AMI Group (Australia) Pty Ltd v Ace Contracting and Haulage Pty Ltd
[2023] FedCFamC2G 1058
•21 November 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
AMI Group (Australia) Pty Ltd v Ace Contracting and Haulage Pty Ltd [2023] FedCFamC2G 1058
File number: LNG 46 of 2022 Judgment of: JUDGE TAGLIERI Date of judgment: 21 November 2023 Catchwords: CONSUMER LAW – unconscionable conduct in trade or commerce in connection with the supply of services – where the respondents deny that there was an agreement for provision of services between the applicant and the respondents, but that there was an agreement between the applicant and a third party – finding that the applicant and respondents entered into an agreement for the respondents to collect/transport a semi-trailer and investigate/repair defects to hydraulic rams up to $2,000 – finding that the respondents did not return the rams to the respondents intact and engaged a third party to perform work on the semi-trailer without the knowledge or consent of the applicant – finding that the respondents engaged in unconscionable conduct
CONSUMER LAW – damages assessed – claim for damages for loss of income rejected – claim for damages in respect of as-new replacement rejected - damages ordered for repair cost
Legislation: Australian Competition and Consumer Act 2010 (Cth) ss 237, sch 2 – ss 21, 22 Cases cited: Australian Competition and Consumer Commission v Mazda Australia Pty Limited [2023] FCAFC 45
Paciocco v Australia and New Zealand Banking Group Limited [2015] FCAFC 50
Division: Division 2 General Federal Law Number of paragraphs: 49 Date of hearing: 19 July 2023 Place: Melbourne Solicitor for the Applicant: Ms Frake, BDF Law For the First and Second Respondents: The First Respondent in person ORDERS
LNG 46 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: AMI GROUP (AUSTRALIA) PTY LTD)
Applicant
AND: ACE CONTRACTING AND HAULAGE PTY LTD
Respondent
ORDER MADE BY:
JUDGE TAGLIREI
DATE OF ORDER:
21 NOVEMBER 2023
THE COURT DECLARES THAT:
A.The Respondents breached s 21 of the Australian Competition and Consumer Act 2010 (Cth) in that they engaged in unconscionable conduct in trade or commerce in connection with the supply and possible supply of services.
B.The Respondents have engaged in conduct which constitutes the tort of detinue.
THE COURT ORDERS THAT:
1.The Respondents pay the Applicant damages in the sum of $3,897.28.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
Judge Taglieri
These proceedings are primarily brought pursuant to s 21 in Schedule 2 of the Australian Competition and Consumer Act 2010 (Cth) (“the Australian Consumer Law”). The Applicant AMI Group (Australia) Pty Ltd alleges that the Respondents engaged in unconscionable conduct in trade or commerce in connection with the supply of services.
BACKGROUND
By Statement of Claim lodged on 23 September 2022 (“the Statement of Claim”), the Applicant alleges unconscionable conduct by the Respondents with respect to an agreement made between the parties, in part orally and in part in writing, for the First Respondent to transport a semi-trailer, investigate defects to two weeping hydraulic cylinders (“the rams”) on it and repair them on condition that the cost of repairs did not exceed $2,000 (“the repairs”).
The Applicant further alleges that Respondents were:
·Not authorised to repair the rams because of the estimated cost quoted exceeded $2000; and
·Then lost and/or failed to return a component of the rams,[1] rendering them incapable of repair, and as such it has become necessary to replace the rams at a cost of $9,350.
[1] End caps in particular.
The relief sought in the Statement of Claim is for damages pursuant to s 237 of the Australian Consumer Law in the sum of $9,350, being the replacement cost for the rams, and further damages for loss of income due to being unable to use the semi-trailer for two months.
The Applicant has also pleaded an alternate claim in detinue the Statement of Claim at [29].
By the Respondents’ Defence filed 2 December 2022, they admit to the jurisdiction and operation of the Australian Consumer Law, but deny the terms of the agreement for repair of the rams.
In essence, the Respondents assert that there was never an agreement for the Respondents to investigate defects and repair the rams. Instead, they merely referred the Applicant to a third party, Mr Mountney who could undertake the repairs.
The Respondents also assert that the repairs were undertaken by Mr Mountney, who refused to return the rams because the Applicant refused to pay for the cost of the repairs.
Noting the pleadings and summary given above, the parties agree that there was no agreement for the Respondents to perform the repairs to the rams. The dispute relates to the nature of the Respondents’ conduct and the condition of the rams when they were collected from the Respondents’ possession.
The First Respondent also pleaded a set-off claim, but at the defended hearing conducted on 19 July 2023 (“the defended hearing”) this was not argued or pursued whatsoever.
By the time of the defended hearing, despite being ordered to file and serve affidavit material and documentary evidence relied upon, the Respondents had not done so.
Consequently, there is no evidence before the Court supporting the allegations of material fact and law pleaded in the Defence filed 2 December 2022 or set-off claim.
THE DEFENDED HEARING
Despite non-compliance with the Court’s procedural and pre-trial orders, the First Respondent’s authorised representative Mr Simmons, who is also the Second Respondent, participated in the hearing and was afforded opportunity to cross-examine on the evidence relied upon by the Applicant. He also made submissions as to why the Applicant’s claims should be dismissed.
There had been some dispute or doubt as to whether the Second Respondent, who had participated in the procedural hearings, was authorised to represent the First Respondent. Mr Gerald Williams, a director of the First Respondent, appeared at the start of the hearing. I enquired whether the Second Respondent was authorised to represent the First Respondent and Mr Williams confirmed that he was. Mr Williams then did not participate further in the hearing.
The Applicant was legally represented at the hearing by Ms Frake. Two affidavits were read into evidence in support of the Applicant's case, namely:
·The affidavit of Bethan Donnet Frake filed 21 April 2023; and
·The affidavit of Adam Geoffrey John McMaster filed 21 April 2023 (“McMaster affidavit”). Mr McMaster affirms that he is the sole director of the Applicant and authorised to make the affidavit on its behalf.[2]
[2] The McMaster affidavit at [1].
The Affidavit of Service of Ms Frake filed 21 July 2023 was also read in evidence and relevantly satisfies me that the Respondents have had ample notice of the nature of the claim and have been served with the affidavits relied upon by the Applicant.
Although the Respondents had not given notice to cross-examine on the affidavit evidence relied on by the Applicant, the Second Respondent appearing for the Respondents sought to cross-examine Mr McMaster. I gave leave for cross-examination to occur.
In substance, the Second Respondent challenged Mr McMaster in respect of the claim that there was ever any agreement between the Respondents and the Applicant to repair the rams. Further, the Second Respondent put to Mr McMaster that the agreement about repair of the rams was between the Applicant and Mr Mountney.
The cross-examination was confusing and largely irrelevant because the Applicant’s case was that the conditional term of the agreement about the repairs was not capable of performance, and no complaint or claim is made as to non-performance of repairs to the rams.
Mr McMaster denied ever receiving an invoice from a Mr Mountney for any works in respect of the rams and denied ever having an agreement for Mr Mountney to undertake the repairs.
Arising from cross-examination, the Second Respondent was granted leave to tender a limited number of documents that had been referred to in cross-examination. They were:
(a)A copy of the text message dated ‘8 October’ referred to by the Second Respondent during the cross-examination of Mr McMaster;
(b)Notice of the registered business address of ACE Contracting and Haulage Pty Ltd; and
(c)A copy of the tax invoice from Bob Mountney.
Contrary to the order made granting leave, the Second Respondent submitted an additional document by email which was signed but not sworn, and which did not fall within the limited leave that had been granted to him.
The text message may show that contact details for Mr Mountney were sent to Mr McMaster on 18 June 2021 and that on 8 October 2021 Mr McMaster’s contact details were sent to somebody. The document showing an address of the First Respondent seems immaterial given that the Second Respondent was aware of the issues and appeared in defence of the Respondents. Mr McMaster denied ever requesting that Mr Mountney do any work and also denied receiving the invoice which was produced pursuant to the leave referred to at [22] of these reasons.
I have had regard to the documents received and referred to at [22] of these reasons, but they have very little probative value concerning the issues to be decided. Following cross-examination of Mr McMaster, his evidence remained intact, and I accept him as credible witness. It is significant that the Respondents have not called Mr Mountney as a witness.
RELEVANT FINDINGS OF FACT
Accepting the evidence of Mr McMaster and there being no probative evidence contrary to it, I find as follows:
(a)Mr McMaster was a director of the Applicant and authorised to enter into agreements on its behalf at relevant times;
(b)The Second Respondent was an authorised representative of the First Respondent at all relevant times;
(c)The parties entered into an agreement on 21 September 2021, made partly in writing and partly orally, containing two essential terms. First, for the Respondent to collect and transport the Applicant’s semi-trailer; and, second, to investigate minor defects and repair the rams on condition that the cost of repairs did not exceed $2,000 (“the agreement”);[3]
[3][3] The McMaster affidavit at [8] to [15].
(d)Between 21 September 2021 and 8 October 2021, the First Respondent completed and performed the first term of the agreement, but the second conditional term was not performed as the quote for repairs exceeded $2,000;[4]
[4] The McMaster affidavit at [11] to [15].
(e)Mr McMaster spoke to an unknown person on 7 October 2021 who represented he was calling for the Second Respondent and requested $5,000 for the rams, but could not confirm that this sum would be the total price for finishing the repairs of the rams. Mr McMaster told the unknown person to leave the rams as they were and that he would arrange their repair himself;
(f)Mr McMaster collected the semi-trailer from the Respondents on 8 October 2021, but could not locate the rams at the First Respondent’s premises;[5]
[5] The McMaster affidavit at [17].
(g)On 8 October 2021 the Respondents issued an invoice relating to transporting the semi-trailer and minor repair works in the sum of $2,332;[6]
[6] The McMaster affidavit at Annexure AGJM3.
(h)The First Respondent’s invoice does not refer to or include repairs to the rams;
(i)On 13 and 14 October 2021, the Second Respondent and Mr McMaster exchanged messages concerning payment of the invoice for $2,332 and the statements by the Second Respondent convey and I find that the First Respondent was in financial difficulty;
(j)An employee of the Applicant collected the rams from the First Respondent’s premises on 16 October 2021, but they were not put together and were in pieces;[7]
[7] The McMaster affidavit at [23].
(k)The Applicant intended for the rams to be repaired by PirTek (Launceston) P/L, but was subsequently advised that the end caps and other parts were missing;[8]
[8] The McMaster affidavit at [24] and [25].
(l)Between approximately late October 2021 and March 2022, Mr McMaster sought to retrieve the end caps for the rams from the Respondents without success;[9]
(m)On 24 March 2022, the Applicant obtained a quote for replacement of the rams in the sum of $8,500;[10]
(n)A demand was made to the Respondents for return of the end caps or for payment of replacement rams;[11]
(o)The Applicant had the rams patched up and sealed on 30 October 2022 at a cost of $5,497.28, and the semi-trailer has been used for the purposes of the Applicant's business;[12]
(p)After the Respondents had fulfilled the first term of the agreement for transporting of the semi-trailer, I infer from the evidence that is likely that the Second Respondent arranged or allowed without permission, authority, or knowledge of the Applicant for a third person, Mr Mountney who was likely not an employee of the Respondents, to inspect and investigate repairs to the rams. This is a reasonable inference to make on the evidence because:
(i)Mr McMaster received a call on 7 October 2021 from an unknown person requesting payment of money to finish repairs to the rams;
(ii)When the Mr McMaster collected the semi-trailer on 8 October 2021, the rams were not attached;[13]
(iii)When the employee of the Applicant collected the rams, it became known shortly later that the end caps were missing;[14] and
(iv)the Second Respondent represented to Ms Frake that the end caps had been retained by Mr Mountney.[15]
[9] The McMaster affidavit at [26] to [28].
[10] The McMaster affidavit at annexure AGJM5.
[11] The McMaster affidavit at [29] and [30].
[12] The McMaster affidavit at [45].
[13] The McMaster affidavit at [17].
[14] The McMaster affidavit at [25].
[15] The McMaster affidavit at [35].
In Mr McMaster’s affidavit, he denies any liability in respect of the set-off and as the Respondents have not provided any evidence in support of the same, the set-off is not established and was not prosecuted at the hearing in any event. The set-off claim will be dismissed.
It is also significant that the Respondents failed to adduce any evidence in support of their allegations in the Defence or probative evidence to rebut the evidence of the Applicant. They have had ample opportunity to do so.
LEGAL PRINCIPLES
Amongst other things, s 21 of the Australian Consumer Law provides that:
(1) A person must not, in trade or commerce, in connection with:
(a) the supply or possible supply of goods or services to a person …
…
engage in conduct that is, in all the circumstances, unconscionable.
…
Section 22 of Schedule 2 of the Australian Consumer Law provides for a number of non-exhaustive considerations for the assessment of whether conduct is unconscionable. The provisions of ss 21 and 22 have been the subject of extensive judicial consideration, and the reasons for judgment of the Full Court of the Federal Court in Australian Competition and Consumer Commission v Mazda Australia Pty Limited [2023] FCAFC 45 (“ACCC v Mazda”) at [478] to [488] provide an exposition of the relevant principles and approach that should be followed.
Relevantly it is now well established that unconscionable conduct:
·Is conduct that is contrary to what the law deems to be in good conscience and calls for a remedy;
·Involves a sufficient departure from the norms of acceptable commercial behavior as to be against conscience or to offend conscience;
·May be established despite there being an absence of exploitation of vulnerability; and
·It extends the reach of the statutory unconscionable conduct prohibition so that it will protect more consumers and small businesses against egregious conduct by corporations.
I agree that in ACCC v Mazda the Full Court stated that poor commercial conduct had to be more than just immoral to be unconscionable.
Nonetheless, the following statements by the Court at [487] and [488] of the reasons for judgment are instructive:
488.Finally, it is to be noted that whilst exploitation of “some form of pre-existing disability, vulnerability or disadvantage” is often a feature of unconscionable conduct, it is not a necessary feature for the impugned conduct to fall within the meaning of s 21 of the ACL: Australian Competition and Consumer Commission v Quantum Housing Group Pty Ltd (2021) 285 FCR 133; [2021] FCAFC 40 at [78] (Allsop CJ, Besanko and McKerracher JJ).
[original emphasis]
All of these authorities emphasise that the task is an evaluative one. The conclusions reached may be “contestable” in the sense that reasonable judicial minds may differ, as Allsop CJ observed in Paciocco v Australia and New Zealand Banking Group Limited [2015] FCAFC 50 at [304].
ASSESSMENT
Addressing the considerations which inform if conduct is unconscionable in the circumstances of this claim, I find as follows:
(a)The First Respondent’s agreement with the Applicant and conduct purportedly pursuant to it were in trade and commerce within the Australian Consumer Law;
(b)The Second Respondent at all material times was the authorised agent of the First Respondent and entered into an agreement with the Applicant through its authorised agent, Mr McMaster;
(c)The First Respondent was a supplier of possible services, relevantly repair services for the rams. In connection with the possible service, the parties agreed that the Respondents would investigate the repairs but only proceed with them if the cost was less than $2,000;
(d)The Respondents likely knew that the semi-trailer was an important piece of equipment to be used for generating income for the Applicant’s business. The Applicant had entrusted the Respondents with possession of the semi-trailer for the purpose of investigating what works were to be undertaken to repair the rams. This put them at a disadvantage by relinquishing control and possession of the semi-trailer;
(e)The Respondents likely gave up possession of the rams or part of them to a third party, Mr Mountney, without permission or agreement of the Applicant or Mr McMaster, thereby breaching the trust that the Applicant had placed with the Respondents and in bad faith;
(f)Mr Mountney likely retained the end caps of the rams with the knowledge of the Respondents, who failed to recover the rams and return them to the Applicant as their owner having given possession of them to Mr Mountney;
(g)Alternatively, the Respondents can be inferred to have lost some components of the rams and thereby failed to return them to the Applicant when required in breach of the trust the Applicant had placed in the Respondents and which was in bad faith;
(h)The Respondents failure to return the end caps of the rams prevented or delayed the repair of the rams preventing the use of the semi-trailer between 16 October 2021 and 30 October 2022, when they were “patched up”;
(i)By their conduct as described in the reasons above, the Respondents did not reasonably disclose to the Applicant as a customer their intended conduct to use another party to investigate the repairs and thereby lose possession of the rams; and
(j)The Respondents also disconnected the rams or allowed them to be disconnected and did not return them to the semi-trailer as previously attached in the condition they were in when they collected it for transportation pursuant to the agreement between the parties.
Accepting the evidence of Mr McMaster, I am also satisfied that a person acting on behalf of the Second Respondent demanded payment of $5,000 from the Applicant for the rams, when there was no basis for the demand given the conditional term for repair of the rams. I agree that this is relevant pursuant to s 22(1)(d) and (l) of the Australian Consumer Law. The making of the demand could well have been motivated by the financial difficulties referred to at [25(i)] of these reasons.
I do not accept that the Respondents kept the end caps of the rams as punishment for the Applicant not agreeing to continue to use the First Respondents services in having the rams serviced, but I am satisfied that the failure to recover all components of the rams and return them to the Applicant is relevant to characterising the nature of their conduct and was in bad faith.
Evaluating the conduct above collectively in accordance with the applicable statutory provisions and principles identified in these reasons, I am satisfied that the Respondents engaged in unconscionable conduct.
ALTERNATE CLAIM IN DETINUE
The findings in these reasons for judgment support the claim in detinue also. The Respondents retained or failed to return components of the rams which belonged to the Applicant without the right to retain them, as the Respondents had been paid for the services they provided pursuant to the agreement.
Although the Second Respondent stated that the end caps were retained by Mr Mountney, there is no evidence that they sought to recover them from Mr Mountney and return them to the Applicant after multiple attempts by Mr McMaster to have them do so.
There is evidence to indicate that the Respondents’ retention and or failure to return all the components of the rams is inconsistent with the Applicant’s right to have the parts returned to it as owner and the terms of the agreement between the parties.
RELIEF TO BE GRANTED
The relief claimed in the Statement of Claim is set out at [37] to [43]. The Applicant seeks damages to compensate for replacement of the rams and loss of use of the semi-trailer during the period when the rams had not been repaired and returned. It also pleads aggravated or exemplary damages, interest and costs.
However, in the written and oral submissions relied upon at the hearing, the Applicant’s practitioner did not agitate the claim for aggravated or exemplary damages or interest. For that reason, I only address the claims that have been pursued.
Damages in the sum of $9,350 is sought for the replacement rams. However, there is no evidence that this sum has in fact been incurred by the Applicant. Instead, the Applicant repaired the rams at a cost of $5,497.28.
The rams were already in need of repair when the semi-trailer came into possession of the Respondents. The semi-trailer has operated since 30 October 2022 and there is no probative evidence from a suitably qualified source that replacement of the rams is necessary because of any of the Respondents’ actions or that loss of some of the components rendered the repaired rams likely to require replacement earlier than would otherwise be the case.
It is established by the evidence that the failure to return all components of the rams required additional parts to be purchased for the repairs undertaken, and labour has been incurred to carry out the repairs. These expenses are ones for which the Applicant is entitled to recover damages, but some cost of repairs would have been incurred regardless of the actions of the Respondents.
The claim for damages for loss of income in the sum of $78,400 is not established by the evidence or the findings of the Court. The Applicant has not produced any evidence that it was required to cancel contracts for transporting goods or equipment with the semi-trailer. There is no evidence that there were contracts that could have been performed or, alternatively, that the Applicant had an established business base for transport using a semi-trailer.
Instead, Mr McMaster’s evidence is a bare assertion, and I am not satisfied that the Applicant has established the loss of income claim on the balance of probabilities, according to the principles expressed in Sellars v Adelaide Petroleum NL [1994] HCA 4 at [16]. The statement at [47] of the Mr McMaster affidavit does not constitute probative evidence as he does not produce any accounts, business records or any other basis for the estimate of $6,000. In addition, the statements in the McMaster affidavit at [47] to [49] contradict the statement at [45].
CONCLUSION
There will be an order that the Respondents pay damages to the Applicant, but before pronouncing the precise orders I will hear submissions from the parties as to the quantum of damages established by the evidence based on these reasons. It appears that the damages should be measured by the difference between the cost of additional parts and labour for the repairs less the repair costs that would otherwise have been incurred but for the conduct of the Respondents.
I propose to order damages calculated as follows:
Value of parts and labour for repairs[16] $5,497.28 Less: repair estimate from Pirtek[17] $1,600 Total $3,897.28 [16] The McMaster affidavit at Annexure 8.
[17] The McMaster affidavit at [15].
I certify that the preceding forty-nine (49) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Taglieri. Associate:
Dated: 21 November 2023
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