B Crous Pty Ltd as trustee for Morayfield Centre & Ipswich Unit Trust t/as Morayfield Day & Night Pharmacy v Jordyn Industries Pty Ltd

[2025] NSWDC 40

District Court

New South Wales

Medium Neutral Citation:

B CROUS PTY LTD as trustee for MORAYFIELD CENTRE & IPSWICH UNIT TRUST t/as MORAYFIELD DAY & NIGHT PHARMACY v JORDYN INDUSTRIES PTY LTD [2025] NSWDC 40

Hearing dates:

25 February 2025

Date of orders:

7 March 2025

Decision date:

07 March 2025

Jurisdiction:

Civil

Before:

Acting Judge Levy SC

Decision:

1. Verdict and judgment for the plaintiff in the agreed sum of $337,664 including pre-judgment interest;

2. The defendant is to pay the plaintiff’s costs of the proceedings on the ordinary basis unless a party can show an entitlement to some other costs order;

3. The exhibits may be returned;

4. Liberty to apply on 7 days’ notice if further or other orders are required.

Catchwords:

MERCANTILE LAW – contract for supply of goods – non-supply – failure of defendant to refund deposit as agreed following failure to deliver the goods – rejection of defence of a claim of agency by which defendant sought to avoid liability

Legislation Cited:

Corporation Act 2001 (Cwth), s 1307(1)

Cases Cited:

Ermogenous v Greek Orthodox Community of South Australia [2002] HCA 8; (2002) 209 CLR 95

Helton v Allen (1940) 63 CLR 691; [1940] HCA 20

Hyundai Merchant Marine Co Ltd v Dartbrook Coal (Sales) Pty Ltd [2006] FCA 1324

Secure Parking Pty Ltd v Woollahra Municipal Council [2016]

Watson v Foxman [1995] 49 NSWLR 315

Category:

Principal judgment

Parties:

B Crous Pty Ltd ACN 121 801 125 as trustee for Morayfield Centre & Ipswich Unit Trust t/as Morayfield Day & Night Pharmacy (Plaintiff)
Jordyn Industries Pty Ltd (Defendant)

Representation:

Counsel:
Mr LN Hamilton (Plaintiff)
Mr AD Justice (Defendant)

Solicitors:
Cronin Miller Litigation (Plaintiff)
Catalyst Legal (Defendant)

File Number(s):

2023/434002

Publication restriction:

None

Judgment

Introduction

1. These reasons concern a commercial dispute over the fallout from the defendant’s non-supply of 50,000 rapid antigen test (RAT) kits which were ordered by the plaintiff during the time of the COVID-19 pandemic.

Factual background

2. The plaintiff, B Crous Pty Ltd, as Trustee for Morayfield Centre & Ipswich Unit Trust trading as Morayfield Day and Night Pharmacy ACN 121 801 125, claims liquidated damages from the defendant, Jordyn Industries Pty Ltd, for breach of an agreement they entered into on 27 January 2022 for the supply of those goods.

3. The agreement in question was transacted between Mr Ryan Pratten on behalf of the plaintiff and Mr Gary Cutcliffe on behalf of the defendant. The substantive terms of the agreement between the parties are contained in a series of undisputed email exchanges.

4. The consideration for the transaction, namely $1,150,000, for the goods the subject of the transaction, namely 50,000 RAT test kits to be supplied by the defendant to the plaintiff, and the deposit the plaintiff paid to the defendant to secure the order of those goods, namely $518,500, are not in dispute.

5. Furthermore, there is no dispute that the plaintiff was entitled to the return of the deposit it paid because the goods were not delivered to the plaintiff in Brisbane by the specified date of 15 February 2022.

6. The matter at issue in this case is that the plaintiff only received a partial return of the deposit, namely the amount of $240,500, leaving an unpaid balance of $277,000. That is the amount of the plaintiff’s claim, plus pre-judgment interest.

Issue calling for determination

7. The parties produced a schedule of 12 issues for determination but ultimately, the pivotal determinative question at the core of the litigation was identified to be whether in the transaction in question, Mr Cutcliffe was acting as the agent for a disclosed principal, the ultimate supplier of the goods in question as he claimed, or whether there was no such disclosure, as was claimed by Mr Pratten.

Applicable legal principles

8. The construction of the agreement between the parties must proceed according to the objective theory of contract: Secure Parking Pty Ltd v Woollahra Municipal Council [2016] NSWCA 154, at [13]. A search for a subjective motive or intention harboured by a party is not permitted where the contractual documents are clearly expressed: Ermogenous v Greek Orthodox Community of South Australia [2002] HCA 8; (2002) 209 CLR 95, at [24]-[25].

9. Absent any dispute over the validity and binding nature of the underlying agreement, the applicable legal principle which governs the outcome of the proceedings is that where a party enters into a contract without qualification as to their capacity or contracting status, they must be taken to be contracting personally. The position may be otherwise where there had been a contemporaneous disclosure of a relationship of agency, but in that event, it must be made clear that the party is acting as an agent in the legal sense: Hyundai Merchant Marine Co Ltd v Dartbrook Coal (Sales) Pty Ltd [2006] FCA 1324, per Kiefel J, at [105].

10. There is no dispute that if the pivotal question identified in paragraph [7] above, is determined in favour of the plaintiff, there should be a verdict and judgment in its favour in the agreed sum of $337,664 including pre-judgment interest, plus costs to be agreed or assessed.

Evidence review

11. The parties produced a joint court book: Exhibit “A”, Tabs 1 – 9, pp 1 – 109. The court book contained the affidavits of both Mr Pratten and Mr Cutcliffe, and the relevant email correspondence referred to in those affidavits. The plaintiff also tendered an ASIC document which related to a credit issue involving Mr Cutcliffe: Exhibit “B”. Both Mr Pratten and Mr Cutcliffe gave oral evidence. Their evidence is reviewed below.

Evidence of Mr Pratten

12. Mr Pratten is a pharmacist and a partner of Jaydin Chemist Group Pty Ltd which is the parent company of a group of 8 pharmacies which includes the plaintiff company B Crous Pty Ltd, the trustee of Morayfield Centre & Ipswich Unit Trust trading as Morayfield Day and Night Chemist. It was his responsibility to manage and resource stock for that group of pharmacies.

13. He explained that historically, as he became aware of some transactions which took place about 15 – 20 years earlier, the Jaydin Group had dealt with Mr Cutcliffe as a supplier of certain goods sold by pharmacies. It is not disputed that Mr Pratten had no personal involvement with those historical transactions and his evidence in that regard was based on a belief which he had obtained on inquiry.

14. On the basis of that prior historical connection, Mr Pratten followed a suggestion made to him to approach Mr Cutcliffe to seek a supply of 50,000 units of rapid antigen test kits in the time of the COVID-19 pandemic when such goods were scarce and in high demand because of the prevailing public health crises.

15. Mr Pratten said that he had entered into negotiations with Mr Cutcliffe and reached an agreement on 27 January 2022 that comprised the following terms:

1. The defendant company would provide the plaintiff with 50,000 units of rapid antigen test kits where each unit would contain 5 tests;

2. Those goods, which were of the value of $1,150,000, were to be delivered in Brisbane on 10 – 11 February 2022, if not sooner;

3. Part of the consideration for that agreement was that the plaintiff would pay a deposit of 45 per cent of the value of the goods, namely $517,500 to confirm the order, with the balance of $632,500 to be paid by the plaintiff on despatch of the goods following an inspection of the goods;

4. The agreement ultimately incorporated a guarantee that the goods were to be delivered in Brisbane by 15 February 2022, and failing that delivery, the amount of the deposit of $517,500 would be repaid in full.

16. That agreement was confirmed in writing by an exchange of emails between Mr Pratten and Mr Cutcliffe: Exhibit “A”, Tab 6, pp 57 – 64.

17. On the basis of that agreement the plaintiff company paid the defendant company a deposit in the agreed sum of $517,500 in payment of an invoice issued by the defendant, Jordyn Industries Pty Ltd, dated 27 January 2022, which was in evidence (Exhibit “A”, Tab 6, pp 60 – 61), as was the evidence of the payment: Exhibit “A”, Tab 6, p 62.

18. Mr Pratten stated that the goods were not delivered by the agreed due date, or at all. In those circumstances, he requested that Mr Cutcliffe repay the deposit as provided by the guarantee component of the agreement. He said that Mr Cutcliffe informed him that he could pay a partial return of the deposit in the amount of $240,500, and that the balance of $277,000 would be refunded when that sum was returned to the defendant from the supplier of the goods.

19. Mr Pratten said that the sum of $240,500 was repaid to the plaintiff on 15 February 2022, and he was told by Mr Cutcliffe that the balance would also be paid when the defendant received a return of the funds.

20. Mr Pratten said that shortly after he became aware that the payment of $240,500 had been made, he then became aware that the payment had been made by “Benjamin James Medical Supplies”. Mr Pratten stated that until that time, he had not heard of that entity, or of Mr Ben Truswell, a name that was later mentioned by Mr Cutcliffe.

21. Thereafter email exchanges occurred wherein Mr Patten was seeking payment of the outstanding balance of $277,000 of the deposit monies and Mr Cutcliffe was stating that he was “chasing his supplier daily” for that payment. Those exchanges also included text messages and a telephone call over the ensuing period up until 6 May 2022. At that date, the balance of the deposit remained unpaid, hence the commencement of these proceedings.

22. The critical portion of the defendant’s cross-examination of Mr Pratten centred around the content of an alleged but disputed conversation between Mr Pratten and Mr Cutcliffe on 27 January 2022 as was asserted by Mr Cutcliffe.

23. In that regard, Mr Pratten was asked to consider the content of paragraph 3 of Mr Cutcliffe's affidavit affirmed on 10 October 2024, concerning a conversation which was said to be in effect, in the following terms:

“Pratten:   Hi Gary, we had dealings many years ago when you were in Queensland, I understand you can supply RAT tests.

Me:   Yes Ryan, I can organise them through my brother in law, Ben Truswell, he has the contacts not me.

Pratten:   well id (sic) like to place an order (I refer to paragraph 9(a) of the Pratten affidavit for details of the order).

Me:      that's fine, can you pay the deposit to Ben?

Pratten:   it's a lot of money, and I don't know Ben. Id (sic) prefer to pay it to you and you pass it on.

Me:   Ok, but ill (sic) just be acting as agent for Ben. As said, I don't have the contacts.

Pratten:   that's fine, its just I don't know Ben, just have an invoice raised to us for the deposit and ill (sic) arrange for it to be paid.”

[Exhibit “A”, Tab 7, p 91]

24. In cross-examination, Mr Pratten was repeatedly asked to concede, but on each occasion disputed, that the conversation in question included any reference to Mr Ben Truswell, or that he, Mr Cutcliffe would “be acting as agent for Mr Truswell”: T11.50; T12.1 – T12.7; T12.50; T13.22 – T13.32; T15.24; T16.11; T16.33; T17.23; T17.35; T18.17; T18.47; T19.2.

Evidence of Mr Cutcliffe

25. Mr Cutcliffe stated that he was a former director of the defendant company Jordyn Industries Pty Ltd. He said he ceased to be a director in about 2002 – 2003, at which time his wife took over his role as a director.

26. Mr Cutcliffe’s evidence-in-chief comprised his affidavit affirmed on 10 October 2024, paragraphs 1 – 4. The affidavit annexed a relevant copy of a bank statement showing that the day after Jordyn Industries received the plaintiff’s deposit of $517,500, a transfer of $516,028 was made to another account identified by number but not by name. That matter was not clarified by documentary evidence.

27. Mr Cutcliffe set out his recollection of the terms of his conversation with Mr Pratten on 27 January 2022. Those terms are set out at paragraph [23] above.

28. Mr Cutcliffe’s affidavit stated that in reliance on that conversation he caused an invoice to be raised (in the amount of $1,150,000) and received and banked a deposit paid by the plaintiff company in the sum of $517,500. He stated that the bank statement attached to his affidavit showed that on 28 January 2022 the transfer of funds in the amount of $516,028 was paid to Mr Ben Truswell “in satisfaction of [his] discussion with Mr Pratten” as stated in his affidavit: Exhibit “A”, Tab 6, pp 91 – 92. There was no objective evidence to show that payment in fact went to Mr Truswell or an entity associated with him.

29. Mr Cutcliffe was cross-examined on that evidence: T21 – T56. The answers given during cross-examination were saliently revealing, as follows:

1. His affidavit, which was prepared on 10 October 2022 with the assistance of his solicitor, some 2 years and 8 months after the events of 27 January 2022, was based on his best recollection at that time, assisted by his solicitor, unaided by any contemporaneous notes: T22.16; T41.21 – T42.10;

2. Mr Cutcliffe sought to assert, contentiously, that the agreement he had reached with Mr Pratten was not completely in writing, but also had “a lot” of verbal components: T45.15. He sought to refer to the content of emails that were exchanged after the agreement had been perfected to support his contention that he had disclosed his role as agent at the time the agreement was negotiated;

3. Mr Cutcliffe denied that his account of the conversation he had set out in his affidavit as cited at paragraph [23] above, was untruthful (T38.25), and he denied that his recollection of that conversation was untruthful: T38.45; T40.18. He also denied that in the relevant conversation he had with Mr Pratten that there had been no mention of Mr Ben Truswell: T38.49 – T39.16; T39.27;

4. Mr Cutcliffe gave conflicting evidence as to whether in his account of the 27 January 2022 conversation with Mr Pratten, the word “agency” was used. At one point he said he never mentioned the word agency and just used the words that the goods were coming from Ben: T39.44. When pressed on the accuracy of that statement he said he was “not sure - it was just Ben”: T39.50 – T40.1. That evidence was in contrast to his asserted account of the conversation as set out in his affidavit where he used the words “… but I’ll just be acting as agent for Ben”: Exhibit “A”, Tab 6, p 91. That aspect of his evidence, when tested, left him “very confused”, and he sought to retreat to a claim of confusion over the words “agent” or “agency”, invoking his limited schooling to the 8^th grade as an explanation for this;

5. Mr Cutcliffe was asked to elaborate on the business activities of Jordyn Industries Pty Ltd. He said it owned a shed for which it received rent as a landlord (T45.43 – T46.8), and that the transaction involving the RAT testing kits was a one-off transaction: T46.18. That said, he said that at the time, he did not know that it was important to fully document the detail: T46.23. This was notwithstanding the large amount of the transaction involving over $1M;

6. Mr Cutcliffe was questioned about his past history and the current status of his entitlement to be a company director in this country. He said “Yeah, I’d say. Yeah”: T47.12;

7. When that issue was pursued in further cross-examination (at T47 – T52), it transpired that according to an ASIC document described as a media release published on 9 October 2023, that on 22 September 2023 as the sole director of an ice vending machine company called 24-7 Ice Pty Limited, he had pleaded guilty to five offences of falsification of company books between 1 May 2017 and 31 May 2017 in contravention of s 1307(1) of the Corporation Act 2001 (Cwth): Exhibit “B”;

8. Those offences, which included him engaging in falsification conduct after the company had been placed into administration on 27 April 2017, where after that date, he had instructed an employee of the company to amend lease agreements and to create false sales/loan agreements and a false invoice. Following his conviction for those offences he was released without sentence after entering into a recognisance to be of good behaviour for 18 months and he was ordered to pay a security of $500. He was then automatically disqualified from managing corporations for a period of 5 years from 6 October 2023: Exhibit “B”.

Assessment of reliability and credibility of testimony

30. Mr Pratten’s evidence was given in a coherent, straightforward, confident, and unhesitating manner that appeared reasonable as to its content and presentation. He made fair concessions in cross-examination when these were due. No reason emerged from his evidence to raise doubts over the reliability or the credibility of that evidence.

31. In contrast, I considered Mr Cutcliffe to be an unconvincing witness whose evidence raised inherent doubts over its reliability. He said he had limited recall of the events: T33.15 – T37.5. He had not made any contemporaneous notes of the critical conversation he had with Mr Pratten that formed the basis of the transaction the subject of the proceedings. At times he sought to avoid questions asked in cross-examination by asking questions, interrupting the cross-examiner before the question had been completed, and at times he made combative comments which required rebuke. I considered him to be an unsatisfactory and unreliable witness on key matters of dispute.

32. In those circumstances, I considered Mr Pratten’s evidence should be preferred on critical matters in dispute because of the reasoned content of that evidence.

Submissions of the parties

33. On behalf of the plaintiff it was submitted, based on the evidence of Mr Pratten, that there was a valid agreement entered into between Mr Pratten and Mr Cutcliffe on behalf of the respective companies on the terms identified by Mr Pratten. It was further submitted that Mr Cutcliffe’s account of an alleged agency and an alleged involvement with Mr Truswell should be rejected as being unreliable and incredible evidence, with the result that the plaintiff should be entitled to the verdict and judgment it seeks.

34. On behalf of the defendant it was submitted that it was relevant to consider the background discussions between Mr Pratten and Mr Cutcliffe’s uncle, Mr Mark Barnett, and Mr Cutcliffe’s brother-in-law, when determining whether there was a component of either disclosed or undisclosed relationship of agency in the negotiations between Mr Pratten and Mr Cutcliffe. It was submitted that Mr Pratten’s non-disclosure of those discussions represented a lacuna in the evidence.

35. That said, on behalf of the defendant it was conceded that the pivotal issue to be determined was whether Mr Pratten was made aware of the existence and involvement of Mr Truswell in the transaction in question, which included a consideration of the documentation of the transaction.

36. On behalf of the defendant it was submitted that as it was plain to Mr Pratten that Mr Cutcliffe was not the manufacturer of the goods in question, this pointed to the likelihood of him being an agent. This raised the question of whether there was an actual disclosure of agency at the relevant time as claimed.

37. It was submitted that despite the way in which Mr Cutcliffe had expressed himself in his evidence it should be found that he had made a disclosure of his role as an agent for Mr Truswell at the time the agreement was formed. It was accepted by the defendant that this was the essential factual question to be resolved in order to determine the outcome of the proceedings.

38. In the course of submissions on behalf of the defendant it was accepted that it was necessary to construe the context meaning of the word “we” in the email communications Mr Cutcliffe and his wife had sent to Mr Pratten after the non-supply of the RAT Kits created a breach of the agreement. It was agreed this was a relevant consideration in construing the logic of the events comprising the transaction when looking at the objective documents. On that premise, it was submitted that it was open on the evidence to conclude that Mr Cutcliffe’s role was simply that of an agent, a disclosed agent.

Consideration

39. In my view the exchange of emails between the parties must be seen to be a sufficiently comprehensive definition of the term of the contract negotiated between the parties: Ermogenous, supra, at [24]-[25].

40. It follows that Mr Cutcliffe’s evidence by which the defendant sought a finding that the status of Mr Cutcliffe, and therefore the defendant, was that of an agent for the supplier of the goods, Mr Truswell, is not relevant.

41. The asserted claim of a relationship of agency is rejected as there is no reliable evidence of a disclosure to that effect: Hyundai Merchant Marine Co Ltd, supra, at [105].

42. If I am wrong in that regard, it is necessary to identify a further basis upon which the defence fails in this case.

43. In that regard, I consider that Mr Cutcliffe’s evidence on the claim of agency, is unsupported by contemporaneous pre-contractual and contractual documents, or notes, is unreliable and it should not be accepted for the reasons identified at paragraphs [30] to [32] above. Given that over 2 years had passed before Mr Cutcliffe prepared his affidavit without contemporaneous notes and given his conceded limited recollections as to salient details as referred to at paragraph [29] above. I consider his evidence should not be accepted as it is unreliable: Watson v Foxman [1995] 49 NSWLR 315, at 319, citing Helton v Allen (1940) 63 CLR 691; [1940] HCA 20.

44. I accept Mr Pratten’s evidence to the contrary.

45. It follows that the plaintiff’s claim must succeed.

Disposition

46. The plaintiff has established its entitlement to the orders it seeks.

Costs

47. As the plaintiff has succeeded in obtaining a judgment in its favour, it should have an order that the defendant should pay its costs of the proceedings on the ordinary basis unless a party can show an entitlement to some other costs order, for which there should be liberty to apply.

Orders

48. I make the following orders:

1. Verdict and judgment for the plaintiff in the agreed sum of $337,664 including pre-judgment interest;

2. The defendant is to pay the plaintiff’s costs of the proceedings on the ordinary basis unless a party can show an entitlement to some other costs order;

3. The exhibits may be returned;

4. Liberty to apply on 7 days notice if further or other orders are required.

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