Ballymoss Pty Ltd v Kollaras and Co Pty Ltd
[2021] VCC 1241
•1 September 2021
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
Case No. CI-20-02138
| BALLYMOSS PTY LTD (ABN 16 006 923 717) trading as Monacellars | Plaintiff |
| v | |
| KOLLARAS & CO PTY LTD (ABN 85 001 919 884) trading as Kollaras Trading Company | Defendant |
| and | |
| VP BRANDS INTERNATIONAL PTY LTD (ACN 614 813 384) trading as All Stars Liquor | Third Party |
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JUDGE: | HIS HONOUR JUDGE COSGRAVE | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 16 June 2021 | |
DATE OF RULING: | 1 September 2021 | |
CASE MAY BE CITED AS: | Ballymoss Pty Ltd v Kollaras & Co Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2021] VCC 1241 | |
REASONS FOR RULING
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Subject: PROCEDURE
Catchwords: Amendment of pleading - Order 23.02 – Australian Consumer Law
Legislation Cited: County Court Civil Procedure Rules 2018 - Goods Act 1958 (Vic)
Cases Cited:Cargill Australia Ltd v Viterra Malt Pty Ltd [2018] VSCA 260; Mandie v Memart Nominees Pty Ltd 2016 VSCA 4
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | G L Meehan with M D Dean | Rennick & Gaynor |
| For the Defendant | D B Bongiorno | Holding Redlich |
HIS HONOUR:
Introduction
1 By its summons filed 31 May 2021 the Defendant and Plaintiff by Counterclaim (“Kollaras”) seeks leave to file and serve the proposed defence and counterclaim exhibited to the affidavit of Nathan Paul Cecil affirmed 27 May 2021.
2 Kollaras’s defence and counterclaim filed 22 July 2020 was struck out by consent orders made in the proceeding on 8 April 2021.
3 The Defendant by Counterclaim (“Ballymoss”) objects to the filing of the proposed amended counterclaim on the grounds that the proposed amendments have no real prospect of success. Ballymoss does not object to the filing of the proposed defence.
Background
4 This matter has been joined with a related matter, being proceeding CI-20-01140. The plaintiff in this proceeding (Ballymoss) is the defendant in that proceeding. Both matters were previously set down for trial on 21 April 2021.
5 On 23 March 2021, Ballymoss filed an application seeking, inter alia, that Kollaras’s counterclaim be struck-out pursuant to Order 23.02(a) and/or (c) of the County Court Civil Procedure Rules (“the Rules”) (subsequently, this summons was amended to also seek the entry of judgment pursuant to Order 23.01 of the Rules).
6 By orders made on 8 April 2021, Ryan J vacated that trial and struck out Kollaras’s counterclaim by consent, providing in summary: Kollaras serve Ballymoss with a proposed counterclaim, Ballymoss respond by either consenting to Kollaras filing and serving that counterclaim, or alternatively, requiring Kollaras to apply for leave to do so.
7 On 6 May 2021, Kollaras provided Ballymoss with the proposed defence and counterclaim. On 11 May 2021, another copy – this time signed by counsel - was provided.
8 Kollaras’s submissions made two observations regarding the form of the defence and counterclaim:
(a) the defence had also been amended – something for which Ryan J’s orders did not provide; and
(b) certain columns from within Annexure A to the defence and counterclaim had been redacted on the basis of commercial confidentiality. In this regard, Kollaras anticipated either having to make an application seeking appropriate orders (see, for example Cargill Australia Ltd v Viterra Malt Pty Ltd [2018] VSCA 260) or providing Annexure A in unredacted form. Kollaras no longer pressed this course at the hearing before me. The proposed defence and counterclaim was entirely unredacted.
9 On 19 May 2021, shortly before Ballymoss was due to respond, Kollaras wrote to Ballymoss as follows:
“Should you require the plaintiff by counterclaim to seek leave to file the proposed Defence and Counterclaim, we would ask you, in the interests of promoting the overarching purposes under the Civil Procedure Act 2010 (Vic) (the Act), to articulate precisely why you have chosen not to consent. In our view, the Defence and Counterclaim appropriately plead our client’s position. Should you not agree, an articulation of your position would, in our view, be consistent with s 19 (obligation to only take steps to resolve or determine dispute), s 20 (obligation to cooperate), s 23 (obligation to narrow issues in dispute) and s 24 (obligation to ensure costs are reasonable and proportionate) of the Act.”
10 Ballymoss responded as follows:
“The orders made on 8th April do not oblige our client to give you advance reasons for non consent. Plainly, if our client does not consent and you issue an application then our client would provide written submissions setting out the grounds of opposition to such application. We have already provided detailed written submissions in support of our previous strike out application. Our client does not consent to your client filing the proposed counterclaim.”
11 In response, Kollaras inquired whether the removal of the redacted columns satisfied the concerns of Ballymoss. The next day, Ballymoss replied stating “Please make your application”.
12 In these circumstances, Kollaras made its application by its summons filed on 31 May 2021. The outstanding issues are:
(a) whether Kollaras should have leave to file and serve the proposed defence and counterclaim; and
(b) whether the defence should be filed in its current form or marked-up in accordance with Rules 36.05(2) and (4).
Form of defence
13 Ballymoss wants the amended defence to be marked-up in accordance with the usual practice required by the Rules.
14 Kollaras seeks a dispensation from the usual rules given the major amendments made to the defence.
15 In its submissions, Kollaras stated that it has already provided a marked-up copy of the defence to Ballymoss. The document was said to be at tab 17 of exhibit NPC1 to the affidavit of Nathan Cecil sworn 24 May 2021. Assuming this to be correct, it is appropriate that Kollaras should file a marked-up copy of the defence. However, I also direct that Kollaras file a clean copy of the pleading, not marked-up as required by Rule 36.05. In circumstances where the amendments to the pleading are apt to confuse, this will enable the judge hearing the trial, or any other interlocutory application, to more easily read and understand the pleading.
Position of Kollaras regarding the counterclaim
16 Kollaras contended that the counterclaim set out sufficiently clearly its claims for breach of warranty, misleading and deceptive conduct, and debt.
Position of Ballymoss regarding the counterclaim
17 Ballymoss objects to the counterclaim on the basis that it has no real prospect of success. In so contending, Ballymoss relies upon the decision of the Victorian Court of Appeal in Mandie v Memart Nominees Pty Ltd.[1] There, the Court of Appeal observed that:
[1]2016 VSCA 4.
“[42] The CP Act has changed the litigation landscape. One of the main purposes of that legislation is to reform practice and procedure in civil proceedings, including by reforming the law relating to summary judgment. More than ever, the focus is now pointedly on efficiency and cost-effectiveness, albeit that they are not the only, nor the predominant, considerations. One consequence is that amendments that might have been permitted previously may no longer be allowed. As such, the older authorities that preceded the CP Act which set out when a pleading amendment will be allowed must be approached with caution.
[43] The power conferred on the court by s 63(1) of the CP Act to dispose of claims before a trial facilitates one of the stated purposes of the Act. Subject to limited exceptions, if a claim or defence has no real prospect of success, then summary judgment may be given. It must follow that a proposed pleading amendment raising a claim or defence of that type should not be permitted. To grant leave in that circumstance would be futile as the claim or defence would be susceptible to a summary judgment application. This principle facilitates the administration of justice, as it enables courts to prevent claims or defences being pleaded where they will inevitably fail and thus avoid the cost and inconvenience that would otherwise arise if those claims or defences were permitted to be made only to be the subject of summary judgment subsequently.
[44] Since the introduction of the CP Act and the ‘no real prospect of success’ test, various authorities have used different language to explain what the test means.
[45] According to Lysaght: a prospect which is not ‘real’ is ‘fanciful’; although the ‘no real prospect of success’ test in s 63(1) of the CP Act is more liberal than the common law test of ‘hopeless’ or ‘bound to fail’, there may not be much difference between them in practice; and, properly understood, a real question to be tried is one which realistically might result in the respondent to an application for summary judgment succeeding in the proceeding.”
Accordingly, to the extent that the proposed amended counterclaim is futile and fanciful, it should be disallowed.
Submissions of Ballymoss
18 The first area of dispute concerns Kollaras’s claims on the warranty and indemnity.
19 The relevant parts of the proposed counterclaim read as follows:
“ 3. Between June 2018 and November 2019:
(a)Monacellars and Kollaras contracted for Monacellars to sell and deliver Kollaras various alcoholic beverage products pursuant to and in accordance with the terms of the purchase orders issued by Kollaras; and
(b)subject to paragraph 5 below, Monacellars sold and delivered Kollaras various alcoholic beverage products as described in the purchase orders issued by Kollaras.
Particulars
The purchase orders issued to Monacellars in this period are particularised in Annexure A hereto.
Breach of Warranty
4. It was a term of each sale that Monacellars:
(a)warranted that all taxes and duties payable in relation to the goods sold and delivered had been paid at the applicable rates and in full;
(b)agreed to indemnify and keep Kollaras indemnified upon demand for any liabilities, penalties, fines, infringements or costs (including legal costs) in the event that the warranty in paragraph 4(a) above was not true; and
(c)warranted that the goods shall be free from any charge or encumbrance in favour of any third party not declared or known to Kollaras before or at the time when the contract is made.
Particulars
With respect to paragraphs 4(a) and (b), words to this effect were in the bottom left hand corner of each purchase order.
With respect to paragraphs 4(c), Kollaras refers to s 17(c) of the Goods Act 1958 (Vic) or alternatively s 17(3) of the Sale of Goods Act 1923 (NSW).
5. Contrary to the warranty in:
(a)paragraph 4(a) above, the taxes and duties payable in relation to the goods sold and delivered had not been paid at the applicable rates and in full; and
(b)paragraph 4(c) above, the goods were not free from any charge or encumbrance in favour of any third party.
Particulars
Taxes and Duties Not Paid
With respect to paragraph 5(a), the taxes and duties payable were pursuant to ss 15, 19, 19AA and Ch 22, Sch 3 of the Customs Tariff Act 1995 (Cth) as follows:
A.$7,963,047.92 in customs duties (the figures for each export, totalling$7,963,047.92, are set out in Annexure A hereto).
B.the calculation of those figures are set out in Annexure B hereto;
As to the non-payment of these taxes and duties, this is to be inferred from the following matters:
False Invoices
A.Between 9 August 2018 and 10 December 2019, Monacellars purchased certain goods from VP Brands International Pty Ltd trading as All Stars Liquor (All Stars). These goods, which it subsequently sold to Kollaras, are more fully described in paragraph 6 of Monacellars' statement of claim on its third party notice dated 30 July 2020.
B.Between 9 August 2018 and 10 December 2019, in Monacellars' purchase of those goods from All Stars, All Stars rendered invoices to Monacellars falsely describing the goods sold. This is more fully described in paragraph 10 of Monacellars' statement of claim on its third party notice dated 30 July 2020
Monacellars' and All Stars' Failure to Produce Documents
C.Between March 2020 and April 2020, Kollaras made various requests for Monacellars to provide documents, information and assistance establishing that customs duties were paid in respect of the goods. Despite the requests, Monacellars has failed to provide such documents, information and assistance. Kollaras refers to:
1. letter and email from Kollaras' solicitors to Monacellars' solicitors dated 18 March 2020;
2. email from Kollaras' solicitors to Monacellars' solicitors dated 30 March 2020;
3. emails from Kollaras' solicitors to Monacellars' solicitors dated 9 April 2020;
4. email from Kollaras' solicitors to Monacellars' solicitors dated 8 May 2020;
5. letter from Kollaras' solicitors to Monacellars' solicitors dated 22 May 2020; and
6. letter from Monacellars' solicitors to Kollaras' solicitors dated 26 May 2020.
D.So far as Kollaras is aware, All Stars has not produced any document in this proceeding establishing that customs duties were paid in respect of the goods supplied by All Stars to Monacellars. It has otherwise failed to provide such documents to Monacellars despite its requests. Kollaras refers to:
1. paragraphs 12(a) and (b) of Monacellars' defence to counterclaim dated 29 July 2020; and
2. paragraphs 1 and 2 of Monacellars' further and better particulars of the defence dated 15 October 2020.
Unsuccessful Drawback Claims
E.Between October 2019 and December 2019, Kollaras sold the goods to various overseas buyers. The particulars of each sale (including the invoice numbers, dates, price and goods) are particularised in Annexure A hereto.
F.Between October 2019 and December 2019, Kollaras applied to the Australian Border Force (ABF), pursuant to s 168 of the Customs Act 1901 (Cth), for a refund drawback of the customs duties in respect of the goods in a sum of approximately $7,963,047.92 (Drawback Claims). The Drawback Claims (including the export declaration number, drawback claim date, drawback number and the sum claimed) are particularised in Annexure A hereto.
G.As expressed by its letter dated 23 December 2019 to Kollaras, the ABF has declined to process and approve, or alternatively has indicated that it would refuse, the Drawback Claims on the basis that:
1. Kollaras had not submitted documents and information sufficient to establish that import duty was paid in respect of the goods; and
2. the ABF had not been able to identify any records sufficient to establish that import duty was paid in respect of the goods, including via ABF's own Integrated Cargo System.
Kollaras refers to ABF's letter dated 23 December 2019 to its solicitors.
Charges and Encumbrances
With respect to paragraph 5(b), the charges and encumbrances on the goods arise by reason of:
A.s 15 of the Customs and Tariffs Act 1995 (Cth); and
B.s 165 of the Customs Act 1901 (Cth).
6. By reason of paragraph 5 above, Kollaras has:
(a)suffered loss and damage; and
(b)incurred costs (including legal costs) as referred to in paragraph 4(b) above.
Particulars
Kollaras refers to the following amounts:
A.the amount of the unpaid duties, being $7,963,047.92;
B.legal costs associated with the pursuit of payment of the Drawback Claims; and
C.other costs, expenses and disbursements associated with the pursuit of payment of the Drawback Claims.”
20 Ballymoss objects to the pleading of the warranty claim. The warranty, which appears in the bottom left-hand corner of the purchase orders issued by Kollaras, is in the following terms:
“‘By accepting this order, you warrant that all taxes and duties payable in relation to the goods have been paid at the applicable rates and in full and agree to indemnify and keep us indemnified upon demand for any liabilities, penalties, fines, infringements or costs (including legal costs) in the event that this warranty is not true.”
21 Ballymoss argued that the pleading attempted to improperly separate the warranty from the indemnity so that they were each separate, stand-alone terms. Ballymoss objected to this because, on its proper interpretation, the clause did not give a stand-alone right to damages against Ballymoss in the event that import duty which was due to the Commonwealth was not paid on goods. Ballymoss contended that the parties expressly agreed that, if the Commonwealth import duty was not paid, Ballymoss would be liable to indemnify Kollaras “upon demand for any liabilities, penalties, fines, infringements or costs (including legal costs) in the event that this warranty is not true”.
22 Ballymoss noted that Kollaras pleaded no demand made against it. Ballymoss contended that the claim for costs in paragraph 6(b) of the proposed counterclaim was for legal costs, expenses and disbursements associated with “pursuit of payment” of the drawback claims. Ballymoss said that Kollaras’s claim for costs was founded upon the contracted indemnity and not the implied term pleaded in paragraph 4(c) of the proposed counterclaim. Ballymoss argued that because there had been no demand made against Kollaras, the indemnity claim for costs was bound to fail.
23 Also, in relation to paragraph 4 of the pleading, Ballymoss argued that because of the terms alleged in paragraph 4(a) and 4(b), the term in 4(c) was impliedly excluded because the context and term of the Kollaras purchase order showed that the parties had “a different intention” for the purposes of excluding section 17(c) of the Goods Act (Vic) and/or section 17(3) of the Goods Act (NSW). Thus, the warranty in paragraph 4(c) could not be implied in this agreement.
24 Ballymoss also said that the claim to the duty drawback was not properly pleaded. It contended that the pleading was deficient because it failed to plead an entitlement to the drawback of import duty and failed to identify any legal basis for that entitlement. Kollaras, it was said, failed to plead:
· an entitlement to the duty drawback; and
· any of the matters contained in regulation 37 of the Customs (International Obligations) Regulations 2015 (Cth) or the conditions relating to drawback of import duty.
It said that the alleged warranty by Ballymoss was not a promise by Ballymoss that Kollaras would be able to obtain a duty drawback. Unless Kollaras could show that it met the prerequisites for obtaining the drawback, its claim for breach of warranty must fail.
Kollaras’s response
25 In response, Kollaras rejected the construction of the warranty term contended for by Ballymoss. It argued that the thrust of Ballymoss’s argument was that, if there were a breach of the warranty, the only remedy available to Kollaras was that offered by the indemnity. The Ballymoss construction required that the warranty be construed in such a way that the usual remedy of damages for breach of warranty was excluded.
26 As to paragraph 4(c) of the proposed counterclaim and the existence of a contrary intention which precluded any reliance upon the Goods Act, Kollaras made two points. First, it said that this was a construction issue which ought properly be dealt with at trial. Secondly, Kollaras said that the Ballymoss construction was wrong. The term pleaded in paragraph 4(a) related to the payment of taxes and duties, whereas the term in paragraph 4(c) concerned goods being free from charges and encumbrances. The terms addressed different subject matters and one could not automatically infer from paragraphs 4(a) and 4(b) that there was a different intention for the purposes of section 17 of the Goods Act.
Analysis
27 In my view, Ballymoss has not established that Kollaras’s proposed counterclaim in relation to these matters is futile or has no real chance of success.
28 The question of construction of the warranty term appearing on the purchase orders should be addressed at trial. The question raises issues about the context of the purchase order document, whether there are other terms or materials which are relevant and whether the factual context pertaining to the use of the purchase order and the making of any agreement is relevant.
29 Further, I regard it as a matter of legitimate contest whether the warranty clause must be read as necessarily excluding a damages claim. I consider that it is open to Kollaras to argue that the giving of the indemnity is an extra obligation which Ballymoss has assumed in addition to the liability for damages which would normally flow at common law when a party breaches a contractual warranty.
30 Ballymoss says that, on Kollaras’s case, it is entitled to damages whether or not:
· the drawback is available;
· the drawback was applied for;
· Kollaras sold the goods to customers, either domestic or overseas; and
· Kollaras still retained the goods.
Ballymoss noted that Kollaras made no allegation that the value of the goods supplied by Ballymoss was diminished or otherwise affected adversely by the conduct of Ballymoss.
31 In my view, Kollaras can make the allegations it has in relation to the warranty. Whether Kollaras is successful in proving more than nominal damages is a different question. The matters raised by Ballymoss, which I would expect to see in a defence to the counterclaim, might well have a bearing on the quantum of any damages.
32 I note in passing that Ballymoss had complaints also about a plea that Kollaras was entitled to a drawback from the Commonwealth. It was clear from Kollaras’s submissions that it makes no such claim as part of its damages. Kollaras’s claim for breach of warranty alleged that its damages could be measured by the difference between the real value of the goods purchased from Ballymoss and the value of the goods as warranted. The aim was to put the claimant in the same position as if the warranty had been honoured. If the warranty were true and the taxes and duties had been paid to the Commonwealth, they would likely have been the same amount as that identified in the drawback claims. However, the correlation in the amounts did not mean that Kollaras claimed as part of its damages an entitlement to the drawback. Rather, the point of the unsuccessful drawback claim, as set out in the pleadings, was to provide a basis to establish that the duties and taxes were not paid on the goods. To that extent, Ballymoss’s criticisms of this aspect of the pleading were misconceived.
33 I regard Kollaras’s failure to plead a demand as inconsequential. In my opinion the reference in the warranty (see paragraph 20 above) to “keep us indemnified upon demand” is likely to be construed as Ballymoss being obliged to indemnify Kollaras when Kollaras makes demand upon it.
34 In short, I have a similar view regarding Ballymoss’s arguments about the potential application of the Goods Act legislation. I consider that Kollaras has raised a sufficiently arguable point regarding the differing subjects addressed in paragraphs 4(a) and (b) of the proposed counterclaim. That being so, I am not satisfied that Ballymoss’s arguments are so strong that I must find that Kollaras’s arguments have no real chance of success and, therefore, it would be futile to allow the amendment. Indeed, I regard Kollaras’s position as open and arguable at trial.
Misleading and deceptive conduct
35 The next area of criticism related to Kollaras’s claim in misleading and deceptive conduct. The pleading was as follows:
“ 7. In delivering the goods to Kollaras, Monacellars represented that:
(a) customs duties had been paid on the goods in full; or
(b) further and alternatively, to its knowledge, customs duties had been paid on the goods in full.
Particulars
The representation was implied from the following:
A.the words in the bottom left hand corner of each purchase order issued by Kollaras prior to Monacellars' delivery of the goods;
B.the purchase orders, issued by Kollaras prior to Monacellars' delivery of the goods, specified delivery was to "NON-BONDED" premises (being premises not subject to customs control for goods on which customs duty has already been paid);
C.the goods were delivered, in accordance with those Purchaseki o h Orders, to non bonded premises; and
D.the price for the goods were understood by Monacellars and Kollaras to be "duty inclusive," meaning that they included a price component in respect of the payment of customs duties upon the import of the goods into Australia, and the goods were not sold on a "duty exclusive," "duty free" or "underbond" basis.
8. Notwithstanding the representations in paragraph 7 above:
(a)customs duties had not been paid on the goods in full; and
(b)Monacellars knew this.
Particulars
As to paragraph 8(a), Kollaras refers to the particulars to paragraph 5.
As to paragraph 8(b), Monacellars knowledge is to be inferred from its dealings with All Stars, including the false descriptions in those invoices issued by All Stars to Monacellars. This is more fully described in paragraph 10 of Monacellars' statement of claim on its third party notice dated 30 July 2020. As to Monacellars' knowledge of that falsity, Kollaras refers to:
A. its possession of invoices describing the goods from All Stars; and
B.its possession of the goods which did not conform with those invoices.
9. By reason of paragraph 8 above, Monacellars' representation in paragraph 7 above was:
(a)conduct that is misleading or deceptive or is likely to mislead or deceive; and
(b)contrary to s 18 of the Australian Consumer Law, being Sch 2 to Competition and Consumer Act 2010 (Cth).
10. Because of the conduct in paragraph 9 above, Kollaras:
(a)accepted the goods;
(b)incurred a debt to Monacellars referrable to those goods; and
(c)paid for the goods;
thereby suffering loss and damage.”
36 In summary, Kollaras alleged that in delivering the goods to it, Ballymoss represented that the customs duties on the goods had been paid in full or, to its knowledge, customs duties had been paid in full. Kollaras alleged that the full customs duties payable on the goods had not been paid and Ballymoss was aware of this. The representation which Ballymoss made about the duties was misleading or deceptive. Because of Ballymoss’s conduct in misleading or deceiving Kollaras, Kollaras suffered loss or damage by accepting the goods, incurring a debt to Ballymoss referable to the goods and paying for the goods.
Submissions of Ballymoss
37 Ballymoss argued that the representations alleged did not arise from, and were not supported by, the particulars. It said that a reasonable person would not have implied the representations from the particulars. There was, said Ballymoss:
· no express statement made by Ballymoss or on its behalf making either of the alleged representations. The goods were simply delivered as requested by Kollaras; and
· no allegation that Kollaras told Ballymoss that the goods were to be exported to overseas customers and so Kollaras wanted to obtain the drawback, or that Kollaras would not buy the goods unless the duty had been paid or it could obtain the drawback.
Ballymoss said that the claim depended upon unpleaded allegations of misrepresentation by silence.
38 As regards paragraph 10 of the proposed counterclaim Ballymoss said that:
· there was no pleading of reliance by Kollaras on Ballymoss’s alleged conduct which contravened the Australian Consumer Law (“ACL”);
· there was no pleading that, but for Ballymoss’s misleading conduct, Kollaras would have acted differently;
· the expression “Because of” was embarrassing; and
· the reference to “conduct” in paragraph 9 was nonsensical because no such conduct was pleaded there.
39 Kollaras’s response was in substance to the effect that the pleaded claim was clear and unobjectionable. Kollaras maintained that the representations were fairly implied from the matters particularised.
40 It was said to be a matter of implication that the goods complied with the term (set out at paragraph 20 above) from the Kollaras purchase order – the act of delivering goods after receipt of a purchase order containing such a term conveyed that the customs duties applicable to such goods had been paid. The purchase order specified delivery to non-bonded premises. These premises are apparently used for goods upon which customs duty has been paid. If the relevant duty has not been paid, the goods ought not be there. Here, the goods were delivered to non-bonded premises.
41 Finally, the price for the goods was said to be understood by Ballymoss and Kollaras to be inclusive of duty. This meant that they included a price component in respect of the payment of customs duties upon the import of the goods into Australia and the goods were not sold on a “duty exclusive”, “duty free” or “under bond” basis.
42 Kollaras alleged that customs duties were not paid in full on the goods which Ballymoss delivered and Ballymoss knew this. The knowledge was inferred from the matters set out in the particulars.
43 Kollaras argued that the misrepresentation was made out when Ballymoss delivered the goods in the particular circumstances surrounding the delivery, namely: the goods were delivered in response to the purchase order from Kollaras to non-bonded premises where the price payable was understood to be duty inclusive. To that extent, Kollaras said that it did not rely upon an allegation of misleading conduct arising through silence. Rather, Kollaras relied upon the delivery of the goods in the particular context existing between the parties.
44 Kollaras contended that the causation plea was sufficient as the term “because of”, which was used in paragraph 10 of the proposed counterclaim, was copied or taken from section 236(1)(a) of the ACL. Kollaras said that it did not need to refer to the concept of reliance because its claim was plain. Later during submissions, Kollaras’s counsel stated that he was prepared to add to paragraph 10 words to the effect of “in reliance on the conduct in paragraph 9 above” in order to overcome any objection about the causation plea.
45 Kollaras also submitted that it did not have to include a counterfactual in its pleading. It was enough to say that, because of what Ballymoss did in the particular circumstances, and in reliance upon it, Kollaras accepted the goods, incurred a debt to Ballymoss in relation to the goods and actually paid for some of them. This caused Kollaras to suffer loss. Kollaras submitted that the loss comprised the acceptance of the goods from Ballymoss – it paid for some goods and was obliged to pay for the balance of them. Kollaras contended that its plea was to the effect that it relied upon the representation of Ballymoss in accepting the goods. I observe in passing that while Kollaras has particularised the two classes of goods, namely paid for and unpaid, in an annexure to the proposed counterclaim, the copy I have was not coloured and did not specify the amounts claimed in dollar terms.
Analysis
46 Kollaras’s pleaded claim for misleading or deceptive conduct troubles me, especially the damages component. It specifies the loss as the acceptance of the goods from Ballymoss, paying for some of the goods and being obliged to pay for the balance.
47 In the context of the ACL, a party should allege in its pleading the damage it has sustained as a result of the conduct which allegedly contravenes the ACL. This entails some identification of how the party is worse off due to the contravening conduct. Given that Kollaras says it has sold the goods to overseas customers, I do not readily see how merely accepting the goods from Ballymoss creates a loss. Whether or not any applicable duties or taxes have been paid on the goods could affect the price which Kollaras was willing to pay for the goods or the price at which it might sell the goods to customers. Kollaras’s profits on the resale of the goods could have been affected. But it seems to me that, as presently framed, the claim would allow Kollaras to buy the goods from Ballymoss, resell them to overseas customers (presumably at a profit as there was no allegation to the contrary) and then, in addition, recover the value of the goods. This could not be an accurate statement of Kollaras’s loss. Such a claim for loss and damage would have no real prospect of success.
Unpaid supplies
48 Kollaras alleges that:
· Ballymoss and Kollaras contracted for Kollaras to sell and deliver to Ballymoss various beverage products in accordance with purchase orders issued by Ballymoss and invoiced issued by Kollaras;
· Kollaras sold and delivered products to Ballymoss in the sum of $886,722.03;
· it was a term of the contract that Ballymoss make payment within 30 days of invoice; and
· despite demand Ballymoss failed to pay for the products delivered.
49 Ballymoss contends that the claim should be pleaded as a set-off to its claim. While Ballymoss raises a fair point to the extent that, commonly, such a claim would be pleaded that way, it does not invalidate this part of the counterclaim.
Conclusion
50 Accordingly, for the reasons set out, I dismiss Kollaras’s application to file the proposed amended counterclaim.
51 I direct the parties to confer about the form of final order and costs in an effort to agree upon orders giving effect to this ruling. If they cannot agree, then by 4:00pm on 3 September 2021, each party is to file with my chambers and serve a written submission setting out the orders sought and the reasons therefor. The submissions are not to exceed four A4 pages, a minimum 12 point typeface, and 40mm margins on either side of the page. Unless I regard it as necessary or a party persuades me otherwise, I intend to determine the final orders and costs without a further hearing.
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