Aquitania Investments Pty Ltd ATF the Elizabeth McKay Trust t/as Aqua Pump & Irrigation v Glenn Patrick Lucassen t/as Kool Temp Refrigeration and Air Conditioning Services [No 2]
[2022] WADC 39
•13 MAY 2022
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: AQUITANIA INVESTMENTS PTY LTD ATF THE ELIZABETH MCKAY TRUST t/as AQUA PUMP & IRRIGATION -v- GLENN PATRICK LUCASSEN t/as KOOL TEMP REFRIGERATION AND AIR CONDITIONING SERVICES [No 2] [2022] WADC 39
CORAM: GETHING DCJ
HEARD: 19 & 20 APRIL 2022
DELIVERED : 13 MAY 2022
FILE NO/S: CIV 881 of 2021
BETWEEN: AQUITANIA INVESTMENTS PTY LTD ATF THE ELIZABETH MCKAY TRUST t/as AQUA PUMP & IRRIGATION
Plaintiff
AND
GLENN PATRICK LUCASSEN t/as KOOL TEMP REFRIGERATION AND AIR CONDITIONING SERVICES
Defendant
GLENN PATRICK LUCASSEN t/as KOOL TEMP REFRIGERATION AND AIR CONDITIONING SERVICES
Plaintiff by counterclaim
AQUITANIA INVESTMENTS PTY LTD ATF THE ELIZABETH MCKAY TRUST t/as AQUA PUMP & IRRIGATION
Defendant by counterclaim
Catchwords:
Contract - Whether oral contract made - Turns on own facts
Legislation:
Nil
Result:
Claim dismissed
Judgment on counterclaim
Representation:
Counsel:
| Plaintiff | : | Mr C M Hershowitz |
| Defendant | : | Mr P G McGowan |
| Plaintiff by counterclaim | : | Mr P G McGowan |
| Defendant by counterclaim | : | Mr C M Hershowitz |
Solicitors:
| Plaintiff | : | Kitto & Kitto Barristers And Solicitors |
| Defendant | : | Barry Nilsson Lawyers (WA) |
| Plaintiff by counterclaim | : | Barry Nilsson Lawyers (WA) |
| Defendant by counterclaim | : | Kitto & Kitto Barristers And Solicitors |
Case(s) referred to in decision(s):
Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd [2000] WASCA 27; (2000) 22 WAR 101
Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336
Chou v AWAP SGT 26 Investment Ltd [No 3] [2018] WASC 383
Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95
Helton v Allen [1940] HCA 20; (1940) 63 CLR 691
John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451
King v Adams [2016] NSWSC 1798
La Mela v Franklexis Pty Ltd [2020] WASCA 83
MKP Management Pty Ltd & Shire of Kalamunda [2020] WASCA 130
Suvaal v Cessnock City Council [2003] HCA 41; (2003) 200 ALR 1
Thorby v Goldberg (1964) 112 CLR 597
Trimat Holdings Pty Ltd v Investment Club Pty Ltd [2022] WASCA 29
Williams v Smith [1960] HCA 22; (1960) 103 CLR 539
GETHING DCJ:
Introduction
The plaintiff, Aquitania Investments Pty Ltd (Aquitania) as trustee for the Elizabeth McKay Trust, trades as Aqua Pump & Irrigation (Aqua Pump). The sole director of Aquitania is Robert Bruce McKay, who is known by his middle name. Aqua Pump is a business dealing with water pumps and irrigation products. At all material times, it had business premises in Midvale.[1]
[1] ts 22 - ts 23 (McKay).
The defendant, Glenn Lucassen, trades as Kool Temp Refrigeration and Air Conditioning Services (Kool Temp), and has done for many years.[2] In the last 10 years, the business of Kool Temp has focussed more on irrigation systems than refrigeration and air‑conditioning which its business name suggests.[3]
[2] I will refer to Kool Temp and Mr Lucassen somewhat interchangeably as the context dictates.
[3] ts 131 (Lucassen).
Both businesses dealt with Valmont Irrigation Australia Pty Ltd (Valmont), a supplier of irrigation products. Valmont uses the brand name 'Valley' for some of its products.[4] One of the products supplied by Valmont is a centre pivot irrigation system (Pivot). A Pivot is a sprinkler system which rotates 360 degrees from a central point over a period of a number of hours, delivering a consistent, programmable, amount of water across a large paddock.[5]
[4] At some points, the witnesses refer to the entity as being 'Valley' as opposed to 'Valmont'. For consistency, I will refer to the entity as Valmont, though will refer to 'Valley' where that makes more sense in the context.
[5] ts 23 (McKay); ts 135 (Lucassen); Exhibit 3.
Aqua Pump alleges that, at a meeting on 2 March 2016, it and Kool Temp entered into an agreement to jointly market Pivots supplied by Valmont (Pleaded Agreement). Under the Pleaded Agreement, the parties would share 50% each of the net sale of proceeds of any Pivot supplied by Valmont. Aqua Pump says that Kool Temp has not done so, and so has sued claiming damages for breach of the Pleaded Agreement. It identified two sales of Pivots for which it says it was entitled to, but did not, receive its share of the profits: one in March 2017 to Belendaine Pty Ltd as trustee for the KPSJ Trust (Belendaine Transaction) and a second in November 2019 to Milyeanup Pastoral Co Pty Ltd as trustee for the John Dunnett Family Trust (Milyeanup Transaction).[6]
Kool Temp denies the Pleaded Agreement. Rather, its case is that from time to time it purchased equipment from, and provided subcontracting services to, Aqua Pump. In this context, the two businesses agreed to promote the products and services of each other to their own respective clients.[7] In addition to defending the action on this basis, Kool Temp filed a counterclaim. The counterclaim has two components, each relating to the supply and installation of a Pivot for Yanchep Sun City Pty Ltd (Yanchep) (Yanchep Transaction). The first relates to the unpaid balance of invoices it rendered to Aqua Pump for subcontract work on the Yanchep Transaction. The second is for breach of a specific agreement by which it says that Aqua Pump agreed to pay it 50% of the net profit of the Pivot supplied from Valmont as part of the Yanchep Transaction.
At the beginning of the trial Aqua Pump sought and obtained leave to file an amended reply and defence to counterclaim.[8] In this amended document, Aqua Pump in essence admits the counterclaim, but continues to assert that any liability arising should be set off against the liability of Kool Temp for breach of the Pleaded Agreement. As the circumstances of the counterclaim are tied up with those of the claim, it is necessary to consider the facts relating to the Yanchep Transaction in determining the claim.
In relation the claim made by Aqua Pump, for the reasons which follow I am not satisfied on the balance of probabilities that the parties made the Pleaded Agreement. So the claim will be dismissed. This leaves Kool Temp entitled to judgment on the counterclaim in the amount of $26,221.27.
The trial
[6] See generally: Plaintiff's Amended Statement of Claim, filed 24 November 2021 (ASOC).
[7] Defendant's Defence and Counterclaim filed 10 May 2021 (D&C), par 6.4.
[8] Plaintiff's Proposed Amended Reply and Defence to Counterclaim, filed 14 April 2022 (R&DC), and ordered to stand as the amended pleading without further filing or service.
At the commencement of trial of the action, the parties tendered a joint trial bundle of documents by consent.[9]
[9] The documents in which I will refer to as 'TB' followed by the page number. The documents numbered 70 and 71 were not tendered (ts 7). The documents numbered 84 and 85 were marked for identification at the commencement of the trial but were not ultimately tendered (ts 7).
Aqua Pump called Mr McKay. It was not in issue that Mr McKay was the directing mind and will of Aqua Pump.[10] It also called Leo Hodgson, then an employee of Valmont, and who was present at the meeting at the beginning of March 2016. For Kool Temp, Mr Lucassen gave evidence. Kool Temp also called Bill Bennett, an employee of Aqua Pump at the beginning of March 2016.
[10] See generally: MKP Management Pty Ltd & Shire of Kalamunda [2020] WASCA 130 [74] ‑ [81] (judgment of the court); Trimat Holdings Pty Ltd v Investment Club Pty Ltd [2022] WASCA 29 [147] (judgment of the court).
The central area of contention is whether at a meeting at the beginning of March 2016, Mr McKay, on behalf of Aqua Pump, and Mr Lucassen entered into the Pleaded Agreement. So it is instructive to commence with the facts relating to this meeting (Part 3). Aqua Pump relies on a number of interactions between it and Kool Temp after the beginning of March 2016, so it is necessary to look at the conduct of the parties generally after this date (Part 4). It is then necessary to examine the Yanchep Transaction (Part 5), the Belendaine Transaction (Part 6) and the Milyeanup Transaction (Part 7). Against this factual background, the central issue of whether the Pleaded Agreement was made can be determined (Part 8), as can the consequence of any breach of that agreement (Part 9) and the appropriate final orders (Part 10).
Facts relating to the meeting in early March 2016
3.1 Evidence of Mr McKay
Mr McKay gave evidence that Aqua Pump commenced operation in 2009. It deals with anything to do with water, including irrigation products, pumps, sprinkler systems and filtration systems.[11] Its clients range from large mining companies to farming operations to retail consumers.
[11] The scope of its business is apparent in the advertisement at TB 33.
In the period up to the end of February 2016, Mr Lucassen had been a customer of Aqua Pump, purchasing products from it. He had also done some subcontracting work for Aqua Pump from time to time such a refrigeration repairs and installing pumps; 'a few little jobs … but nothing major' in the words of Mr McKay.[12]
[12] ts 23 ‑ ts 24 (McKay).
Mr McKay gave evidence that in late 2014, Mr Lucassen came into his office at the Midvale premises, unannounced, and spoke to him about a business arrangement involving Pivots. Mr Lucassen said that there were many customers in the Kimberley region who wanted to buy Pivots. However, he could not get an account with Valmont. He had applied, but had been knocked back because he did not meet the criteria. In particular, he did not have a shop front. Mr Lucassen proposed that he and Aqua Pump form an arrangement whereby the shop front of Aqua Pump would be used to obtain an account with Valmont. Aqua Pump would supply the pumps for the Pivot, Mr Lucassen would supply the labour and they would split the proceeds 50/50. Mr McKay responded that he was definitely interested in such an arrangement, adding when giving evidence that this was because there was a profit to be made.[13] At some point, Mr Lucassen had sent Mr McKay by email some pictures showing the work he was doing.[14]
[13] ts 24 - ts 26.
[14] TB 23 - TB 26.
Prior to 2016, pivot sprinklers had not been an area of business for Aqua Pump, and Mr McKay had no experience in the area.[15]
[15] ts 76 (McKay).
Mr McKay went on in evidence to say that as part of this arrangement, the two businesses engaged in some joint advertising. The reason for doing so was to promote what they were doing so that when Valmont came to assess the account application, they could see that the two businesses had been working as a partnership in relation to pivot sprinklers.[16]
[16] ts 26 - ts 27.
In evidence was a page from the Farmers Weekly of 19 February 2015. The page contained an advertisement for Aqua Pump as well as an advertorial in the following terms:[17]
[17] TB 33.
With the increase in demand for installation and upgrading of pivot sprinklers, Kool Temp and Aqua Pump & Irrigation have joined forces to service this market.
Kool Temp's Glenn Lucassen has extensive experience in installing and servicing pivot sprinklers through WA.
Combining this with Aqua's speciality in pumps and irrigation means there is no project that cannot be handled.
Overhauling and upgrading existing pivot sprinkler set-ups is attracting a lot of farmers' attention.
For a fraction of the cost of new devices, old pivot sprinklers can be refurbished to a new performance level.
The life of a pivot sprinkler can be extended greatly by under slinging the pipe work in PVC or poly and remanufacturing the head works in stainless steel, which can be manufactured at a similar cost to galvanised pipe but will last years longer.
All the pumps and valves associated with water supply to pivot sprinklers can also be serviced.
The team handles the removal and re-installation of pumps and electrical repairs.
For more information call Glenn on XXXX XXX 721 or Aqua Pump & Irrigation on XXXX X201.
Preceding this advertorial, Mr McKay had sent an email to Mr Lucassen setting out the proposed text of the advertorial, in identical terms to that ultimately published.[18] In response, Mr McKay said that Mr Lucassen came into the shop and discussed the advertorial with him. Mr Lucassen was happy with it, but said that he could not pay for any advertising. Mr McKay agreed to do so.[19]
[18] TB 31 - TB 32.
[19] ts 28 - ts 29.
On 31 March 2015, Mr McKay sent Mr Lucassen an email in the following terms:[20]
Hi Glen
See attached advert in this weeks farm weekly. Still haven't had any response have you had any calls?
How are you going with getting some solar pumps into remote areas?
Business is quietening down her[sic] now so we are keen to get some sales/work up north if you have any ideas?
Cheers
Bruce
It is a fair inference from the date and text of this email that at least one other advertorial had been placed in the Farmers Weekly.
[20] ts 29 - ts 30; TB 34.
Mr Lucassen's wife, Natalie, responded by email the same day, stating:[21]
Hi Bruce
Glen is away down south. I will let Glenn know that you sent this email.
Kind regards
Nat Lucassen
[21] ts 29 - ts 30; TB 34.
Mr McKay went on to say that through the whole of 2015, Mr Lucassen would call into the shop, or give him a call on the phone, and they would discuss what was happening with the arrangement. Mr Lucassen told him that he was talking with Valmont at the same time. The indications were that Valmont was going to provide an account. Mr McKay was not concerned with the delay given the size of Valmont.[22]
[22] ts 30.
About a week before the beginning of March 2016, Mr McKay gave evidence that Mr Lucassen phoned him and said that Valmont had agreed to come over and inspect Aqua Pump's premises to see if it was suitable to open an account. There would be a meeting in his office.[23]
[23] ts 30 - ts 31 (McKay).
Mr McKay said that the meeting occurred on 2 March 2016.[24] In cross‑examination he accepted that he did not have any independent recollection of the date of the meeting, but relied on the diary notes from Mr Hodgson (a copy of which is at Annexure A).[25] The meeting was late morning, around eleven o'clock.[26]
[24] ts 30 (McKay).
[25] ts 76 (McKay).
[26] ts 31 (McKay).
Mr Lucassen attended with Mr Hodgson. Mr McKay had never met Mr Hodgson before, nor spoken to him.[27]
[27] ts 80 (McKay).
Mr McKay was in his office when they walked in. He got up and greeted them at the front counter. The three of them went and sat down in his office. They had a discussion about the arrangement that Mr McKay and Mr Lucassen had been planning for the preceding 12 months. Mr Hodgson said he had come over to inspect the Aqua Pump business with a view to opening an account. He asked Mr McKay a number of questions about Aqua Pump's business, which Mr McKay responded to, telling him about the business. Mr Hodgson said that if Valmont was going to open an account, Aqua Pump was expected to do a variety of things. It had to promote the Valley product. It had to go to field days. It had to have signage in the office and promote the Valley product. Aqua Pump would be responsible for those costs.[28]
[28] ts 31 - ts 32 (McKay).
Mr Lucassen told him that he had applied for a dealership with Valmont.[29]
[29] ts 80 (McKay).
There was a discussion about the target market which Valmont was interested in, being the Kimberleys. Mr Lucassen said he had a property in 12 Mile at Broome. He was going to build premises there to run this business. Initially, Mr McKay was going to run it in the Perth branch, then he was going to shift to Broome to run the shop there and stock it. While he was in the shop, Mr Lucassen was going to be doing the fieldwork.[30]
[30] ts 33 (McKay).
After the discussion about what Valmont required, Mr Hodgson wanted to know what the arrangement was between Aqua Pump and Kool Temp. They spoke about what had been discussed in late 2014 and 2015, being to split the net profits of the supply of Pivots 50/50. They were going to remain separate businesses. If a job came up, he would get the pump sales, Mr Lucassen would get the installation and the labour side of the job.[31]
[31] ts 33 - ts 34 (McKay).
The meeting lasted about two hours. After that, Mr Hodgson went around the workshop and had a look at the business.[32]
[32] ts 34 (McKay).
Mr McKay gave evidence that he did not record the agreement with Mr Lucassen in writing as he trusted him, as well as the fact that he viewed Mr Hodgson as being a witness.[33]
[33] ts 34 (McKay).
In cross-examination, Mr McKay said that between 2010 and the meeting in March 2016 he had had only a handful of conversations with Mr Lucassen, the majority of them in 2015 to 2016.[34] He accepted that, aside from the Farmers Weekly article and correspondence, there was no correspondence from him to Mr Lucassen setting out the arrangement.[35]
[34] ts 71 - ts 72 (McKay).
[35] ts 73 - ts 75, ts 78 (McKay).
Mr McKay agreed that he did not apply for or obtain an ABN for the 'partnership' but said that one was not required as they each had independent businesses already with ABNs.[36] He described the arrangement between him and Mr Lucassen as involving mutual referrals.[37] He said that Mr Lucassen had not referred any clients to him to purchase pumps, but that if he had there was no arrangement to share profits.[38] Likewise, he did not expect any profit sharing for referring Mr Lucassen irrigation work not involving a Pivot.[39] He would, however, get a mark-up if he engaged Mr Lucassen on a subcontract basis.[40]
[36] ts 75 (McKay).
[37] ts 75 (McKay).
[38] ts 75 (McKay).
[39] ts 75 - ts 76 (McKay).
[40] ts 76 (McKay).
The essence of Mr Lucassen's position as to the March 2016 meeting with Mr Hodgson was put to Mr McKay in cross-examination who did not resile from his evidence‑in‑chief.[41]
3.2 Evidence of Mr Hodgson
[41] ts 80 - ts 81 (McKay).
Mr Hodgson gave evidence that he had many years' experience in irrigation. In 2015 to 2017 he was living in Bega, New South Wales, and was employed by Valmont as a sales and territory manager. After leaving Valmont in 2017 he was a private contractor. He ended up working for Aqua Pump.[42]
[42] ts 99 (Hodgson).
His role at Valmont involved him looking after customer design and quoting on Valley products. He was also involved with potential or prospective dealerships. This included doing the initial interview to assess the capability of the applicant to deal with Valmont's products. One of the criteria which Valmont was looking for was for the applicant to have business premises that would display Valley marketing and be able to handle the storage and repair of the normal servicing and building of a product. There would also be a business and financial assessment, as well as an assessment of their ability to sell and build the product.[43]
[43] ts 99 - ts 101 (Hodgson).
Mr Hodgson gave evidence that his first contact with Mr Lucassen was a phone call from him when he was at an irrigation conference in Melbourne. Mr Lucassen wanted to get a Valley (Valmont) account. Mr Lucassen told him something of his background and experience. Mr Hodgson told Mr Lucassen that he would get a Chris Curtis to ring him back. Mr Curtis was Mr Hodgson's manager.[44]
[44] ts 102 - ts 104 (Hodgson).
On 29 February 2016, Mr Hodgson flew to Perth. Before doing so, he had seen a copy of the Valmont Dealership Agreement signed by Mr Lucassen.[45] The purpose of that visit was for Mr Hodgson to assess whether Mr Lucassen would be suitable for a dealership.[46]
[45] ts 117 (Hodgson); TB 38 ff.
[46] ts 104 - t s 105 (Hodgson).
The Perth visit was the first time he had met Mr Lucassen in person, thought they had spoken a number of times on the phone.[47]
[47] ts 118 (Hodgson).
Mr Hodgson stayed with Mr Lucassen. In evidence‑in‑chief, Mr Hodgson said that the two of them went down south to Scott River to speak to a couple of customers who were disappointed with the Valley dealers in that area. One of them was a Mr Dunnett, whose pivot sprinkler system Mr Lucassen had repaired at some earlier stage. It appears that this was a Valley pivot sprinkler as Mr Hodgson refers to Mr Dunnett as a customer.[48] In cross‑examination, Mr Hodgson clarified that Mr Dunnett was the only customer they visited at that stage.[49]
[48] ts 105, ts 124 ‑ ts 125 (Hodgson).
[49] ts 124 - ts 125 (Hodgson).
Mr Hodgson said he and Mr Lucassen had a general conversation over a few beers the night Mr Hodgson arrived. Mr Lucassen had told him about Mr McKay, describing him as his 'partner'. He also said that they had their own separate entities and that they share the profits in Pivot sales 50/50. The arrangement was that they were going to support each other in a partnership with the Valley product. Mr Hodgson said that Valmont wanted a footstep in the Pilbara. He was told that Mr Lucassen and Mr McKay were going to set up a shop there, but in the meantime had the Perth shopfront. He was going to assess the Perth shopfront to see if it could support the transition to Broome.[50]
[50] ts 105 - ts 106 (Hodgson).
Counsel for Aqua Pump then led Mr Hodgson on the issue of the date on which the meeting occurred, the first reference to the fact and date of the meet being:[51]
And prior to you and Mr Lucassen coming to Aqua Pump's shop on 2 March 2016, what did you do with your time in WA?‑‑‑Went south
And when you say, 'South,' where did you go?‑‑‑Scott River.
This question assumed that the meeting with Aqua Pump was on 2 March 2016, which was not something Mr Hodgson had at that point given evidence about.
[51] ts 105 (Hodgson).
Mr Hodgson's answer places the trip down south to Scott River prior to the visit to Aqua Pump's office. He then immediately contradicted this answer, again in response to a question which assumed that the meeting was on 2 March 2016:[52]
All right. And on the second - how did you come to meeting with Mr McKay? How did that meeting come about? Why did you travel to his shop?‑‑‑I said to Mr Lucassen, 'I've got to see the shop front. I've got to talk to your partner.' And he said, 'No worries. We'll go down in the morning and we'll do it,' yeah.
This conversation, which was the catalyst for the visit to Aqua Pump's office, occurred on the evening he arrived, being 29 February 2016. His answer places the meeting at Aqua Pump's office the following morning, being 1 March 2016.[53]
[52] ts 106 (Hodgson).
[53] ts 104 (Hodgson).
And then more leading: 'Okay, so on 2 March 2016 you drove to Aqua Pump shop, correct?'. The transcript does not record an audible answer.[54]
[54] ts 107 (Hodgson).
Mr Hodgson was taken to some notes he had made in a diary. They are made on the diary page for 2 March 2016. A copy of the notes is Annexure A to this decision. Mr Hodgson gave evidence that the notes were made on the same day as the diary date or 'around that area', but prior to meeting Mr McKay and Mr Lucassen. In cross‑examination he said he would have made the notes prior to the meeting, as a reminder of matters he wanted to question the parties about.[55]
[55] ts 107, ts 118 (Hodgson); TB 61.
After arriving at Aqua Pump's office, Mr Hodgson said that he and Mr Lucassen met with Mr McKay in his office. This was the first time Mr Hodgson had met Mr McKay. The discussion focussed around going to Broome, which was the target, and setting up a Valley account. Both Mr McKay and Mr Lucassen said that they had other customers in Broome. There was a discussion that it was imperative to get a dealership for there to be a shop front, which was to be in Broome. They would work together, with Mr McKay in the shop and Mr Lucassen doing the installations. The two of them explained that the arrangement was they would share 50/50 in the profits for Valley products. Valmont already had a master dealer in Perth, so they had to move to Broome. At one point, Mr Lucassen went out for a cigarette, and Mr Hodgson said he 'got the same story' from Mr McKay as Mr Lucassen was telling him.[56]
[56] ts 106 - ts 110 (Hodgson).
The meeting went for a couple of hours.[57] In cross-examination, Mr Hodgson disagreed that the meeting was only for a few minutes.[58]
[57] ts 109 (Hodgson).
[58] ts 120 (Hodgson).
After the meeting finished Mr Hodgson had a look around the shop and then had to go to catch a plane.[59]
[59] ts 110 (Hodgson).
Mr Hodgson could not recall whether Mr Lucassen was calling in to Aqua Pump's premises in Midvale to get some parts for a job.[60]
[60] ts 120 (Hodgson).
Mr Hodgson said that he did not communicate to Mr Lucassen his thoughts about the application for a Valmont dealership whilst in Perth, saying:[61]
… by the end of the meeting had you communicated to Mr McKay and Mr Lucassen as to whether from your perspective the application for a dealership would be approved or not?‑‑‑No, at that stage I would have to go back to my superior, which is Chris Curtis.
Okay?‑‑‑And discuss it with Johnny Campbell as he was a territory man.
In cross-examination he added that he had to report back to his 'superior' Mr Curtis.[62] Mr Campbell was the territory manager for Western Australia as regards Valmont dealers.[63]
[61] ts 110 (Hodgson).
[62] ts 110 (Hodgson).
[63] ts 110 (Hodgson).
After the March meeting in Perth, Mr Hodgson had a discussion with Mr Curtis and Mr Campbell.[64] The net result was that no dealership was granted to either Mr Lucassen or Mr McKay. However, a cash account would be set up to in the name of Kool Temp to allow it to purchase directly from Valmont (I infer as opposed to going through another dealer).[65]
[64] ts 111 (Hodgson).
[65] ts 112 - ts 113 (Hodgson).
After the events of March 2016, Mr Hodgson said he maintained a close relationship with Mr Lucassen, consulting for him on hydraulics design and other technical questions.[66]
3.3 Mr Lucassen's evidence
[66] ts 116 (Hodgson).
Mr Lucassen gave evidence that he had been dealing with Aqua Pump for a number of years prior to 2016, purchasing pumps and other equipment. Before the meeting with Mr Hodgson in March 2016, he had attended the Midvale shop a 'half a dozen times at the most' to pick up parts. From around 2014 he also did some subcontracting work for Aqua Pump.[67]
[67] ts 132 - ts 134, ts 137 - ts 138 (Lucassen); TB 1.
Prior to 2016, Mr Lucassen had only been involved in the repair of Pivots, not their sale or installation.[68]
[68] ts 135 (Lucassen).
In cross-examination, Mr Lucassen was taken to two emails which appear from their face to have been sent by him to Mr McKay on 19 December 2014. One attached a photo of a pump and some piping, the other a photo of a Valmont pivot system.[69] He said that his wife probably sent them for him, though they were sent on his behalf. He denied sending these emails to Mr McKay in the context of discussion with him about a Valmont dealership and a profit-sharing arrangement. Rather, they were sent to Aqua Pump for use in its advertising, something which Mr Lucassen did not know anything further about.[70]
[69] TB 23 - TB 26.
[70] ts 160 - ts 162 (Lucassen).
In cross-examination, Mr Lucassen was taken to the advertorial and emails referred to at [16] ‑ [19]. He denied ever having seen the email or seen the advertorial or knowing anything about this.[71]
[71] ts 163 - ts 165. (Lucassen).
In cross-examination, Mr Lucassen denied having discussions around this time (2014 - 2015) with Mr McKay about a profit share arrangement in relation to a dealership. Nor did he discuss with Mr McKay that he had been talking to Valmont about a potential dealership.[72]
[72] ts 159 - ts 160 (Lucassen).
On 22 February 2016, Mr Lucassen signed a document styled 'Valmont Irrigation Australia Pty Ltd - Dealership Agreement'. This document had been sent to him by Mr Curtis, to whom he returned it once he had signed it.[73]
[73] TB 38 - TB 59; ts 135 - ts 136 (Lucassen).
The reason Mr Lucassen came to apply for a Valmont dealership was because he fixed a lot of their sprinklers and the people he was doing that work for asked him to inquire about getting a dealership. This was around 2015.[74]
[74] ts 159 (Lucassen).
Mr Lucassen gave evidence that at the time he signed the Valmont Dealership Agreement, he had not met nor spoken to Mr Hodgson. However, after doing so, he had a telephone conversation with Mr Hodgson who told him he was coming over to Perth.[75]
[75] ts 137, ts 165 (Lucassen).
Subsequently, on 18 February 2016, Mr Hodgson sent Mr Lucassen an email stating: 'I will be flying into Perth on the Monday 29th February at lunch time and flying out on the 03rd Mar 2016 @ 0800hrs'.[76]
[76] TB 37; ts 138, ts 170 (Lucassen).
Mr Lucassen picked Mr Hodgson up at the airport. Although he did not expressly say so, it is implicit in Mr Lucassen's evidence that he picked Mr Hodgson up on Monday 29 February. Mr Hodgson stayed at Mr Lucassen's place.[77]
[77] ts 138, ts 160 (Lucassen).
Mr Lucassen and Mr Hodgson had some discussions before going to the Aqua Pump's Midvale premises, which appear to have been the evening Mr Hodgson arrived. In those discussions, Mr Lucassen said that he subcontracted to Aqua Pump, describing it as a working relationship. In cross-examination, Mr Lucassen denied telling Mr Hodgson that he and Mr McKay were partners.[78]
[78] ts 170 - ts 171 (Lucassen).
The next morning, 1 March 2016, he and Mr Hodgson went to Aqua Pump's premises in Midvale. Mr Lucassen said that he had checked this date the night before he gave evidence at the trial against an invoice for the work which he did in Scott River. He said that the instructions he gave to his solicitors that the meeting was on 2 March 2016[79] was a mistake. At this point, I was concerned that counsel for Aqua Pump may be taken by surprise by a relevant document which had not been discovered. So I adjourned to allow counsel to be provided with a copy of the invoice and to take instructions. On reconvening, counsel for Kool Temp informed me that Mr Lucassen, right or wrongly, had taken the view that the invoice was not relevant, so had not provided it to his instructor until that morning. Counsel for Aqua Pump did not ask Mr Lucassen anything more about the invoice, nor was it the subject of re-examination, and it was not tendered.[80]
[79] As reflected in D&C, par 6.7.
[80] ts 165 - ts 169 (Lucassen).
Mr Lucassen gave evidence that the purpose of going to Aqua Pump's premises was for him to pick up some parts which he needed to repair a Pivot at Scott River, for a client of his, John Dunnett from Milyeanup Pastoral Company. Those parts were a 6 inch valve and a 18 litre bladder. They were at Aqua Pump's premises for no longer than 10 minutes, collected the parts, then left.[81]
[81] ts 138 - ts 139, ts 165 - ts 166, ts 174 - ts 175 (Lucassen).
Whilst at the Midvale premises, Mr Lucassen introduced Mr Hodgson to Mr Bennett and Mr McKay, saying that 'this was the Valley dealer that I've just signed up with'. The discussion was around the front counter. Mr Lucassen said that at no time did he and Mr Hodgson go into Mr McKay's office.[82]
[82] ts 139 (Lucassen).
During this conversation, Mr Hodgson mentioned that 'we were looking for a shop front'. Mr McKay offered his services as the shop front. Mr Lucassen turned this offer down as the shop front had to be in Broome, 'because there was … already … a huge dealer that had sold hundreds of machines. And we didn't want - they didn't want to tread on his turf'. I understand this to refer to the existing Valmont dealer in Perth.[83]
[83] ts 139 - ts 140, ts 172 - ts 173 (Lucassen).
In cross-examination, Mr Lucassen reiterated his denial of going into Mr McKay's office. He denied that the meeting occurred in the way described by Mr McKay and Mr Hodgson when giving evidence.[84]
[84] ts 172 (Lucassen).
Mr Lucassen also gave evidence that Mr Hodgson had brought with him to Western Australia a transducer (which was a control timer) which was to be used in the repairs the two of them were going to do at Scott River.[85]
[85] ts 138, ts 166 (Lucassen).
After leaving the Midvale shop, Mr Lucassen and Mr Hodgson travelled to Scott River (Milyeanup), arriving about 12.30 pm. They immediately set about repairing the Pivot, there being some urgency as the grass it was supposed to irrigate for cattle feed was dying. They worked until about 4.30 pm, including to install the transducer which Mr Hodgson had brought with him. The two of them then had dinner with Mr Dunnett and his wife, and stayed at a cottage which appears to have been on Mr Dunnett's property. The next morning they continued to work on the irrigation system. Around 12.30 pm to 1.00 pm, they went back to the cottage, picked up their gear, and drove back to Perth, arriving about 6.00 pm. The next morning, Mr Lucassen dropped Mr Hodgson at the airport around 6.00 am to fly out.[86]
[86] ts 140 ‑ ts 141, ts 170 - ts 171 (Lucassen).
Mr Lucassen had already made plans to move to Broome. His intention was to open a shop in Broome for the Valmont dealership. His wife and son were already in Broome, with their son in school there. They were waiting on settlement of another property so that they could complete the purchase of the property on which the shop would be built. However, the other settlement fell through, so his wife and son had to come back to Perth.[87]
[87] ts 141, ts 172 - ts 173 (Lucassen).
On 8 March 2016, Mr Curtis sent an email to Mr Lucassen, copied to Mr Hodgson, the substance of which was:[88]
Please be advised that effective today you will become a Valley Dealer, as per the terms of our agreement.
[88] Exhibit 5; ts 136 (Lucassen).
Mr Lucassen subsequently rang Mr Curtis and told him that the property deal in Broome had fallen through. Mr Curtis told him to leave the dealership to 'idle' until he was ready to go.[89] (Although Mr Lucassen did not expressly state that this conversation was after the email in [70], the terms of the email suggest that it did and I so infer).
[89] ts 172 - ts 173 (Lucassen).
Mr Lucassen explained that although he would not be a dealer, he was provided with an account with Valmont which allowed him to deal directly with Valmont.[90] In April 2016 Mr Lucassen filled out a credit application with Valmont and was provided with a credit account of AUD$5,000.[91]
3.4 Evidence of Mr Bennett
[90] ts 173 - ts 174 (Lucassen).
[91] TB 63 - TB 64; ts 137 (Lucassen).
Mr Bennett gave evidence that he was an employee of Aqua Pump between around 2009 to 2018, working in sales. He knew Mr Lucassen as a customer of, and subcontractor to, Aqua Pump. He could not recall how many times Mr Lucassen had been to the Midvale shop.[92]
[92] ts 207 - ts 209 (Bennett).
Mr Bennett recalled meeting Mr Hodgson on one occasion, though he could not say when. He came in with Mr Lucassen to pick up some products to put in a pivot system in Scott River. The two of them had a discussion with Mr McKay behind a closed door in Mr McKay's office, something he added 'which normally didn't happen'. He did not hear the discussion, nor participate in it. He said that they were not in the office for any great period of time.[93]
[93] ts 209 - ts 210 (Bennett).
He may have met Mr Hodgson on one other occasion.[94]
3.5 Determination
[94] ts 209 - ts 210 (Bennett).
It is instructive at this stage to make some initial findings as to what occurred prior to, at, and immediately after, the meeting at the beginning of March 2016. As I set out in more detail below, I consider that each of Mr McKay, Mr Hodgson and Mr Lucassen had an unreliable recollection of the events in some regards. Each, perhaps understandably, tended to reconstruct their recollections to suit their positions in the action. Mr Lucassen tended to understate his involvement with Aqua Pump. Mr McKay tended to embellish or overstate their relationship. Likewise Mr Hodgson, who because of his current employment was aligned to Mr McKay. On the other hand, I regard Mr Bennett's evidence being honest, accurate and reliable. His evidence was led by counsel for Kool Temp. It was not challenged in cross-examination by counsel for Aqua Pump. His evidence was measured and restrained, without a hint of reconstruction or embellishment. I accept it. Taking Mr Bennett's evidence into account, and using the documents as a framework, a coherent picture emerges. It is one which does not exactly represent what either party invited the court to find, though it squarely and consistently reflects all evidence I find to be cogent.[95]
[95] Williams v Smith [1960] HCA 22; (1960) 103 CLR 539, 545 (Dixon CJ, McTiernan, Fullagar, Kitto & Menzies JJ); Suvaal v Cessnock City Council [2003] HCA 41; (2003) 200 ALR 1 [36] (Gleeson CJ & Heydon J).
It is common ground between Mr Lucassen ([51]) and Mr McKay ([12]), and I find, that for several years prior to March 2016, Mr Lucassen had been a customer of Aqua Pump, purchasing products from it.
It is also common ground between Mr Lucassen ([51]) and Mr McKay ([12]), and I find, that in the several years prior to March 2016 Mr Lucassen had also done some minor subcontracting work for Aqua Pump from time to time.
The next point in the chronology is the Farmers Weekly advertorial ([16]). It is implausible and inherently unlikely that this advertorial would have been placed without the knowledge and consent of Mr Lucassen; were this not the case, had someone had rung him on the mobile phone number in the advertorial and mentioned it, an awkward and probably commercially counter-productive, exchange would have occurred. This conclusion is reinforced by the email communications between Mr McKay and Kool Temp ([18] and [19]). I find that the Farmers Weekly advertorial was placed with the knowledge and consent of Mr Lucassen. It follows that I find Mr Lucassen's recollection to the contrary to be unreliable ([54]). I accept Mr McKay's recollection in part, at this stage, only to the extent reflected in the advertorial. I find that around the beginning of 2015 there were conversations between Mr McKay and Mr Lucassen about their two businesses joining forces to service the market for the installation and upgrading of pivot sprinklers. Those conversations led to the publication of the advertorial, which appeared on at least two occasions. I will return to the question of whether these conversations went as far as discussing a profit‑sharing arrangement later in these reasons.
The next pieces of objective evidence to add to the narrative are that:
(a)on 22 February 2016 Mr Lucassen signed a Valmont dealership agreement ([56]); and
(b)on 8 March 2016 Mr Curtis advised Mr Lucassen that, effective that date, he would become a Valley (Valmont) dealer ([70]).
Mr Lucassen's evidence that he returned the signed Valmont Dealership Agreement to Mr Curtis once he had executed it ([56]) makes sense from this chronology, so I accept it. There is no version of the Valmont Dealership Agreement signed by Valmont in evidence. Mr Hodgson's evidence that he saw this before coming to Western Australia was not challenged and I accept it ([36]).
This leads to the next issue which is when Mr Hodgson came to Perth. The starting point is the email on 18 February 2016 from Mr Hodgson from to Mr Lucassen, the terms of which I repeat for ease of reference: 'I will be flying into Perth on the Monday 29th February at lunch time and flying out on the 03rd Mar 2016 @ 0800hrs'.[96] Mr Lucassen's evidence as a whole accords with this email, something he reiterated in cross‑examination.[97] Notwithstanding the importance of the chronology, and the fact that this email was in the trial bundle, neither counsel questioned Mr Hodgson about it. Nonetheless, I accept Mr Lucassen's evidence, which is corroborated by the email, and find that Mr Hodgson arrived in Perth on Monday 29 February at lunch time and flew out on 3 March 2016 at 8.00 am.
[96] TB 37; ts 137 (Lucassen).
[97] ts 170 (Lucassen).
The next issues to determine are why Mr Hodgson came to Western Australia to visit Mr Lucassen and what he did here. Mr Lucassen did not give direct evidence as to his understanding of why Mr Hodgson came to Perth. However, his evidence that Mr Hodgson brought a transducer with him was unchallenged ([67]), and so I accept it. This clearly suggests a pre-arranged plan to do repair work at Scott River. Mr Lucassen disagreed with the suggestion that the purpose of the visit down south was for Mr Hodgson to visit some customers.[98] However, his evidence is consistent with Mr Hodgson's evidence that he visited one of Mr Lucassen's customers, being Mr Dunnett at Scott River ([38]) this customer was a mutual customer of both Valmont and Kool Temp.
[98] ts 166 (Lucassen).
Mr Hodgson's evidence as to why he came to Perth was 'to assess the dealership'.[99] As to which dealership, he said: 'That would have been Kool Temp's and Aqua Pump's'.[100] And in cross-examination he said the purpose was to assess the 'business as a whole', that is, to check out Mr Lucassen's suitability to be a Valmont dealer and to visit one of his customers.[101] This is consistent with his evidence that after the meeting in Perth he had a discussion with Mr Curtis and Mr Campbell. Mr Hodgson's evidence that he came to assess the suitability of Mr Lucassen's business to become a Valmont dealer was not challenged in cross-examination, and I accept it.[102] His evidence is also consistent with Mr Curtis emailing Mr Lucassen on 8 March 2016, conveying a decision that one would expect would follow in the circumstances. I find that Mr Hodgson visited the customer at Scott River for the general purpose of assessing Mr Lucassen's business by speaking to a mutual customer who had a Pivot.
[99] ts 105 (Hodgson).
[100] ts 105 (Hodgson).
[101] ts 120 (Hodgson).
[102] ts 120 (Hodgson).
As I mentioned, counsel for Aqua Pump did not challenge Mr Lucassen's evidence that Mr Hodgson had brought with him to Western Australia a transducer which was to be used in the repairs the two of them were going to do. However, Mr Hodgson was not asked whether this was the case in cross-examination. Nor was it put to him that he assisted Mr Lucassen with the repairs at the Scott River property.[103] Mr Lucassen had a very detailed recollection of the events, giving it the hallmark of accuracy. It also accords with common sense; to make a trip of that duration simply for a client call seems a disproportionate use of time and resources. I accept his evidence in this regard. I find that a more specific purpose of Mr Hodgson's visit was to do some repair work for the customer at Scott River using the transducer he brought over.
[103] See generally ts 124 - ts 125 (Hodgson).
It was common ground between Mr Lucassen and Mr Hodgson that Mr Lucassen picked him up at the airport, and that he stayed with Mr Lucassen. Mr Hodgson did not expressly say that Mr Lucassen took him back to the airport, but given Mr Lucassen was his host, this makes sense, and accords with Mr Lucassen's evidence. So I find that Mr Lucassen picked Mr Hodgson up from the airport, had him stay at his house, and then took him back to the airport. Given the finding at [81], I further find that Mr Lucassen dropped Mr Hodgson off at the airport at 6.00 am on 3 March 2016. It follows that I do not accept Mr Hodgson's evidence that he went to the airport immediately after the meeting at Aqua Pump premises in Midvale, and regard his recollection of doing so as being unreliable.
It was common ground between Mr Lucassen ([68]) and Mr Hodgson ([40]) that during the visit to Western Australia they travelled to Scott River to visit a customer of Kool Temp who had a Pivot.
It was not put to Mr Hodgson in cross-examination that this trip occurred over 1 and 2 March 2016, with an overnight stay, as Mr Lucassen later said in evidence. Scott River is near Augusta.[104] Mr Lucassen's evidence to the effect that the trip down and back took around four hours each way was not challenged in cross‑examination.[105] Nor as a matter of common sense (or judicial experience) could it be. Nor was Mr Lucassen cross-examined on the invoice he produced late in the day ([62]).
[104] ts 132 (Lucassen).
[105] ts 140, ts 141, ts 169 - ts 170 (Lucassen).
Mr McKay did not have an independent recollection of the date on which the meeting at Aqua Pump occurred, relying on the entry in Mr Hodgson's diary ([22]). Likewise, Mr Hodgson's recollection appears to be based on his diary note rather than any independent recollection ([43]). And, as set out above, he was heavily led on the topic, in a manner inconsistent with his other evidence. I return to the diary note shortly.
I add to this the purpose of the trip to Scott River. It appears that, and I accept, that Mr Lucassen and Mr Hodgson each had a slightly different purpose for the trip to Scott River. For Mr Lucassen it was to fix a pivot system. For Mr Hodgson it was to speak to a mutual customer of Valmont and Mr Lucassen who had a pivot system and, perhaps secondarily, to help Mr Lucassen fix the pivot system with the transducer he brought over with him ([84]). This makes perfect sense from their different perspectives. Mr Hodgson could not recall whether Mr Lucassen picked up some parts whilst at Aqua Pump's premises.[106] Mr Bennet's evidence supports that of Mr Lucassen that he purchased some parts to put in a pivot system at Scott River. So I accept this occurred, and also find that Mr Lucassen did some repair work whilst at Scott River. Given my finding that Mr Hodgson brought a transducer with him for use in the repairs at Scott River, and given Mr Hodgson's experience in irrigation, I also find that it is more likely than not he assisted Mr Lucassen with the repair work. Given the time taken to travel there and back, and do the work, Mr Lucassen's chronology at [68] is the only way the trip could have occurred within the constraints of Mr Hodgson's flights. I add to this the evidence of Mr Hodgson at [41] which also suggests the meeting at Aqua Pump was on the morning after he arrived, being 1 March 2016. This evidence was not tainted by leading and was, in my view, the more accurate recollection. I do not accept Mr Hodgson's evidence that the meeting was on 2 March 2016. This evidence was tainted by being adduced through leading questions and is inconsistent with the remainder of the chronology. Mr Hodgson's evidence of going to the airport straight after the meeting at Aqua Pump's office is inconsistent with the email he sent to Mr Lucassen with this travel plans. As already noted ([85]), I regard this part of his recollection as being unreliable as well. Rather, I find that the trip occurred as Mr Lucassen described, and that the meeting at Aqua Pump's office in Midvale was on 1 March 2016.
[106] ts 120 (Hodgson).
This finding does not necessarily call into question Mr Hodgson's evidence that he made the notes on the same day as the diary entry, being 2 March 2016;[107] this accords with common sense. However, the finding does call into question Mr Hodgson's evidence that he made the notes prior to the meeting at Aqua Pump as a reminder of matters he wanted to question the parties about ([43]). In cross‑examination, Mr Hodgson stressed that he had a 'full recollection' as he had to go back and report to Mr Curtis.[108] In the context, I find that it is more likely than not that Mr Hodgson made the diary notes on 2 March 2016 as a note of the matters he would report back to Mr Curtis.
[107] ts 107 (Hodgson).
[108] ts 121 (Hodgson).
Turning to what occurred on 1 March 2016, I accept the evidence of Mr Bennett that on the arrival of Mr Lucassen and Mr Hodgson, they had a meeting in Mr McKay's office and that the door was closed. This is consistent with the evidence of Mr McKay ([24]) and Mr Hodgson ([44]). I regard Mr Lucassen's recollection to the contrary as being unreliable ([64], [66]).
On the other hand, I also accept the evidence of Mr Bennett that they were not in the office for any great period of time. This is consistent with the evidence of Mr Lucassen as to duration of the time he and Mr Hodgson were at Aqua Pump's premises ([63]). It is inconsistent with the recollection of Mr McKay that the meeting lasted about two hours ([28]) and that of Mr Hodgson that the meeting lasted of a couple of hours ([45]). I regard their recollections in this regard as being unreliable. I find that the meeting was a short meeting. This is consistent with the plan of Mr Lucassen and Mr Hodgson to travel to Scott River immediately afterwards.
This then takes the analysis to the purpose of the meeting. It is common ground between Mr Lucassen ([61]) and Mr Hodgson ([39]) that on the evening the latter arrived in Perth there was a discussion as to the relationship between Kool Temp and Aqua Pump (though a disagreement as to what was discussed). Mr Hodgson knew that Aqua Pump was at least a business associate of Kool Temp (as he wrote in his diary note - Annexure A), on his evidence a partnership ([39]).[109] This, in the context of the facts I have found so far, leads me to conclude that it is more likely than not that the purpose of the meeting was for the three participants to have a discussion about the relationship between Aqua Pump and Kool Temp in the context of the latter's then pending application to become a Valmont dealer. This explains why the meeting took place behind closed doors (something which Mr Bennett commented normally did not happen);[110] a routine sales transaction would not have required this level of privacy.
[109] ts 119 - ts 129 (Hodgson).
[110] ts 209 (Bennett).
As to what was discussed at the meeting, it is common ground ([26], [44], [65]), and I find that there was a discussion on the occasion of Mr Hodgson's visit to the effect that the focus of Kool Temp's application to become a Valmont dealer, on both sides, was to operate out of Broome, and that Mr Lucassen was in the process of securing land for business premises there.
As to Mr Hodgson's evidence of what else was discussed at the meeting, in cross-examination Mr Hodgson accepted that the description of Aqua Pump as a 'business associate' in his diary entry document was 'my own personal word, not his word' (Annexure A). But he went on to say that his understanding was that they were in partnership. He disagreed with counsel for Kool Temp that he was never told they were in partnership.[111] I regard Mr Hodgson's evidence that he was told it was a partnership as an embellishment; if he was told it was a partnership, in particular one involving profit sharing, he would have written that in the diary note, and he did not. This inconsistent record again calls into serious question the reliability of his recollection more generally of 1 March 2016 meeting. Adding this to the concerns identified above ([85], [89] and [92]), I do not accept that Mr Hodgson had a reliable collection generally as to what was discussed at the 1 March 2016 meeting, and so reject his evidence to the extent that it is not supported by other evidence which I accept.
[111] ts 119 (Hodgson).
That leaves the evidence of Mr McKay and Mr Lucassen as to what was discussed. Given the weight placed on the subsequent events by counsel for Aqua Pump, it is necessary to return to this issue after having set out the evidence as to those events.
It is, however, convenient to summarise the factual findings I have made so far, adding in some other evidence that was not challenged:
(a)for several years prior to March 2016, Mr Lucassen had been a customer of Aqua Pump, purchasing products from it; he had also done some minor subcontracting work for Aqua Pump from time to time ([77], [78]);
(b)at around the beginning of 2015 there were conversations between Mr McKay and Mr Lucassen about their two businesses joining forces to service the market for the installation and upgrading of pivot sprinklers ([79]);
(c)the conversations in (b) led to the publication of an advertorial in The Farmers Weekly, which was placed with the knowledge and consent of Mr Lucassen ([79]);
(d)on 22 February 2016 Mr Lucassen signed a Valmont Dealership Agreement, returning it to Mr Curtis once he had signed it ([80]);
(e)Mr Hodgson saw this agreement before coming to Western Australia ([80]);
(f)in response, Mr Hodgson came to Western Australia to visit Mr Lucassen for the purpose of assessing Mr Lucassen's suitability to be a Valmont dealer, including to visit a mutual customer of Valmont and Kool Temp at Scott River, and to do some repair work for that customer ([82] ‑ [84]);
(g)Mr Hodgson arrived in Perth on Monday 29 February at lunch time, and was collected from the airport by Mr Lucassen, with whom he stayed ([81], [85]);
(h)Mr Hodgson brought with him a transducer which would be used in the repair work at Scott River ([82], [84]);
(i)Mr Hodgson and Mr Lucassen had a conversation about his Valmont dealership application on the evening of his arrival, this conversation included the nature of the relationship between Aqua Pump and Kool Temp ([93]);
(j)on the morning of 1 March 2019, Mr Lucassen took Mr Hodgson to the premises of Aqua Pump in Midvale [89]:
(k)on their arrival, they had a meeting with Mr McKay in his office, behind a closed door ([91]);
(l)the meeting in Mr McKay's office was a short meeting ([92]);
(m)the purpose of the meeting was for the three participants to have a discussion about the relationship between Aqua Pump and Kool Temp in the context of the latter's then pending application to become a Valmont dealer ([93]);
(n)at the meeting there was a discussion to the effect that the focus of Kool Temp's application to become a Valmont dealer, on both sides was to operate out of Broome, and that Mr Lucassen was in the process of securing land for business premises there ([94]);
(o)at some point whilst at the Aqua Pump shop, Mr Lucassen purchased some parts for the repair work to be done at Scott River ([89]);
(p)after leaving Aqua Pump's shop, Mr Lucassen and Mr Hodgson travelled to Scott River, a journey of about four hours ([89]);
(q)Mr Lucassen's purpose for the trip to Scott River was to fix a pivot system, using the parts he had purchased from Aqua Pump and the transducer which Mr Hodgson had brought over ([89]);
(r)Mr Lucassen did some repair work whilst at Scott River, assisted by Mr Hodgson ([89]);
(s)the two of them stayed overnight at Scott River, did some more work the following morning (2 March 2016) before returning to Perth, arriving around 6.30 pm ([89]);
(t)on the morning of 3 March 2016, at around 6.00 am Mr Lucassen took Mr Hodgson to the airport, and he flew out at 8.00 am ([81], [85]);
(u)on returning over east, Mr Hodgson had a discussion with Mr Curtis and Mr Campbell, reporting on the findings of his visit ([49]);
(v)on 8 March 2016 Mr Curtis advised Mr Lucassen that, effective that date, he would become a Valley (Valmont) dealer ([70]);
(w)the property deal in Broome which Mr Lucassen was relying on to fund the Valmont shop subsequently fell through ([71]);
(x)Mr Lucassen rang Mr Curtis to tell him the fact in the preceding paragraph, in response to which Mr Curtis told him to leave the dealership to 'idle' until he was ready to go ([73]); and
(y)in the meantime, Kool Temp was provided with an account with Valmont which allowed him to deal directly with Valmont ([74]).[112]
[112] ts 173 - ts 174 (Lucassen); ts 112 - ts 113 (Hodgson).
I return later in these reasons to make more detailed findings as to what was discussed at the 1 March 2016 meeting (see Part 8.3).
Events subsequent to the beginning of March 2016
In general terms, the events subsequent to the beginning of March 2016 were not in issue; where there is an issue, I have identified it. I find as follows.
The fact that Kool Temp had been given an account by Valmont was something that Mr McKay was aware of.[113]
[113] ts 35 (McKay).
Aqua Pump began promoting Valley products in its Midvale premises. There was a Valley sign under the front counter. There were Valley brochures on the front counter. There was a display screen which played a video about Valley products.[114] Valley products were promoted on Aqua Pump's website.[115]
[114] Exhibit 3.
[115] TB 165; ts 35 - ts 36. Mr McKay's evidence in this regard was not challenged in cross-examination.
At some point, Mr Lucassen took some marketing materials from Aqua Pump's shop to give to his clients. He denied doing so under any arrangement with Mr McKay. Rather, he said he would be happy to get the subcontracting work.[116]
[116] ts 175 (Lucassen).
In the period after March 2016, Mr Lucassen continued to have dealings with Aqua Pump on matters unconnected with Pivots. For example, on 4 April 2016, Mr McKay sent Mr Lucassen an email relating to the supply of a solar pump for installation in Derby.[117]
[117] ts 35 (McKay); ts 142 (Lucassen); TB 62.
In July 2016, Mr Lucassen installed a solar pump for a Lindsay Honey as a subcontractor to Aqua Pump. There was a dispute about this work which is not relevant for present purposes.[118]
[118] TB 65 - TB 66; ts 142, ts 176 - ts 177 (Lucassen).
In around August 2016, Mr McKay and Mr Lucassen went to a property in Brookton belonging to a Mr Hart and provided a quote for a Pivot, which was not successful.[119]
[119] TB 67 - TB 68; ts 37 - ts 38 (McKay); ts 142 - ts 143, ts 175 (Lucassen).
In around October 2019, Mr McKay sent Mrs Lucassen an email about the supply and installation of a Pivot for a 100 acre Pivot for a property in Eneabba. This was for a Mr Smoothy. It is apparent from this email chain that Mr McKay had been in email communication with representatives of Valmont about this quotation. The email reads:[120]
Hi Guys
Please see attached quote for a Valley 7 span pivot poly lined & galv. Option. What price do you recon delivered to Eneaba? With a 30 GM% I make it $194000 + gst & $17850 + install. I recon 30 GM% is too high and he will go Upton or T&L.
Please let me know what price to submit to the customer. I need to send this tomorrow
Thanks
Regards
Bruce
Mr McKay gave evidence that Mr Lucassen phoned him in response and said that 30% was already below the price he wanted to sell it for, so they went with that price and did not get this sale.[121] Mr Lucassen said he had never seen this email. He did, however, prepare a handwritten quotation for this project, which he gave to Mr McKay (Smoothy Quote).[122]
[120] Exhibit 2; ts 38 - ts 39 (McKay).
[121] ts 39 - ts 40 (McKay).
[122] TB 164; ts 177 ‑ ts 178, ts 204 (Lucassen).
In 2018, Mr Lucassen, his wife and their son attended the Dowerin Field Day. The Dowerin Field Day is an agricultural-based event where suppliers like Aqua Pump go and display products that they sell and service. Aqua Pump had a display tent at the Dowerin Field Day in 2018 as it had done in the past.[123] That much is not in dispute; what is in dispute is the reason for their attendance.
[123] TB 166 - TB 168; ts 41 - ts 42 (McKay)
Mr Lucassen gave evidence that he only attended the Dowerin Field Day in 2018 to install a solar pump, which he billed Aqua Pump for. He and his family were only there for half an hour or so. He did not see any promotional material for Valley products.[124]
[124] ts 179 - ts 181 (Lucassen).
Mr McKay gave evidence that Aqua Pump promoted Valley products at the 2016, 2017, 2018 and 2019 Dowerin Field Days. This included a screen with a rolling video display of Valley products.[125]
[125] ts 41 - ts 44 (McKay); Exhibit 3.
Mr McKay's evidence about what Aqua Pump was doing to promote Pivots and Valley products more generally at the Dowerin Field Day was not really challenged in cross-examination.[126] He produced the video footage that was played.[127] The fact that he had this video in this possession in itself tends to corroborate his evidence that he was displaying it.
[126] ts 94 (McKay).
[127] Exhibit 3.
Mr McKay did not give evidence to the effect that Mr Lucassen was at the Dowerin Field Day in 2018 for the purpose of promoting Valley products; merely that he was there.[128] However, Mr Lucassen's version of events was not put to him in cross-examination. There is in evidence a photograph of Mr Lucassen's son outside the Aqua Pump's tent, next to a solar pump.[129] I infer that this is solar pump which Mr Lucassen installed, and accept his evidence as to why he attended the 2018 Dowerin Field Day. Given that Mr McKay's evidence as to what he did to promote Valley products at the Dowerin Field Days 2016, 2017, 2018 and 2019 was not challenged in cross-examination, I do not accept Mr Lucassen's evidence that this promotion did not occur in 2018. I accept Mr McKay's evidence that Aqua Pump promoted Valley products at the 2018 Dowerin Field Day, as he had done at this event in other years. The promotion included a screen with a rolling video display of Valley products.
[128] ts 41 (McKay).
[129] TB 166.
Mr McKay also gave evidence that he permitted Mr Lucassen to have a meeting with a new customer on 16 June 2016 using his office.[130] Mr Lucassen denied ever doing so.[131]
[130] ts 45; TB 177.
[131] ts 181 (Lucassen).
Mr McKay gave evidence that he permitted Mr Lucassen to have a meeting with a Martin Porter of 'Valley Australia' on 29 November 2017 using his office.[132] Mr Lucassen recalled doing so for five minutes, but in the context that he was doing some work 'at Bruce's'.[133]
[132] ts 45 (McKay); TB 175.
[133] ts 181 - ts 182 (Lucassen).
On 16 July 2019, Ben Osborne of Valmont sent an email to Mr Lucassen asking him for this business address for the website. On 18 July 2019, Mr Lucassen, through his wife it appears, replied:[134]
[134] TB 106; ts 153, ts 183 - ts 184 (Lucassen).
Good Morning Ben
Our details are
Kooltemp Refrigeration and Irrigation Services
XXXX Needham Road, Wooroloo, W.A. 6558
M: XXXX XXX 721
ABN: XXXXX XXX194
We are partners with Aquapump and Irrigation Specialist, using Grundfos/ Franklin solar pumping systems.
Please contact me if you need any more information.
Best Regards
Mr Lucassen was asked about this in cross-examination, which I will return to later.
Mr McKay gave evidence that on 3 October 2019 he had a meeting in his office with Ben Pevreall, the vice president for Southeast Asia for Valmont. At the meeting they discussed the 'Kool Temp Aqua Pump Valley Account', in particular the lack of sales and what could be done to increase the sales.[135] Mr McKay's evidence was not challenged in cross-examination, and is consistent with the documentary records, so I accept it and so find.
[135] ts 46 - ts 47; TB 115.
At some later stage, Mr Lucassen took Mr Hodgson to the north of the State to see some Aboriginal communities that were clients of his.[136]
[136] ts 115, ts 124 (Hodgson); ts 175 (Lucassen).
Yanchep transaction
5.1 Overview
The Yanchep Transaction is relevant for two purposes. From Aqua Pump's perspective, is a part of the conduct from which it invites the court to infer that the Pleaded Agreement was made. From Kool Temp's perspective, it is the subject of the counterclaim. As mentioned, at the commencement of the trial Aqua Pump admitted the counterclaim, but maintained that it could be set off against any damages it was found liable to pay. Because of the first purpose it is nonetheless necessary to examine the circumstances of the Yanchep Transaction.
5.2 Facts
The facts in relation to the Yanchep Transaction are largely not in dispute, and are set out below. Where there is a dispute, I have noted this by referring to the evidence given by the relevant witness.
Yanchep was a long-standing client of Aqua Pump.[137]
[137] ts 47 (McKay).
Mr McKay gave evidence that he could have purchased the Pivot from any Valley (Valmont) dealer in Western Australia or over east. However, he chose to purchase it from Mr Lucassen as 'that was our agreement'.[138] Again, he says pursuant to the Pleaded Agreement, he asked Mr Lucassen to install the Pivot for Yanchep.[139]
[138] ts 48 (McKay).
[139] ts 48 (McKay).
In the middle to end of 2018 there were discussions between Mr McKay and representatives of Yanchep about the installation of a Pivot for Yanchep. This included a site visit with representatives of Yanchep to another farm which had a Pivot. Mr McKay and Mr Lucassen visited the Yanchep site and had discussions between about the job.[140]
[140] TB 84; ts 59, ts 81 - ts 82, ts 85 (McKay); ts 150 (Lucassen).
It is apparent from the materials before the court that Mr McKay had email communications with Mr Hodgson, who was then working with another supplier of pivot sprinklers, about supplying a pivot system for Yanchep.[141] Counsel for Kool Temp sought to portray this as inconsistent with the Pleaded Agreement. The difficultly with that contention is that it is evident from the same email chain that it was initially addressed to both Mr McKay and Mr Lucassen ('Hi Bruce and Glen'),[142] though Mr Lucassen says he did not recall receiving the email addressed to him.[143] I do not regard this evidence of being of any consequence to the determination of the facts in issue.
[141] TB 86 - TB 87; ts 81 - ts 83 (McKay).
[142] TB 86.
[143] ts 150 - ts 153 (Lucassen).
On 11 July 2019, Yanchep sent Mr McKay an email containing a request for a quotation for a 20 hectare Pivot.[144] Mr McKay forwarded this email to Mr Lucassen on 15 July 2019, adding the following:[145]
[144] TB 90 - TB 91; ts 60, ts 85 (McKay).
[145] TB 90 ‑ TB 91; ts 60, ts 85 - ts 86 (McKay); ts 153 (Lucassen).
Hi Guys
Please see attached RFQ from Yanchep Sun City. Can you please quote to me the following:
1x Stainless steel head works 150mm. Pipe only, we will supply valves, meter etc
Trench, weld & lay pipe. Probably 200mm poly
1x Center Pivot as per RFQ
All electrical required for bore & pivot
Please itemise the quote and supply all drawings
Thanks
Regards
Bruce
In response Mr Lucassen prepared a handwritten quote which he gave to Mr McKay. A copy is at Annexure B. The initial quote is the writing in pen (Initial Yanchep Quote).[146]
[146] Exhibit 4; ts 59 (McKay); ts 153 - ts 154 (Lucassen).
The Initial Yanchep Quote was used by Mr McKay to provide an initial quote to Yanchep for the whole of the job.[147] A copy of the initial quote from Aqua Pump to Yanchep is not in evidence.
[147] ts 59 (McKay).
Mr McKay then entered into negotiations with Yanchep. The outcome of those negotiations was that the initial quote provided by Aqua Pump was not acceptable. Mr McKay went back to Mr Lucassen and asked him to revise the Initial Yanchep Quote. He did so, amending it in pencil, which is apparent from Annexure B (which I will refer to as the 'Revised Yanchep Quote'). He gave this to Mr McKay. Mr Lucassen was able to identify savings of $13,000.[148]
[148] ts 61, ts 85 - ts 87, ts 94 (McKay); ts 153 - ts 156 (Lucassen).
Mr Lucassen gave evidence that the reduction of $13,000 was on the basis that he would be carrying out all the work described in the quote other than the supply of the pump.[149]
[149] ts 156 (Lucassen).
Mr McKay then presented a revised total quote to Yanchep, which was accepted.[150]
[150] ts 88 (McKay).
Mr McKay described the job as 'his job' on which Mr Lucassen was subcontracting to do services on.[151]
[151] ts 89 (McKay).
Mr McKay gave evidence that Mr Hodgson had advised both Kool Temp and Aqua Pump on this job, something apparent from the emails in evidence.[152] He went on to say that Mr Hodgson was supposed to have been paid by Kool Temp, but was not.[153] This, he was told by Mr Lucassen, was an amount of $13,000.[154] This issue was not taken up with Mr Lucassen or Mr Hodgson, either in examination‑in‑chief or cross-examination. I again do not regard this evidence of being of any consequence to the determination of the facts in issue.
[152] TB 97; ts 88 - ts 89 (McKay).
[153] ts 92 (McKay).
[154] ts 92 - ts 93 (McKay); ts 153 - ts 154 (Lucassen).
On 13 September 2019, Yanchep provided a purchase order to Aqua Pump for the supply, installation and commissioning of a Pivot. A copy of this purchase order is at Annexure C.[155]
[155] TB 99; ts 47 (McKay).
Aqua Pump then invoiced Yanchep for the job as a whole in progress payments.[156] Specifically after it had received the purchase order, on 13 September 2019, Aqua Pump issued an invoice to Yanchep for the supply of the Pivot in the amount of $110,000 plus GST, totalling $121,000. On 14 October 2019, Aqua Pump issued Yanchep with a further invoice in relation to the supply of the Pivot for a foreign currency variation, in the amount of $8,847 plus GST, totalling $9,731.70.[157] Yanchep paid Aqua Pump a total of $218,050 (including GST) for the supply, installation and commissioning of the Pivot.[158]
[156] ts 48 (McKay).
[157] TB 100, TB 101; ts 57 - ts 58 (McKay)
[158] ts 61 (McKay)
Aqua Pump then proceeded to order the Pivot from Valmont. There is a chain of emails at the end of September 2019 between Mr McKay and representatives of Valmont, and in part Mr Lucassen, to the following effect:[159]
[159] TB 103 - TB 109.
(a)on 20 September 2019 Valmont emailed both Mr McKay and Mr Lucassen about the sale of the Pivot;
(b)on 23 September 2019 there was a further email to both Mr McKay and Mr Lucassen requesting them to confirm their details;
(c)in response, Mr McKay, in an email not copied to Mr Lucassen, said:
Hi Ben
Thanks for the email. From my perspective I need an invoice in Aqua Pump & Irrigations name as I will be paying for the pivot. Glenn is away on leave & difficult to contact at present. Please advise how you need it to work to get the order happening. I have the funds here to pay deposit or whatever is required by Valmont to secure the order.
My details are …
(d)in response, Valmont advised that it could only invoice to the Kool Temp account, copying the email at [114];
(e)in response, Mr McKay emailed saying that he understood that only Kool Temp could be invoiced, and has some queries; and
(f)there were further emails between Mr McKay and Valmont discussing the mechanics of the sale.
Mr Lucassen gave evidence that he had never seen these emails.[160]
[160] ts 156 - ts 157 (Lucassen).
In the end, the tax invoice from Valmont for the Pivot was issued to Kool Temp, in the amount of US$64,515.30.[161]
[161] TB 110; ts 57 (McKay)
Mr McKay gave evidence that Mr Lucassen knew that he was ordering directly from Valmont.[162] It was put to Mr McKay in cross‑examination that what he did was to go behind Mr Lucassen's back, do the deal with Valmont directly and cut him out of what otherwise would be his role as the Valmont dealer. Mr McKay denied this.[163] Likewise, it was put to Mr Lucassen in cross-examination that he consented to Mr McKay purchasing a Pivot from Valmont, because this was done pursuant to the profit-sharing agreement, something which Mr Lucassen disagreed with.[164]
[162] ts 89 - ts 90 (McKay).
[163] ts 90 (McKay).
[164] ts 186 (Lucassen).
Mr Lucassen gave evidence that he was up north in the second part of September 2019, something which Mr McKay appears to have been aware of.[165] He did not become aware that Mr McKay had been dealing directly with Valmont until he returned from that trip.[166] He was not very happy to find that Mr McKay had been dealing directly with Valmont on the Kool Temp account. He raised the matter with Mr McKay in a conversation in early October 2019 at the front of the Midvale shop. It is sufficient for present purposes to say that Mr Lucassen expressed his displeasure in strong terms. In response, Mr McKay offered to give him 50% of the profit on the supply of the Pivot. Mr Lucassen was not happy, but made what appears to have been a pragmatic, commercial, decision to accept this and proceed to do the job of installing the Pivot.[167]
[165] ts 150, ts 156, ts 185 - ts 186 (Lucassen); TB 107.
[166] ts 156 (Lucassen).
[167] ts 156 - ts 157, ts 186 - ts 188 (Lucassen).
Aqua Pump supplied Yanchep with a Pivot in accordance with this purchase order.[168]
[168] ts 48 (McKay).
The Pivot was sourced from Valmont using the account of Kool Temp.[169]
[169] TB 110; ts 48 (McKay).
On 26 September 2019 Aqua Pump paid Valmont the sum of AUD$99,059.24 by direct transfer.[170]
[170] TB 114; ts 57 (McKay).
In November 2019 Aqua Pump also paid an amount of $2,505.25 (including GST) in relation to the transport of the Pivot.[171]
[171] TB 111 - TB 112; ts 58 (McKay).
Aqua Pump then subcontracted with Mr Lucassen to do the installation. Specifically, it issued a purchase order dated 1 October 2019 totalling $50,105 (including GST). The works in the purchase order mirror the works to be done by Mr Lucassen as set out in the Revised Yanchep Quote. A copy of the purchase order is at Annexure D.[172]
[172] TB 116, TB 117, TB 174; ts 49, ts 59, ts 93 (McKay); ts 158 (Lucassen).
The Pivot was installed by Mr Lucassen in late 2019.[173] He issued invoices along the way totalling in the vicinity of the $50,105 in the purchase order (the appears to have been some minor variations). Of those, $16,590.50 remains owing, and is the subject of the counterclaim.[174]
[173] ts 48 (McKay).
[174] D&C, pars 14, 15; TB 117 - TB 123; ts 61 (McKay); ts 158 - ts 159 (Lucassen).
On 19 February 2020 at 7.56 am, Kool Temp (Glenn and Nat) sent Ian McKay, copied to Mr McKay, an email in the terms which follow (Ian McKay is Mr McKay's brother who does his accounts):
Hi Ian
Are you able to pay the outstanding accounts for Kooltemp for YSC project PO 6520 and extras. This is our Final Notice. All the accounts are outstanding and are due to be paid.
We are demobilising our machinery for the YSC site today as requested.
Kooltemp is no longer contracting to Aquapumpa as you requested.
The agreement with Bruce for the last 5.5 years was when the client pays we get paid.
As Attached PO 6520 al work is completed and commissioning sheet signed by Masaki to say it is completed.
We will be forwarding you a invoice for 50% of the profit on the Pivot machine as agreed with Bruce originally.
Regards
Glenn and Nat
Mr Lucassen was cross-examined on this email:[175]
Yes, certainly. And just the third last line of - of this email reads:
'The agreement with Bruce for the last 5.5 years was when the client pays we get paid'.
And I suggest to you what you meant by that is you had an agreement with Bruce five and a half years before you sent this email and under that agreement when a client purchased a Valmont centre pivot from either of you they were required to immediately remit 50 per cent of the profit of that sale to the other party?---Sorry, mate, not at all.
Mm?---Right. Not at all.
But you agree with - - -?---Right. The agreement was made as a subcontractor that when we do the job for the client, the client pays, we get paid.
…
And when you wrote this email on 19 February 2020 to Mr McKay and you said that you would be forwarding an invoice for 50 per cent of the profit from the Yanchep sale and you said that was agreed with Bruce originally, what you meant by agreed with Bruce originally was you'd agreed with Bruce originally on 2 March 2016 to share in pivot sales?---No, not at all.
[175] ts 189 - ts 191 (Lucassen).
On 19 February 2020, Mr McKay sent an email in the following terms to Ben Osborne of Valmont, copied to Mr Pevreall, though not to Kool Temp:[176]
[176] TB 149; ts 51 (McKay).
Dear Ben
Can you please copy your manager in on this email as I don't have his address:
Please be advised, effectively immediately, Aqua Pump and Irrigation have terminated the Valley Irrigation dealership operational, technical and logistics support relationship with Kooltemp Refrigeration.
Aqua Pump and Irrigation will no longer provide Kooltemp with showroom, warehouse or workshop facilities. Furthermore, any technical or product support for pump services or supply and associated irrigation or related products will no longer be provided.
Kooltemp Refrigeration has been directed to discontinue any reference, direct or otherwise, to Aqua Pump and Irrigation logistical, technical or product support.
I have contacted Ben Pevreall, who visited our office mid 2019, and requested his direction on the process for Aqua Pump and Irrigation's to lodge a Valley Irrigation Dealer application.
I understand Aqua Pump and Irrigation have a number of quotes outstanding, issued under the Kooltemp Refrigeration business name. As Aqua Pump and Irrigation, at this stage, does not have a dealership I need your direction on how these quotes can be honoured in Aqua Pumps and Irrigation's name, independent of the previous arrangement. Furthermore, if they cannot be transacted in or business name please advise in a timely manner so that I can offer my customers an alternative solution.
I look forward to confirmation of the Termination Notice and the treatment of outstanding quotes.
Regards
Bruce McKay
Mr McKay gave evidence that he first found out that Mr Lucassen had sold other Pivots in around late November or early December 2019 when Mr Lucassen was installing the Pivot for Yanchep. He was not impressed, feeling that Mr Lucassen had installed a Pivot behind his back. His response was not to pay Mr Lucassen his 50% for the Pivot for the Yanchep Transaction, which he considered he was otherwise under an obligation to pay.[177]
[177] ts 49 - ts 50 (McKay).
The action was commenced by writ filed 16 March 2021.
5.3 Determination
As to the first component of the counterclaim, although the counterclaim was pleaded as a breach of contract, it is in substance a simple debt recovery claim. I am satisfied on the balance of probabilities that:
(a)between 29 November 2019 and 27 December 2019 Kool Temp performed work for Aqua Pump under a subcontract arrangement and rendered invoices;
(b)most of the amounts invoiced were paid by Aqua Pump, but $16,590.50 was not; and
(c)Aqua Pump remains indebted to Kool Temp in the amount of $16,590.50, and it is entitled to judgment on the counterclaim in this amount.
As to the second component of the counterclaim, it was common ground that Kool Temp was entitled to judgment on the counterclaim for 50% of the net profits on the sale of the Pivot, but for different reasons:
(a)Aqua Pump contending that it was pursuant to the Pleaded Agreement; and
(b)Koop Temps saying that it was pursuant to a standalone agreement.
I return to which of these two contentions I accept later ([193]).
However, it was not in issue that, regardless of the basis, the amount of this profit was $9,630.77, calculated as follows:[178]
[178] Plaintiff's Schedule of Net Sale Proceeds for Pivot Sales, dated 20 April 2022 (Plaintiff's Schedule); ts 226.
Sale price $130,731.70 Pivot ($A) $121,000.00 FX variation $ 9,731.70 Less cost $111,470.16 Pivot $108,965.16 Transport $ 2,205.00 Net profit $ 19,261.54 50% $ 9,630.77
Belendaine Transaction
Aqua Pump claims that on or around 2 March 2017 Kool Temp sold a Pivot to Belendaine Pty Ltd as trustee for the KPSJ Trust (Belendaine) and failed to remit 50% of the net profit on the sale of the Pivot in breach of the Alleged Agreement.[179] It says that the net profit is to be calculated by subtracting from the amount paid by Belendaine ($178,672) the cost of the pivot system and the transport costs ($104,669), giving a net profit of $74,003, half of which is $37,001.50 (all amounts including GST).[180]
[179] ASOC, pars 11 and 12.
[180] Plaintiff's Schedule.
Kool Temp does not take issue with the sale having taken place. It says that Aqua Pump is not entitled to any of the net sales proceeds claimed as it denies the Pleaded Agreement. If it is liable to pay damages by way of half the net profit, those damages must be calculated by deducting from the amount paid by Belendaine not only the cost of the Pivot and the transport costs, but also the costs incurred by Kool Temp in installing the Pivot.[181]
[181] Defendant's Schedule of Net Sale Proceeds for Pivot Sales, filed 20 April 2022 (Defendant's Schedule).
It is not in issue that Mr Lucassen did not tell Mr McKay about the Belendaine Transaction; he says he did not have to.[182]
[182] ts 191 (Lucassen).
I will return to the issue of whether the Belendaine Transaction was in breach of any agreement later. However, it is convenient to deal with the facts in relation to the Belendaine Transaction at this stage as they go to the issue of whether the Pleaded Agreement was in fact made. The following facts are not in issue (all $AUD amounts including GST):
(a)the Pivot the subject of the Belendaine Transaction was installed at a property in Gelorup, near Bunbury;[183]
(b)the Pivot was purchased by Kool Temp from Valmont for a price of US$78,943.70, which ended up being AUD$94,202.10;[184]
(c)Kool Temp paid transport of $10,466.90 for the Pivot;[185]
(d)Kool Temp invoiced Belendaine $178,672.80 for the supply, installation and commissioning of the Pivot (Belendaine Invoice) - its invoice is Annexure E;[186] and
(e)Belendaine paid Kool Temp the invoiced amount.[187]
[183] ts 143 (Lucassen).
[184] TB 73 ‑ TB 74, TB 77 - TB 79; ts 143 - ts 145, ts 149 (Lucassen).
[185] TB 74, TB 78; ts 146 (Lucassen).
[186] TB 76; ts 145 - ts 146 (Lucassen).
[187] TB 70 - TB 72; ts 148 (Lucassen).
Mr Lucassen gave evidence that on a draft of the Belendaine Invoice (which is in evidence) he made some handwritten notations in which he estimated his costs (Belendaine Draft Invoice). Those notations are:[188]
[188] TB 75; ts 193 - ts 197 (Lucassen).
Transport $11,000
Installation $15,000
Hire of machine $2,500
Adapt stainless pipework $3,200
Electrical $3,400
Food/Travel $2,800$37,900
It is apparent that the transport costs were in fact $10,466.90, though Mr Lucassen clarified that his note included his own fuel costs.[189]
[189] ts 145 - ts 147; ts 193 - ts 197 (Lucassen).
Counsel for Aqua Pump cross-examined Mr Lucassen on the handwritten figures on the Belendaine Draft Invoice, in effect suggesting that the handwritten figures were a later addition designed to reduce the profit on the Pivot for the purposes of this litigation. Mr Lucassen maintained his evidence that the handwritten figures were written at the time of preparing the invoice.[190]
[190] ts 192 - ts 197 (Lucassen).
There are two other documents which, in my view, support Mr Lucassen's evidence. The first is the Initial Yanchep Quote (Annexure B).[191] This document reflects very similar reasoning to that which is evident in the annotations at [156]. In particular, the cost of building the pivot system is expressed at $50 per metre, leading to a quote of $13,000 on the project, which was reduced to $11,500 in the Revised Yanchep Quote.
[191] TB 173; Exhibit 4.
The second is the Smoothy Quote.[192] Again, the cost of building the pivot system is expressed at $50 per metre, giving a price of $17,850 for a 357 metre system.
[192] TB 164.
On the Belendaine Draft Invoice, for a 357 m long Pivot, a rate of $50 per metre leads to a figure of $16,350, of the same order of magnitude as the $15,000 figure stated, noting the discount applied in the Revised Yanchep Quote.
There is another factor which supports the position of Mr Lucassen. It is clear that the cost paid by Kool Temp to Valmont for the pivot system by itself is AUD$94,202.10. What Belendaine contracted for, as is apparent from the text in the Belendaine Invoice, was a fully installed and commissioned pivot system. This involved additional works, works specified in general terms in the Belendaine Invoice and in more specific terms in the handwritten notations. It does not make commercial sense to describe the 'profit' on the Pivot to not include these amounts. Moreover, the position taken by Kool Temp is consistent with the manner in which Aqua Pump asserts that the 50% profit share be calculated for the Yanchep Transaction (see [151] above).
For these reasons, I accept Mr Lucassen's evidence that the notations in [156] represent his costs of installing and commissioning the Pivot for Belendaine. I am of the view that if there is an agreement in terms of the Pleaded Agreement, Kool Temp breached it by engaging in the Belendaine Transaction and the damages payable as calculated by Kool Temp. This is an amount of $22,206.90, calculated as follows (all including GST): [193]
[193] Defendant's Schedule.
Amount invoiced to Belendaine $178,672.80 Less the cost of the Pivot $104,669.00 Pivot incl transport ($A) $94,202.10 Transport
$10,466.90 Sub total $ 74,003.80 Less Kool Temp's costs $ 29,590 Pivot assembly $16,5000 Machine hire $ 2,750 Pipework $ 3,520 Electrical $ 3,740 Food/travel $ 3,080 Net profit $ 44,413.80 50% $ 22,206.90
Milyeanup Transaction
The issues between the parties as regards the Milyeanup Transaction are the same in concept as the Belendaine Transaction. It is not in issue that the Milyeanup Transaction took place and that Kool Temp failed to remit 50% of the net profit on the sale of the Pivot (or any amount at all) to Aqua Pump. Aqua Pump again says that the net profit is to be calculated by subtracting from the amount paid by Milyeanup the cost of the pivot system and the transport costs, giving an amount of $38,855.26, half of which is $19,427.63.[194] Kool Temp says that if it is liable to pay damages by way of half the net profit, those damages must be calculated by deducting from the amount paid by Milyeanup not only the cost of the Pivot and the transport costs, but also the costs incurred by Kool Temp in installing the Pivot.[195]
[194] Plaintiff's Schedule.
[195] Defendant's Schedule.
The following facts are not in issue (all $AUD amounts including GST):
(a)the Pivot was purchased by Kool Temp for the sum of US$93,013.68, which became AUD$140,400.74;[196]
(b)Kool Temp invoiced Milyeanup $206,316 for the supply, installation and commissioning of the Pivot (Milyeanup Invoice) - this invoice is Annexure F; [197] and
(c)Milyeanup paid Kool Temp the invoiced amount.[198]
[196] TB 124 - TB 126, ts 148 (Lucassen)
[197] Exhibit 6; ts 149, ts 202 (Lucassen).
[198] Evident from the invoice at TB 127.
Again, Mr Lucassen wrote the details of his costs on a draft of the Milyeanup Invoice, being:[199]
Electrical/wiring $3,450
Removing old sprinkler and disassemble $5,500
Install new 200mm pipes for new connections $3,150
Travel/food $3,500Hire of telehandler $2,500
[199] TB 127; ts 149 - ts 150, ts 201 - ts 203 (Lucassen).
For the same reasons I set out for the Belendaine Transaction, I accept the damages calculation contended for by Kool Temp. If there is an agreement in terms of the Pleaded Agreement, Kool Temp breached it by engaging in the Milyeanup Transaction and the damages payable are as calculated by Kool Temp. This is an amount of $9,472.63, calculated as follows (all including GST):[200]
[200] Defendant's Schedule.
Amount invoiced to Milyeanup
$206,316.00
Less the cost of the Pivot
$140,400.74
Sub total
$ 65,915.26
Less Kool Temp's costs
$ 46,970.00
Transport
$10,560
Removal old system
$ 6,050
Pivot assembly
$16,500
Hire telehandler
$ 2,750
Pipework
$ 3,465
Electrical
$ 3,795
Food/travel
$ 3,850
Net profit
$ 18,945.26
50%
$ 9,472.63
Was any agreement made at the meeting in early March 2016?
8.1 Pleaded positions
The Pleaded Agreement is pleaded in the following terms:[201]
[201] ASOC, par 8.
8.During the meeting, Mr McKay (on behalf of Aqua Pump) and Mr Lucassen concluded an oral agreement (Agreement), the express terms of which were as follows:
8.1Mr Lucassen would:
8.1.1hold an account with Valmont and, in due course, become an authorised Pivot dealership;
8.1.2commence selling Pivots in Western Australia;
8.1.3travel to regional locations and meet with potential Pivot buyers;
8.1.4install the Pivots (together with pumps and irrigation equipment supplied by Aqua Pump), and charge the customer for his installation services;
8.1.5build a workshop and showroom in Broome for the purposes of marketing and selling Pivots in the Kimberley region.
8.2Aqua Pump would:
8.2.1make the Midvale Unit the 'shop front' for Mr Lucassen's Pivot dealership;
8.2.2identify leads and refer them to Mr Lucassen;
8.2.3promote and market the Pivots, including by installing signs and marketing material inside and outside the Midvale Unit;
8.2.4attend field days when required;
8.2.5arrange for its staff to attend training and workshops when required;
8.2.6supply pumps and other irrigation equipment required for the installation of the Pivots;
8.2.7fit-out the Broome workshop and showroom, and have Mr McKay live at and work from the workshop and showroom.
8.3 Mr Lucassen would pay, from the sale of any Pivots, 50% of the net sale proceeds to Aqua Pump.
Kool Temp denies that the Pleaded Agreement was made.[202]
8.2 Relevant law
[202] D&C, par 8.
The question to be determined in the present action is whether at the meeting which I have found to be on 1 March 2016 in Mr McKay's office, the parties reached a bilateral agreement, and had the necessary intention, to immediately create a legally binding contractual relationship.[203] This must be determined objectively having regard to all relevant circumstances.[204] The relevant circumstances may include prior negotiations and subsequent conduct.[205] 'Intention' is used to describe 'what it is that would objectively be conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened'.[206] 'That intention is tested objectively by reference to what a reasonable observer would have concluded'.[207] It is 'not a search for the uncommunicated subjective motives or intentions of the parties'.[208] Direct expressions of intent by a party, made after the contract was arrived at, are not admissible.[209]
[203] La Mela v Franklexis Pty Ltd [2020] WASCA 83 [83] (judgment of the court) (La Mela).
[204] Ermogenous v Greek Orthodox Community of SA Inc(2002) 209 CLR 95, 105 - 106 (Gaudron, McHugh, Hayne & Callinan JJ) (Ermogenous); La Mela [84].
[205] Chou v AWAP SGT 26 Investment Ltd [No 3] [2018] WASC 383 [133] – [135] (Allanson J) (Chou).
[206] Ermogenous (105) - (106); La Mela [83]; Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd [2000] WASCA 27; (2000) 22 WAR 101 [25] - [26] (Ipp J with whom Pidgeon J agreed).
[207] La Mela [84].
[208] Ermogenous (105) - (106); La Mela [83]; Anaconda [25] - [26].
[209] Anaconda [25] - [26].
Once the court has determined that the requisite intention is present, it is then necessary to go on to consider whether the terms of the bargain, or at least its essential and critical terms, have been agreed upon or whether the intended contract is so incomplete or uncertain as to be void.[210]
[210] Anaconda [28]; Ermogenous (105); Thorby v Goldberg (1964) 112 CLR 597, 607 (Menzies J).
In the present action, the Pleaded Agreement is said to have been made entirely orally, as to which the following observations of Hammerschlag J in John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd instructively summarise the principles:[211]
Where a party seeks to rely upon spoken words as a foundation for a cause of action, including a cause of action based on a contract, the conversation must be proved to the reasonable satisfaction of the court which means that the court must feel an actual persuasion of its occurrence or its existence. Moreover, in the case of contract, the court must be persuaded that any consensus reached was capable of forming a binding contract and was intended by the parties to be legally binding. In the absence of some reliable contemporaneous record or other satisfactory corroboration, a party may face serious difficulties of proof. Such reasonable satisfaction is not a state of mind that is obtained or established independently of the nature and consequences of the fact or facts to be proved
[211] John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451 [94] (Hammerschlag J).
This quote was adopted by Allanson J in Chou v AWAP SGT 26 Investment Ltd [No 3].[212] His Honour also observed that the party who alleges that the oral agreement was made 'bears the onus of proving, and the court must be satisfied that there is sufficient evidence to support a positive finding that the agreement it alleges was made'.[213] And that it 'is trite law that for the court to find the agreement was made, the court 'must feel an actual persuasion of its occurrence or existence''.[214]
[212] Chou [133].
[213] Chou [132].
[214] Chou [132], citing Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336, 361 (Dixon J); Helton v Allen [1940] HCA 20; (1940) 63 CLR 691, 712 (Dixon, Evatt & McTiernan JJ)
Relevant to the present action, Allanson J also observed that:[215]
The court can have regard to the commercial context, and to both pre‑contractual … and post-contractual conduct … as relevant to determining whether an agreement has come into existence between the parties. Subsequent conduct may also be admissible as evidence where the terms of an oral contract are in issue. As Sakar J said in King v Adams:
'Ascertaining the existence and terms of an oral contract is a question of fact … Consideration of surrounding circumstances and post contractual conduct is permissible when the existence or terms of an oral contract are in issue …'
In having regard to conduct after the date of the alleged agreement, the court must of course consider the possibility that a party may regret and seek to walk away from its earlier agreement.
…
To enable an objective determination of whether there was a mutual intention to contract the terms [as] alleged …, it is necessary to consider the evidence of pre and post contract conduct.
8.3 Determination
[215] Chou [134] - [135], [138], citing King v Adams[2016] NSWSC 1798 [65] - [66], other references omitted.
There are two competing hypotheses as to what occurred at the 1 March 2016 meeting:
(a)there was an arrangement to continue the then existing working relationship between Aqua Pump and Kool Temp; or
(b)the parties went further and made a legal binding agreement, being the Pleaded Agreement.
The events prior to the 1 March 2016 meeting certainly support the fact that there was a working relationship between Aqua Pump and Kool Temp. That relationship had three parts: Mr Lucassen would purchase products from Aqua Pump, he would do minor subcontracting for Aqua Pump and the two businesses were working together to try to get work installing and repairing pivot sprinklers. Putting the oral evidence of Mr McKay to one side, the actual events events themselves do not necessarily support the conclusion that the Pleaded Agreement was made at the meeting on 1 March 2016; they are equally consistent with this working relationship continuing, albeit with Kool Temp having a Valmont account and desiring a Valmont dealership with a Broome shopfront.
The events after the 1 March 2016 meeting, support the conclusion that this working relationship continued. Mr Lucassen continued to purchase parts from Aqua Pump ([103]). He continued to do subcontract work for Aqua Pump ([104]). Significantly, the two businesses worked together to put in a quote for the installation of a Pivot for Mr Hart in August 2016 ([105]) and Mr Smoothy in October 2019 ([106]). And they worked together in relation to the Yanchep Transaction. This evidence is again equally referrable to either hypothesis.
I accept that Mr McKay promoted Valley (Valmont) products in the Aqua Pump shop [101] and at the Dowerin Field Days ([111]). Counsel for Aqua Pump in effect contended that common sense dictates that he would not have done so unless in performance of the Pleaded Agreement.[216] I agree to an extent; common sense would dictate that Mr McKay would not have promoted Valley products unless there was some commercial benefit to Aqua Pump. However, as the quotes and invoices from the Yanchep Transaction reflect, aside from any profit‑sharing agreement, Aqua Pump would obtain a significant commercial benefit from the supply and installation of a Pivot in the form of the supply of the required pumps (being an allowance of $60,000 for that job). So again, the evidence of Mr McKay promoting Valley (Valmont) products is equally referrable to either hypothesis.
[216] ts 237 - ts 238.
The Belendaine Transaction and the Milyeanup Transaction are also equally referrable to either hypothesis. On the one hand, these transactions can be seen as in breach of the Pleaded Agreement. On the other hand they are entirely consistent with the position of Kool Temp that there was no Pleaded Agreement, and that both parties were free to transact in relation to Pivots with other customers should they choose not to take advantage of the working relationship between the two businesses. For the same reasons, the Yanchep Transaction, at least prior to the dispute arising, is also equally referrable to either hypothesis.
There is, however, one aspect of the Yanchep Transaction which is inconsistent with the Pleaded Agreement. In my view, the Initial Yanchep Quote (Annexure B) prepared by Mr Lucassen is inconsistent with the Pleaded Agreement being in existence. The quote is structured on the basis that Kool Temp would be supplying all the materials (including the Pivot) and performing all the work save for the installation of the pumps, which were specifically noted to be the responsibility of Mr McKay ('Bruce to Quote'). This is consistent with his understanding of the working relationship between the two businesses, one which I have just observed made commercial sense to both of them. If there was a profit‑sharing agreement, one would have expected that it would have been reflected on the face of the Initial Yanchep Quote in some way. And it is not. When giving evidence Mr McKay did not say that he raised any concerns with Mr Lucassen as to the way in which the quote had been structured.
Counsel for Aqua Pump placed some weight on the email of July 2019 which I have quoted at [114]. Mr Lucassen was asked about this in cross-examination:[217]
[217] ts 184 - ts 185 (Lucassen).
You were telling Mr Osborne you were partners?‑‑‑Yeah.
Because you had a profit share arrangement with ‑ ‑ ‑ ?‑‑‑No, we were working partners, mate. I've told you about 10 times. He had his business. I had my business. Now, the reason why Ben Osborne, I told Ben Osborne this is that I've got support with pumps and irrigation equipment. That is all. And that's all it's ever been, mate
Yes, but you referred to Bruce as your partner, didn't you? Or Aqua Pump as your partner?‑‑‑Well, all right, well, partner. Have you looked at the definition of partner? What I ‑ ‑ ‑
(Indistinct)?‑‑‑Definition of partner.
Sorry, yes, let me ask you about that. Does - does the word 'partner' to you involve an understanding that there is a sharing of profit?‑‑‑No.
No?‑‑‑Absolutely not.
Do you refer to every other business you deal with as a partner or who supplies you with pumps and other things, do you call them your partner?‑‑‑Yeah.
You do?‑‑‑Yeah, of course I do.
Okay?‑‑‑Yeah, especially, I've got - I've got a couple of - that are supplying irrigation stuff. I'm doing over like about 50,000 a year with them. And I call them my partners as well.
The characterisation adopted by Mr Lucassen is not inherently implausible. So the email of July 2019 also becomes equally referrable to either hypothesis. The same conclusion applies to Mr Lucassen's characterisation of the email of 19 February 2020 ([144] - [145]).
Counsel for Aqua Pump also placed some weight on the email of October 2019 in relation to the supply of a Pivot for Mr Smoothy in which Mr McKay expressed the view that a 30% gross margin for the Pivot was too high and would cause Mr Smoothy to go elsewhere (quoted at [106]). Even this email is equivocal as between the two hypotheses. It could be construed as Mr McKay initiating a discussion about whether the mutual shared profit margin should be reduced to get this job. However, it could also be construed as Mr McKay initiating a discussion in which he was trying to get Mr Lucassen to reduce this profit margin on the Pivot so that both of them would get the job (as with the Revised Yanchep Quote), with Mr McKay benefitting from the pumps component of the job. Though it does appear that Mr Mckay had been in contact with Valmont about this Pivot.
It does appear that Valmont knew that there was some arrangement between Aqua Pump and Kool Temp. In addition to what I have just mentioned about the Smoothy Quote, this is evident from:
(a)the July 2019 email from Kool Temp in which Aqua Pump was described as a partner of Kool Temp ([114]);
(b)the fact that Valmont was in email communication with both Mr McKay and Mr Lucassen in relation to the Yanchep Transaction and was prepared to supply Aqua Pump with a Pivot on Kool Temp's account ([133]); and
(c)the fact that on 3 October 2019 Mr McKay had a meeting in his office with Ben Pevreall, the vice president for Southeast Asia for Valmont, at which they they discussed the 'Kool Temp Aqua Pump Valley Account', in particular the lack of sales and what could be done to increase the sales ([115]).
However, this evidence is also consistent with the understanding of Valmont being that there was a working relationship between the two businesses as regards the supply and installation of Pivots, perhaps that Aqua Pump was a 'business associate' as Mr Hodgson initially recorded in his diary notes (Annexure A).
In summary, I find that there is nothing in any of the written communications before the court between Mr McKay and Mr Lucassen which expressly refers to the Pleaded Agreement or which refers to it implicitly or tacitly in a matter that is not readily explicable by the hypothesis that there was a working arrangement between the two businesses. Likewise the correspondence and conduct between Aqua Pump and Valmont is also readily explicable by the hypothesis that there was a working arrangement between the two businesses. Accordingly, in my view, the events subsequent to the meeting on 1 March 2016 do not unequivocally point to the existence or performance of the Pleaded Agreement. Rather, they are at least equally, if not more, consistent with the continued existence of a working relationship between the two businesses.
A hypothetical makes the point clearer. In the Pleaded Agreement (set out at [167]), Aqua Pump says that Mr Lucassen was going to build a workshop and showroom in Broome for the purposes of marketing and selling Pivots in the Kimberley region. Aqua Pump agreed to fit‑out the Broome workshop and showroom, and have Mr McKay live at and work from the workshop and showroom. Had Aqua Pump in fact fitted out the Broome workshop, then this, in my view, would have unequivocally pointed to the existence of the Pleaded Agreement; this conduct would not have been explicable as more of the then current working relationship. However, the Broome end of what Mr Lucassen was planning did not occur.
In this context, I return to what was said before and at the meeting on 1 March 2016.
The magnitude of the difference in evidence between Mr McKay (and Mr Hodgson) as to the length of time of the meeting and my factual finding that the meeting was a short one (based on the evidence of Mr Bennett) ([92]), calls into question the reliability of Mr McKay's recollection generally. His recollection of the events of Mr Hodgson's visit had a clear sense of reconstruction to it, including as to the date.
For the reasons I have already articulated ([95]), I do not regard Mr Hodgson's recollection of what was said at the meeting to be reliable. So his evidence does not support the evidence of Mr McKay.
This all leads me to conclude that Mr McKay has embellished his evidence in an endeavour to morph the working relationship with Kool Temp into the Pleaded Agreement. Counsel for Kool Temp made a valid point in cross-examination[218] and final submissions[219] that for an agreement of this significance, one would expect to find some evidence of it writing, or at least mention of it in the communications between the parties; and there is not. I do not regard Mr McKay's evidence of what was discussed at the 1 March 2016 meeting to be reliable. Nor do I regard his evidence that there were discussions about profit sharing before the meeting on 1 March 2016 to be reliable.
[218] ts 78 - ts 79.
[219] ts 217.
As to the evidence of Mr Lucassen, the fact that I do not accept his evidence that there was no meeting in Mr McKay's office, behind a closed door, means that his recollection of events must be somewhat called into question. I find that he understated the conversation which occurred.
Having said that, his recollection of the visit of Mr Hodgson to Western Australia was by far the most detailed of all of the witnesses. It was consistent with that of Mr Bennett as to the short length of the meeting and the fact that he purchased some items for a repair at Scott River. His overall chronology is supported by the objective circumstances. For these reasons his evidence becomes the basis for my factual findings as to what occurred. In combination with the other matters I have identified, it is also a cogent basis to generally not accept the reliability of the recollection of Mr McKay of the 1 March 2016 meeting, and to not accept his evidence. Neither the conduct of the parties before or after the 1 March 2016 meeting requires a contrary conclusion.
I find that, in all the circumstances set out at [97], it is more likely than not that there was at least some conversation about the relationship between Aqua Pump and Kool Temp in the context of the latter's then pending application to become a Valmont dealer. This included a discussion to the effect that the focus of Kool Temp's application to become a Valmont dealer, on both sides, was for the dealership to operate out of Broome, and that Mr Lucassen was in the process of securing land for business premises there ([94]). It also included a discussion of whether there was a role for the business premises of Aqua Pump in Midvale to be used as a shop front in support of Kool Temp's then pending application for a Valmont dealership. I accept Mr Lucassen's evidence that he did not consider there to be any need to do so given that Valmont already had a dealer in Perth and the focus of his application was a dealership in Broome. This finding makes common sense in all the circumstances.
I also find that the conversation at the 1 March 2016 meeting did not go further than I have set out in the preceding paragraph. I do not feel an actual persuasion of the occurrence or existence of any discussion in the terms of the Pleaded Agreement. Put slightly differently, but to the same effect, Aqua Pump has not persuaded me that it is more likely than not that an agreement was made at the 1 March 2016 meeting in terms of the Pleaded Agreement.
It also follows that I do not accept the evidence of Mr McKay that the profit-sharing agreement in relation to the Yanchep Transaction was a manifestation of the Pleaded Agreement. Rather, I accept the evidence of Mr Lucassen as to the circumstances in which the profit‑sharing agreement came into existence ([137]). Kool Temp has proven on the balance of probabilities that there was a profit‑sharing agreement for the Yanchep Transaction as alleged in the D&C. It is entitled to damages for breach of this agreement in the sum of $9,603.77 ([151]). The total Kool Temp is entitled to on the counterclaim is thus $26,951.27.
If the Pleaded Agreement was found to have been made, what consequences follow?
As the matter was fully argued, it is appropriate that I set out the findings I would have made if Aqua Pump had proven that the Pleaded Agreement had been made.
It was not in issue that, if the Pleaded Agreement had been made, the Belendaine Transaction and the Milyeanup Transaction were in breach of it. Nor was it in issue that the damages Aqua Pump would have been entitled to was 50% of the net profit on the sale of each Pivot.
It is not in issue that Kool Temp did not remit to Aqua Pump 50%, or any amount, of the net sale profits for these two transactions.
For the reasons set out above, I find that 50% of the net profit on the sale of the Pivot:
(a)to Belendaine was $22,206.90 ([162]); and
(b)to Milyeanup was of $9,472.63 ([166]).
So if the Pleaded Agreement had been made, I would have found Kool Temp to have breached it and assessed the damages Aqua Pump was entitled to at $31,679.53.
However, I would have then upheld the contention of Kool Temp that any judgment on the counterclaim could be set off against this amount. This result is a routine application of Rules of the Supreme Court 1971 (WA) (RSC) O 2O r 17 which provides that where 'a claim by a defendant to a sum of money (whether of an ascertained amount or not) is relied on as a defence to the whole or part of a claim made by the plaintiff, it may be included in the defence and set-off against the plaintiff's claim, whether or not it is also added as a counterclaim'.
This would have given Aqua Pump an entitlement to judgment in the net amount of $5,458.26 ($31,679.53 less $26,221.27).
What final orders are appropriate?
For the reasons I have set out in this decision, the appropriate final orders are that:
(a)the plaintiff's claim be and is hereby dismissed; and
(b)judgment be entered for the defendant against the plaintiff on the counterclaim in the amount of $26,221.27.
Kool Temp claims interest on any judgment pursuant to the counterclaim. I will hear from counsel on this.
I will also hear from counsel as to costs.
ANNEXURES
Annexure A (TB 61)
Annexure B (Exhibit 4)
Annexure C (TB 99)
Annexure D (TB 174)
Annexure E (TB 76)
Annexure F (Exhibit 6)
I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
SVH
Associate
15 JUNE 2022
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