Able Demolitions and Excavations Pty Ltd v Wilson
[2012] WASC 61
•19 APRIL 2012
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: ABLE DEMOLITIONS AND EXCAVATIONS PTY LTD -v- WILSON [2012] WASC 61
CORAM: KENNETH MARTIN J
HEARD: 12-16 & 20-23 SEPTEMBER, 18-21 OCTOBER & 14 DECEMBER 2011
DELIVERED : 19 APRIL 2012
FILE NO/S: CIV 2200 of 2007
BETWEEN: ABLE DEMOLITIONS AND EXCAVATIONS PTY LTD
Plaintiff
AND
JASON LINDSAY WILSON
Defendant
FILE NO/S :CIV 2326 of 2008
BETWEEN :ALL MINING EQUIPMENT PTY LTD
Plaintiff
AND
ABLE DEMOLITIONS AND EXCAVATIONS PTY LTD
Defendant
Catchwords:
Contracts - Terms - Warranty - Minimum tonnage quantity term - Salvage - Disputed contract - Intent to create contract - Uncertainty - Serious breach or repudiation
Breach of contract - Agency - Sales commission - Essential terms - Breaches by wrongful receipt of funds - Termination - Capacity to support by facts learned retrospectively as to breaches of essential terms - Loss of bargain damages
Legislation:
Trade Practices Act 1974 (Cth), s 51A
Result:
In CIV 2200 of 2007, judgment for plaintiff and defendant's counterclaim dismissed.
In CIV 2326 of 2008, plaintiff's action dismissed and judgment for defendant on defendant's counterclaim.
Category: B
Representation:
CIV 2200 of 2007
Counsel:
Plaintiff: Mr P A Jewell SC & Mr J D MacLaurin
Defendant: Mr G R Ritter QC & Mr G M Rodgers
Solicitors:
Plaintiff: Culshaw Miller Lawyers
Defendant: Gary Rodgers
CIV 2326 of 2008
Counsel:
Plaintiff: Mr G R Ritter QC & Mr G M Rodgers
Defendant: Mr P A Jewell SC & Mr J D MacLaurin
Solicitors:
Plaintiff: Gary Rodgers
Defendant: Culshaw Miller Lawyers
Case(s) referred to in judgment(s):
Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57; (2008) 238 CLR 570
Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd [2000] WASCA 27; (2000) 22 WAR 101
Associated Newspapers Ltd v Bancks (1951) 83 CLR 322
Attorney‑General of Botswana v Aussie Diamond Products Pty Ltd [No 2] [2012] WASCA 73
Attorney‑General of Botswana v Aussie Diamond Products Pty Ltd [No 3] [2010] WASC 141
Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540
Bantick v Boss Properties Pty Ltd [2000] VSC 121
Barrier Wharfs Ltd v W Scott Fell & Co Ltd (1908) 5 CLR 647
Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622
Foran v Wight (1989) 168 CLR 385
Howard Smith & Co Ltd v Varawa (1907) 5 CLR 68
Jones v Dunkel (1959) 101 CLR 298
Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61; (2007) 233 CLR 115
Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11; (2011) 243 CLR 361
Masters v Cameron (1954) 91 CLR 353
McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457
Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359
Shevill v Builders Licensing Board (1982) 149 CLR 620
Uranium Equities Ltd v Fewster [2008] WASCA 33; (2008) 36 WAR 97
Waltons Stores (Interstate) Limited v Maher (1988) 164 CLR 387
Wickman Tools v Schuler AG [1974] AC 235
INDEX
Introduction................................................................................................................................ 5
Aspects underlying the two actions............................................................................................ 6
First action: Able v Jason Wilson t/as TP Recycling.............................................................. 10
First action: Pleadings............................................................................................................. 15
First action: Central issue - Minimum copper cable tonnage promise?.................................. 18
Asserted intersection as between the first and second actions................................................. 20
500 kVa used generator price claim......................................................................................... 23
The asserted minimum quantity of copper cable term in the first action................................. 25
The key witnesses' credibility................................................................................................... 28
Determination: Minimum quantity of cable term.................................................................... 31
Second action: Key facts......................................................................................................... 33
Determination of AME's claim as to the existence of a binding Marketing Contract............. 38
Essential monetary terms of the Marketing Contract............................................................... 43
AME's claim for breach of contract in the second action......................................................... 47
Alleged breach of essential monetary terms in the Marketing Contract by AME................... 48
The Koppern sale to CSI.......................................................................................................... 52
Koppern briquette machines and AME's receipt, retention and consumption of $990,000..... 57
AME's breach of 'non‑negotiable' terms of the Marketing Contract........................................ 66
Mr Cargill's expulsion of AME on 25 October 2007............................................................... 69
Validity of the termination of the Marketing Contract by Mr Cargill on 25 October 2007..... 71
AME's breach damages claim.................................................................................................. 76
Conclusions.............................................................................................................................. 77
KENNETH MARTIN J:
Introduction
CIV 2200 of 2007 and CIV 2326 of 2008 are actions heard together at this trial. CIV 2200 of 2007 involves a contractual dispute over unpaid monies claimed by Able Demolitions and Excavations Pty Ltd (Able) as plaintiff, seeking just over $1 million against the defendant, Mr Jason Wilson. At the time Mr Wilson traded under the business name 'TP Recycling' (TPR).
In the first action, Mr Wilson effectively acknowledges a liability to Able, but in defence raises an alleged breach by Able in 2007 of a minimum tonnage of copper cable promise or warranty embedded within the parties' agreement (the Copper Contract). Existence of any minimum tonnage promise or warranty favouring Mr Wilson is wholly refuted by Able. That is essentially the one core issue in the first action.
The second action, CIV 2326 of 2008, sees the protagonists' positions effectively reversed. This action arises out of agency, marketing and commission sales arrangements in place in late 2007 between Able and All Mining Equipment Pty Ltd (AME), a corporation closely tied to Mr Wilson.
In the second action the first core issue is the disputed subsistence of a binding marketing contract between AME (as agent) and Able (as principal). AME's case was first directed at establishing a perfection of a binding and certain 2007 agreement with Able (the Marketing Contract).
If proved, AME then says the Marketing Contract was repudiated by Able when AME was summarily ejected on 25 October 2007 from the Port Hedland site at which it was then carrying out marketing work. AME seeks damages from Able for loss of bargain based on the denial of its contractual opportunities to generate commissions at a rate of 15% on its sales over a 12 month period.
AME says it was forced to (reluctantly) accept Able's repudiation of the Marketing Contract, effective 13 November 2007 (exhibit 1.114, TB vol 2, page 178), providing the basis for its claim for damages for loss of commissions denied.
For its part, Able contends that if there is found to be a binding Marketing Contract with AME, which it strongly refutes, Able nonetheless was lawfully justified in terminating that agreement on 25 October 2007 by reason of AME's serious breaches of that Marketing Contract at the time.
As I mentioned, the two actions were heard together. All evidence adduced at the trial was elicited in both actions.
Aspects underlying the two actions
The geographical setting to both actions is the now defunct BHP Billiton Boodarie Iron Plant at Port Hedland, Western Australia (the Boodarie Plant).
The Boodarie Plant was shut down by BHP Billiton in 2004, following a serious explosion in which one worker was killed and others seriously injured. The Boodarie Plant manifested an attempt at 'value adding' in the local resources industry before export, by producing briquettes of iron ore in a then state‑of‑the‑art plant as an adjunct to the Western Australian iron ore mining industry. The Boodarie Plant was owned and operated by a subsidiary of BHP Billiton Limited, namely BHP Billiton Direct Reduced Iron Pty Ltd, commonly referred to as BHPBDRI.
BHPB's decision to close the Boodarie Plant necessitated the demolition of all standing infrastructure and the restoration of the plant site. Much of the Boodarie Plant (that is, much of the plant, equipment and materials) still had value; in this respect, the Plant's closure created an opportunity for profit.
On 5 January 2007, BHPBDRI awarded a demolition contract for the Boodarie Plant to Able (exhibit 7). Able's head office is in Victoria. But it does business and is registered as a licensed demolitions operator in most Australian States and Territories.
Mr Paul Rossignoli is a director and the long term guiding hand of Able's demolition business. Mr Rossignoli is usually referred to as 'Paul Rossi'. That was mostly how he was addressed during trial by both sides. I will carry over the abbreviated nomenclature for him in these reasons.
Mr Rossi is a self‑made man. Having left school at a young age, he had little formal education. He then worked in the demolition industry for almost 40 years. During the opening of the case I was informed by senior counsel for Able that Mr Rossi had very limited reading capacity. As soon became apparent, Mr Rossi struggles to read or to comprehend large groupings of words in documents. He cannot operate a computer. Nevertheless, as Able's key witness at the trial, Mr Rossi presented to me as astute in regard to business, particularly the workings of the salvage and demolition industries.
Both CIV 2200 of 2007 and CIV 2326 of 2008 arise out of arrangements made in 2007 between Mr Rossi, on behalf of Able, and Mr Jason Wilson, another self‑made businessman in the West Australian salvage, scrap metal and recycling industry.
In 2007 Mr Wilson operated TPR and another business, Jason's Pallets. Mr Wilson's TPR business was active salvaging and extracting copper from disused cables. Mr Wilson owned a unique machine that could process and recycle copper metal into a saleable copper product that could be sold on a profitable basis, including to overseas purchasers. Mr Wilson used this copper extraction machine from business premises in Kewdale which facilitated his copper recycling business (see exhibit 37).
Mr Wilson and Mr Rossi first encountered each other in an earlier 2006 business deal involving Mr Wilson's acquisition of salvageable copper cable at the BHPB Olympic Dam site at Roxby Downs, South Australia. At trial, much was made of the earlier business dealing. But, in my view, it provided little beyond historic background concerning Mr Rossi and Mr Wilson's first business encounter.
In August 2006, TPR reached agreement with Tyabb Machinery Brokers, then an agent of Able, to pay slightly under three quarters of a million dollars to acquire approximately 100 ‑ 150 tonnes of surplus electrical cable at the BHPB Olympic Dam site at Roxby Downs (see exhibit 1.1).
When Mr Rossi and Mr Wilson first met at Roxby Downs, Mr Wilson was accompanied by a personal assistant, Ms Sarah Beardmore. She was called as a witness at trial for AME. Mr Wilson, like Mr Rossi, has limited literacy skills. He also needs assistance with reading documents and hence his usual practice of travelling with a personal assistant such as Ms Beardmore when on business.
Mr Wilson was also, in my assessment, an astute businessman, especially in turning a profit from a business opportunity. Mr Rossi and Mr Wilson present as very alike in that respect, albeit Mr Wilson is at least a generation younger.
On Mr Wilson's account of events at Roxby Downs, business with Mr Rossi had been cordial and largely satisfactory. He did say, however, that at the end of his work at Roxby Downs he had been somewhat disappointed by the less than anticipated quantity of copper cable he was ultimately able to secure and load on his truck for transport back to Perth for processing. He says he made a mild verbal complaint to Mr Rossi at Roxby Downs about this shortage of cable at about the time he was due to set off in his truck to drive back to Perth. He said that he told Mr Rossi that the amount of copper he had been able to collect at Roxby Downs had been 'a bit light'. Mr Wilson related that Mr Rossi, in attendance with his son Glen at the time, responded by saying, 'Don't worry, I have something much bigger coming up'.
Mr Wilson suggested that Mr Rossi was alluding, by this oblique terminology, to Able's forthcoming demolition work for BHPB at the Boodarie Plant. Able ultimately secured the demolition contract in January 2007.
Mr Rossi disputed Mr Wilson's account, suggesting he could not have known at that time (i.e. the last quarter of 2006) if Able would secure a demolition contract with BHPB for the Boodarie Plant in Western Australia. But Able was certainly tendering for the demolition contract around this time. This peripheral background issue is not that significant. On this occasion I will accept Mr Wilson's account over Mr Rossi's. It is an account corroborated by his assistant, Ms Beardmore, who accompanied Mr Wilson to Roxby Downs. I assessed her to be a reliable witness.
For reasons that will emerge, I assessed neither Mr Rossi nor Mr Wilson to be generally reliable witnesses. A casual review of the trial transcript confirms that in their evidence, both men at times manifested the propensity to avoid providing direct responses to questions posed to them, not only in cross‑examination, but also in evidence‑in‑chief. I will elaborate upon aspects of their respective evidence within these reasons. At the outset, however, I make it clear that I have seldom accepted uncorroborated evidence from either Mr Rossi or Mr Wilson in areas where their evidence is contentious.
Roxby Downs was the catalyst for the parties' subsequent business dealings.
It is uncontroversial that in early 2007, having just secured the Boodarie Plant demolition contract from BHPBDRI, Mr Rossi telephoned Mr Wilson in Perth to inform him of that development. Over the telephone, Mr Rossi enquired of Mr Wilson whether he was interested in acquiring the salvageable copper cable at the Boodarie Plant from Able. He was.
Mr Wilson had familiarity with the Boodarie Plant site. Jason's Pallets had provided racking when the Plant was being commissioned by BHPB only some few years before. Mr Wilson told Mr Rossi in effect that he was ready to travel to Port Hedland at short notice to talk and to see for himself the copper cable at the Boodarie Plant.
Mr Wilson made arrangements to fly to Port Hedland with his assistant, Ms Beardmore, to meet Mr Rossi as soon as he could. At trial, Mr Wilson said he and Ms Beardmore had actually flown up to Port Hedland on 13 January 2007, only to be met at the airport lounge by Mr Rossi who told him that some unforeseen events had arisen which would prevent a business meeting at the Boodarie Plant site on that occasion. Mr Wilson was untroubled, he said, and flew back to Perth. The meeting at Port Hedland was put back to 23 January 2007 when, according to Mr Wilson, the two men did meet at site and had a substantive business negotiation.
There was controversy at trial over whether or not there had been the 'false start' and postponement of the meeting at the Port Hedland airport lounge on 13 January 2007. Mr Wilson thought there had been. Mr Rossi thought not. Mr Wilson's personal assistant, Ms Beardmore, could not recall. It matters little. Some tendered photographs of the Boodarie Plant taken by Ms Beardmore (exhibits 14, 31(a) ‑ (t) and 32), who again accompanied Mr Wilson to site, display an automatic time stamp marking. The photographs also display a number 23 which I interpret to mean the date of 23 January 2007. That is, I find, the day she, together with Mr Wilson, was shown around the Boodarie Plant site by Mr Rossi and took her photographs whilst Mr Wilson was looking at potentially salvageable cable, with a view to recycling its copper content.
A false start at the Port Hedland airport lounge on 13 January 2007 may explain some references to the earlier date in some witness statements. Bearing in mind that Ms Beardmore could not corroborate Mr Wilson's statement that a meeting took place on 13 January 2007, I am not satisfied that it did actually happen.
What is more important is that it is clear that Mr Rossi and Mr Wilson, accompanied by Ms Beardmore, met and negotiated over copper cable at the Boodarie Plant site at Port Hedland on 23 January 2007.
First action: Able v Jason Wilson t/as TP Recycling
In the first action, Able claims from Mr Wilson unpaid monies due for 253.903 tonnes, revised downwards in Able's written closing submissions (by reference to exhibit 1.12) to 253.876 tonnes, of copper cable. The discrepancy - in Mr Wilson's favour - is attributable to Able's tax invoice 10045 (exhibit 1.55, TB vol 2, page 102) for 38.309 tonnes, with the materials movements log figure (exhibit 1.12) being only 38.282 tonnes.
That amount of cable is accepted by Mr Wilson as having been removed by TPR from the Boodarie Plant site in the period 14 July to 6 October 2007 (see Able's invoices to TPR numbered 10028, 10029, 10031 and 10034 - exhibits 1.26, 1.27, 1.28 and 1.29, TB vol 1, pages 37 ‑ 40; 10039 and 10045 - exhibits 1.50 and 1.55, TB vol 2, pages 97 and 102).
TPR had paid Able over $2 million for another 485.928 tonnes of copper cable which Mr Wilson caused TPR to load and truck away from the Boodarie Plant site back to Perth, in the period between March and July 2007. However, Able says TPR's payments invariably were late, with the monies due being remitted well outside the 14 day or 48 hour payment arrangements the parties had agreed upon.
There is no dispute that in early 2007 Able and Mr Wilson perfected a binding agreement over the acquisition of copper cable from the Boodarie Plant site, which is the Copper Contract. That is so notwithstanding that the Copper Contract has to be winkled out of a telephone conversation between Mr Rossi and Mr Wilson in early January 2007, subsequent face to face conversations and subsequent passing written communications.
There is no dispute that there was, eventually, an agreed purchase price of $4 per kg plus GST, which was to be paid to Able by Mr Wilson as consideration for the tonnages of copper cable TPR removed from site. The agreement as to a settled price evolved over time. By no later than mid‑March 2007, it is uncontroversial Able was to receive the agreed price of $4 per kg plus GST for all cable that Mr Wilson (as TPR) removed from site.
Therefore, the unpaid amount that is due to Able by Mr Wilson in respect of the 253.876 tonnes of copper cable at $4.40 per kg is $1,117,054.40 (GST inclusive). That amount has been due to Able from Mr Wilson since mid‑October 2007. It remains unpaid.
To the extent the Copper Contract was partly oral, it began with Mr Rossi and Mr Wilson's telephone conversation in early January 2007. This is their first contact conversation in 2007. It led to Mr Wilson and Ms Beardmore travelling to site to meet Mr Rossi face to face on 23 January 2007. There is dispute over precisely what was said as between Mr Wilson and Mr Rossi at the Boodarie Plant site on 23 January 2007. Ms Beardmore, in attendance, took some photographs. But, as I assessed her evidence, she did not actively participate in the negotiations.
Mr Rossi and Mr Wilson both stated in their evidence that the copper cable sales arrangements they reached that day would be documented later.
As Mr Wilson relates the meeting of 23 January 2007 with Mr Rossi, he says that as discussions concluded he was given a photocopied single page that had earlier been shown to him by Mr Rossi from the Able/BHPBDRI demolition contract (exhibit 7). This substantial contract document contains written estimates by BHPBDRI as to the copper cable at the site (see exhibit 1.6, TB vol 1, page 10 which is the relevant page from exhibit 7). I do not accept all Mr Wilson's evidence on this issue. Whilst I find Mr Wilson was shown the BHPBDRI estimate page by Mr Rossi at the time, I find that he was not given a copy of the page from exhibit 7 on that occasion at Port Hedland. However, it is uncontentious that subsequent to the meeting at Port Hedland, a copy of the relevant BHPBDRI estimate page from exhibit 7 that Mr Wilson had been shown at site was sent by Able to Mr Wilson as part of a three page facsimile communication of 1 February 2007 (exhibit 1.4, TB vol 1, page 8).
The actual estimate page sent to Mr Wilson (43 of 46) by facsimile and as extracted from exhibit 7, carries the heading, 'BHPB Estimated Metal Content for the HBI plant'. Under a heading 'Cables', it says:
Cable, copper weight for site total (1,800 km) - 1,751 tonne
Power distribution cable 587 tonne
Total for plant 2,338 tonne
Notes on this same page explain that the BHPB estimate did not include cable at some nominated places, including at substations, the relay room and a switchyard.
The bottom of this same page shows another heading, 'Contractors Estimated Metal Content for the HBI Plant'. However, there was no other information following on that page (or for that matter on the next page, 44 of 46) in exhibit 7 for that heading so as to provide any more information as to a metal quantity estimate being made by Able as the Contractor. Much later within exhibit 7 there is another page showing contractor's estimates, which are numerically the same as the tonnage amounts estimated by BHPB, as seen on the earlier page 43 of 46. But I find this later page was never shown to, seen by, or sent to Mr Wilson.
Ms Beardmore's account of what little she recalls was said between the men about copper cable at the site meeting on 23 January 2007 provides no more information (see pars 6 and 7 of her witness statement, exhibit 52).
The face to face site negotiations between Mr Wilson and Mr Rossi on 23 January 2007 were followed by Able's written facsimile communication of 1 February 2007. This was sent to Mr Wilson by Able's employee, a Mr Barry Cargill. Mr Cargill's covering facsimile to Mr Wilson says 'Please refer to attached letter and copy of extract of Appendix E from BHPB Boodarie Iron Contract document regarding estimated metal content at the HBI plant'. This letter is exhibit 1.5 (TB vol 1, page 9). It refers to the scope of work as:
The Scope of Work shall include the removal of all used copper cable from the redundant HBI plant including communications, instrumentation, 3 and 4 core armoured and non‑armoured cable and solid core cable.
It provided as regards a completion date:
TP Recycling are to complete or be close to completing the cable removal by the 30 June 2007.
The faxed letter also asked for a bank guarantee:
A$1 million Bank Guarantee is required by Able Demolitions & Excavations Pty Ltd to insure [sic] the cables are removed and paid for.
Under the heading 'Payment', the following was provided as to price and also as to the immediacy for Able's receipt of monies:
TP Recycling is to pay Able Demolitions & Excavations Pty Ltd $4.00 per kilogram for all cable removed from site.
All monies will be due and payable upon removal of cable or portions thereof from the HBI demolition site.
The letter to Mr Wilson ended:
Please confirm your acceptance in writing.
(my emphasis in bold)
But Mr Wilson did not immediately confirm his acceptance in writing of the terms of Able's communication of 1 February 2007. Nor did he arrange for a $1 million bank guarantee.
There ensued more direct discussions between Mr Rossi and Mr Wilson at Port Hedland. Their outcome was a concession by Mr Rossi, that he would not press for immediate payment for removed cable. Instead, a 14 day payment arrangement was accepted to apply for a two month period from commencement of the contract. But after that initial two month period of the Copper Contract, TPR's payments for cable were to be remitted to Able within 48 hours of the cable material departing from the site.
On 28 February 2007, Mr Wilson arranged for a document entitled 'Deed of Guarantee and Indemnity' to be sent to Mr Rossi (see exhibit 1.10, TB vol 1, page 17) at Port Hedland. The document appears to be legally drawn. But it falls a very considerable distance short of approaching anything like a bank guarantee. For a start, no bank is mentioned. After receipt Mr Rossi sent this document off for some advice from his Victorian legal advisers. It is not revealed what the advice was. Assessing the document would hardly have been a challenge. But it is plain that Mr Rossi nevertheless proceeded with cable sale arrangements with Mr Wilson, notwithstanding the clear failure to satisfy Able's request for a bank guarantee for $1 million.
Mr Wilson made some arrangements of his own during February 2007. On 5 February 2007, Mr Wilson as TPR signed a one page contract with Conform Pty Ltd (Conform) (see exhibit 1.7, TB vol 1, page 11; see also exhibit 38). Conform is a corporation controlled by Mr Robert Wardrop, who was called as a witness for AME at the trial and had had some earlier business dealings with Mr Wilson in Queensland.
In early 2007, Mr Wilson sought to engage Mr Wardrop's services to assist him with the performance of the Copper Contract at Port Hedland. A very rough document was prepared by Mr Wardrop on behalf of his corporation Conform for it and Mr Wilson to execute. Clause 2 in the document provides under a heading 'Scope of Contract':
Conform shall provide project management human resources to TP for the removal of cable from the Boodarie HBI Plant Port Hedland as appointed by Able Demolitions, and approved by the site owner BHP Billiton.
TP shall pay to Conform AU1.00 per kilogram for the amount of cable removed up to and/or exceeding the Able [D]emolitions indicated 2338 metric tonnes total OR alternatively in the event that there is less than the indicated tonnage a lump sum fixed amount of AUD250,000.
Mr Wardrop in evidence at trial said there was a drafting error in the second paragraph of cl 2. Mr Wardrop said the true price agreed with Mr Wilson was 10 cents per kg or, as Mr Wardrop expressed it, $100 per tonne. ($1 per kg for 2,338 metric tonnes would amount to $2,338,000; both men accepted that such a figure was exorbitantly wrong).
Mr Wardrop also said the $250,000 figure, whilst reading as a stipulated minimum payment to Conform, irrespective of actual tonnages of cable removed, was also a cap, to prevent Conform receiving more than $250,000. Even allowing for the obvious error in the $/kg rate, I do not see how the clause could possibly be read as a maximum and not a minimum figure, absent rectification.
Mr Wilson and Mr Wardrop's business relationship is admittedly strained, although litigation has not ensued. Mr Wardrop says he is owed money by Mr Wilson out of this dealing. Success for Mr Wilson in this litigation against Able may enhance Mr Wardrop's prospects of being paid by Mr Wilson. Accordingly, I treat Mr Wardrop's evidence with some caution.
But issues arising out of the strained commercial relationship between Mr Wilson and Mr Wardrop are somewhat of a distraction. The real significance of the business arrangements reached between Mr Wardrop's corporation Conform and Mr Wilson on 5 February 2007 is that:
(a)the 2,338 metric tonne BHPB estimate figure from exhibit 1.6 has obviously been deployed in the negotiations between Mr Wardrop and Mr Wilson and ultimately in their arrangements; and
(b)the contract between Conform and Mr Wilson expressly recognises the possibility that the estimated figure might prove to be an overestimate. That pessimistic possibility was obviously very much alive to Mr Wilson in his business dealing with Mr Wardrop. It was carefully recognised and addressed by the financial provision for a minimum amount payable to Conform.
First action: Pleadings
Able and Mr Wilson's somewhat divergent stances upon the content of their (accepted) Copper Contract are reflected in their respective pleadings. Able's position is found in pars 5, 6, 7 and 13 of a re‑amended statement of claim filed 18 August 2007, as follows:
5.On or about 1 February 2007, the Plaintiff entered into an agreement with the Defendant for the purchase and removal of the copper cabling from the Site ('the Agreement').
Particulars of the Agreement
The Agreement was partly written, partly oral and partly to be implied.
(i)In so far as it was written, it consisted of a document dated 1 February 2007 prepared by the Plaintiff and faxed by the Plaintiff to the Defendant on or about 1 February 2007.
(ii)In so far as it was oral, it consisted in discussions between the Plaintiff and the Defendant in or about mid January 2007 and on or about 1 February 2007.
(iii)In so far as it was to be implied, it consisted of the Defendant paying the Plaintiff for loads of copper cabling removed from the Site pursuant to the Agreement, and in all things necessary to give the Agreement business efficacy.
6.The relevant terms of the Agreement were that:
(a)The Defendant would supply all labour, tools and equipment to remove the cable from the plant site to ground level.
(b)The Defendant would remove loads of copper cabling from the Site.
(c)The Defendant would pay to the Plaintiff $4.00 per kilogram plus GST with all monies due and payable upon removal of cable or portions thereof from the Site.
7.From on or about 3 March 2007 to 3 April 2007, the Defendant removed 151.404 tonnes of copper cabling from the Site and paid the Plaintiff $4.00 per kilogram plus GST for those loads pursuant to the Agreement.
…
13.In or about early March 2007, the Plaintiff and the Defendant agreed to vary the payment terms of the Agreement temporarily for two months only such that the Defendant would pay the Plaintiff $4.00 per kilogram plus GST for each load of copper cabling within 14 days of the Defendant removing the load from the Site (the Varied Agreement).
Particulars of the Varied Agreement
The Varied Agreement was partly oral and partly to be implied:
(i)In so far as it was oral, it consisted in discussions between the Plaintiff and the Defendant in early March 2007 prior to the removal of the first load from the Site.
(ii)In so far as it was to be implied, it consisted in the Defendant paying to the Plaintiff amounts for the loads of copper cabling removed from the Site pursuant to the Varied Agreement, and in all things necessary to give the Varied Agreement business efficacy.
Mr Wilson's position is seen under pars 5, 6, 7, 15, 31 and 32 of an amended defence and counterclaim, filed during trial under my leave granted on 18 October 2011, as follows:
5.The Defendant denies paragraph 5 of the Statement of Claim but admits that an agreement was entered into with the Plaintiff in or about February 2007 full particulars of which are outlined in the Counterclaim hereunder.
6.The Defendant denies paragraph 6 of the Statement of Claim to the extent that it refers to the terms of the agreement referred to in paragraph 5 of the Statement of Claim.
7.The Defendant admits paragraph 7 of the Statement of Claim.
…
15.The Defendant denies the agreement as asserted in paragraph 13 of the Statement of Claim but says there was an agreement reached between them in or about May 2007, full particulars of which are referred to in the Defendant's Counterclaim.
…
31.Thereafter the parties entered into an agreement ('the agreement') in or about February 2007, the agreement was partly oral and partly in writing, particulars of which are as follows:
(a)To the extent that the agreement was in writing, it comprises:
(i)A letter from the Plaintiff to the Defendant dated 1 February 2007;
(ii)An undated letter from the Defendant to the Plaintiff sent in February 2007 offering to accept the Plaintiffs offer at a purchase price of $4,000.00 per tonne including GST.
(b)To the extent that it was oral it was as a result of conversations between the Plaintiff and the Defendant in January and February 2007.
32.The terms of the agreement were:
(a)The Defendant would purchase from the Plaintiff and remove from the site all used copper cable;
(b)That the copper was not less than 2338 tonne;
(c)That the Defendant would commence the work of removal in or about March 2007 and aim to finish the removal process by 30 June 2007;
(d)That the Defendant would remove all copper cable systematically and thoroughly in an orderly manner;
(e)That the Defendant would supply all labour, tools and equipment to remove the cable from the plant site to ground level;
(f)That the Defendant would implement and follow all of the site safety rules in operation at the time;
(g)That the Defendant would pay the Plaintiff $4.00 including GST per kilogram for all copper cable removed from the site;
(h)That the money payable pursuant to the agreement was to be paid upon the removal of the copper cable or portions thereof from the demolition site as follows:
(i)For the first two months of the agreement within 14 days of departure from Port Hedland; and thereafter
(ii)Within 48 hours after confirming weights and signed departure dockets/consignment notes provided to the Defendant's fax number or e‑mail.
Notwithstanding a degree of limited disagreement over aspects of the parties' oral discussions, there is ultimately no challenge to the subsistence of a perfected contractual relationship in the first half of 2007, concerning the sale and removal of copper cable from the Boodarie Plant site by Mr Wilson, at an agreed price of $4 per kg plus GST.
Mr Wilson eventually responded in writing to Able's facsimile of 1 February 2007. The response appears to have been faxed from Mr Wilson's business, Jason's Pallets, to Mr Rossi in Port Hedland on 28 February 2007 (see exhibit 1.11, TB vol 1, page 20). Mr Rossi on‑forwarded the fax from Mr Wilson to Melbourne. Mr Rossi then appears to have signed and dated the instrument on 14 March 2007. A document signed off by Able was then faxed back to Mr Wilson in Perth on 16 March 2007.
Concerning the GST payable on the $4 per kg price, the amended passing document displays a striking out of the word 'incl' by a diagonal slash, followed by its replacement with a handwritten '+' sign. This exchange settled the issue of the GST to be paid to Able. The end consequence of this handwritten amendment was that the sentence finally reads '$4.00 per kg which equals $4000.00 per tonne + GST'.
The faxed document also contained a payment deadline, under the heading 'Conditions of payment':
Able Demolition will be paid within 14 days of departure from Port Hedland. TP Recycling will pay within 14 days for max of 2 months only. TP Recycling will then be paying within 48 hours after confirming weights and signed departure dockets/con notes provided to following fax number and email.
So from the middle of March 2007 there is no issue over the agreed price struck between Able and Mr Wilson of $4 per kg plus GST, for all copper cable removed by TPR from the Boodarie Plant site.
First action: Central issue - Minimum copper cable tonnage promise?
Distillation of the parties' respective stances ultimately reveals the one core issue of disagreement between them in the first action. This is whether or not it was ever a term in the Copper Contract that Able promised Mr Wilson (see par 32(b) of Mr Wilson's counterclaim) there would be not less than 2,338 tonnes of used copper cabling available for Mr Wilson to remove from the Port Hedland Boodarie Plant site.
A subsidiary alternative issue arises on the pleadings over whether, in the event no such express term as to a minimum tonnage of copper is found as established, that by oral statements Mr Rossi conveyed a broadly analogous oral representation to Mr Wilson as to a minimum quantity of copper cable in the amount of not less than 2,338 tonnes (see par 28(b) of Mr Wilson's counterclaim). But this subsidiary issue of misrepresentation or statutory misleading or deceptive conduct was not pressed strongly at trial. The overwhelming focus at trial was upon Mr Wilson seeking to establish the express (oral) term within the parties' Copper Contract for the minimum quantity of copper cable, in an amount of not less than 2,338 tonnes.
There is no dispute in the first action that Mr Wilson removed 739.831 tonnes of copper cabling from the site in the period between 3 March and 6 October 2007. Of this, 253.876 tonnes has admittedly not been paid for by Mr Wilson.
If there was a minimum quantity of copper cable term, the ensuing issue is whether or not Able is liable in damages to Mr Wilson for breach of this minimum tonnage promise that Mr Rossi is said to have orally made to Mr Wilson. That promise, as alleged, was (as things turned out according to Mr Wilson) that there would be roughly three times the amount of cabling available at the site as was actually removed by Mr Wilson. If it is found Mr Rossi promised Mr Wilson a minimum of 2,338 tonnes of copper cable, Mr Wilson correlatively complains of a manifest breach by Able of that term. Mr Wilson says there was far less cable at site than 2,338 tonnes. When he left site in October 2007, he says there were only 20 ‑ 30 tonnes of cable left, at most.
So, Mr Wilson cross‑claims against Able for loss of bargain damages for breach of the minimum tonnage term of the Copper Contract. He quantifies TPR's damages claim against Able by reference to a deficiency of 1,598.54 promised tonnes of cable (allowing for what cable he did remove). Mr Wilson then multiplies that figure by his asserted lost profit figure of 67 cents per kg to generate the claimed damages of $1,071,021.80 (see exhibit 28, annexure JLW12).
Mr Wilson ultimately seeks to set off that unliquidated damages figure of $1,071,021.80 against the $1,117,054.40 debt which he accepts is otherwise due by him to Able for the 253.876 tonnes of copper cable not paid for. On that basis, Mr Wilson would still owe Able $46,032.60 for copper cable on his best case.
Able denies there was any minimum cable tonnage term in the parties' Copper Contract. Able also denies any parallel oral representation or misleading conduct by Mr Rossi as to a minimum tonnage of copper cable.
It will be remembered that on Mr Wilson's case, there had also been a deficiency in the realised amount of copper cable in the washup of the earlier 2006 arrangements with Able at Roxby Downs. So, as Mr Wilson would portray it, an outcome of tonnage deficiency in a promised amount of available copper cable from the Port Hedland Boodarie Plant was an instance of Able's lightning striking him twice.
Asserted intersection as between the first and second actions
By some late amendments to his defence at trial, a further contention on behalf of Mr Wilson emerged. This was that he and Mr Rossi had agreed, as part of further arrangements in mid to late August 2007 (which Mr Wilson contends culminated in what he propounds under the second action as the Marketing Contract between AME and Able) to defer the payment of Mr Wilson's existing copper debt to Able, 'until the end'.
This debt deferment arrangement was said to be an outcome of Mr Wilson confronting Mr Rossi at site in mid‑2007 over the presenting reality of a significant and obvious deficiency in the available copper cable at the Boodarie Plant. Mr Wilson says this conversation led Mr Rossi to respond, first by acknowledging a cable deficiency and second, by offering to 'make it up' to Mr Wilson by a new deal that, in August 2007, after more negotiations, unfolded to become the parties' Marketing Contract.
Under this Marketing Contract, first Mr Wilson, then subsequently his corporation AME, could earn a 15% sales commission (plus GST) from Able for all items of used equipment, plant or other infrastructure salvaged and sold off from the Boodarie Plant site before it was demolished.
According to Mr Wilson, there was a further aspect to the deferment of the copper debt agreed to by Mr Rossi. Mr Wilson's copper debt to Able could be reduced and set off from the likely sales commissions to be earned by AME under the Marketing Contract, with those likely sales commissions prospectively assessed in mid‑2007 as being more than enough to extinguish Mr Wilson's $1 million plus copper debt.
Mr Rossi disputes that there was such an agreement to defer payment of the copper debt, or to set it off or reduce it against sales commissions earned by AME under a Marketing Contract. He and Able do not even accept there was a perfected Marketing Contract.
I am yet to explain the full ramifications of the second action. But, as I will relate, whatever view one takes about the existence of the alleged Marketing Contract as between Able and AME, it appears to be accepted that all potential future performance of such a Marketing Contract had ended by no later than 5.00 pm on Tuesday 13 November 2007. That is the position, as I understand it, even on AME and Mr Wilson's cases (see exhibit 1.114, TB vol 2, page 178). Termination of the performance of the Marketing Contract would be the result of AME's acceptance of what Mr Wilson asserts to be Able's repudiation by renunciation (of the Marketing Contract) by the actions of Able's then senior site representative, Mr Barry Cargill, unilaterally ordering Mr Wilson and his AME personnel offsite on 25 October 2007.
If Able's conduct on 25 October 2007 is assessed as a repudiation by renunciation of a Marketing Contract, AME's acceptance of Able's repudiation and the ensuing termination of obligations of future performance under that Marketing Contract will not extinguish what were the parties' unconditionally accrued rights and entitlements prior to the termination: see Dixon J in McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457, 476 ‑ 477.
So, were I to accept Mr Wilson's contention that Able had agreed to defer his obligation to pay for copper cable that was removed from site until 'the end', nevertheless, on any view, that 'end' was reached on an accepted cessation of obligations of future performance under the Marketing Contract, not later than at 13 November 2007.
In that circumstance, Mr Wilson's no longer deferred copper debt to Able might, on Mr Wilson's case, potentially be reduced by the amount of AME's vested entitlements to sales commission payments due to AME from Able, under the terminated Marketing Contract (i.e. assuming the deferment and extinguishment contentions of Mr Wilson are accepted).
AME's sales commission entitlement from Able under a Marketing Contract, subject to resolving some additional timing considerations I will mention later, is accepted by Able to be $416,032.35 (see exhibit 17, annexure RGC8).
That sales commission figure includes a commission amount of $297,000 (GST inclusive) in respect of a completed sale of six used Koppern briquette machines (at $1.8 million plus GST) to a third party, Crushing Services International Pty Ltd (CSI).
At 13 November 2007, CSI had not rendered full payment of the Koppern purchase price of $1.8 million plus GST to Able. At that time, CSI had only paid half the purchase price. The balance was paid in early 2008. As I will explain, CSI made its 2007 50% deposit payment for six used briquette machines that was, very controversially, received and held not by Able, but by AME.
It is undisputed that on 17 October 2007, AME received $990,000 from CSI as a 50% payment of the Koppern briquette machines purchase price by a direct payment into AME's Port Hedland bank account (see exhibit 35). AME held that 50% purchase price deposit as agent, on behalf of Able. Not only that, Mr Wilson accepts by his evidence (see cross‑examination ts 1050 ‑ 1052) AME has subsequently consumed those deposit funds, by applying them for its own purposes. AME has refused to account for, or pay, the deposit funds received from CSI to Able.
Able eventually, in 2008, accepted AME had earned an entitlement to $297,000 as sales commission on the briquette machine sale to CSI, on completion of that sale. But AME chose to utilise far more of the $990,000 deposit it held than its commission of $297,000. It is now clear from AME's tendered bank statements over the period October 2007 ‑ January 2008 (exhibit 45), that of the $990,000 AME received on 17 October 2007 (by direct bank transfer from CSI into AME's bank account) all but $91,099.22 of those funds had been expended by 8 January 2008. After 8 January 2008, the AME bank account was closed, indicating all funds have been removed by AME from that account.
AME's financial statements for the financial year ended 30 June 2008 were tendered at the trial (see exhibit 44). AME's balance sheet, showing non‑current financial liabilities, lists an unsecured loan from Able to AME, in the amount of $841,500. As I will explain later, no rational explanation emerged during trial, from either Mr or Mrs Wilson, as to why AME should be in receipt of any monies greater than $297,000, out of the $990,000 in funds AME received and held on behalf of Able from CSI.
As AME has now seemingly consumed all of the $990,000 it received from CSI in October 2007, AME's aggregate commission entitlement of $416,032.35 (including the Koppern briquette sale commission, plus some commission on further completed sales, on which AME uncontroversially earned 15% sales commission), is not enough. AME would still owe Able $573,967.65 from the CSI deposit funds. There are no other sales commissions due to AME by Able that are unmet and so, potentially capable of reducing Mr Wilson's now non‑deferred copper debt to Able (of $1,117,054.40).
The copper debt has been due to Able by Mr Wilson even on his (and AME's) best case, since 13 November 2007.
That analysis leaves unresolved issues concerning:
•A smaller debt of $71,500 (GST inclusive) claimed by Able in respect of a salvaged 500 kVa generator sold by Able to Mr Wilson.
•Mr Wilson's claim against Able for damages for breach of the minimum tonnage of copper cable warranty within the Copper Contract (alternatively, damages for misrepresentation or misleading and deceptive conduct).
•AME's claim for loss of opportunity damages, in respect of Able's denial of AME's right to earn further sales commissions until October 2008, under the Marketing Contract and which is said to exceed AME's residual liability to account as agent to Able for the balance of the CSI funds (of $573,967.65) it has retained and consumed.
I turn to deal with the claim by Able against Mr Wilson, seeking payment of the purchase price for a 500 kVa used generator, which remains unpaid.
500 kVa used generator price claim
This small debt claim of Able arises as something of a side issue in the first action. Able claims the payment as due from Mr Wilson under a distinct verbal contractual agreement reached in March 2007 by Mr Rossi with Mr Wilson concerning Mr Wilson's acquisition of a second‑hand 500 kVa generator, which was part of an array of saleable used plant and equipment at the Boodarie Plant.
It became an accepted fact at the trial that Mr Wilson did remove a second‑hand 500kVa generator from the Boodarie Plant site on 3 March 2007, with Mr Rossi's permission. That was the same day the first truckload of copper cable left the Boodarie Plant to be transported south, to Mr Wilson's Kewdale premises.
It was also accepted by Mr Wilson at trial that no payment had been rendered by him to Able for this second‑hand generator, that has since been in Mr Wilson's possession (i.e. from March 2007).
I mention the parties' statement of agreed facts (exhibit 2). Agreed facts 8 ‑ 11 stipulate:
8.In March 2007, [Able] and [Mr Wilson] entered into and [sic] agreement in respect of a 500 KVA used diesel generator set.
9.In or about early March 2007, [Able] delivered the generator set to [Mr Wilson], and [Mr Wilson] took possession of that generator set.
10.On or about 15 March 2007, [Able] rendered to [Mr Wilson], and [Mr Wilson] received on or shortly thereafter, an invoice numbered 10009 in the sum of $71,500 (inclusive of GST) in respect to the generator set.
11.[Mr Wilson] either remains in possession of the generator set, or has sold, leased or otherwise disposed of it.
For this second‑hand generator Able claims $71,500 (GST inclusive) from Mr Wilson, under a discrete purchase agreement (pars 8, 9, 10, 11 and 18 of Able's re‑amended statement of claim in the first action).
Mr Wilson had once contended in defence to this small claim that the 500 kVa generator agreement with Mr Rossi was of a different character. He said it was not an outright purchase. Rather his defence was that the arrangement was one of Mr Wilson using 'his skills and knowledge to attempt to sell the plaintiff's 500 KVA generator on the plaintiff's behalf' (former par 8 of the defence and counterclaim).
Prior to Mr Wilson's last tranche of amendments to his defence at the trial, it had been contended (at par 9 of Mr Wilson's defence) that there had been no intent, as between Able and Mr Wilson, to create a legal contract for the sale of a 500 kVa generator. The (penultimate) defence pleading of 6 August 2010 did not even admit that a 500 kVa generator had left site on Mr Wilson's truck in early March 2007.
Able's tax invoice no 10009 issued on 15 March 2007 to TPR for $71,500 (GST inclusive) is found at exhibit 1.14 (TB vol 1, page 26).
However, by trial Mr Wilson had changed tack. He accepted in the statement of agreed facts, in his witness statement and in oral evidence, that there had been a sale to him by Able of this second‑hand generator. The arrangement between he and Mr Rossi was not a brokering assignment, as earlier pleaded.
In evidence‑in‑chief, Mr Wilson elaborated expansively (without objection) upon his two tendered witness statements (exhibits 28 and 29). He related in evidence what was then an unpleaded explanation about a purchase by him of a used generator by a 'cash‑only' arrangement he said he had reached verbally with Mr Rossi. He related that he had agreed to pay $50,000 cash to Mr Rossi, but only as and when Mr Rossi attended at Mr Wilson's business premises in Kewdale to personally receive the cash. According to Mr Wilson, this was a cash arrangement, 'between mates'.
The position after Mr Wilson's last tranche of defence amendments to embody the just emerged trial evidence was that, in essence, Mr Wilson contends Mr Rossi has not to date attended his Kewdale business premises to receive $50,000 in cash for this second‑hand generator.
Notwithstanding issue of these proceedings back in 2007 by Able seeking $71,500 and all that has followed, Mr Wilson in 2011 asserts he falls under no obligation to render any payment for the generator until Mr Rossi attends at Kewdale to collect $50,000 in cash. However, a Depreciation Schedule found in statements of account produced on behalf of TPR at the trial (exhibit 42), under a heading 'Motor Vehicles & Forklifts', prepared to 30 June 2008, somewhat embarrassingly for Mr Wilson shows a 500 kVa generator listed as an asset of Mr Wilson's business with the historical value of $65,000.
Mr Wilson's late emerging cash deal explanations were refuted by Mr Rossi. On this issue I prefer Mr Rossi, who is supported by Able's unmet invoice to TPR for $71,500 (GST inclusive) on 15 March 2007. That invoice was never challenged after issue. It was just not paid. Mr Wilson's late change of position and his explanations, in my view, are hollow and threadbare. I reject them outright as fabrications.
Mr Wilson also seeks to set off any monies (including cash) due by him to Able for this 500 kVa generator against his unliquidated damages counterclaim against Able for breach of the minimum tonnage copper cable warranty. It is appropriate to move to resolve that contention.
The asserted minimum quantity of copper cable term in the first action
Mr Rossi denied, both in examination‑in‑chief (ts 189) and in cross‑examination (ts 270, 273, 283 and 287), he had ever made any promise or a representation to Mr Wilson that there was a minimum tonnage of copper at the Boodarie Plant.
No term expressing a minimum tonnage of copper cable warranty or a promise akin to that which Mr Wilson seeks to show was breached, can be found in the parties' passing written communications of 1 and 28 February 2007 (exhibits 1.4, 1.5, 1.6 and 1.11, TB vol 1, pages 8, 9, 10 and 20). These are the only written components that comprise or evidence the acknowledged Copper Contract between Able and Mr Wilson (for his business, TPR). There is of course the reference to an attached BHPBDRI tonnage estimate seen on the faxed page (43 of 46) of the Able/BHPBDRI demolition contract (exhibit 7) sent to Mr Wilson. However, this page clearly refers to BHPB's estimated quantities, not to an Able estimate of quantities.
In the quest to unearth this term, I turn to scrutinise oral components of the Copper Contract. I refer to this passage from ts 189 in Mr Rossi's examination‑in‑chief:
Did you say anything about the quantity estimates in the BHP contract?---I told him there was an estimate in the BHP contract.
Did you refer to the figure at that time?---That's - well, I told him I couldn't remember exactly what it was, but it was under 2,500 tonnes.
Mr Wilson needs to show some basis for me to find that there was a term in the Copper Contract in his favour promising him the minimum tonnage of copper cable. Mr Wilson approached the issue in examination‑in‑chief, led by senior counsel. His two witness statements do not assist the exercise.
I refer to this extract of Mr Wilson's evidence, commencing halfway down ts 670, carrying through to ts 671 and 672, concerning the asserted minimum tonnage copper term Mr Wilson seeks to show:
On what you would describe as not coms but copper cable, can you tell the court a bit about that? It's the various size that you encountered it - - -?---Yes.
…
Port Hedland, yes?---Port Hedland, yes. The cable was mind‑boggling. It was - it was pretty exciting. It's the best you've ever seen, like it's the biggest in the world so, I can't explain how much copper was there because you couldn't - you couldn't quote it because you need to - you need the plans of the building to do that, and it's just massive so, you're looking at a ratio of from 90 - what have you got - 90 to about 60 per cent copper you would be getting from high‑grade cable. So it would be 90 to 60 a ratio of.
60 to 90 per cent copper to plastic?---Yes. Mine, yes.
I see. Thank you. As you walked around were you able to assess the quantity in any way or its weight?---No chance.
What would be needed for that?---Well, you need - Paul Rossi already had the document. He gave it - - -
No, don't worry about Paul Rossi. What would you need if you had to do it?---What would I need?
If you wanted to work out the quantity or the tonnage?---If I had to work it out, I'd just - you'd need to ask BHP for the schematics of the building.
Yes?---That's the only way.
And then with the schematics, how would you go about it then working out the weights?---You look at the purchase of how much copper they bought for the site, then you'd halve it.
Halve it?---Yes.
Right. Why was that?---Because going by other projects and looking at Roxby Downs, you know, they bought four reels and there was half reels and quarter reels left, so they would never use the whole lot but we don't know what they were - we don't know if they were sold.
Did you endeavour to obtain any plans or anything like that from Mr Rossi or from BHP on this first visit?---I didn't have to.
In what sense?---I already knew what was there.
All right. How did you know what was there?---Mr Rossi showed me.
I see.
KENNETH MARTIN J: What did he show you?---He showed me the BHP document that he had won the deal on.
(See also Mr Wilson's cross‑examination across the morning of Tuesday 18 October 2011, day 10 of trial, ts 921 ‑ 925).
By his evidence, Mr Wilson accepts he could not have made a reliable estimate, because the amount of cable he saw was 'mind‑boggling' (ts 670). He does not raise any plausible basis to suggest Mr Rossi was in a better position to render a more reliable estimate than he could. Mr Wilson accepts that the best and most reliable source of information about estimated copper cable tonnage was from BHPBDRI as owner of the plant, it, after all, being responsible for placing the cable there at site in the first place. So much, I think, must have been obvious to both Mr Rossi and Mr Wilson.
Mr Wilson was, of course, shown by Mr Rossi, then later sent, a copy of BHPBDRI's cable tonnage estimate (exhibit 1.6, TB vol 1, page 10). But what was shown and sent was very clearly labelled as an estimate. The BHPBDRI cable tonnage estimate was not, I find, ever underwritten to Mr Wilson as 'ironclad' by Mr Rossi. The figure was plainly not Mr Rossi's own estimate. Mr Rossi and Able engaged in demolition work. Mr Wilson knew that. Mr Rossi was in no better or more qualified position to render a reliable visual assessment about copper cable than Mr Wilson.
So it is unlikely Mr Rossi would have offered a better or more reliable estimate, given the 'mind‑boggling' amount of copper cable which was personally seen and acknowledged by Mr Wilson in his evidence at trial. I find he did not.
Mr Wilson's contention that there was an oral term within the Copper Contract that provided that there was not less than 2,338 tonnes of copper cable at site, has not been established. In fact, Mr Wilson's evidence is quite to the contrary, as I assess it. He plainly knew that a reliable estimate was best made by the plant owner and he had that estimate. I find that the cable tonnage estimate by BHPBDRI was not underwritten by Able.
The key witnesses' credibility
This is a case where, as I have said, I usually will not, without independent verification or corroboration, accept the evidence of either Mr Rossi or Mr Wilson, in the contentious areas of their testimony. Both men's evidence at trial was, in my assessment, largely unreliable. Both men frequently presented as intent on rationalising or justifying their respective positions, then incidentally trying to do damage in passing to the other's case. However, Mr Wilson's evidence overall was worse than Mr Rossi's, from a reliability perspective. On my assessment, Mr Wilson had a glib, but frequently shoddy excuse for most inconvenient facts put to him. I assessed Mr Wilson to be a witness willing to say almost anything that popped into his head, if he thought it could alleviate his witness box discomfort or advance his case, irrespective of its truth or the state of his own knowledge. Three examples from Mr Wilson's evidence suffice to display these traits. I refer to some further illustrations of these traits from Mr Wilson's evidence later in these reasons.
First, Mr Wilson bizarrely admitted during his cross‑examination that he had 'lied' when he gave his evidence‑in‑chief concerning an alleged telephone conversation with Mr Ellison of CSI. The relevant part of the transcript reads (ts 1012 ‑ 1013):
Are you seriously saying that, that you discussed 50 per cent and then he tried to trick you by putting 250,000 in?---Well, I'm reading between the lines there because 250,000, I wouldn't have said that to Chris Ellison because Paul Rossi pulled me up to say 250,000 wasn't enough so no, I wouldn't have said that; I've misled you there because I wouldn't have said that to Chris Ellison because Paul Rossi is the one who told me that 250,000 wasn't enough.
But you have said to the court the only discussion you had with Chris Ellison was a 50 per cent deposit?---We had many dealings.
Yes but a 50 per cent deposit on these briquetters?---Well, after looking at the paperwork it wasn't enough that Paul said so we got 50 per cent.
I will just make sure you understand what I'm asking you?
---Okay. Yes. Ask me again.
Remember you told the court how you were on the phone one night, you were taking to Mr Rossi and you were talking to Mr Ellison?---Yes, yes.
And you said that you discussed with Mr Ellison that it was to be a 50 per cent deposit, that there was never any other discussion of any other amount?---Right.
Is that right?---Yes, that's what I said. If that's what is in the documentation - - -
No, no, no. That's what you told the court happened?
---Right, okay.
Do you wish to change that?---Well, I only knew about the percentage because it wasn't enough so yes, it's probably wrong, yes.
Sorry, what is probably wrong?---That we only discussed the sale of selling the briquette machines and when he sent through the PO it wasn't enough on the PO.
Is it right that you discussed with Mr Ellison only a 50 per cent deposit on that telephone on that occasion?
---What I said at that point in time last - three weeks ago I wouldn't have brought up the 50 per cent deposit, I'm lying, because I didn't know about the 50 per cent deposit until Paul Rossi picked up that it wasn't enough.
Have I understood you correctly? Are you saying you're lying?---I'm lying on the percentage of the 50 per cent because I wouldn't have known about the 50 per cent until we received the PO.
Seriously, Mr Wilson, this case has to be decided fairly as far as possible and I don't want to be unfair to you but - - -?---Yes, I understand, but we've chucked around a lot of things but I wouldn't have known until he said.
I just want to understand what you say is incorrect. Are you saying that it is incorrect that you spoke to Mr Ellison about a 50 per cent deposit?---Yes.
Why did you say it then last time?---Because we were talking - we probably were talking about the sale and all that stuff of doing the briquette sale and we probably wouldn't have discussed much other than - well, the 25 per cent come through but that wasn't enough. I didn't know about the briquette machines until Paul told me about going a percentage to BHP.
That's the whole point. I suggest that this $250,000 that appears on that purchase order addressed to Able was something entirely of your creation, the 250,000. No-one else had any input to that except you?---Well, I don't make the call, he did. He made the call. It wasn't enough. That's why we didn't go ahead with it. It took a month. I'm sorry I said 500 - we needed half, 50 per cent but I didn't know until we got the PO.
(my emphasis in bold)
Second, when Mr Wilson was questioned in cross‑examination he first said that he was entitled to a 15% sales commission under another (subsequent) contract with an entity known as Liberty. However, after being informed by Able's senior counsel that Able would call for the contract, Mr Wilson's answer changed to 'I can't … I don't recall what the percentage is. I don't know' (ts 879).
Third, Mr Wilson gave evidence that the amount of $841,500 recorded in AME's balance sheet as a loan from Able was 'sitting there frozen' in an AME bank account. After being presented with AME's financial statements for the year ending 30 June 2008 and ANZ Bank statements for AME spanning 12 October 2007 - 14 January 2008 (exhibits 44 and 45 respectively), Mr Wilson then was forced to agree under sustained cross‑examination that the money was no longer frozen. The passage is ts 1090:
By 2 January 2008, a little over two months later, the balance is down to $81,683.22. Is that right?---91,000, but anyway I see what you are saying.
2 January I am saying?---Okay, yes. Yes.
I suggest to you that you have just used this money as you have seen fit and as you have wanted to?---Not for a month until I can see here that we have been - we didn't touch the money until we were actually kicked off site.
Yes, but when you starting touching the money you have used it just as you wanted to. Isn't that right?---It looks like from here that I have been kicked off site and I need to survive.
I see. You said a moment ago that the amount of 841,500 being recorded as the loan from Able was a frozen account?---Yes, it was.
But it's not so because you have used it?---Not after I've been kicked off site. I didn't touch the money.
After you have been kicked off site you have used it?---Yes, I have.
So it is no longer a frozen account?---True.
Mr Wilson routinely adopted a dissembling approach in his evidence, until cornered by an inconvenient fact. In that case he would try to shift ground. His evidence was highly unsatisfactory.
Accordingly, I have for the most part endeavoured to reach findings of fact by reference to what is factually uncontroversial or contained in unchallenged documentary evidence, or by seeking to draw logical inferences from facts otherwise firmly established by documents.
Determination: Minimum quantity of cable term
Mr Wilson having related that he had, in 2006, mildly complained to Mr Rossi that there was less copper at Roxby Downs than he had expected, was hardly a 'babe in the woods' in relation to the potential for a quantitative estimate of copper cable not to be realised in the end. But I find that, even so, Mr Wilson did not raise the issue of a minimum cable tonnage with Mr Rossi in 2007. I find the reason was because Mr Wilson had seen for himself a 'mind‑boggling' amount of cable at site, on 23 January 2007. He also had BHPBDRI's owners estimate (exhibit 1.6, TB vol 1, page 10). He knew the owner of the plant was the party in the best position to render a reliable cable estimate. That was enough for Mr Wilson to proceed, as he did.
I conclude in the first action that there was no minimum copper term, promise or warranty by Mr Rossi to Mr Wilson. The result for Mr Wilson is that he cannot set off his unpaid copper debt against a damages counterclaim for breach of a nonexistent term.
So Mr Wilson owes Able $1,117,054.40 as his unpaid copper debt, plus a smaller debt for the second‑hand generator of $71,500, totalling $1,188,554.40 (GST inclusive).
As to Mr Wilson's alternative related subsidiary arguments grounded in misrepresentation or misleading and deceptive conduct, I correlatively conclude on all the evidence that first, Mr Rossi never made any personal estimate, representation or prediction to Mr Wilson as to a minimum tonnage of copper cable at the site.
Second, even if it was the case (contrary to the primary finding) that Mr Rossi did express a verbal opinion as to a minimum quantity of copper at the site (at the same level as the BHPB estimated tonnage figures), I would nevertheless have concluded that Mr Rossi's expression of that opinion or prediction as to a minimum quantity of copper cable was not negligently rendered because it had a more than reasonable underlying basis in fact: see s 51A of the Trade Practices Act 1974 (Cth), before it was replaced in the Australian Competition and Consumer Law. Mr Rossi's opinion was supported by the 'mind boggling' amount of copper cable observable to the naked eyes of all at site, as well as by an ostensibly reliable Plant owner's estimate, contained within the document held by Mr Rossi from BHPBDRI as part of Able's demolition contract (exhibit 7).
Put another way, reasonable reliance on BHPBDRI's superior knowledge as Plant owner would afford Able reasonable grounds for any estimate (assuming one was offered) by Mr Rossi as to a minimum quantity of copper cable at site, at the level of the BHPB figure estimate. Even Mr Wilson seemed to accept this as reasonable, by his evidence in examination‑in‑chief.
I was asked to render findings about a residual amount of copper cable still at site. Able suggested that a considerable amount of copper cable still remains at site, particularly at an area known as the 'Twin Towers'. Mr Wilson refuted that. He suggested that there could not have been more than 30 tonnes of copper cable at site. Bearing in mind my end conclusion, it is not necessary to resolve the residual cable issue. Were it necessary to do so, I would tend to accept 30 tonnes, being Mr Wilson's estimate. It was corroborated by Mr Steve Atkin (see exhibit 54, par 4), whose evidence I assessed to be reliable on the residual cable.
I now move to deal with the major issue in the second action, namely AME's claim for loss of opportunity damages arising out of its assertion that Able denied AME the right to earn further sales commissions under the Marketing Contract.
Second action: Key facts
The facts underlying the first action provide the background to the second. The second action's plaintiff, AME, is the corporation Mr Wilson specifically caused to be incorporated on 5 September 2007 to carry out sales and marketing work for Able under the asserted Marketing Contract. In the second action Able is the defendant.
By contrast to the first action, in the second the existence of a binding and effectual contractual relationship between AME and Able under a Marketing Contract is strongly refuted by Able.
AME contends that a binding Marketing Contract arose out of further verbal discussions between Mr Rossi and Mr Wilson, commencing in mid‑August 2007, culminating in an important face to face site meeting of Saturday 25 August 2007. Uncontroversially, this was a meeting which Mrs Wilson flew up from Perth to attend and where, at the end of the negotiation that day, the participants shook hands.
AME contends Mr Rossi and Mr Wilson verbally agreed on 25 August 2007 that Mr Wilson would utilise a new corporation to market for sale on behalf of Able as much used plant, equipment and infrastructure from the Boodarie Plant as possible before the Plant was demolished, at a commission rate payable to AME of 15%, plus GST. The prices to be achieved by AME for what was sold were to be at better than scrap price.
AME's case is that the potential repercussions of the scheduled meeting of Saturday 25 August 2007 were so significant for the Wilson family, Mrs Wilson flew up from Perth to meet Mr Rossi, view the site, and to participate.
Mr Wilson said, and here I accept, he needed his wife's concurrence before he would commit to any further business arrangements with Mr Rossi, since they would require him to spend approximately a year in Port Hedland overseeing a significant (in scale) sale and marketing programme for Able. Taking on such a marketing job would also require a significant investment from Mr Wilson in personnel and on the ground infrastructure, to viably establish AME, then to achieve the magnitude of used equipment sales expected. Mr Wilson assessed the scale of the marketing task would require his family to move from Perth to Port Hedland, and for his young children to enrol in local schools, for at least a year.
Whilst there is no dispute a site meeting and negotiation between Mr and Mrs Wilson and Mr Rossi took place on Saturday 25 August 2007 at Port Hedland, the legal consequences of what arose from that meeting are highly contentious.
According to Mr Wilson, he and others on his TPR staff (including the AME trial witnesses Messrs Atkin and Wardrop) by about August 2007 had all spoken to Mr Rossi about a manifest presenting deficiency in available copper cable at site. It was suggested, and I find, that Mr Rossi had been personally sympathetic in response to this grievance. He eventually responded with a new proposal, effectively to 'make it up to [Mr Wilson]' (exhibit 50, par 18).
On Mr Wilson's case, the new sales and marketing arrangements with Able would provide a basis to defer ('until the end') Mr Wilson's copper debt and to allow that debt to be met out of the sales commission AME was likely to earn. That position is plausible and I find it to be so.
On the ground at the Boodarie Plant there looked to be a vast array of potentially salvageable and valuable items of plant and equipment at the site, capable of being profitably sold off to third parties. Some would need careful detachment from where they were affixed. That would involve both time and money to achieve. At the same time, however, Able had to meet a one‑year Boodarie Plant demolition timetable head commitment to BHPBDRI (see exhibit 7). All demolition work for the Boodarie Plant needed to be completed by Able by mid‑October 2008.
Mrs Wilson related by her witness statement (exhibit 48) her one visit to site at Port Hedland and her participation in a Saturday meeting between her husband and Mr Rossi on 25 August 2007:
23.In our meeting we talked about money arrangements. I paid particular attention to those arrangements because I would have the ongoing responsibility to enter the transactions in the books and records. We discussed the percentage of commission; Jason initially suggested 20%, but after a short discussion we agreed on 15%. Jason told Paul Rossi that he would have to establish a new company to do the sales. We agreed that Able Demolitions would send invoices to the buyers of the equipment and receive payment and that Able Demolitions would pay the new company the commission when payment was received.
(my emphasis in bold)
24.We shook hands and agreed. As far as I was concerned, the agreement was made then and there. Paul Rossi said he would later get some form of document drawn up.
25.After the meeting Paul Rossi showed me around the office and introduced me to a couple of people working there.
26.In the days following the meeting work got underway. AME was incorporated, a website was established and an enormous amount of computer work was done, as well as a lot of cataloguing, recording and research work. Quite a lot of work had to be carried out on the BHP site.
27.AME incurred set up costs of $88,100.23. They are costs which AME would not be likely to again incur in the period of about 14 months in which the agreement was to operate. …
I accept the essence of this evidence, notwithstanding a formal deficiency in some evidentiary aspects of its expression, particularly as to what is said was 'agreed'. But the essence of what is suggested is not that controversial. Mrs Wilson referred to a list (annexure TLW9, exhibit 48) breaking down AME's set up costs as $88,100.23. This I also accept.
Mr Wilson explained how he and AME got to work immediately, embarking on what he assessed would be the massive sales task. AME was to advertise and to bear that cost.
Both Mr Wilson and Mr Clayton Wendt (a computer‑skilled employee of AME who had worked to set up AME's new website to facilitate the sales) said that Mr Rossi had asked them whether they could sell $4 million worth of equipment by Christmas 2007. Mr Rossi denied posing any such question. However, with the corroboration of Mr Wendt, I find that Mr Rossi did ask a question to that effect. However, I do not accept the context for Mr Rossi's question was, as Mr Wilson suggested, Mr Rossi's need to raise the $4 million before Christmas, so he could 'pay out his missus'. Mr Wendt's evidence put the discussion in a different context, specifically, the need for Mr Rossi (or Able) to meet a taxation obligation. I find that a tax liability was the context for Mr Rossi's request.
The high financial dimensions of the mooted selling exercise and the limited time from late August 2007 to Christmas 2007 (i.e. four months) are important. They have a contextual impact against Able's first line of defence, which is that the parties never reached any final or binding marketing agreement. The fact that Mr Rossi and Mr Wilson discussed subsequent written documentation to embody their arrangements, does not necessarily inhibit a legal conclusion as to the perfection of a binding contract, under a Masters v Cameron category 1 or category 4 scenario: see Uranium Equities Ltd v Fewster [2008] WASCA 33; (2008) 36 WAR 97 [129]. Whilst the Saturday meeting was a negotiation between Able (by Mr Rossi) and Mr Wilson, the parties did, I find, resolve upon Mr Wilson undertaking this sales work by a soon to be incorporated corporate vehicle. This corporate vehicle later emerged as AME.
Mr Wilson now moved swiftly. From 5 September 2007, AME set about preparatory work for performing. The task would involve creation of a sophisticated AME website to be established from scratch by Mr Wendt, to display detail about available items of plant and equipment for sale. In that context, there needed to be digital photographing and cataloguing of numerous potentially saleable items of plant and equipment at site by AME staff. Preparatory tasks also required AME to assemble a sales team at Port Hedland. The new AME website would be the focal point around which the marketing and sales exercise would be conducted. AME's new website would be capable of being accessed worldwide by potential customers to view information about salvageable materials and equipment on offer from Able at the Boodarie Plant site.
It is a fact that no written marketing agreement was ever settled and signed off as between Able and AME, although they did exchange written communications upon the issue during October 2007 (see exhibit 1.62, TB vol 2, pages 112 ‑ 114). AME's employee, Mr Steve Atkin, sent an email to Mr Barry Cargill (Able's Operations Director at site) on Thursday 18 October 2007 attaching an informal business agreement that 'we have been discussing so far'. That communication ended, 'Looking forward to the letter of intent from Able Demolition' (see exhibit 1.67, TB vol 2, pages 121 ‑ 123).
Mr Cargill had assumed command at Port Hedland for Able after the first week of October 2007. Mr Rossi had left due to stress‑related mental health issues. Mr Rossi took a lengthy holiday overseas in Fiji, where he was not contactable.
Mr Cargill responded to AME's 18 October 2007 communication on behalf of Able by facsimile the same day: see exhibit 1.66 (TB vol 2, pages 118 ‑ 120) and the original of the same document being exhibit 1.68 (TB vol 2, pages 124 ‑ 126, including appendix 1). Mr Cargill's response for Able refers to itself as a 'letter of intent'. Under a heading 'Background', it was said:
This document constitutes an agreement in principle by the parties to the transaction outlined below. However, it is preliminary in nature and not intended to be legally binding on either party. The parties will use this document until such time as a legal agreement is in place.
But the self‑analysis by Mr Cargill at the time as to an agreement 'in principle' is irrelevant. The test to ascertain the existence of a contract is objective, not subjective.
There followed an email communication from Mr Atkin on behalf of AME to Mr Cargill at 8.33 am on Wednesday 24 October 2007 under the subject heading 'Re: movement of purchased goods from site' (TB vol 2, pages 157 ‑ 159). That was sent in a context of the looming weekly site meetings routinely convened at site between Able and AME. The next such meeting was scheduled for 10.00 am on Thursday 25 October 2007.
Mr Cargill responded by his email of Wednesday 24 October 2007 at 3.48 pm (exhibit 1.100, TB vol 2, page 161) concerning Mr Atkin's comments on draft standard operating procedures document Able had circulated. Able's proposed agenda for the weekly meeting scheduled for the following day at 10.00 am (exhibit 1.101, TB vol 2, page 162) then also issued. For that same meeting, see AME's suggested agenda items (exhibit 1.103, TB vol 2, pages 164 ‑ 166) particularly under a heading 'Communication of business contract' and under further headings 'Advertising' and 'Sales'.
A binding agreement analysis is advanced on behalf of AME, on the basis of either Masters v Cameron categories 1 or 4 scenarios: see Masters v Cameron (1954) 91 CLR 353, 360 ‑ 362; Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622, 628 and Uranium Equities Ltd v Fewster [129], [131] and [212]. That outcome is viable notwithstanding that both parties may have envisaged and discussed a subsequent formal documentation process.
Able refutes that any binding Marketing Contract was ever consummated with Mr Wilson or AME. Referring to passing communications over a formal contract document I have mentioned, Able points out what it says were significant and unresolved issues still to be finalised between the parties. In effect, Able contends for a legal analysis towards only a category 3 Masters v Cameron situation, namely, where, objectively assessed, there is to be no binding contract until the envisaged formal written agreement has been mutually executed. That event never came to pass.
Able essentially says that during what was a 'trial' period, the parties were still negotiating towards the content for their final written agreement, which needed to be finalised and signed off. Even so, Able accepts a legal responsibility to pay AME 15% sales commission (plus GST) on all completed sales of plant and equipment that were negotiated on its behalf by AME during the 'trial' period.
From an evidentiary perspective, in determining the existence or otherwise of a binding contract between Able and AME, the parties' subsequent conduct after 25 August 2007 can be examined as part of the overall picture, with a view to objectively assessing a perfected contractual relationship or otherwise: Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540, 547 ‑ 548 (Gleeson CJ) referring to Barrier Wharfs Ltd v W Scott Fell & Co Ltd (1908) 5 CLR 647, 669 and Howard Smith & Co Ltd v Varawa (1907) 5 CLR 68. That of course is not the proper approach for an exercise of contractual interpretation, once a binding contract has been ascertained: see Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57; (2008) 238 CLR 570 [35] (Gummow, Hayne and Kiefel JJ).
Determination of AME's claim as to the existence of a binding Marketing Contract
The parties' post‑contractual conduct is relevant and admissible for the purposes of assessing whether
it was not in the contemplation of either party that they were to be bound until all the essential preliminaries had been agreed to, nor until a formal contract had been drawn up embodying all the matters incidental to a transaction of such a nature.
per Gleeson CJ (NSW) in ABC v XIVth Commonwealth Games (548) citing Barrier Wharfs Ltd v Scott Fell & Co.
Although both Able and AME did envisage that their marketing arrangements would be formally documented and signed, there was no suggestion that AME would wait until a document was finalised before commencing and carrying out its marketing work on behalf of Able. In fact, the position was quite the contrary, given my finding that Mr Rossi made his statement to Mr Wilson and AME's staff concerning an objective (for Able) to sell $4 million worth of plant and equipment from the Boodarie Plant site before Christmas 2007.
In Shepherd, Dixon CJ said (at 377 ‑ 378):
But the rule is of general application in the discharge of contract by breach, and enables a party to any simple contract who fails or refuses further to observe its stipulations to rely upon a breach of conditions, committed before he so failed or so refused, by the opposite party to the contract as operating to absolve him from the contract as from the time of such breach of condition whether he was aware of it or not when he himself failed or refused to perform the stipulations of the contract.
(my emphasis in bold)
The principle was also referred to and acknowledged by Brennan J in Foran v Wight (1989) 168 CLR 385, 424.
From trial documentation it is clear that on 25 October 2007 Able and Mr Cargill did not know of the underlying facts concerning AME's issue of its own tax invoice direct to CSI on 14 October 2007 and of AME's ensuing receipt of $990,000 from CSI on 17 October 2007.
It is also clear from letters Able's solicitor sent to AME's solicitor much later, that Able did not ascertain the full facts concerning AME's receipt of CSI's 50% deposit until sometime in 2008 (see exhibit 1.120, TB vol 3, page 189 ‑ 190 and exhibit 1.134, TB vol 3, page 208, being Able's solicitor's letters of 12 November 2007 and 18 January 2008 respectively).
On 18 January 2008, Able's solicitor, Mr Barry Kenna, wrote to AME's solicitor, Mr Arns:
It has been brought to our client's notice that All Mining Equipment Pty Ltd (AME), a company controlled by Wilson, issued an invoice to Crushing Services International Pty Ltd (CSI) on 14 October 2007 for $1,980,000.00 including GST for the sale of six Kippern [sic] briquetting machines. These machines are the property of our client and under no circumstances should the invoice have been presented to CSI with instructions of payment of 50% of the sale price into AME's account.
CSI produced copies of the tax invoice and a National Australia Bank EFT transaction record yesterday showing that CSI transferred proceeds of $990,000.00 into AME's bank account on 17 October 2007. Not only was AME not entitled to these monies, it has not even notified our client of the receipt of these funds.
Mr Kenna's letter for Able demanded that monies AME had received in October 2007 be refunded to CSI by noon on Wednesday 23 January 2008. AME did not comply with that demand.
The same day, Mr Wilson caused Ms McFarlane of AME to respond by email to Mr Kenna at 3.13 pm (exhibit 1.135, TB vol 3, page 209). The response was in these terms:
Dear Mr Kenna
In reference to you [sic] letter to Arns & Associates, dated 18 January, requesting the rturn [sic] of the deposit to CSI, we would like to inform you that the deposit from CSI of $900,000 was returned on the 12 November 07. On the day the deposit was made into CSI account it was brought to our attention from your company that there was corrospondence [sic] between CSI and Able, information relayed to us was that the briquette machines were still being extracted, so the deposit was cancelled.
AME are entitled to their commission.
Regards
Jason Wilson
That email, sent on Mr Wilson's behalf, alludes to the fact AME drew a cheque for $900,000 payable to CSI against AME's bank account in November 2007. But CSI's National Australia Bank online statement (exhibit 1.121, TB vol 3, pages 191 ‑ 192) shows that payment was subsequently stopped on the cheque. Mr Wilson for AME accepts he stopped payment (ts 1041 ‑ 1044).
Able's case is that its key personnel (Mr Cargill, Mr Charylo and Mr Rossi) did not, as I accept, ascertain the full facts concerning AME's receipt of $990,000 on 17 October 2007 until much later, in 2008. Nevertheless, invoking the Shepherd principle, which I assess is open, Able relies upon the underlying existence of such facts to support a lawful termination of the Marketing Contract for AME's breach of essential terms therein on 25 October 2007, when Mr Cargill expelled AME's personnel from site (albeit at that time, for other reasons).
Having ascertained the existence of a binding Marketing Contract, with the essential monetary terms as to Able's exclusive receipt of money and issue of tax invoices, the key questions remaining distil essentially to:
(a)whether Mr Cargill's expulsion of AME and its personnel from site at the Boodarie Plant on 25 October 2007 on behalf of Able can be justified, on a basis as articulated by Mr Cargill at the time;
(b)if not, whether, applying the Shepherd principle, Mr Cargill's expulsion of AME on 25 October 2007 can nevertheless still be justified by reason of a subsistence at the time of a serious breach by AME of the essential monetary terms of the Marketing Contract, notwithstanding that these breach events were only subsequently learned of by Able and arising by AME's conduct in its dealings with CSI, regarding the sale and purchase of the six Koppern briquette machines.
Mr Cargill's expulsion of AME on 25 October 2007
Mr Rossi was not in attendance at the eventful weekly site meeting between AME and Able of 25 October 2007. Neither was Able's Mr Charylo, who was based in Melbourne. Able's representative was Mr Cargill. However, Mr Charylo has a note of two telephone conversations with Mr Wilson that day, which I accept is accurate as to content.
Mr Cargill was not called as a witness at trial. So I infer that his account of events would not have been of assistance to Able: see Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11; (2011) 243 CLR 361 and Jones v Dunkel (1959) 101 CLR 298.
Mr Wilson was undoubtedly in attendance at this meeting for AME. He was accompanied by Ms McFarlane and Mr Atkin. As explained, I have difficulty accepting Mr Wilson's evidence where it is uncorroborated in controversial areas. But in this area it is well supported. Essentially, Mr Wilson stands uncontradicted as to what occurred at the meeting. First, I refer to what Mr Atkin says in his witness statement (exhibit 53, par 26). I accept Mr Atkin's evidence towards these events as reliable. At par 26 Mr Atkin said:
I went to the meeting with Jason and Maree McFarlane, another AME employee. Able Demolitions was represented by Cargill and Paul Erbs. Jason wanted to talk about his contract. Part of the conversation which I recall went as follows, in substance:
Jason said: 'Hang on, I want to talk about our formal agreement. And I want to know when we are getting paid for the sales we've made. Money has gone to your bank. When do we get our 15% commission?'
Cargill said: 'No you're not getting a formal contract. We haven't prepared one yet, and have no intention of doing one at this stage'.
Jason banged the table and said: 'What do you mean you're not paying us, and you don't have a formal agreement?'
Cargill said: 'You can't talk to me like that. You're kicked off site, effective now. Pack up your stuff and leave'.
There is a small variation under Ms McFarlane's account for AME (see exhibit 43, witness statement par 7). Her version of what Mr Cargill said was, 'That's it. You can pack up and leave in an hour'.
Mr Charylo made a consolidated file note of several summarised telephone conversations in which he participated with Mr Wilson over a period between Monday 22 and Wednesday 31 October 2007 (see exhibit 1.78A, TB vol 2, page 137 or exhibit 20 for the original). Mr Charylo, who was a plain speaking and reliable witness, noted two telephone calls with Mr Wilson on 25 October 2007, in these terms:
Thursday 25th * Jason phoned early afternoon to say he was leaving site and would be issuing court orders on Wednesday 31‑10‑07 next over Broken Contract. Then abruptly hung up.
and:
* Jason phoned later in the afternoon (approx) 3.30pm attempting to be conciliatory. He kept on about having to sell a certain amount of gear before Christmas. Some agreement with you [which I assess to refer to Mr Paul Rossi].
There was an issue over precisely when AME's sales commission invoices were sent from Perth by Mrs Wilson to Able in Melbourne. Despatch obviously occurred sometime on Thursday 25 October 2007. Exhibit 1.104A (TB vol 2, page 167A) indicates Mrs Wilson sent AME's invoices at 10:59:14 am AEST, (then) two hours ahead of Western Standard Time (WST). That meant her AME invoices were sent at approximately 9.00 am WST, one hour before the scheduled weekly meeting at 10.00 am between Able and AME, at Port Hedland.
AME's tax invoices to Able display an earlier date of 23 October 2007 (see exhibits 1.85 through 1.95, TB vol 2, pages 145 ‑ 155). However, it is clear that the AME tax invoices to Able were only sent out by email on Thursday 25 October 2007, as attachments to Mrs Wilson's emails to Mr Charylo.
Word of Mr Cargill's expulsion of Mr Wilson from site at Port Hedland appears to have quickly reached Mr Charylo in Melbourne. The event is recorded in Mr Charylo's note as (exhibit 1.78A, TB vol 2, page 137; exhibit 20):
Thursday - Jason had altercation with Barry and threatened violence on Barry. Barry told him to leave site immediately.
I find that Mr Wilson raised his voice and banged the table in that meeting. But a suggestion put to Ms McFarlane and Mr Atkin in cross‑examination, that Mr Wilson grabbed Mr Cargill by the throat, was rejected by both these witnesses. I accept their evidence on the point. I find that Mr Wilson became somewhat emotional, but that he did not threaten Mr Cargill with violence. Obviously, however, there was palpable tension in the air at this meeting. Mr Cargill's summary expulsion of AME's personnel from site would hardly have been a cordial occasion.
I also find there had been some earlier tension between Mr Cargill and Mr Wilson prior to 25 October 2007. Mr Cargill for Able had effectively replaced Mr Rossi at site as Able's senior representative after the first week of October 2007, due to Mr Rossi's illness. There followed Mr Rossi's effectively incommunicado status, whilst he was recuperating overseas for a time in Fiji. Mr Cargill and Mr Wilson did not enjoy the same degree of cordial working relationship as had previously subsisted between Mr Rossi and Mr Wilson.
Mr Cargill manifested a different attitude towards priorities in Able's work at site. Mr Rossi had sought to obtain as much value as possible for Able out of the salvageable equipment at site within the overall site demolition process. But Mr Cargill's main priority appeared to be meeting the 12 month demolition timeline Able had committed to with BHPB. To the extent that removing salvageable equipment for sales impacted against Able's demolition timetable, Mr Cargill was prepared to lose an opportunity to sell equipment, if necessary, so as to meet the timetable and thereby to appease BHPBDRI. This led to tensions with Mr Wilson and AME.
The working relationship which Mr Wilson had established with Mr Rossi over time could not be replicated with Mr Cargill. This was mainly I find due to Mr Cargill's focus on demolition over used equipment salvage and sale.
There ensued the expulsion of AME at the meeting on Thursday 25 October 2007, with Mr Cargill summarily ordering Mr Wilson and AME staff off site that day.
Validity of the termination of the Marketing Contract by Mr Cargill on 25 October 2007
I would have reached a conclusion there was no justifiable basis under the Marketing Contract for Mr Cargill to have summarily ordered AME's personnel off site at Port Hedland on Thursday 25 October 2007, had it not been for the implications of AME's covert tax invoice to CSI and AME's following receipt of $990,000 in CSI funds. Those matters do provide, in my assessment, a proper foundation for the application of the Shepherd v Felt and Textiles principle.
To 25 October 2007, AME appeared to be progressing satisfactorily with its marketing and sale of salvageable equipment at site for Able. Some more tensions emerged around Mr Wilson's (legitimate) requests for a written Marketing Contract for AME. Mr Cargill was not at the time prepared to progress such a document. But AME's requests for a written document were no basis to expel AME from site on one hour's notice. Mr Wilson's raising his voice or thumping the table at the meeting was also inconsequential. None of that was enough to support Mr Cargill's unilateral expulsion of AME from site.
But then, it is necessary to consider the principle confirmed by Shepherd v Felt and Textiles, in light of facts as they later became known to Able.
By reference to Able's solicitor's letter of 18 January 2008 (exhibit 1.134, TB vol 3, page 208), it would appear that only on 17 January 2008 did CSI provide Able with copies of what I find was AME's covert tax invoice, sent to CSI on 14 October 2007, and of CSI's bank statement, proving to Able that CSI had transferred $990,000 into AME's bank account on 17 October 2007.
There is nothing in Mr Kenna's communications of 12 November 2007 (exhibit 1.120, TB vol 3, pages 189 ‑ 190) or 18 January 2008 (exhibit 1.134, TB vol 3, page 208) on behalf of Able to sustain AME's excuse that Mr Wilson did not return at least $900,000 to CSI (as Mr Wilson had promised in early November 2007) because of tension between conflicting demands to the funds by Able and CSI.
AME's promise to CSI to return the funds is found in Mrs Wilson's email on behalf of Mr Wilson of 9 November 2007 to Mr Ellison (exhibit 1.116, TB vol 2, page 184). By this email Mr Wilson states that AME would return the $990,000 deposit to CSI, minus $90,000 for its 'expenses'. A cheque was drawn by AME for $900,000 payable to CSI. But, as discussed previously, Mr Wilson then stopped payment on the cheque.
In opening, senior counsel for AME (ts 120) sought to explain this:
Your Honour will hear from Mr Wilson about that. He had proceeded to authorise the bank to pay. He had gone to the bank and done just that, and it was only when he received a demand - he seems quite content to pay it back to CSI - it was only when he received a demand from Able saying that they wanted the money that he went to the bank and said, 'Am I too late to stop it because I've got these conflicting demands'. Until then he thought it was quite appropriate to refund the money to Mr Ellison - Mr Ellison's company, CSI.
He had taken the very step to do it and he countermanded that. It wasn't a case of funds not there. He had done that and then he went to the bank that very day and said, 'Am I too late to stop that because I've just got this other demand'. So I suppose as an interpleader you wouldn't too readily hand money over to either in that situation where the demands are coming from both directions, and all of that at a time when he had been excluded from the site.
Mr Wilson's evidence at trial suggested he had received a telephone call from someone at Able (that he could not identify) requiring him to pay the CSI deposit monies to Able, and not to CSI. This was the reason advanced by Mr Wilson to stop AME's cheque for $900,000 to CSI on 12 November 2007. I do not accept that evidence from Mr Wilson.
Both Mr Wilson's witness statements (exhibits 28 and 29) were silent about the circumstances surrounding AME's receipt of $990,000 in funds from CSI as of 17 October 2007. Nor, as I listened to Mr Wilson's evidence at trial, did he provide any elaboration to support how he was supposedly placed in any sort of interpleader‑like dilemma against conflicting demands to the funds from both Able and CSI.
The documentary evidence is against this excuse. Mr Kenna's letter of 18 January 2008 (exhibit 1.134) concludes with a sentence, 'Should the monies not be refunded to CSI by 12 noon on Wednesday 23 January 2008, our client proposes to …'. Mr Wilson's response to this letter, sent by email directly to Mr Kenna (exhibit 1.135, TB vol 3, page 209), was in terms:
In reference to [your] letter to Arns & Associates, dated 18 January, requesting the [return] of the deposit to CSI, we would like to inform you that the deposit from CSI of $900,000 was returned on the 12 November 07. On the day the deposit was made into CSI account it was brought to our attention from your company that there was [correspondence] between CSI and Able, information relayed to us was that the briquette machines were still being extracted, so the [deposit] was cancelled.
AME are entitled to their commission.
Regards
Jason Wilson
A 'still being extracted' excuse for the machines was used by Mr Wilson. No mention is made of conflicting demands over the funds AME held. And, at best, a 15% sales commission on a then incomplete sale to CSI was only $297,000 or thereabouts, falling a considerable distance short of the $990,000 held by AME.
I assess Mr Wilson's further excuse that the 'machines were not extracted', as disingenuous. It is irreconcilable with Mr Wilson's explanation proffered through senior counsel about being placed in a position of uncertainty, by being, in effect, 'torn between two claimants' for the funds.
I do not accept any of Mr Wilson's other explanations or attempted rationalisations for what I ultimately assess as AME's calculated and covert conduct in issuing its own tax invoice to CSI, then receiving and retaining $990,000 paid by CSI, from 17 October 2007. Meritless explanations by Mr Wilson, some of which I have already mentioned, included:
(a)urgent circumstances left no time for AME to follow Able's 'slow' procedures (which I find not to be the case) for the issue of tax invoices from either Port Hedland or Melbourne;
(b)that the deal had 'changed' (a reference by Mr Wilson under cross‑examination to his arrangements with Able, premised on a view that appears to have been held by Mr Wilson, that he had unilateral licence to change contractual arrangements with Able as he thought fit) (ts 1047);
(c)that the funds were needed in order to 'survive' (ts 1046);
(d)wholly unsubstantiated assertions emerging under strong cross‑examination that Mr Rossi and Mr Ellison had (somehow) tried to 'trick' AME out of its sales commission on the Koppern briquette transaction (ts 1012, ts 1046).
I assess explanation (d) above as utterly desperate. But Mr Wilson's diverse excuses are all equally threadbare. The explanation that Mr Wilson cancelled the $900,000 cheque payable to CSI because of perceived conflicting instructions received from an unidentified person at Able, I find to be contrary to the documentary evidence. I find that Able would have been satisfied if Mr Wilson had returned to CSI the briquette deposit monies that AME had wrongfully received.
The true position, I find, is that Mr Wilson acted covertly in obtaining $990,000 from CSI. Later, he was aggrieved at what he considered Mr Cargill's wholly unjustified expulsion of AME from site on 25 October 2007. I find that Mr Wilson determined that his strategic position would be improved overall, if AME held the $990,000 for as long as possible, applying some species of his 'law of the jungle' business philosopy. Beyond that, Mr Wilson's various businesses badly needed money at the end of 2007. So Mr Wilson made another decision not only to hold onto Able's funds, but to consume them. He then caused AME to consume more (i.e. all) of the $990,000 than a $297,000 sales commission amount that AME would have been entitled to, on its best case, when and if the Koppern sale to CSI was completed. This was inexcusable. It amounted, in effect, to an agent (AME) misappropriating funds it held on behalf of its principal, to its own ends. Mr Wilson's actions on behalf of AME constituted grave misconduct by an agent.
By 14 January 2008, the balance of the CSI funds held by AME had diminished to $91,087.42 (see exhibit 45). As at the date of trial, the AME Port Hedland bank account was closed. This strongly suggests all the CSI deposit funds were consumed by AME.
It is noteworthy that AME's accounts, produced for the year ended 30 June 2008 (upon which Mrs Wilson was closely cross‑examined, see ts 1264 and following), show the amount of $841,500, recorded as a loan from Able on AME's non‑current financial liabilities in AME's balance sheet. Yet there is no evidence to sustain an argument that there ever was such a loan consensually made from Able to AME.
Apart from AME's entitlement to sales commission, not exceeding $297,000 (GST inclusive) on completion of the sale of the six Koppern briquette machines to CSI (and that sale only being completed on 4 March 2008), AME had no other right, claim or entitlement to the $990,000. Mr Wilson knew this to be so.
Ultimately I conclude that the Shepherd principle has been validly invoked by Able to sustain the legitimate termination of the Marketing Contract as of 25 October 2007, based on AME's breaches of the essential monetary terms of the Marketing Contract. AME has no entitlement to damages against Able. AME was the party at fault and in breach, not Able.
So, AME must refund the balance of the $990,000, less AME's entitlement, acknowledged at trial by Able, to sales commission of $416,032.35, (i.e. AME must pay $573,967.65 to Able). AME is liable to pay interest to Able on $573,967.65 from 4 March 2008, the date the Koppern sale to CSI was completed.
AME's breach damages claim
Lest different views be taken as to the legitimacy of Able's termination of the Marketing Contract, I will record in summary fashion my findings and conclusion that AME would otherwise have been entitled to loss of bargain damages from Able for a repudiation of the Marketing Contract by the renunciation conduct arising from Mr Cargill's expulsion of AME on 25 October 2007. That Marketing Contract could have run on to AME's potential financial advantage, from a sales commission perspective, for another 12 months.
But I do not accept Mr Wilson's assessment of AME's lost profits, based on a straight line extrapolation over a further 12 months of AME's sales commissions earned, as he saw it, across two months to 25 October 2007 (see [196] earlier). In my assessment, it is more probable that Mr Wilson and AME would have been no more successful in achieving future sales of used Boodarie plant and equipment than Able ultimately proved to be, over the ensuing months into 2008.
Mr Charylo produced documents in which were listed the further sales achieved by Able (see exhibit 21 and its light purple shaded tabulated sales recorded from November 2007 to 18 August 2010 and exhibit 22). I accept Mr Charylo's evidence as reliable on this issue, as I did generally. I do not accept Mr Wilson's bare assertion that AME would have achieved better sales results than Able, by reason of the greater sales skills of its personnel, including himself. That is conjecture. Furthermore, Mr Wilson's dubious business ethics also rendered himself and AME, on my assessment, an 'accident waiting to happen' - I have the gravest doubt AME would ever have done any better in sales across 2008 than Able ultimately did.
Using a 15% sales commission (plus GST) on further equipment sales achieved by Able into 2008, without my discounting for adverse contingencies bearing upon AME, would generate for AME lost profit sales commission damages in the vicinity of approximately half a million dollars. That amount is still below the balance of the CSI deposit funds retained by AME and repayable with interest to Able ($573,967.65 plus interest).
In mid‑2008, Able and BHPBDRI fell into litigation over their demolition contract. Able's demolition contract was prematurely terminated. That litigation eventually settled. If Able's contract had been wrongly terminated, as it suggested, and Able wrongly ordered off site by BHPB, that event would have delivered a negative flow through effect upon AME, effectively ending its capacity to perform its sales role under the Marketing Contract on that independent basis. It is not necessary to explore contractual frustration potentialities arising out of those events, given the overall conclusion, adverse to AME, I have reached.
Conclusions
On my assessment, applying the Shepherd v Felt and Textiles principle, AME's conduct by issuing its own tax invoice to CSI for the Koppern sale price ($1.8 million plus GST), receiving $990,000 from CSI on 17 October 2007 and then retaining those funds, at that time provided a legitimate breach edifice to sustain Able's effective termination of the Marketing Contract on 25 October 2007. Termination by Able was justifiable arising out of the fact of breach conduct by AME, which subsequently came to Able's knowledge in 2008. Those facts prove AME's substantial breaches of essential monetary terms in the Marketing Contract prior to 25 October 2007.
In the second action (CIV 2326 of 2008) AME is liable to Able on its counterclaim for $573,967.65 plus interest from 4 March 2008, until judgment.
In the first action (CIV 2200 of 2007) Mr Wilson is liable to Able for $71,500 (GST inclusive) for the 500 kVa generator, plus his copper debt of $1,117,054.40, totalling $1,188,554.40 (GST inclusive). That total sum has been outstanding under the Copper Contract from 25 October 2007, when I have found that Able validly terminated the Marketing Contract. From that date the arrangements reached with Mr Rossi to defer Mr Wilson's copper debt 'until the end', had well and truly reached their end.
Prima facie then, in CIV 2200 of 2007 there should be orders:
(a)judgment for the plaintiff in the amount of $1,188,554.40 with simple interest on that amount accruing as from 25 October 2007 at the rate of 5% per annum until judgment;
(b)the counterclaim of the defendant be dismissed;
(c)as to costs (see below).
Prima facie, in CIV 2326 of 2008 there should be orders:
(a)dismissing the plaintiff's action;
(b)judgment for the defendant Able on its counterclaim against AME in the amount of $573,967.65 plus simple interest on that amount as from 4 March 2008 at the rate of 6% per annum until judgment;
(c)as to costs (see below).
In each action Able as the successful party should receive its taxed costs. The parties should submit a minute of orders giving effect to these reasons within 7 days. If the parties cannot agree a minute of orders I will resolve any residual issues in dispute on the papers.
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