so.

3. There was a disagreement as between the parties as to the basis on which AA Technical Services occupied the Leased Premises on and from 17 July 2013. 

4. It was AA Technical Services' case that on or about early July 2013, Mr Paul Dodd, the son and authorised agent of the directors of AA Technical Services, had discussions with Mr Diedler and Mr Ken Polla.  It claimed that the discussions related to AA Technical Services remaining in the Leased Premises after the expiry of the Redevelopment Notice; and that during these discussions Mr Diedler and Mr Polla made the following representations:

   (a)that AWD Diversified was not ready to proceed with the redevelopment of the Building and the Leased Premises;

   (b)that AA Technical Services could remain in the Leased Premises until the end of August 2013 provided that:

   (c)AA Technical Services paid all outstanding moneys owed to AWD Diversified under the Lease to 17 July 2013; and

   (d)thereafter paid rent and outgoings every 10 days at the same rate as the Lease (defined in the pleading and in these reasons as the First Rent Representation).

5. It was also AA Technical Services' case that at a meeting on 19 July 2013, Mr Paul Dodd and Mr Troy Kennedy, an employee of the CBD Health Spa Business, met with Mr Diedler and Mr Polla at the offices of AA Technical Services, and at that meeting, Mr Diedler and Mr Polla made the following representations on behalf of AWD Diversified:

   (a)that AA Technical Services could remain in the Leased Premises to the end of August 2013 provided that AA Technical Services paid a fixed amount for rent and outgoings every 10 days (defined in the pleadings and in these reasons as the Second Rent Representation);

   (b)the Second Rent Representation included the following payments:

   (i)Payment Due 22 July 2013 for the period 19 July 2013 - 31 July 2013: $19,537.57;

   (ii)Payment Due 1 August 2013 for the period 1 August 2013 - 11 August 2013: $16,531.79;

   (iii)Payment Due 12 August 2013 for the period 12 August 2013 to 21 August 2013: $15,028.90; and

   (iv)Payment Due 22 August 2013 for the period 22 August 2013 to 31 August 2013: $15,028.90 (the sum of $15,028.90 was defined in the pleadings and has been defined in these reasons as the Second Payment Rate);

   (c)that AWD Diversified reserved the right to provide 10 days' notice to vacate the Leased Premises; and

   (d)that when electricity invoices were issued they would be paid by the next payment date.

6. Mr Diedler admitted that the Second Rent Representation was made and, among other things, pleaded that:

   (a)AA Technical Services was required to vacate the Leased Premises on or before 17 July 2013 in accordance with the Redevelopment Notice and the Lease;

   (b)AA Technical Services failed to vacate the Leased Premises, and by reason of its failure, was in breach of the Lease as at 17 July 2013;

   (c)AWD Diversified offered to AA Technical Services a licence of the Leased Premises, or alternatively, a tenancy at will, on the condition AA Technical Services paid all outstanding arrears owing pursuant to the Lease as at 17 July 2013;

   (d)the offer was on the following terms:

   (i)AA Technical Services was entitled to remain in possession of the Leased Premises subject to payment of the Second Payment Rate every 10 days;

   (ii)if AA Technical Services failed to make payment of the Second Payment Rate on time, AWD Diversified would re‑enter the Leased Premises and terminate the arrangement;

   (iii)AWD Diversified had the right to provide AA Technical Services with 10 days' notice to vacate the Leased Premises; and

   (iv)AA Technical Services paid all electricity invoices by the next payment date. 

7. AA Technical Services pleaded that it then disputed the calculation of the Second Rent Representation, and the separate electricity invoices in July and August 2013.  It also pleaded that representations were made by Mr Diedler and Mr McKenzie from mid-July 2013, with threats that if payments were not made by AA Technical Services, they would turn off the electricity to the Leased Premises and lock AA Technical Services out of the Leased Premises (defined in the pleading and in these reasons as the First Lock-Out Representation). 

8. AA Technical Services was aggrieved that (among other things) AWD Diversified brought the Lease to an end in circumstances where it was unable to obtain finance for the refurbishment between January and August 2013; ultimately defaulted under the terms of the Option Deed; it sought to negotiate new leases in the Building in breach of its obligations under the Option Deed; in September 2013 it offered AA Technical Services a new lease in the Leased Premises with a significantly higher rent than had been payable under the Lease; and in the end, sold the Property to Makmal Capital for a lesser amount after the Option Deed was varied without ever having redeveloped the Property. 

9. It was AA Technical Services' case that after August 2013, AA Technical Services remained in the Leased Premises and received further invoices from AWD Diversified on 9, 17, 18 and 27 September 2013 (defined in the pleading as the September Invoices); and that the invoices were calculated on the basis of a 10 day term arrangement between AWD Diversified and AA Technical Services. 

10. AA Technical Services also complained that representations continued to be made by Mr Diedler and Mr McKenzie throughout September 2013, with threats that if payments were not made, they would turn off the electricity to the Leased Premises and lock AA Technical Services out of the Leased Premises (defined in the pleading and in these reasons as the Second Lock-Out Representation).

11. AA Technical Services also pleaded that throughout early October 2013, Mr Diedler and Mr McKenzie on behalf of AWD Diversified accused AA Technical Services of being in default and made a further representation that if AA Technical Services did not pay the 'September Invoices' in full on the due dates, they would cause the electricity to be turned off and lock AA Technical Services out of the Leased Premises (defined in the pleading and in these reasons as the Third Lock-Out Representation). 

12. It was common ground between the parties that on 10 October 2013, AWD Diversified issued AA Technical Services with an invoice calculated on the basis of 20 days of occupation at the Leased Premises.

13. Despite this, AA Technical Services complained that on 14 October 2013, Mr Diedler on behalf of AWD Diversified represented that there was no lease in place between AWD Diversified and AA Technical Services, and that AA Technical Services was on a 10 day lease arrangement subject to all payments being received on time. 

14. Then on 30 October 2013, AWD Diversified issued AA Technical Services with an invoice which was calculated on the basis of a full month in the amount of $45,564.86.

15. AA Technical Services pleaded that on or about 25 November 2013, AWD Diversified drew down on the bank guarantee provided by AA Technical Services pursuant to the Lease, received $43,436.84, and applied that sum to the December 2013 rental and outgoings obligations of AA Technical Services, which amounts were not yet due or payable.  It also pleaded that AWD Diversified also drew down on the bank guarantee provided by the former tenant of the Leased Property that had not been cancelled.

16. While it was admitted on behalf of Mr Diedler and Mr McKenzie that the AA Technical Services' bank guarantee was drawn down, there was disagreement as between the parties as to the circumstances in which the draw down occurred and how the moneys received were applied.

17. AA Technical Services pleaded that by text message from Mr McKenzie to AA Technical Services at or around 6.28 pm on 16 January 2014, Mr McKenzie on behalf of AWD Diversified demanded that if AWD Diversified did not receive $20,000 by the following morning, AA Technical Services would be 'shut down' without warning.

18. AA Technical Services disputed that it was in arrears or otherwise in default under the Lease, and contended that it had overpaid AWD Diversified.  It maintained that as at 17 January 2014, AA Technical Services owed AWD Diversified the amount of $10,435.24 on the basis of invoices issued by AWD Diversified less all payments made by AA Technical Services including application of the bank guarantee.  AA Technical Services also claimed that:

    (a)on the basis of the Second Payment Rate, as at 17 January 2014, AA Technical Services owed AWD Diversified the amount of $7,049.45; and

    (b)on the basis of the 'Original Lease Rate', AA Technical Services as at 17 January 2014 had overpaid AWD Diversified the amount of $24,992.71 and was not in arrears or in default.

19. Despite the dispute as to the correct rate of rental not having been resolved, on the morning of 17 January 2014 at or around 8.00 am, Mr Diedler and Mr McKenzie caused AWD Diversified to turn off the electricity to the Leased Premises and at or around 11.30 am changed the locks of the Leased Premises.

20. AA Technical Services pleaded that on the same day it demanded that AWD Diversified allow it to re-enter the Leased Premises, and offered to pay the sum of $12,000 by 6.00 pm on 17 January 2014, and $11,143.71 by 5.00 pm on 22 January 2014.

21. AA Technical Services pleaded that at all material times AWD Diversified denied AA Technical Services re-entry to the Leased Premises and otherwise rejected AA Technical Services' offer to resume the Lease of the Leased Premises.  It complained that it was also denied access to the Leased Premises to secure its property after the lock-out, and conditions were attached to its access for that purpose.

22. In this regard, AA Technical Services pleaded that throughout January to April 2014, AWD Diversified, through Mr Diedler and Mr McKenzie:

    (a)did not allow the removalists engaged by AA Technical Services or AA Technical Services to utilise the lifts to access the first floor of the Leased Premises and represented that the lifts were either not operational or alternatively, were only able to carry two to three people (the Lift Representations);

    (b)unilaterally imposed deadlines for the removal of AA Technical Services' property;

    (c)did not allow the removalists or AA Technical Services to remove AA Technical Services' property from the ground floor of the Leased Premises until the first floor of the Leased Premises was cleared;

    (d)on several occasions failed to allow AA Technical Services access to the Leased Premises to remove its property despite request; and

    (e)denied AA Technical Services access to its property at the Leased Premises.

23. AA Technical Services complained that the Lift Representations were made despite the lifts in the Leased Premises working and at all times able to carry at least six people.

24. AA Technical Services complained that on the morning of 30 April 2014, it found that a storage company was removing its property from the ground floor of the Leased Premises.  Between 30 April 2014 and 2 May 2014, AWD Diversified through Mr Diedler and Mr McKenzie caused AA Technical Services' property to be removed from the Leased Premises by removal business A2B and stored by A2B (defined in the pleading and in these reasons as the Equipment Seizure).

25. On 29 April 2014 and 2 May 2014 AA Technical Services' solicitors communicated to AWD Diversified's solicitors that if any of AA Technical Services' property was removed from the Leased Premises it should be delivered to AA Technical Services.  That was not done.  On 30 April 2014 AA Technical Services discovered that its property the subject of the Equipment Seizure was taken to a storage facility owned by A2B.

26. AA Technical Services pleaded that Mr Diedler caused AWD Diversified to charge AA Technical Services $38,070 (defined in the pleading as the Seizure Costs) for the Equipment Seizure and storage costs by way of an invoice from A2B.  AWD Diversified's solicitors informed AA Technical Services that storage charges for AA Technical Services' equipment would be $5,000 for the next month and demanded that if AWD Diversified was not reimbursed for the Seizure Costs and failed to collect its property from A2B within 14 days, then AWD Diversified would make arrangements to sell its property.

27. AA Technical Services pleaded that the Seizure Costs and storage costs were significantly higher than rates for comparable removal and storage services.  AA Technical Services disputed the validity of the Equipment Seizure and the amount of the Seizure Costs and storage costs and communicated the dispute to AWD Diversified's solicitors.

28. On 23 May 2014 AA Technical Services and AWD Diversified came to an agreement regarding the payment of some of the Seizure Costs in the amount of $8,301.59 payable to AWD Diversified.  However, it pleaded that despite having paid $8,301.59 by way of bank cheque to AWD Diversified on 26 May 2014, it was not able to recover all of its property from A2B. 

29. On or about 13 October 2014 AA Technical Services and A2B came to an agreement to pay a further $3,500 to A2B in order to recover the remaining property from A2B.  AA Technical Services paid $3,500 to A2B on 14 October 2014, and following the payment to A2B by AA Technical Services, AA Technical Services was able to recover the remaining property held by A2B since the Equipment Seizure.

30. It pleaded that AA Technical Services incurred expenses of $34,241.26 in its endeavours to relocate the CBD Health Spa Business, and identify and prepare any of the new premises (defined in the pleadings as the Relocation Expenses).  By way of particulars to that plea, AA Technical Services said that it incurred the Relocation Expenses in its endeavours to relocate the CBD Health Spa Business which consisted of the following:

    (a)costs paid to IAG Architects for interior design of $6,636.66 in or around March 2013 in relation to one possible new premises;

    (b)costs paid to Taylor Sparks Graphic Design for signage and advertising of $20,680.80 in or around March to December 2013 in relation to three possible new premises; and

    (c)costs paid to Suburban Design for interior design services of $6,923.80 in relation to two possible new premises in or around July 2013 and November 2013 to January 2014.

31. AA Technical Services pleaded that as a result of the refusal of AWD Diversified to allow AA Technical Services to re‑enter the Leased Premises, the Equipment Seizure and the inability of AA Technical Services to utilise its property, AA Technical Services' bank would not support any application for further finance by way of guarantee or to assist in the fit-out of the new premises.  AA Technical Services was unable to secure finance and did not ultimately enter into a new lease.  Accordingly, without a further lease AA Technical Services was unable to continue to conduct the CBD Health Spa Business and the CBD Health Spa Business ceased to operate.

32. AA Technical Services complained that upon AA Technical Services collecting its property from A2B in May and October 2014, AA Technical Services discovered that some of its property was missing, and some was damaged beyond repair and was not saleable.

33. AA Technical Services sold the recovered saleable property at auction between 6 January 2015 and 7 February 2015 (defined in the pleading as the Equipment Sale), and the proceeds after deduction of the costs of sale were $5,487.35.

34. AA Technical Services pleaded that on or about 13 May 2014, AWD Diversified sold the Property. 

The complained of conduct of AWD Diversified

1. The gravamen AA Technical Services' case was that having entered into the Option Deed, AWD Diversified could never have performed its obligation under the Lease to offer Replacement Premises to AA Technical Services.[35] AA Technical Services claimed that the disregard by AWD Diversified of its obligation to AA Technical Services under the Lease in pursuit of a sale of the Property to Makmal Capital for $29 million (exclusive of GST) was unconscionable in all of the circumstances. Further, it claimed that the conduct of AWD Diversified that followed it issuing the Redevelopment Notice, in light of the relative strengths of AWD Diversified and AA Technical Services' respective bargaining positions, was unconscionable and AA Technical Services suffered loss or damage because of the conduct of AWD Diversified in breach of the Australian Consumer Law.

   [35] ts 89 - 90 (20 September 2021).

2. As a secondary claim, AA Technical Services contended that because of the unconscionable conduct of AWD Diversified after the lock-out, particularly its refusal to allow AA Technical Services to recover its property, it suffered loss and damage by the loss of its property. 

3. AA Technical Services pleaded conduct of AWD Diversified that it said was, in all of the circumstances, unconscionable and contravened s 21 of the Australian Consumer Law at par 97 of its final pleading. It pleaded that the conduct of AWD Diversified in having executed of the Option Deed; in having issued and maintained the effect of the Redevelopment Notice; in having made the First and Second Rent Representations; in having made the First, Second and Third Lock-Out Representations; in having drawn down on the bank guarantee; in having made the demand for payment of $20,000 by text message on 16 January 2014 and having threatened lock-out; in having locked-out AA Technical Services from the Leased Premises on 17 January 2014; in having failed to reasonably facilitate AA Technical Services’ removal of its property from the Leased Premises after the lock-out; in having made the Lift Representations; in having engaged in the Equipment Seizure; and in having invoiced the Seizure Costs, was in all of the circumstances, taken individually or as a whole, unconscionable.

4. The conduct complained of was pleaded as having been unconscionable in the circumstances pleaded, referenced and relied upon by AA Technical Services.  Much of the conduct complained of was said to be unconscionable by reference to circumstances which concerned the Option Deed, performance under the Option Deed, and the claim that AWD Diversified had disregarded its obligation to AA Technical Services under the Lease by entering into the Option Deed and bringing the Lease to an end.

The conduct of Mr Diedler and Mr McKenzie

1. AA Technical Services pleaded that Mr Diedler and Mr McKenzie were involved in, aided and abetted, or directly or indirectly knowingly concerned with, or were a party to the contraventions of s 21 of the Australian Consumer Law by AWD Diversified as pleaded in pars 97 and 98 of its pleading.

Alleged loss and damage

1. The final part of the pleading concerned AA Technical Services' plea that it suffered loss and damage. AA Technical Services claimed that as a result of AWD Diversified's conduct and Mr Diedler and Mr McKenzie's conduct or involvement in contravening s 21 of the Australian Consumer Law as pleaded, AA Technical Services suffered loss and damage.

1. The case primarily advanced on behalf of AA Technical Services was that AWD Diversified's entry into the Option Deed and it having issued and maintained the Redevelopment Notice led to everything that followed; and that AA Technical Services suffered loss and damage because of the conduct of AWD Diversified.  It did not seek an award of lost profits.  Rather, it sought instead to recover the total of the liabilities it incurred and was unable to pay because of the closure of the CBD Health Spa Business.  It argued that but for the conduct of AWD Diversified, the CBD Health Spa Business would have generated sufficient revenue that it would have met its debts, and it incurred additional debts that it would not have otherwise if AWD Diversified had not acted as it did.

2. AA Technical Services gave updated particulars of the damage it allegedly suffered.[36]  It asserted that it had suffered loss and damage in the sum of not less than $1,796,400.28.  At trial, it pressed for recovery of $1,790,699.60 comprised as follows:

   [36] AA Technical Services' particulars of loss and damage filed 6 September 2021.

   (a)[AA Technical Services'] ongoing and recurring expenditure in the sum of $1,439,096.79 which consisted of:

   (i)$868,485.46 loan liability to Commonwealth Bank of Australia, particulars of which are contained in Schedule 'A';

   (ii)$242,940.23 tax liability to the Australian Taxation Office, particulars of which are contained in Schedule 'B';

   (iii)$130,038.19 in Superannuation liability, particulars of which are contained in Schedule 'C';

   (iv)$44,611.32 to Noble Finance;

   (v)$43,706.45 to Go Getta Hire Equipment;

   (vi)$25,261.50 to Ricoh;

   (vii)$24,418.98 loan to AUSvance;

   (viii) $26,018.67 in additional wages;

   (ix) $9,819.12 in additional payroll tax liabilities;

   (x) $8,670.00 to EC Credit Control for Orbit Group Cleaning;

   (xi) $4,870.22 in insurance costs;

   (xii) $3,629.05 to Foxtel;

   (xiii) $3,000.00 to Vodafone;

   (xiv) $1554.37 to Flexware;

   (xv) $933.73 to Coca Cola;

   (xvi) $698.50 to The Media Pot; and

   (xvii) $441.00 to Danica Graphic Design;

   (b) legal fees of $26,377.96;

   (c) removal and storage fees paid to the Removalists of $38,336.05;

   (d) Relocation Expenses of $33,420.32;

   (e) excess rent and outgoings to [AWD Diversified] of $5,700.68 for the period 17 July 2013 to 17 January 2014 [this was not pressed at trial];

   (f) increased salary costs of $42,274.25;

   (g) [AA Technical Services] paid some of the Seizure Costs in the sum of $11,801.59;

   (h) $199,392.64 for:

   (i) items of the Equipment that were not returned to [AA Technical Services]; and

   (ii) items of Equipment were damaged, rendering them unsaleable.

3. Particulars of the loan liability to the Commonwealth Bank of Australia as set out in Schedule A were as follows:

   Schedule 'A'

   Ongoing and recurring expenditure:

   Commonwealth Bank of Australia

Date	Description	Amount (in GST)
21.09.2011	Commonwealth Bank approves $600,000 loan and $20,000 overdraft to Plaintiff
17.01.2014	Balance owing on loan and overdraft at 17 January 2014	$606,540.47
11.12.2013 - 10.06.2018	Interest and fees on loan and overdraft for 17 January 2014 to 10 June 2018	$170,468.31
11.06.2018 - 10.09.2019	Interest and fees on loan and overdraft for 11 June 2018 to 10 September 2019	$37,764.56
11.09.2019 - 10.12.2019	Interest and fees on loan and overdraft for 11 September 2019 - 10 December 2019	$5,937.23
11.12.2019 - 10.03.2020	Interest and fees on loan and overdraft for 11 December 2019 - 10 March 2020	$45,146.67
11.03.2019 - 10.06.2021	Interest and fees on loan and overdraft for 11 March 2019 - 10 June 2021	$2,628.22
Total:	$868,485.46

1. Particulars of the tax liability to the Australian Taxation Office as set out in Schedule B were as follows:

   Schedule 'B'

   Ongoing and recurring expenditure:

   Australian Taxation Office tax liability

Date	Description	Amount (inc GST)	Discovery document
17.01.2014 - 10.07.2018	Payments made to ATO from 17 January 2014 until 10 July 2018	$242,940.23	Exhibit 433, 493
Total:	$242,940.23

1. Particulars of the superannuation liability as set out in Schedule C were as follows:

   Schedule 'C'

   Ongoing and recurring expenditure:

   Superannuation liability

Date	Description	Amount (inc GST)
25.08.2021	Superannuation Guarantee outstanding at 25 August 2021	$130,038.19
Total:	$130,038.19

1. As a secondary claim, AA Technical Services contended that because of the unconscionable conduct of AWD Diversified after the lock-out, particularly its refusal to allow AA Technical Services to recover its property, it suffered loss and damage by the loss of its property.  It sought damages for that loss. 

Overview and observations in relation to the evidence

1. The trial took place over nine days in September and October 2021.  In order to properly assess AA Technical Services' case, Mr Diedler and Mr McKenzie's defence, the evidence that was given at trial, and to ensure this had not been impaired by the delay between the hearing and the publication of these reasons, I took a number of steps.  They included giving careful consideration to the whole of the transcript; my contemporaneous notes of each hearing day and my recorded observations; the papers for the judge; the written submissions of the parties and the chronology filed in advance of the hearing; the submissions made which included submissions as to the credibility of witnesses, whose evidence I should prefer, and why; and the documents tendered in evidence.

2. My assessment of the witnesses was assisted by my review of the transcript, my notes, the submissions made, and the documents tendered.  My conclusions as to the credit and reliability of the witnesses was primarily based on the consistency of the evidence they gave, and whether the evidence was consistent with contemporaneous records and the facts that were objectively established.

Documentary evidence

1. A considerable volume of documentary evidence was tendered.  Prior to trial, a book of documents was filed with legible copies of each of the documents intended to be tendered at trial by the parties.  The book of documents comprised six lever arch files and 493 separate documents.  The book contained an index of its contents, being a list of the documents in chronological order, and each individual document was separated in the physical bundle by a separate tab. 

2. Prior to the commencement of trial it was ordered that each document proposed by a party for inclusion within the trial bundle would, in the absence of any specific objection by another party, be taken to be authentic, prepared by its apparent author; in the case of a communication, sent by the person appearing to have sent it, and received by the person appearing to have received it on or about the date which it bore.[37]  At the commencement of the trial it was confirmed that no party sought to tender the original of any document included in the book of documents. 

   [37] Order 5 of the orders made by Sanderson M on 4 March 2021.

3. The book of documents as a whole was not tendered in evidence.  Rather, documents referred to in the course of the trial, were taken to be tendered unless objection was taken.  The trial bundle document number was adopted as the exhibit number.  No issue was taken by any party as to the authenticity of any document sought to be tendered.

4. During the course of the trial, 11 documents not in the book of documents were also tendered on behalf of AA Technical Services (marked as numbers 494 to 504 (inclusive)).  They were the first expert report of Jennifer Elizabeth Low dated 13 June 2018 and filed in the proceeding on 4 March 2020; the second expert report of Ms Low dated 15 August 2018 and filed in the proceeding on 4 March 2020; the expert report of Marc O'Loughlin dated 17 December 2018 and filed in the proceeding on 4 March 2020; a bundle of documents titled 'reconstructed income and expenditure ledgers'; the affidavit of Llifen Paz Palacio Nunez, a lawyer employed by Roe Legal Services, sworn and filed in the proceeding on 9 November 2018; the affidavit of Mr Diedler sworn and filed in the proceeding on 6 March 2019; the affidavit of Mr Diedler sworn and filed in the proceeding on 20 November 2020; the affidavit of Mr Diedler sworn on 21 April 2017 and filed in the proceeding on 26 April 2017; the affidavit of Mr Diedler sworn on 14 September 2021 and filed in the proceeding on 15 September 2021; an email communication dated 30 January 2014 from Ginette Tan to Fabrice Lincoln and Ms Ching Pui Choo, attaching rates, tax and utilities bills and a statement of loan; and an Australian Securities and Investments Commission extract for AWD Diversified dated 1 September 2021.

Correspondence

1. Considerable written correspondence was tendered, and I had regard to the same.  As noted above, no objection was taken to any document tendered on the basis of authenticity.  In most cases, the author and recipient of email communications was apparent as the name of the author and the recipients were recorded in the 'to', 'from' and 'cc' fields.  Mr Alan Dodd accepted that his email address was [email protected], and that he had daily access to that email address.

2. The truth of the contents of some of the correspondence was in issue, particularly as to whether the correspondence accurately recorded (as purported) matters discussed and agreed.  As necessary, I have summarised below the contents of certain communications as I have dealt with specific issues in the judgment.

Books and records

1. In the disposition of this matter I was cognisant that the documents tendered may not have been the only documents relevant to the matters in issue.  First, I was cognisant that no documents were discovered by Mr Diedler nor Mr McKenzie in the proceeding.

2. In his affidavit sworn on 21 April 2017, Mr Diedler deposed that he had 'no documents relating to any matter in issue in these proceedings' in his possession, custody or control.[38] Mr Diedler made a further affidavit which was signed but undated and filed on this proceeding on 15 September 2021.[39]  At pt 2A of that affidavit Mr Diedler listed the documents relating to matters in question in this proceeding that were, but were no longer, in his possession, custody and power.  He described those documents as follows: email communications spanning the period from 1 January 2011 to 31 December 2015 (which period was described as the 'Relevant Period') sent and received from [email protected]; text messages for the Relevant Period; physical documents, including handwritten notes, correspondence memos, agreements, etcetera, for the Relevant Period brought into existence on behalf of AA Technical Services or 'Access West', relating to any issue in dispute whatsoever, including the Option Deed, the dispute with AA Technical Services, invoices for rent, the sale to Makmal Capital and deregistration of AWD Diversified; bank accounts of AWD Diversified; and legal correspondence as between Lawton Gillon and AWD Diversified.

   [38] Exhibit 501.

   [39] Exhibit 502.

3. In the course of his cross‑examination, Mr Diedler gave evidence to the effect that he only accessed his emails while at work; and when the Property was sold he vacated the Building some months after and he did not take any records with him when he left.  He gave evidence to the effect that the business records of AWD Diversified, AWD Capital Ltd and AWD Realty Pty Ltd were left in the Building; and as there was no money left in the company, he was not going to incur any expense in storing the books and records.  The effect of Mr Diedler's evidence was that he abandoned the books and records of the AWD companies in the Building some months after the Property was sold, possibly around December 2014. 

4. Mr McKenzie did not give discovery in the proceeding, and did not file any affidavit for the purpose of discovery.  He also gave evidence to the effect that he had left the documents of AWD Diversified in his possession in the Building.

5. Secondly, while documents were discovered by AA Technical Services, I was also cognisant that it did not have available to it all of its books and records.  For the reasons set out below, I accepted that nearly all of the physical books and records of AA Technical Services as they concerned the day-to-day operations of the CBD Health Spa Business, including the gym equipment, were in the Leased Premises when AA Technical Services was locked-out of the Leased Premises in January 2014.  The property of AA Technical Services that was returned to it (after AWD Diversified arranged for its own removalists to remove the property from the Leased Premises) did not include the books and records.  Further, computers that were used in the operation of the CBD Health Spa Business were damaged or destroyed while in the power of AWD Diversified before they were returned to AA Technical Services, and remote access to electronic business records was difficult and limited.  AA Technical Services prosecuted this action in circumstances where there was a lacuna of documentary evidence for different periods of time, including with respect to the age and service history of the gym equipment. 

Lay evidence

1. A total of 11 witnesses gave evidence, two were experts.  Seven were lay witnesses called by AA Technical Services.  Mr Diedler and Mr McKenzie also gave evidence and were cross‑examined. 

2. The topics that were the subject of the non‑expert evidence are summarised at a high level below, together with key observations with respect to the evidence given.  It is not intended to be a comprehensive recitation of the evidence of each witness.  When dealing with specific issues in the judgment, I have described the substance of the evidence given in greater detail.

Alan Edric Dodd

1. Mr Alan Dodd is a consulting engineer.  He is a director of AA Technical Services, which was incorporated at the suggestion of his accountant for accounting purposes and ease of contracting when he began consulting. 

2. Among other things, Mr Alan Dodd gave evidence as to the circumstances in which AA Technical Services came to acquire the CBD Health Spa Business in September 2011, including the negotiation of the purchase price; the purchase price and how it came to be allocated as between goodwill, and fixtures and equipment; the acquisition of the CBD Health Spa Business and how it was funded; the settlement of the purchase of CBD Health Spa Business on 17 February 2012; the assignment of the Lease to AA Technical Services; and the provision of a bank guarantee to secure the performance of AA Technical Services' oblgiations under the Lease once assigned.

3. Mr Alan Dodd also gave evidence as to his intended and actual involvement with the day-to-day operation of the CBD Health Spa Business post-settlement; the source of working capital for the CBD Health Spa Business post-settlement and the banking arrangements; the information he received in relation to the proposed redevelopment of the Building; receipt of the Redevelopment Notice and the plan to relocate the CBD Health Spa Business; email communications sent and received concerning the CBD Health Spa Business, including the payment of rent and potential relocation; the payment arrangements concerning rent from July 2013; his preference in the latter part of 2013 that the CBD Health Spa Business relocate to an alternative premises rather than enter into a new lease with AWD Diversified; there having been an ongoing dispute with AWD Diversified as to whether AA Technical Services was in arrears with respect to moneys owed; AA Technical Services' position with its bank in late 2013 and early 2014; the borrowing of additional moneys in late 2013 by AA Technical Services; and how he came to learn that AA Technical Services had been locked-out of the Leased Premises.

4. Mr Alan Dodd also gave evidence as to what transpired after the lock‑out, including his role in arranging for Marand Transport to remove the property of AA Technical Services from the Leased Premises; the removal of equipment from the Leased Premises by A2B; the collection of the recovered property by Marand Transport from A2B; having entered the Leased Premises again in November 2014 and what he observed; having inspected the recovered property recovered by Marand Transport and the condition of the same; the payments made by AA Technical Services to Marand Transport; the sale of the recovered property; AA Technical Services having paid the debts of the CBD Health Spa Business; and amounts owed by AA Technical Services to the Australian Taxation Office.

5. Mr Alan Dodd had almost no day-to-day involvement in the operation of the CBD Health Spa Business.  Indeed, he often worked interstate or overseas for extended periods.  Mr Alan Dodd struck me as an honest witness, whose responses to questions occasionally revealed his frustration and anger at the conduct of AWD Diversified in period that AA Technical Services operated the CBD Health Spa Business.  While Mr Alan Dodd's evidence was in parts vague and occasionally inconsistent with the documents and the evidence of other witnesses, the inconsistencies appeared to me, likely in part, a result of him receiving considerable information through emails and telephone calls with Mr Paul Dodd and Mr Kennedy while he was occupied interstate and overseas in his own consulting engineering business; and in part as a result the effluxion of time.

Troy William Kennedy

1. Mr Kennedy worked as a manager of the CBD Health Spa Business from early 2012 until late November or early December 2013.  Among other things, he gave evidence as to how he came to know Mr Paul Dodd; how he came to be approached by Mr Paul Dodd to help run the day-to-day operations of the CBD Health Spa Business; what he understood and observed to be the roles of Mr Paul Dodd and Mr Alan Dodd were with respect to the purchase and ongoing management of the CBD Health Spa Business; his role, authority and the basis upon which he was engaged as a manager post‑settlement; the structure and staffing of the CBD Health Spa Business; the layout within the Leased Premises; and the records that were created and kept in relation to the operation of the CBD Health Spa Business.

2. Mr Kennedy gave evidence as to his interactions with the landlord of the premises in which the CBD Health Spa Business operated, first through Mr Polla and later with Mr Diedler and Mr McKenzie; and the nature and frequency of those interactions. 

3. Mr Kennedy gave evidence as to how he came to be informed about the proposed redevelopment of the Building in which the CBD Health Spa Business operated; his recollection of how the CBD Health Spa Business traded prior to that time; his recollections of meetings that he attended concerning the proposed redevelopment; the work that was undertaken to relocate the CBD Health Spa Business; the signage that was put up within the Leased Premises concerning the proposed relocation of the CBD Health Spa Business; the large 'for lease' sign that was erected in front of the Building in early 2013 with an image of the Building as if redeveloped; the delivery of the Relocation Notice in January 2013 and the response to the same; the impact of the need to relocate on the CBD Health Spa Business; and there being some doubt around June 2013 as to whether the redevelopment of the Building was going ahead.

4. Mr Kennedy also gave evidence as to the circumstances in which the CBD Health Spa Business continued to operate from the Leased Premises after the expiry of the Redevelopment Notice; the nature of his and Mr Paul Dodd's involvement in the operation of the CBD Health Spa Business from about July 2013; the extent to which he had an independent recollection of having attended meetings concerning the Leased Premises from about July 2013; his involvement in the preparation of a document titled 'CBD Active Business Plan 2013';[40] and to his recollection of another gym called Snap Fitness opening across the road from the Leased Premises.

   [40] Exhibit 115. 

1. As to the conduct of AWD Diversified from 17 January 2014, it significantly delayed the removal of AA Technical Services' property from the Leased Premises by requiring AA Technical Services to comply with conditions that were not reasonably necessary for the protection of its own legitimate interests.  The combination of conditions that AWD Diversified sought to impose were not justified nor reasonable.

2. Among other things, AA Technical Services was entitled to recover its property from the Leased Premises; AWD Diversified was not entitled to rely on the terms of the Lease, and was not entitled to require performance under the Lease as a condition of access for removal; AWD Diversified had no contractual right to impose conditions upon the removal of property; AWD Diversified had no reasonable basis to impose as a condition of entry and removal the payment of rent by AA Technical Services for the whole of January and February as it sought to do on 5 March 2014; AWD Diversified was not entitled to hold the property in an effort to extract payment well in excess of the moneys owed to it; AWD Diversified had no reasonable basis to be concerned that AA Technical Services would abandon its property on the first floor; and it was not established on the evidence that the property of AA Technical Services on the first floor was less valuable than that on the ground floor. 

3. There was an attempted exploitation of AA Technical Services from late January to early March 2014 in a manner offensive to 'commercial conscience'.  Further, AWD Diversified's reliance on the determined Lease after 17 January 2014 was without foundation and capricious.  The actions of AWD Diversified from 17 January 2014 were characterised by a substantial departure from what was generally commercial behaviour.  It sought to exploit a position of unfair bargaining power and applied unfair tactics, and was such a departure from what is generally accepted commercial behaviour as to be unconscionable. 

4. The established unconscionable conduct of AWD Diversified was carried out by one or both of Mr Diedler and Mr McKenzie, and occasionally at their direction and with their implicit or express agreement (as found above). I found that Mr Diedler and Mr McKenzie were each persons involved in contravention of the Australian Consumer Law.

Damages

Primary claim

1. The case primarily advanced on behalf of AA Technical Services was that AWD Diversified's entry into the Option Deed and it issuing and maintaining the Redevelopment Notice led to everything that followed; and that AA Technical Services suffered loss and damage because of the conduct of AWD Diversified. 

2. AA Technical Services did not seek an award of lost profits.  Rather, it sought instead to recover the total of the liabilities it incurred and was unable to pay because of the closure of the CBD Health Spa Business.  It argued that but for the conduct of AWD Diversified, the CBD Health Spa Business would have generated sufficient revenue that it would have met its debts, and it incurred additional debts that it would not have otherwise if AWD Diversified had not acted as it did.

3. On behalf of AA Technical Services it was submitted that when regard was had to the deliberate nature of the conduct of AWD Diversified, the proper course would be to award those damages flowing 'directly' from that conduct, but not those losses where the cause was 'independent', 'extrinsic' 'supervening' or 'accidental' of that conduct.[445] It was submitted that an award on that basis would allow a claimant to recover debts and expenses incurred as a consequence of the relevant conduct, similar to an award in deceit,[446] and would be consistent with the legislative purpose underlying s 21 of the Australian Consumer Law, as identified by Allsop CJ in Paciocco v Australia & New Zealand Banking Group Ltd and Good Living Company Pty Ltd as trustee for the Warren Duncan Trust No 3 v Kingsmeade Pty Ltd [2021] FCAFC 33.

   [445] Berry v CCL Seizure Pty Ltd (2020) 271 CLR 151 [31].

   [446] Doyle v Olby (Ironmongers) Ltd [1969] 2 QB 158, 167.

4. AA Technical Services claimed that it had suffered loss and damage in the sum of not less than $1,796,400.28.  At trial, it pressed for recovery of $1,790,699.60.  It sought to recover by way of damages ongoing and recurring expenditure incurred in relation to the CBD Health Spa Business; legal fees; fees paid to Marand Transport; fees paid to A2B; increased salary costs incurred and paid from January 2013 as a result of AWD Diversified having issued the Redevelopment Notice (that is the increased salary costs of having assigned Mr Woolfenden and Ms Newell to undertake the duties that were not being performed by Mr Paul Dodd and Mr Kennedy); and the diminution in value of equipment. 

5. If my construction of cl 25 of the Lease was wrong, and AWD Diversified indeed acted contrary to its obligation to AA Technical Services under the Lease in entering into the Option Deed and failing to offer Replacement Premises, then in circumstances where AWD Diversified did not take legal advice, I would have had no hesitation in accepting that the conduct of AWD Diversified from 16 January 2013, in light of the conduct that followed and the relative strengths of their respective bargaining positions, was unconscionable and AA Technical Services suffered loss or damage because of the conduct of AWD Diversified, and Mr Diedler and Mr McKenzie's conduct or involvement, in breach of the Australian Consumer Law.

6. As to the damages that would have been awarded had I concluded that the conduct of AWD Diversified from 16 January 2013, in light of the conduct that followed and the relative strengths of their respective bargaining positions, was unconscionable (and Mr Diedler and Mr McKenzie had been involved in the same), I noted as follows.  On the evidence, I accepted that there was a decline in the revenue of the CBD Health Spa Business from June 2012, the majority of the decline suffered in the twelve months to December 2013, and the greatest decline suffered in the six months to December 2013.  The evidence established that there was an also an increase in AA Technical Services' expenses from January 2013.[447]  The evidence of Ms Low was supported by the evidence of Mr Kennedy, Mr Burston, Ms Zink as to the decline in the revenue of the CBD Health Spa Business from December 2012, and the evidence of Mr Paul Dodd as to the increase in expenses.[448]  I also accepted that the redevelopment caused uncertainty that led to the non-renewal of memberships.  Further, the actions of Mr McKenzie in turning off the power to the Leased Premises causing chaos likely contributed to that decline.

   [447] Exhibit 495 (second expert report of JE Low dated 15 August 2018 and filed in the proceeding on 4 March 2020).

   [448] ts 318 (22 September 2021).

7. I accepted AA Technical Services' submission that the uncertainty and the fall in revenue led to a loss of the ability to service the existing debts and the incurring of further debt that could not be paid. 

8. Further, I accepted that there was a history of the CBD Health Spa Business being able to pay its debts.[449]  In that regard, Ms Low's evidence was that if the actual results for the period June 2012 to December 2013 had been in line with the previous owner's results for the six months to 31 December 2010, the sales results would have been $470,291 higher; and if the actual results for the period June 2012 to December 2013 had been in line with the results for the business for the first three months to May 2012, the sales results would have been $198,597 higher.[450]  Having regard to the evidence of Ms Low, I accepted that but for the uncertainty and fall in revenue that followed the Redevelopment Notice, AA Technical Services would have serviced its debts. 

   [449] Exhibit 5.

   [450] Exhibit 495 (second expert report of JE Low dated 15 August 2018 and filed in the proceeding on 4 March 2020).

9. The ongoing and recurring expenditure claimed by AA Technical Services was established on the evidence.  As to the increased salary costs and relocation costs incurred by AA Technical Services, they too were established on the evidence. 

10. However, in light of my findings, while AWD Diversified engaged in some conduct after July 2013 that was, in all of the circumstances, unconscionable and contravened s 21 of the Australian Consumer Law, and Mr Diedler and Mr McKenzie were involved in that contravention, entry into the Option Deed and issuing and maintaining the effect of the Redevelopment Notice was not in all of the circumstances unconscionable.

11. The unconscionable conduct that was established did not cause the whole of the loss that was suffered by AA Technical Services.  It was AA Technical Services' case that the primary cause of AA Technical Services' loss was the conduct of AWD Diversified in January 2013 when the Redevelopment Notice was issued (in circumstances AA Technical Services' maintained it ought not have been).[451]  It was acknowledged that by late November and December 2013, the damage had been done, and the invoices issued from 10 October 2013 for periods greater than 10 days did not cause the whole of AA Technical Services' claimed loss.[452] Nor did the established complained of conduct.

Secondary claim

[451] ts 765 (1 October 2021).

[452] ts 762 (1 October 2021).

1. As a secondary claim, AA Technical Services contended that because of the unconscionable conduct of AWD Diversified after the lock-out, particularly its refusal to allow AA Technical Services to recover its property, it suffered loss and damage by the loss of its property. 

2. For the reasons set out above, I was satisfied that the conduct of AWD Diversified in denying AA Technical Services access to the Leased Premises so as to remove its property from within the Leased Premises after the lock-out on 17 January 2014 was unconscionable, and Mr Diedler and Mr McKenzie were involved in that contravention.

3. The unconscionable conduct of AWD Diversified in relation to the removal of AA Technical Services' property from within the Leased Premises, and Mr Diedler and Mr McKenzie's involvement in the same, caused AA Technical Services to suffer loss and damage through the loss, damage and destruction of its property.  That is, AA Technical Services suffered loss because of AWD Diversified's conduct from 17 January 2014, which conduct contravened the Australian Consumer Law. The cause of AA Technical Services' loss and damage was not independent, extrinsic, supervening or accidental of AWD Diversified's conduct. AA Technical Services was denied access to the Leased Premises to remove its property. Removal from the Leased Premises was then arranged (precipitously in all of the circumstances) by AWD Diversified and undertaken under Mr Diedler's supervision. AA Technical Services' property was lost, damaged or destroyed in the process of being removed from the Leased Premises and stored on the instruction of AWD Diversified. In all of the circumstances, AA Technical Services was entitled to recover its loss from Mr Diedler and Mr McKenzie, as persons involved in the contravention that caused AA Technical Services to suffer loss and damage.

4. On behalf of Mr Diedler it was submitted that AA Technical Services had an 'insurmountable task' in proving that it suffered loss or damage because of the conduct of another person in breach of the Australian Consumer Law.

5. It was submitted on behalf of Mr Diedler that AA Technical Services' claimed loss was in fact caused by 'one of three things':[453]

   (a)the failure of AA Technical Services to vacate the Leased Premises on 17 July 2013, six months after the issue of the Redevelopment Notice, and some 12 months after it became aware of the possibility of redevelopment.  It was submitted that had AA Technical Services vacated on 17 July 2013 (when Mr Diedler says it was contractually bound to vacate), there would have been no loss;

   (b)alternatively, the failure of AA Technical Services to negotiate in good faith with AWD Diversified following the determination date to secure some sort of fixed term tenancy; and

   (c)the failure of AA Technical Services to meet its rental obligations under the Lease.  It was submitted that at the time of the lock-out, AA Technical Services was in arrears and could not meet its rental obligations.

   [453] ts 389 - 390 (23 September 2021).

6. On behalf of Mr Diedler it was further submitted that the removal of AA Technical Services' equipment from the Leased Premises did not cause it to suffer loss or damage as it had no alternative premises nor the financial ability to re-commence trading. 

7. I did not accept that AA Technical Services suffered no loss, nor did I accept that it caused its own loss with respect to the loss of its property.  The loss suffered was a direct result of (or because of) AWD Diversified's unconscionable conduct, and not the conduct of AA Technical Services.

8. It was accepted by AA Technical Services, and it was established on the evidence, that some of AA Technical Services' property was recovered from the Leased Premises by Mr Paul Dodd and Marand Transport.  However, it was also established on the evidence that some of its property went missing, or was damaged or destroyed. 

9. As claimant, AA Technical Services had the onus to prove its damages.  However, the assessment of the loss suffered by AA Technical Services in relation to its missing, damaged and destroyed property in this case was complicated by the limited information that was available to allow the value of the equipment lost, damaged or destroyed to be assessed. 

10. I accepted that the equipment records (including service history records) were lost through no fault of AA Technical Services, but through the actions and fault of AWD Diversified, in circumstances where Mr Diedler and Mr McKenzie had a practical connection to those actions.  AA Technical Services had no option but to prosecute this action in circumstances where there was a lacuna of documentary evidence.

11. In assessing compensation, I proceeded on the basis that the general proposition that the claimant has the onus to prove its damages would properly be qualified in circumstances where the (deliberate) wrong caused the position of uncertainty or difficulty of proof.[454]  I accepted the submission made on behalf of AA Technical Services that it was appropriate for the court to proceed in this case 'in a robust manner, relying on the presumption against wrongdoers, the onus of proof, and resolving doubtful questions against the party whose actions have made the accurate determination so problematic.'[455]  That is, against Mr Diedler and Mr McKenzie, who were involved in the unconscionable conduct of AWD Diversified.

    [454] Pitcher Partners Consulting Pty Ltd v Neville's Bus Service Pty Ltd [116], and the decisions cited and discussed at [109] - [117].

    [455] Houghton v Immer (No 155) Pty Ltd [1997] NSWSC 608; 44 NSWLR 46 at [59], cited in Pitcher Partners Consulting Pty Ltd v Neville's Bus Service Pty Ltd [109].

12. In light of the circumstances in which AA Technical Services lost possession of its books and records, including all equipment records, I was prepared to accept that the assumptions made and the methodology adopted by Mr O'Loughlin in valuing the property of AA Technical Services that was lost, damaged or destroyed were both appropriate and sufficient in the circumstances for AA Technical Services to discharge its onus. 

13. In undertaking a valuation, Mr O'Loughlin was asked to make a number of assumptions, as recorded in his brief.[456] 

    [456] Exhibit 496 (expert report of Marc O'Loughlin dated 17 December 2018 and filed on 4 March 2020, Appendix 1).

14. Mr O'Loughlin was asked to assume that the equipment list which formed part of the Agreement for Sale represented each of the items that were in the Leased Premises when the CBD Health Spa Business was purchased by AWD Diversified.  This was established on the evidence.  I accepted that Mr Lena prepared the inventory list, with the assistance of NGBB (his broker) and his accountant; and on completion of the sale to AA Technical Services, Mr Paul Dodd and Mr Lena 'walked through' through the Leased Premises and Mr Paul Dodd 'ticked items off' the inventory list which was marked as Annexure 1 to the Agreement for Sale.  Mr Paul Dodd had no recollection of any item on the inventory list not having been present and accounted for when the walk through was undertaken.

15. Mr O'Loughlin was asked to assume certain equipment was removed from the Leased Premises, and instructed to not value the same.  This was appropriate.

16. Mr O'Loughlin was asked to assume that the items listed were generally purchased between 2007 and 2008.  In this regard, I noted that it was Mr Paul Dodd's evidence that at completion of the sale in February 2012, the equipment was in working order and was being used by the members.  He also gave evidence to the effect that through the equipment service records, he understood that the age of the equipment was 'anywhere to five years'.  I also noted that it was Mr Lena's evidence that there had been a refurbishment policy, and money had been set aside for the recycling and purchase of new equipment every six months.[457]  Mr Paul Dodd's evidence and that of Mr Lena supported the assumption made by Mr O'Loughlin, as did the cross-referencing undertaken by Mr O'Loughlin.[458]

    [457] ts 419 (24 September 2021).

    [458] ts 379 (23 September 2021).

17. As to the condition of the plant and equipment at settlement in 2012, I accepted that it was operational, in use, and was being maintained.  In this regard, I accepted Mr Lena's evidence that prior to sale there was a maintenance person on staff; staff had been assigned sections of the gym to look after; and there were maintenance agreements for the equipment in place with GymCare.[459]

    [459] ts 419 (24 September 2021).

18. A further assumption asked of Mr O'Loughlin was that the equipment was all in working condition and was used in a commercial gymnasium.  I accepted that the CBD Health Spa Business was operating on the morning of the lock-out and in light of the lack of records, it was reasonable to infer that the equipment was all in working condition and was used in a commercial gymnasium as at 17 January 2014.

19. As to the condition of the equipment Mr O'Loughlin was also asked to assume that it was serviced on three occasions between February 2012 and January 2014.  In this regard, I noted that there was documentary evidence that payments were made by AA Technical Services to GymCare (which entity I understood had maintenance agreements with the previous owner for the equipment) on 7 May 2012 and 12 June 2012.[460]

    [460] Exhibit 67 (pages 1004 and 1012).

20. Mr O'Loughin was also asked to assume that the equipment that was sold and formed part of the 'Auction Results' represented the 'saleable equipment' as provided to the auctioneers; and that all other items were either:

    (a)left in the Leased Premises and never recovered (being the items represented in the 'Building Annexure');

    (b)missing from the items recovered from A2B (being items represented in the 'Missing Annexure'); or

    (c)unable to be sold, and were destroyed or otherwise disposed of.

21. As to this assumption, I proceeded on the basis that the lists of missing property and remaining property prepared by Mr Alan Dodd with the assistance of Mr Paul Dodd were accurate, and therefore the assumptions made by Mr O'Loughlin were reasonable in the circumstances.

22. Mr O'Loughlin recorded that he was instructed to provide a valuation on a 'Market Value in Continued Use' basis, as is where is.  He explained in his report that 'Market Value in Continued Use' was the estimated amount, expressed in terms of money, that may reasonably be expected for a property in an exchange between a willing buyer and a willing seller, with equity to both, neither under any compulsion to buy or sell, and both fully aware of all relevant facts, including installation, as of a specific date, and assuming that the earnings support the value reported.  (Which amount included all normal direct and indirect costs to make the property fully operational.)

1. Having regard to the remedial purpose of the statute, I was satisfied that the assessment of damages in this case, grounded upon a valuation undertaken on a 'Market Value in Continued Use' as is where is basis was entirely consistent with the justice of the case.  The CBD Health Spa Business traded on a 24 hour basis immediately prior to the lock-out.  AA Technical Services was denied access to its property for months before AWD Diversified caused the property to be removed from the Leased Premises, and in that process caused some property of AWD Diversified to be left in the Leased Premises and never recovered, and a significant portion of the property to be lost, damaged or destroyed.

2. There was evidence that in January 2014 attempts continued to be made to progress the relocation of the CBD Health Spa Business to another location.  At the same time, AA Technical Services was liaising with the Commonwealth Bank of Australia in relation to its overdraft facility.[461]  By a letter dated 26 January 2014 from CBRE addressed to Mr Kennedy of CBD Health Spa,[462] the terms of a possible offer to lease premises at 647 Wellington Street, Perth, were documented. 

   [461] Exhibit 201.

   [462] Exhibit 206.

3. The attempts to move the CBD Health Spa Business to a new location were compromised in no small part by AWD Diversified's refusal to allow AA Technical Services access to the Leased Premises to retrieve its property;[463] the lack of transparency as to how the amounts invoiced by AWD Diversified were derived from July 2013; the unreasonable refusal of AWD Diversified to identify precisely the amount owed to AWD Diversified by way of rent and outgoings on 31 January 2014 and 4 February 2014 to facilitate AA Technical Services' discussions with its bank as to whether it would allow the CBD Health Spa Business to continue to operate;[464] and the unauthorised and unconscionable draw down of AA Technical Services' bank guarantee in November 2013. 

   [463] ts 295 (22 September 2021).

   [464] Exhibits 217 (pages 2383 and 2384), 222 and 215.

4. The remedial purpose of the Australian Consumer Law and the justice of the case required AA Technical Services to recover damages for the loss of its property, on the basis that the property is valued on a 'Market Value in Continued Use' basis as at 17 January 2014. Mr O'Loughlin's valuation of the property on that basis was $205,300 (inclusive of GST or $186,636.36 exclusive of GST).

5. The proceeds of the sale of equipment that was recovered and was not damaged or destroyed after deduction of the costs of sale were $5,487.35 (inclusive of GST or $4,988.50 exclusive of GST). 

6. After the recovery of the proceeds of sale were taken into account, I assessed AA Technical Services' recoverable damage by the loss of property in the amount of $199,812.65 (inclusive of GST or $181,647.86 exclusive of GST). 

7. Finally, I note that at trial AA Technical Services' secondary claim focused on the loss of AA Technical Services' property.  However, part of the damages claimed by AA Technical Services' in this proceeding included legal costs, removal and storage fees, relocation expenses and Seizure Costs.  At trial, AA Technical Services' claim with respect to the same was not formally or implicitly abandoned if the primary claim did not succeed, and evidence was tendered in relation to these costs.

8. In order to ensure fairness to the parties, I will hear them in relation to whether in light of my findings these are losses that ought be awarded and if so, the proper assessment of damage in relation to the same.

Final orders

1. For these reasons, AA Technical Services is entitled to damages as against Mr Diedler and Mr McKenzie pursuant to the Australian Consumer Law s 236, together with interest on all sums awarded to AA Technical Services pursuant to the Supreme Court Act and costs.  I will hear the parties as to the matter raised at [1028] and [1029] above, the final form of orders and costs.

Sch A - Option Deed cl 6

6LEASES

Existing leases

6.1The Seller must terminate all leases, licences and other rights of occupation subsisting at the date of this deed in respect of the Property (or any part), effective prior to 1 March 2013.  If the Seller fails to do so, clauses 6.3 and 6.4 of this deed apply to this condition with the necessary changes.

New Office Leases

6.2The Seller must, prior to 31 October 2013, secure leases (which may include binding agreements for lease) for all the Office Space within the Building (as Refurbished) (New Office Lease) to no more than four (4) new tenants in total and each New Office Lease must satisfy all of the following conditions (except to the extent expressly otherwise agreed in writing by the Buyer):

6.2.1 each New Office Lease is with an A-Grade Tenant;

6.2.2 each New Office Lease is for a term of no less than 5 years with one option to renew of 5 years;

6.2.3 each New Office Lease is on usual commercial terms expected for the particular type of premises and the particular nature of the tenant; and

6.2.4 each New Office Lease is approved by the Buyer in writing prior to the Seller agreeing to be bound by it (not to be unreasonably withheld, with notice of approval or non-approval being given within five (5) Business Days of the Buyer being provided with the document).

6.3 If the Seller fails to fulfil any condition in clause 6.2 by the time required, the Buyer may waive the condition or:

6.3.1 extend the date for fulfilment of the condition (any number of times) provided it does not extend beyond the expiry of the Option Period; or

6.3.2 give a notice to the Seller:

(a) setting out the Seller's failure to comply with this deed;

(b) stating that the Buyer does not wish to proceed with the purchase of the Property; and

(c) that the Buyer terminates this deed with immediate effect.

6.4 If the Buyer gives the notice stated in clause 6.3.2 (termination):

6.4.1 this deed will terminate on the giving of that notice;

6.4.2 each party is released from its obligation to perform this deed further and neither party shall have any claim against the other (except in respect of an antecedent breach of this deed);

6.4.3 the Option Fee and all interest earned on it is to be repaid to the Buyer; and

6.4.4 the Seller shall sign the Office of State Revenue (WA) duty cancellation form and any associated forms at the request of the Buyer.

6.5 Subject always to clause 6.2, the Seller must notify the Buyer within three (3) Business Days of a New Office Lease being agreed with the tenant and the Seller must provide to the Buyer a copy of each New Office Lease within three (3) Business Days after it is executed.  The Seller must not subsequently agree to any variation without the consent of the Buyer (not to be unreasonably withheld).

Non-Office Leases

6.6 The Seller may negotiate and secure leases and licenses for areas of the Property that do not form part of the Office Space (Non-Office Lease) provided these Non-Office Leases:

6.6.1 are on reasonable terms and conditions (including for usual commercial rents and fees);

6.6.2 are negotiated on an arm's length basis; and

6.6.3 are approved by the Buyer in writing prior to the Seller agreeing to be bound by it (not to be unreasonably withheld, with notice of approval or non-approval being given within five (5) Business Days of the Buyer being provided with the document). 

6.7 Subject always to clause 6.6, the Seller must notify the Buyer within three (3) Business Days of a Non-Office Lease being agreed with the tenant and the Seller must provide to the Buyer a copy of each Non-Office Lease within three (3) Business Days after it is executed.  The Seller must not subsequently agree to any variation without the consent of the Buyer (not to be unreasonably withheld). 

6.8 If the Seller fails to fulfil any condition in clause 6.6, the Buyer may waive the condition or give a notice to the Seller:

(a) setting out the Seller's failure to comply with this deed;

(b) stating that the Buyer does not wish to proceed with the purchase of the Property; and

(c) that the Buyer terminates this deed with immediate effect. 

6.9 If the Buyer gives to the Seller a notice of termination pursuant to clause 6.8 (termination):

6.9.1 this deed will terminate on the giving of that notice;

6.9.2 each party is released from its obligation to perform this deed further and neither party shall have any claim against the other (except in respect of an antecedent breach of this deed);

6.9.3 the Option Fee and all interest earned on it is to be repaid to the Buyer; and

6.9.4 the Seller shall sign the Office of State Revenue (WA) duty cancellation form and any associated forms at the request of the Buyer.

Sch B - Draft non-binding heads of agreement cl 3

3.LEASING REQUIREMENTS

New leases

3.1 It will be a condition precedent to the Formal Variation that the Seller must within 2 weeks (or such longer period as agreed between the parties or as the Buyer may unilaterally grant to the Seller) of execution of the Formal Variation enter into a new lease or new leases in respect of the Property generating a total net rental income of no less than $650,000.00 per annum and so that:

3.1.1the total average net rental income, per square metre leased, must be no less than $350 per annum; and

3.1.2the initial term of the lease or leases must be between 3 to 5 years; and

3.1.3each lease contains a redevelopment clause and a refurbishment clause on terms approved by the Buyer (in its sole discretion) and in any case requiring a notice of termination of no longer than 6 months to the relevant tenant; and

3.1.4each tenant is to provide appropriate security in the form of bank guarantees or security bonds in favour of the landlord (to be assigned to the Buyer at Settlement);

3.1.5each lease is to be in registrable form (with all necessary plans for registration at Landgate); and

3.1.6each tenant is required to pay its relevant proportion of outgoings (based on the proportion of the lettable area of the premises leased to the total lettable area of the Property) in addition to the net rental.

Leases to be approved

3.2Notwithstanding clause 3.1, the parties acknowledge and agree that each lease to be entered into by the Seller pursuant to clause 3.1 must be approved by the Buyer (in its absolute discretion) in writing prior to the Seller becoming bound by it, such approval or non-approval to be given promptly after provision of the proposed lease or leases to the Buyer.

3.3If requested by the Buyer, the Seller must seek such variations to the lease or leases proposed by the Buyer with each proposed tenant.

3.4For the avoidance of doubt, if there is any existing tenant in the Property which has not been terminated pursuant to clause 6 of the Option Deed, the Seller will have to procure new leases for these tenants, on the terms required in this clause.

No retail leases

3.5The leases must not be subject to the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA).

Seller to register

3.6Each lease must be registered on the certificate of title to the Property promptly after execution of that lease at the cost of the Seller.  It will be a condition of settlement that the leases are registered on the certificate of title.

Incentive

3.7If any incentives are given pursuant to a new lease then the Seller must pay the value of the outstanding incentive to the Buyer at the Settlement of the Property.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

SE

Associate to the Honourable Justice Strk

19 JANUARY 2024