Bob Jane Corporation Pty Ltd v Barrot F.T. Pty Ltd

[2010] SASC 220

SUPREME COURT OF SOUTH AUSTRALIA

(Civil)

BOB JANE CORPORATION PTY LTD v BARROT F.T. PTY LTD

[2010] SASC 220

Judgment of The Honourable Justice Kourakis

21 July 2010

CARRIERS - CARRIAGE OF GOODS - REMEDIES - OF CARRIERS - LIEN

CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - CONSTRUCTION AND INTERPRETATION OF CONTRACTS - IMPLIED TERMS - DURATION OF CONTRACT

CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - CONSTRUCTION AND INTERPRETATION OF CONTRACTS - IMPLIED TERMS - OTHER CASES

DAMAGES - MEASURE AND REMOTENESS OF DAMAGES IN ACTIONS FOR BREACH OF CONTRACT - PARTICULAR CONTRACTS

Plaintiff, a retailer of tyres, and defendant, a transport operator, entered into third party logistics contract whereby defendant warehoused plaintiff’s tyres and delivered tyres to plaintiff’s retail outlets – plaintiff terminated contract after approximately one year – for several weeks defendant continued to deliver some tyres to plaintiff’s retail outlets but during that time parties were in dispute as to terms and conditions on which tyres should be returned to plaintiff – whether pre-contractual representation made to defendant that tyres could be stacked 24 to a pallet on average – whether defendant suffered damages as a result of representation – whether contract for fixed three year term – whether defendant entitled to damages as a result of wrongful early termination of contract – whether defendant was entitled to exercise lien over plaintiff’s tyres during period of dispute as to terms and conditions on which tyres should be returned to plaintiff.

Held: Plaintiff did represent to defendant that tyres could be stacked 24 tyres to pallet on average – representation was not a term of the contract – defendant did not rely on representation – defendant did not suffer any loss as a result of representation – contract was not for fixed three year term – defendant did not hold any contractual right to exercise lien over tyres – even if defendant had statutory right to exercise lien over tyres, that right subject to contractual variation or abrogation – defendant’s extravagant and wrongful demands for compensation and other payments before it would release tyres vitiated statutory lien – plaintiff’s claim for $7,388.48 upheld – defendant’s counterclaim dismissed.

Warehouse Liens and Storage Act 1990 (SA) s 6, s 7; Trade Practices Act 1974 (Cth) s 82, referred to.
Albemarle Supply Co Ltd v Hind & Co [1928] 1 KB 307, applied.
Henville v Walker (2001) 206 CLR 459; Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388, discussed.
Gates v The City Mutual Life Assurance Society Ltd (1986) 160 CLR 1; Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64, considered.

BOB JANE CORPORATION PTY LTD v BARROT F.T. PTY LTD
[2010] SASC 220

Civil

1. KOURAKIS J:      The plaintiff (Bob Jane) is a retailer of passenger car, light truck and four wheel drive tyres.  The tyres are retailed through stores operated directly by Bob Jane and also through franchised “T-Mart” stores.  Bob Jane obtains its tyres from a number of sources.  Some are purchased from manufacturers of well known brands and are generally delivered to the outlets directly from warehouses managed by those manufactures.  Bob Jane also imports tyres from Asian manufacturers for distribution to its outlets.  The tyres which Bob Jane imports itself are stored in warehouses and from there delivered to the retail outlets as they are required.  In early 2006 Bob Jane operated a warehouse for that purpose in Melbourne.  However, in Sydney and Adelaide it contracted out the warehousing and delivery of its tyres.  In early 2006 the contractor it used for that purpose in Sydney was Kings Transport.  The contractor it used in Adelaide was Falls Transport.  The contracting of a third party to warehouse goods, such as tyres, and to deliver them to retail outlets is referred to as third party logistics.

2. In late 2005 or early 2006 a senior executive of Bob Jane, Geoff Robinson, spoke to Mr Barrot, who was the sole shareholder and chief executive of the defendant Concord Park Pty Ltd about providing third party logistics to Bob Jane.  Concord Park Pty Ltd was a transport operator and is the defendant in these proceedings.  Although the defendant is now known as Barrot F.T. Pty Ltd, I shall refer to it as Concord Park in these reasons.  Concord Park Pty Ltd had in the past provided logistic services for the warehousing and delivery of tyres for Michelin.  Concord Park operated a depot in Cavan at which it loaded and unloaded its interstate freight.  I shall refer to it as the Cavan depot.[1]

   [1]    Interstate freight transport was brought to and delivered from the Cavan depot by smaller trucks, but not stored there for more than several days.

3. Mr Robinson and Mr Barrot had known each other from 1980 through mutual acquaintances who worked in a nightclub.  In 2005 Mr Barrot had been employed by Bridgestone.  In the course of that employment he spoke to Mr Barrot about tendering for third party logistic services with Bridgestone.  Concord Park did not ultimately win that contract.

4. At the first meeting between Mr Robinson and Mr Barrot there was only some very general discussion.  Mr Barrot spoke to his chief financial officer, Geoffrey Sampson, and instructed him to prepare a proposal to put to Bob Jane.

5. A number of meetings followed in which Mr Robinson, Mr Barrot and Mr Sampson negotiated an agreement for the provision of third party logistics services to Bob Jane in Sydney and Adelaide.  I shall refer to the agreements reached for each city as the Sydney and Adelaide logistics contracts.

6. Concord Park and Bob Jane reached an agreement on the terms and conditions of the Adelaide logistics contract on or about 21 February 2006.  Even though it is common ground that the terms were agreed on that date, there is a dispute between the parties as to whether the agreement was contingent on the actual delivery of the tyres from Falls Transport and their acceptance by Concord Park.  The tyres were transferred from Falls Transport to the Cavan Depot between 17 and 20 March 2006.

7. In early May 2006 Concord Park took over the provision of logistics services in Sydney from Kings Transport.  Concord Park stored Bob Jane’s tyres in a warehouse which it had leased for that purpose at Smithfield.  Concord Park continued to provide those services until January 2007 when Bob Jane recovered its tyres from the Smithfield warehouse and transferred them to yet another third party logistics provider.  When these proceedings were commenced, they included claims relating to the dispute between the parties over the Sydney logistics contract.  The pleadings were subsequently amended to remove that part of the controversy from this action.  That controversy is now being litigated in New South Wales.  However, it will be necessary to consider the dealings of the parties over the Sydney logistics contract in some detail because they bear on the terms agreed in the Adelaide logistics contract and on the way in which subsequent events transpired here.

8. Concord Park provided services pursuant to the Adelaide logistics contract until 21 June 2007, on which date Bob Jane requested that the tyres it had stored at the Cavan depot be re-delivered to it.  For several weeks after 21 June 2007 Concord Park continued to deliver tyres to Bob Jane outlets, but the remainder of the tyres were not in fact re-delivered until 4 October 2007.  The parties were in dispute between 21 June 2007 and 4 October 2007 as to the terms and conditions on which the tyres should be returned.

9. The issues in these proceedings may be summarised as follows:

   1.Whether it was a term of the Adelaide logistics contract, or a pre-contractual representation made by Bob Jane, that Bob Jane’s tyres could, on average, be stacked 24 tyres to a pallet.  Concord Park claims, and Bob Jane does not dispute, that the average number of tyres per pallet was less than 24.  Concord Park claims damages for the loss it alleges it suffered as a result of the breach of the term or falsity of the representation.

   2.Whether the Adelaide logistics contract was for a fixed term of three years.  Concord Park claims, and Bob Jane denies, that it was.  Concord Park claims damages for its alleged loss as a result of the wrongful early termination of the agreement by Bob Jane.

   3.Whether Concord Park was entitled to exercise a lien over the tyres in the period between 21 June 2006 and 4 October 2006.  Concord Park claims a contractual lien and a lien pursuant to the Warehouse Liens Act 1990.  Bob Jane denies that Concord Park was entitled to exercise a lien on either basis because it was a term of the agreement between them that Concord Park would be extended credit for a period of seven days after the delivery of an invoice.  Bob Jane asserts, and Concord Park does not deny, that at no time in the relevant period was there an amount owing outside the terms of the credit arrangement between the parties.  Concord Park, however, claims that it was entitled to exercise the lien for costs incurred even though the costs so incurred were not yet due and payable in accordance with the credit terms negotiated by the parties.

10. Bob Jane also contends that the conduct of Concord Park in making extravagant and unlawful claims for charges to which it was not entitled vitiated the liens on which it relied.

11. The first two issues turn on the resolution of the conflicting testimony of the witnesses Mr Robinson, Mr Barrot and Mr Sampson.  The third issue largely falls to be determined by the proper construction of the contractual and statutory provisions under which Concord Park makes its claim to a lien and their application to largely undisputed facts.

12. I state at the outset that I was not favourably impressed by any of the three main protagonists in this dispute: Mr Robinson, Mr Barrot and Mr Sampson.  Accordingly, I have adopted the general practice of making a positive finding only where there is some objective support for that finding either in the documentary exhibits or from my assessment of the inherent probabilities concerning disputed events.

13. I find that Mr Robinson, by his conduct in the course of the negotiations, represented to Concord Park that Bob Jane’s tyres could, on average, be stacked 24 tyres to the pallet.  The evidence of Mr Sampson and Mr Barrot to that effect is sufficiently corroborated by the course of email correspondence between Mr Sampson and Mr Robinson after it was discovered that only a significantly lower average was being achieved for me to find that that representation was made.  However, I am not satisfied that the representation was a term of the Adelaide logistics contract because of the nature of the discussions in which the representation was made and because it was not incorporated in the written record of the agreement which was later drawn up by Concord Park.  Nor am I satisfied that Concord Park relied on the representation in entering into the Adelaide logistics contract.  The number of tyres which could be stacked on a pallet was an important determinant of Concord Park’s cost of servicing the Sydney logistics contract, but was not critical in Adelaide.  I find that Concord Park did not suffer any loss as a result of the lower tyre/pallet ratio it was able to achieve.  The operation of the Adelaide logistics contract was always profitable for Concord Park and it did not lose any commercial opportunity by undertaking it.  Concord Park did not claim that it would have been better off by not entering into the Adelaide logistics contract.  In my view, the fact that Concord Park made relatively less profit than it would have made if an average of 24 tyres per pallet had been achieved is not a relevant item of loss for the purposes of Concord Park’s false and misleading conduct claim.

14. I find that the Adelaide logistics contract was not for a three year term.  I am satisfied that, with respect to the Sydney operation, Mr Barrot told Mr Sampson that for it to be profitable it would have to continue for three years.  However, I am not satisfied that Mr Robinson either expressly or impliedly gave any binding commitment that the arrangement would continue for that long.  Nor did he represent that the Sydney logistics contract would not be terminated before that time.  In any event, whatever may have been said about the Sydney logistics contract, there was no similar discussion about the Adelaide logistics contract.  It is not possible to imply, by reason of the parties’ silence on the question of the term of the Adelaide logistics contract, that they proceeded on the basis that the term agreed for the Sydney logistics contract applied.  Moreover, Concord Park expended much less in building its capacity to undertake the Adelaide logistics contract than it did in Sydney.  In particular, dedicated premises were not leased for the purpose of the Adelaide logistics contract.

15. Concord Park did not hold any contractual right to exercise a lien because the terms on the back page of the consignment notes on which it relies had no application to the Adelaide logistics contract.  In my view, the Warehouse Liens Act 1990 entitles a warehouse operator to exercise a lien for charges earned in the storage of goods whether invoiced or not.  However, the statutory right to exercise the lien is subject to contractual variation or abrogation.  The credit arrangements made as part of the Adelaide logistics contract, by necessary implication, abrogated the right to exercise the lien in the ordinary course of the operation of the Adelaide logistics contract with respect to charges falling within the credit period, but not in the event of the contract’s termination.  However, in my view Concord Park’s unequivocal, extravagant and wrongful demands for compensation and other payments before it would release the tyres vitiated the lien.  Concord Park thereby lost any right to refuse Bob Jane’s demand for the return of the tyres.  Concord Park was also thereby disentitled from claiming further charges for the storage of the tyres and lost the defence it would otherwise have had to Bob Jane’s claim for wrongful detention of the tyres.

16. My reasons for the above findings are given below.

    The stacking and racking of tyres

17. The comprehension of the evidence about the negotiation of the Adelaide logistics contract is assisted by an understanding of the range of tyres retailed by Bob Jane and the storage capacity of the pallets on which they were stacked.

18. Bob Jane fitted a wide range of tyres for passenger vehicles, light trucks and four wheel drive vehicles.  The first determinant of the size of a tyre is the rim diameter of the wheel on which it is fitted.  Passenger vehicle tyres range in size from 13″ to 20″ rim diameter tyres.  The rim diameter generally depends on the size of the car.  Four wheel drive tyres generally have a rim diameter of 15″ to 17″; light truck tyres a rim diameter of 14″ to 15″.

19. However, the rim diameter is only one of two components of the total diameter of a tyre.  The other is the side wall of the tyre.  The height of the side wall varies depending on whether the tyre is a passenger car, light truck or four wheel drive tyre and on the tread width.

20. Over the wide range of tyres stored for Bob Jane, the number which could be stacked on a single pallet varied, depending on the tyre, between 12 and close to 40 tyres.  Mr Smith, the state manager of Bob Jane for South Australia, testified that the number of passenger car tyres which could be stored on a single pallet varied with the rim size as follows:  13" rim tyres – 36 to the pallet; 14″ rim tyres – 32  to the pallet; 15″ rim tyres – 28 to the pallet; 16″ to 18″ rim tyres – 24 to the pallet; 19″and 20″ rim tyres – 20 to the pallet.

21. Mr Smith gave evidence that, at the time of the changeover from Falls Transport to Concord Park, the tyres stored by Falls Transport were mostly Maxxi brand tyres.  Towards the end of the contract with Falls Transport, Bob Jane had started to import Xenon brand tyres. Xenon tyres were sold as “Bob Jane Xenon” tyres.  Bob Jane had embarked on a strong marketing push of those tyres in 2006.  The Maxxi tyres were mostly passenger car tyres, but some four wheel drive tyres were also warehoused by Falls Transport.  According to Mr Smith, over the last decade the relative proportion of four wheel drive tyres sold by Bob Jane has increased.

22. Maxxi brand tyres were the largest proportion of the imported tyres retailed by Bob Jane.  Sales of Maxxi brand tyres were increasing in 2006.  Mr Hamden, the general manager of products and sales for Bob Jane, gave evidence that the proportion of passenger car tyres to four wheel drive tyres sold by Bob Jane was about 80 per cent to 20 per cent in New South Wales and 85 per cent to 15 per cent in South Australia.  However, in South Australia there might at any one time have been a greater proportion of four wheel drive tyres in storage because, even though sales were relatively less than Sydney, the quantities of tyres imported into Adelaide were determined by the size of the containers rather than the local demand.  Mr Hamden testified that, of approximately 5,200 tyres stored in Adelaide in June 2006, 1,500 to 1,700 were four wheel drive tyres.

23. Mr Robinson accepted in the course of his evidence that it was not possible to constantly achieve an average of 24 tyres to the pallet across the full range of Bob Jane tyres.

24. The pricing of logistics services for tyres comprises a number of elements.  A weekly storage fee is charged.  A fee is also charged for receiving the tyre into the warehouse and removing it from the warehouse.  The former is referred to as a “handling-in” charge and the latter as a “handling-out” or “picking” charge.  A further fee is charged for delivery of the tyre to a location away from the warehouse.

    The negotiations

25. Mr Barrot testified that he first met with Mr Robinson to discuss a third party logistics contract at the Laverton board room of Concord Park in Victoria.  Mr Sampson was not present.  Mr Robinson informed him that Bob Jane were about to market their own brand of tyres to take on the major manufacturers and that Bob Jane was looking for a third party logistic provider to handle the increased volumes.  The initial discussion concerned Sydney and country New South Wales.  The meeting lasted for less than an hour.  Mr Barrot testified that he then briefed Mr Sampson about the opportunity presented by Mr Robinson.  Mr Robinson did not recall an initial introductory meeting with Mr Barrot before he met Mr Sampson, but he accepted that there may have been one.

26. Mr Barrot testified that within about a week of the initial meeting he met with Mr Sampson and Mr Robinson to discuss providing logistics services from Sydney.  Mr Robinson told them that Bob Jane were going to bring in 15″ to 17″ tyres and that it needed a Sydney warehouse to store anywhere up to 10,000 to 12,000 tyres.  He testified that Mr Sampson asked him many questions: numbers of containers, numbers of different tyres per container, quantities of tyres, sizes of tyres, average orders.  Mr Sampson and Mr Robinson also discussed the appropriate type of racking and the number of tyres which could be stacked per pallet.  Mr Barrot testified that Mr Sampson told Mr Robinson that Concord Park expected to achieve between 24 and 26 tyres to the pallet.

27. Mr Sampson described the first meeting he had with Mr Robinson at Laverton as a fact finding meeting.  He testified that Mr Robinson said that the tyres Bob Jane wanted Concord Park to warehouse were passenger car tyres for 15″ to 17″ rim wheels.  He was told initially that about 8,000 tyres would be stored in Sydney, but the costs model which he later created used an average of 12,000 tyres per week.

1. Mr Sampson testified that Mr Robinson first mentioned the tyre/pallet ratio after he had informed him that the tyres would be palletised.  Mr Sampson’s evidence was that he asked Mr Robinson how many tyres Concord Park would get to the pallet.  Mr Robinson replied with the figure of 24 tyres to the pallet saying that the tyres were 15″ and 17″ rim tyres.  Mr Sampson could not recall whether Mr Robinson had said that they would provide 15″ and 17″ tyres or 15″ to 17″ tyres.  Mr Sampson denied that any other size of passenger car tyre was referred to.  According to Mr Sampson, Mr Robinson informed him that he could work on 24 tyres to the pallet.

2. Mr Sampson claimed that he specifically enquired whether there would be any four wheel drive or truck tyres and that Mr Robinson had replied “its passenger car tyres”.

3. Mr Robinson testified that he first met with Mr Barrot and Mr Sampson at Concord Park’s offices in Laverton.  Price was not discussed at that meeting, nor was any minimum term discussed.  The purpose of the meeting was simply to ascertain whether there was sufficient interest on both sides to enter into an arrangement.  At that meeting Mr Robinson was shown around Concord Park’s Laverton warehouse.

4. Mr Robinson agreed that, in the first meeting with Mr Sampson, he informed Mr Barrot and Mr Sampson that Bob Jane intended to import tyres branded as “Bob Jane Xenon” tyres for passenger cars to compete with Goodyear, Bridgestone and other well known brands.  Mr Robinson acknowledged that at the time of that meeting Bob Jane intended to import only passenger car tyres as part of the Bob Jane Xenon range.  He denied, however, that he had said that only passenger car tyres would be imported.  Indeed, Mr Robinson insisted that he stipulated that if Concord Park were to provide logistics services in Sydney, they would take the whole range of tyre products, but not wheels, because Bob Jane had its own warehouse for wheels in Sevenhills in New South Wales.  Mr Robinson testified that, in the course of negotiations on the rates, he sent a stock on hand report for the tyres in New South Wales to Concord Park which showed that four wheel drive and light truck tyres were stored.

5. Mr Robinson claimed that at the first meeting with Mr Sampson he invited him to visit Bob Jane’s warehouse at Campbellfield in Victoria so that he would have a good understanding of what the contract involved.  According to Mr Robinson, Mr Sampson attended a couple of days later and was shown throughout the warehouse and the full range of tyres.  During the visit to Bob Jane’s Campbellfield warehouse, Mr Robinson gave a running commentary on the types of tyres, which included four wheel drive tyres, and the way they were stored.

6. Mr Sampson denied that he ever went to the Bob Jane warehouse at Campbellfield.  He had been shown the Bridgestone warehouse.  Mr Sampson denied that Mr Robinson asked him to store the whole range of Bob Jane tyres.

7. After the first meeting with Mr Robinson, Mr Sampson reported back to Mr Barrot that he had calculated storage rates based on 24 tyres per pallet which would allow Concord Park to recover its costs of setting up in Sydney within a three year period.  Mr Barrot calculated in his head the prices for the delivery of tyres from the warehouse to Bob Jane’s outlets.  The storage and delivery rates were then incorporated into a written proposal.

8. Mr Barrot testified that the first written proposal, which was dated 7 February 2006, was delivered personally to Mr Robinson at the Laverton board room.  The 7 February 2006 proposal related to Sydney and country New South Wales only.  The quoted rates referred to passenger car tyres only.  There was no mention of light truck or four wheel drive tyres.  The rates in the written proposal were expressed to be subject to a fuel levy which allowed the quoted price for delivery of the tyres to be increased by a proportion that reflected increases in diesel prices against a pre-determined standard.

9. Mr Barrot gave evidence that at that meeting Mr Sampson took Mr Robinson through the assumptions on which the proposal was based and expressly referred to the assumption that tyres would be stored 24 to the pallet.  Mr Sampson also informed Mr Robinson that he had worked on an amortisation of the cost over three years.  According to Mr Barrot, Mr Robinson replied that he had no issue with that.  Mr Barrot told Mr Robinson that, if the offer were accepted, Concord Park would take a long term lease over a warehouse specifically for the Sydney logistics contract.  Mr Barrot told Mr Robinson that Concord Park wanted an agreement to suit that lease and Mr Robinson responded “if the rates are right”.  However, Mr Robinson told them that Concord Park would have to be a bit sharper with the rates which were quoted in the 7 February 2006 proposal.

10. Mr Robinson testified that at that meeting Mr Sampson told him that the quoted rates would be subject to a fuel levy.  Mr Robinson immediately made it clear that Bob Jane would not accept a fuel levy under any circumstances.

11. Mr Robinson described as rubbish the suggestion that he had agreed to a minimum term of three years.  He explained that he would not be able to enter into an arrangement for that long without more senior executives of Bob Jane authorising it.  Mr Robinson said that he could not recall any discussion in which a three year term was sought.

12. Mr Sampson testified that after the first meeting with Mr Robinson he had asked another Concord Park employee, John Glass, to confirm that Concord Park could stack 15″ to 17″ tyres 24 to a pallet.  Mr Sampson did not really explain why he had asked Mr Glass and Mr Hastie to check that 15″ and 17″ tyres would fit on the pallets.  When pushed as to why he did not ask Mr Robinson about storing other sizes and types of tyres, Mr Sampson responded “we didn’t go down that road”.  He testified that he just assumed that there were other suppliers and that Concord Park was being asked to deal with the Bob Jane brand tyres that were about to be heavily promoted.

13. Mr Sampson testified that, at the meeting which discussed the proposal dated 7 February 2006, he informed Mr Robinson that the rates were based on Concord Park achieving 15″ to 17″ tyres 24 to a pallet.  Mr Sampson explained to him that 24 tyres to the pallet was the key criterion used in his costs model.  When that evidence was challenged in cross-examination Mr Sampson replied “…we went through the fact that it was 24 to a pallet and 15″ and 17″ passenger car tyres.  And at nearly every one of those – every one of those meetings prior to actually doing it – that was discussed”.

14. Mr Sampson confirmed Mr Barrot’s evidence that Mr Robinson was told that Concord Park needed a three year deal to get its money back.  According to Mr Sampson, Mr Robinson replied that there was no problem with that.

15. Mr Robinson agreed that Mr Sampson mentioned a costs model on several occasions but could not say whether it was at the first meeting with Mr Sampson or subsequently.  He agreed that Mr Sampson sent him a copy of the costs model but could not recall whether it was sent before or after agreement was reached on the rates.

16. Mr Robinson accepted that Mr Sampson might have told him that Concord Park would have to make a substantial financial commitment at its new premises at Smithfield Park to take on Bob Jane’s business.

17. Mr Robinson denied that he said at the Laverton meeting that the passenger car tyres would be 15″ and 17″ in diameter only and that they could be stacked 24 to the pallet.  Mr Robinson maintained that he told Mr Sampson and Mr Barrot that they would receive four wheel drive tyres as well.  He insisted that “all the inventory was discussed”.  Mr Robinson could not recall, when giving his evidence, the exact split between passenger car tyres and larger tyres that was discussed in the meeting.

18. Mr Robinson would not commit himself to just what the proportion of passenger car tyres to four wheel drive tyres were at the time of the discussions.  Mr Robinson went so far as to deny that it was necessary for him to know what the proportion was so that he could select between the offers based on a flat rate for all tyres and offers which differentiated between four wheel drive and passenger car tyres.  On my understanding of mathematics, it would be impossible to compare a flat rate with a differentiated rate without information about the expected proportion of passenger car tyres to four wheel drive tyres.

19. Mr Robinson denied that he was taken through the written proposal of 7 February 2006 by Mr Sampson.  When Mr Robinson was asked to look at the proposal in cross-examination, he accepted that he may have discussed it.  When he was asked “surely you recall a meeting at which a written proposal was discussed at Laverton” he answered: “No, not really”.  A little later he answered “we would have discussed it.  I don’t recall where or when”.  His attention was drawn to the rates on page 22 of the proposal.  He agreed that he may have discussed those rates.

20. Mr Robinson was quite certain that Mr Sampson had never told him that Concord Park’s costings were based on fitting 24 tyres to the pallet.  He explained that if Mr Sampson had mentioned that ratio, Mr Robinson would have replied that it was “impossible”.  Mr Robinson accepted that it would have been a serious mistake to assume that an average of 24 tyres could be stacked to the pallet across the full range of Bob Jane tyres.

21. Mr Sampson testified that he revised the handling-in/handling-out rates down after the meeting.  On 10 February 2006, Concord Park sent a revised proposal for New South Wales to Bob Jane by facsimile.  Mr Sampson testified that he spoke to Mr Robinson a day or two after the revised rates were set.  Mr Robinson said that the new rates were good and that they had a deal.

22. Mr Robinson could not recall receiving the revised proposal of 10 February 2006, but he agreed that he had received it after he was shown an email by which it was sent.  He could not recall whether he accepted the revised rates in a telephone conversation or at a meeting.

23. Mr Robinson testified that he raised the possible provision of logistics services by Concord Park in South Australia with Mr Sampson.  Mr Robinson testified that he told Mr Sampson it would involve all of the tyre operation of Bob Jane in South Australia.  In South Australia, Bob Jane provided and fitted passenger car tyres, four wheel drive tyres and light truck tyres.  A proposal containing rates for the provision of logistics services in South Australia was sent by Concord Park to Bob Jane on 21 February 2006.  Mr Robinson subsequently telephoned Mr Sampson and told him that Concord Park had won the contract for South Australia.

24. Mr Robinson testified that he believed the single passenger car tyre rate price appearing on page 22 of the Adelaide proposal represented the average price calculated by Concord Park for passenger car and four wheel drive tyres.

25. Mr Robinson denied that there was an agreement that the same terms and conditions would apply to South Australia as New South Wales except for the rates.  Mr Robinson denied that there was any reference to a minimum term for the South Australian arrangements.

26. A costs model was not prepared for the South Australian proposal.  Mr Sampson testified that the costs were based on the same criteria as the New South Wales model.  He suggested that the higher storage rate charged in Adelaide relative to Sydney might have been attributable to higher rent paid in Adelaide.  However, it is difficult to accept that explanation because the Cavan depot rent was payable in any event for the interstate haulage part of Concord Park’s business.  When that was put to Mr Sampson, he replied “this is just my thoughts”.  Eventually he said that he was speculating and had no real recollection of calculating the rates.  He nonetheless maintained that, if he had known that the average tyre/pallet ratio was 16, he would have advised Mr Barrot not to proceed with the contract.

27. Mr Barrot testified that he first heard about the Adelaide proposal from Mr Sampson.  Mr Barrot prepared the Adelaide transport rates and Mr Sampson the storage rates.  Again, there was a telephone conversation in which Mr Robinson agreed that he was told that the tyres would be at the Cavan depot.  Mr Robinson said that he did not have a problem with that.  Mr Barrot told Mr Sampson that the deal had been done in Adelaide shortly after the proposal was sent.

28. The written proposal sent to Bob Jane for the provision of logistics in Adelaide also included a reference to the fuel levy.  Mr Barrot explained that the fuel levy provision was included in all proposals for a transport rate because of the fluctuations in fuel price and the overall trend of increasing fuel prices.  At the time of the negotiations with Bob Jane, the base rate used was $1.10 a litre.  The reference in the written proposals sent by Concord Park to the present levy being 3.4 per cent meant that the then current price of diesel was 3.4 per cent higher than $1.10 per litre; it was probably somewhere in the vicinity of $1.20 a litre.  The effect of the fuel levy provision, if accepted by a customer, is to allow a proportionate increase to the quoted transport rates by an equivalent proportion which in February 2006 was 3.4 per cent.

29. Mr Barrot testified that, after the prices were agreed and when the first invoices were sent for deliveries, Mr Robinson took objection to pay a fuel levy which had been added to the invoices.  Mr Barrot testified that he agreed not to charge the fuel levy at that point because it was not a lot of money and would not be a deal breaker.  Mr Robinson, on the other hand, testified that he had expressly agreed with Mr Barrot before accepting the Adelaide logistics proposal that Bob Jane would not pay a fuel levy.  Mr Barrot accepted that he may have agreed not to charge a fuel levy in his initial meetings with Mr Robinson.  I accept the evidence of Mr Robinson in this respect because it is corroborated by email correspondence on the issue soon after the Adelaide logistics contract was entered into.

30. Mr Barrot agreed that the rates charged for transportation are very sensitive to fuel increases.  He agreed that, from the point of view of transport contracts, both the transport provider and the customer prefer to be free to exploit market opportunities.  Mr Barrot claimed that the three year agreement was not put in writing because he was dealing with someone he thought he could trust.  Mr Barrot explained that, in contracts for a fixed term, there were various bench marks that could be used for allowing price increases in the period of the agreement.  The Victorian Road Transport Association put out an industry standard which reflected the cost increases in the transport industry.  Another alternative would have been to split the transport side of any logistics provision agreement from the warehousing side.

31. Mr Sampson claimed that, if he had appreciated that 24 tyres could not be stacked to the pallet, Concord Park would have quoted a higher rate for the logistics contract.  Notwithstanding Mr Sampson’s inability to recall how the Adelaide prices were fixed, he maintained that a higher price would also have been charged for Adelaide storage rates if he had known that only 16 tyres on average would fit on each pallet.

    The transition

32. Following the agreement on rates, there was some delay in transferring tyres from Kings Transport in Sydney to Concord Park.  The primary reason for the delay was that Concord Park was not ready to receive the tyres at its Smithfield premises, possibly because of some difficulty in obtaining necessary council approvals.  In the intervening period, Bob Jane imported a container of 19″ and 20″ rim diameter Kumho tyres.  Mr Robinson arranged for the container of tyres to be delivered to Concord Park so that the tyres could be distributed by it to Bob Jane outlets around Australia.  It was not necessary to warehouse the tyres because they had been pre-sold.  The large size of the tyres prompted some discussion between Mr Robinson and Mr Sampson which bears on the question of whether Mr Robinson made any representations about the size of the tyres which would be stored for Bob Jane.  I refer to those discussions further below.

33. On 8 March 2006 Kings Transport took a stocktake of the tyres warehoused by them in Sydney.  The stocktake was forwarded to employees of Concord Park by Mr Robinson on 9 March.  Mr Robinson wrote in the forwarding email that the stocktake “may assist you in your set-up”.  The stocktake included reference to tyres branded as Maxxi and Xenon.  Some of the items listed in the stocktake were light truck tyres and may also have included some Kumho tyres.

34. On 14 March 2006 Mr Robinson emailed Kings Transport and advised them of Bob Jane’s intention to terminate their third party logistic arrangement on 13 April 2006.  Mr Robinson forwarded a copy of that email to Concord Park.  The tyres were transferred about a week later than the anticipated date.  On 5 May 2006 an email was sent to Bob Jane’s New South Wales outlet advising them that the third party logistics services had been transferred to Concord Park.

35. In Adelaide, Bob Jane’s tyres were transferred from Falls Transport to the Cavan depot on about 17 March 2006.  Mr Hastie, a Concord Park warehouse manager, came to South Australia to assist with the transfer.  He planned three rows of racks allowing pallets to be stacked three high for the Cavan depot.  The racks provided a capacity to store just over 5,000 tyres.  Whilst in Adelaide on 24 March 2006, he noticed and reported to other Concord Park employees that a significant number of four wheel drive tyres had been received at the Cavan depot.

36. On 17 March 2006 a document referred to as standing operating procedures for the Sydney logistics contract was sent by Concord Park to Bob Jane.  It referred to storage procedures for passenger car and light truck tyres.  Standing operating procedures were also provided to Bob Jane for the warehousing operations in Adelaide.  The operating procedures for Adelaide also referred to four wheel drive tyres and referred to the stacking of 15″ tyres at 20 to the pallet and 13″ and 14″ tyres at 24 to the pallet.

37. Much was made by Bob Jane’s counsel of the inclusion of procedures for the storage and holding of light truck tyres and four wheel drive tyres in those documents.  It was submitted that it was inconsistent with the testimony of Mr Barrot and Mr Sampson that they expected to receive passenger car tyres only.  In my view, the references to larger tyres in the standard operating procedures is more likely to result from the adaptation of operating procedures Concord Park used when it had provided logistics services to Michelin than to reflect the information received from Mr Robinson.

    Post-contract disputation

38. After Bob Jane and Concord Park had agreed the Sydney and Adelaide logistics contracts, regular meetings were held between Mr Robinson and Mr Sampson; senior employees of Concord Park responsible for the Bob Jane logistic services also attended.  Mr Sampson took minutes of those meetings and sent those minutes to Mr Robinson, generally on the same day.

39. Mr Sampson testified that he raised the delivery of the container of Kumho tyres in February 2006 with Mr Robinson; he said to him “we’ve got 19″ to 20″ tyres, this is different to the scope that you have given us”.  According to Mr Sampson, Mr Robinson “re-confirmed that we would be getting 15″ to 17″ tyres and will be capable of getting 24 tyres to the pallet”.

40. In cross-examination it was put to Mr Sampson that his concern with the 19″ and 20″ tyres was that the container did not contain a whole range of tyres, but that it was limited exclusively to 19″ and 20″ tyres.  It was put to Mr Sampson that Mr Robinson assured him that Concord Park would not again receive a container comprising only 19″ and 20″ tyres, but that each container would have a full range of tyres.  It is improbable that the cause of Mr Sampson’s concern was the homogeneity of the tyres in the container because that could have hardly affected his costings:  it is the size of the tyre which would have that effect.

1. In any event, that is not the account which Mr Robinson gave of the discussion about the Kumho tyres.  Mr Robinson responded to the cross-examination on this topic evasively.  He testified that “we met many times, I don’t recall the conversations from every meeting”.  He claimed that he had no idea why Mr Sampson was concerned about the size of the tyres and that he had no recollection of being given any reason for his concern.  Mr Robinson agreed, however, that he “would have” relayed to Concord Park that the Kumho tyres were a one-off project.  Mr Robinson ultimately attributed Mr Sampson’s concern to “the transport or delivery or something, or something like that”.  That recollection is unlikely to be sound.  Although the size of the tyre may affect delivery costs to a minor extent, it was the storage of larger tyres that caused the major difficulty for Concord Park.

2. The email minutes of a meeting held on 14 March 2006 record Mr Robinson saying that the Kumho tyres “will not be ongoing re 19″ and 20″ [tyres]”, and “the basis of costs for 24 tyres to a pallet is correct.  You will receive 15″ and 17″ tyres”.  Mr Robinson claimed that that minute meant nothing to him.

3. The first meeting after Concord Park received Bob Jane’s tyres in Sydney was held on 9 May 2006.  Mr Sampson told Mr Robinson that 24 tyres to the pallet was a key criteria and that he wanted to review the situation when the stock was fully received into the warehouse.  He asked Mr Robinson to review the position with him.  According to Mr Sampson, Mr Robinson agreed. 

4. Mr Robinson was taken to the minutes of the meeting of 9 May 2006 which on its face suggests that he and Mr Sampson were to review the rate at which tyres were stacked per pallet.  Mr Robinson responded by saying “it’s got nothing to do with me how they want to do it, it’s irrelevant”.  Mr Robinson testified that he did not have any recollection of the number of tyres per pallet being discussed at the meeting.  Mr Robinson claimed that he had no idea why his initials were put next to that agenda item.  When asked what another note in the minutes of the same meeting which reads “storage rates per pallet” meant to him, Mr Robinson answered:

   A.Reading it now and the way I read this, it’s a little bit abstract because it says ‘storage rates per pallet’.  Well we never had a rate per pallet, that is a rate per tyre it just doesn’t make sense.  That whole dot point does not make any sense at all because there is no such thing as a rate per pallet.

   Q.The only rate you understood was the cost rate per tyre?

   A.Per unit, so this is – its contradictory and that’s why I don’t understand it, I’m sorry.

   …

   A.How I read this is that for some reason, he’s saying – and that’s it.  He’s written this, the storage rates per pallet.  Well based on an average 22 pallet, it makes absolutely no sense.  There was never any stage where we even ever and nor would I entertain or discuss a pallet rate for storage of tyres.  So this just doesn’t make any sense at all I’m sorry.

5. Mr Robinson said that, if anyone had discussed with him the number of tyres that could be stacked per pallet, he would have answered that it was not his concern.

6. In early June 2006 Mr Sampson forwarded to Mr Robinson an email he had received from Mr Hastie.  The email confirmed that Concord Park, on average, was storing only 16 tyres to the pallet.  Mr Robinson did not recall receiving the email.  He said it was none of his business.  Mr Robinson testified that: “I would have got this and probably said ‘so what?’ what does this – what are they trying to say here?”  I do not accept that testimony.  If Mr Robinson in fact believed that the storage rate was not his concern, I would have expected him to have been sufficiently surprised by the email to remember receiving it.  I would have expected him to have queried Mr Sampson about why it was sent to him, but he did not do so.

7. Mr Sampson gave evidence that he demonstrated the effect of the lower tyre/pallet ratio by using an electronic costs model based on a excel spreadsheet to Mr Robinson at a meeting in Laverton.  Mr Robinson said he had no recollection of that meeting.  In particular, he had no recollection of the model containing a variable rating to the number of tyres per pallet.  He said he was not able to recall such a meeting on 10 August 2006.

8. After Mr Sampson confirmed that the average tyres stored on each pallet was just 16 and not 24, he repeatedly sought to obtain Mr Robinson’s agreement to an increase in the storage rate.

9. Bob Jane’s counsel sought to characterise that conduct as an unethical departure from the agreement on rates which the parties had struck.  I do not share that view of Mr Sampson’s conduct.  In my view, Concord Park was simply attempting to negotiate a consensual variation to the agreement, which it was entitled to do.  I acknowledge that Mr Sampson’s proposed increases were limited to storage fees and did not include any extra costs for handling-in/handling-out even though one of the reasons for Concord Park’s losses was the extra labour above the initial estimate that was used at Smithfield.  No provision for that extra cost was made in the costs model shown to Mr Robinson.  Mr Sampson’s explanation was that that was how he chose to work his costs model.  I acknowledge also that the increase proposed for the storage rate was greater than the 50 per cent increase which would have reflected the difference between the anticipated and actual storage ratios.  Nonetheless, there is nothing untoward in the way in which Mr Sampson pursued Concord Park’s commercial interest.

10. When Mr Sampson sought the rate increases because the tyre/pallet ratio was less than he had anticipated, Mr Robinson never took issue with the implied, and sometimes express, assertion that he had provided the advice on which the average in the costs model was based.  He simply refused to countenance any increase in the storage charges.

    The credibility of the witnesses

11. I accept as generally truthful and reliable the testimonies of Mr Hastie, Mr Hamden, Mr Churchman and the accountants Mr Fitzgerald and Mr Holmes.  However, as I have already stated, I was not favourably impressed with the way in which Mr Sampson, Mr Barrot and Mr Robinson gave their evidence.  In the course of their evidence in-chief they generally answered questions emphatically and with apparent certainty.  In constrast, in the course of cross-examination, when confronted with objective circumstances which were inconsistent with their testimony, they would either become evasive by claiming that they could not recall the detail of events or they would say that they could not explain the apparent inconsistencies.  Often they responded by becoming dismissive of the cross-examiner’s attempts to probe and test their assertions.  I was left with the impression that they adopted an approach to giving evidence which resembled their approach to commercial dealings in the logistics industry without having sufficient regard to their obligations to the Court as witnesses.

12. There are several matters in particular which cause me some concern about their respective testimonies.

13. I was left with some doubt about the credibility of both Mr Robinson and Mr Barrot by evidence concerning contact between them in about July 2007, at a time after Mr Robinson had recently resigned his employment at Bob Jane.

14. Mr Robinson testified in evidence in-chief that after he left his employment with Bob Jane he received a telephone call from Mr Barrot enquiring whether he would “bat” for Concord Park in its dispute with Bob Jane.  Mr Robinson claimed that he had no idea how Mr Barrot knew where to contact him.  According to Mr Robinson he declined to “pad up”.

15. In cross-examination it was put to Mr Robinson that on 2 July 2007 he telephoned Mr Barrot to ask him to tender for logistics services for his new employer Fuchs Oil.  Fuchs Oil supplies oil to the automotive, mining and industrial sectors.  Mr Robinson accepted that he may have contacted Mr Barrot along with other suppliers of logistics services for a national tender call by Fuchs Oil, although he had no actual recollection of ringing Mr Barrot.  Mr Robinson then agreed that on 2 July 2007 Mr Barrot might have visited him at Fuchs Oil in Sunshine, Victoria.  He agreed that Mr Barrot may have obtained Mr Robinson’s telephone number at Fuchs Oil because he had been asked to tender.

16. Mr Barrot testified that Mr Robinson contacted him after he had left Bob Jane and when Mr Robinson was employed by Fuchs Oil.  Mr Robinson asked for help to deal with some transport issues at Fuchs Oil.  He invited Mr Barrot to visit him there.  Mr Barrot did see Mr Robinson at the premises of Fuchs Oil, but said that he had an ulterior motive for visiting him; he wanted to know whether he and Mr Robinson could “look each other in the eye”.  After the meeting at Fuchs Oil, Mr Barrot telephoned Mr Robinson to discuss the difficulties arising out of the Bob Jane contracts in New South Wales and South Australia.  Mr Barrot testified that Mr Robinson replied: “Trevor I don’t want to get involved”.  Mr Barrot asked why.  Mr Robinson repeated: “I just don’t want to get involved”.  Mr Barrot testified that there was no other conversation other than that.  Mr Barrot did not pursue the Fuchs Oil logistics work.

17. However, in a letter written by Concord Park’s solicitor on 27 July 2007 it was claimed that in the course of that conversation Mr Robinson had confirmed with Mr Barrot that the agreement was for a three year period.  The solicitor wrote:

    [I]n this regard my client spoke to Mr Robinson yesterday who confirms that there was a clear understanding that the arrangement was to stand for 3 years and agrees that costings were on that basis – apparently he considers your client’s position both untenable and unfair.

18. It is simply inconceivable that the contents of the solicitor’s letter resulted from a mistake made by the solicitor as to the instructions given by Mr Barrot.  The allegation put in the letter was a serious one.  It had been hinted at in an earlier letter in which Concord Park’s solicitor had enquired, almost as if in passing, whether Bob Jane had spoken to Mr Robinson, who had by that time left their employment, about the terms of the Adelaide logistics contract.

19. Concord Park did not call the solicitor who wrote the letter although he was available to be called.  In my view, the only reasonable explanation for the letter is that Mr Barrot instructed his solicitor that he had spoken to Mr Robinson and that Mr Robinson had expressed the views relayed in the solicitor’s letter.

20. On the basis of Mr Robinson and Mr Barrot’s testimonies, perhaps the most obvious conclusion is that Mr Barrot lied to his solicitor.  However, I am not sure that that is the case.  It was, in the circumstances, a big lie to make and one that would have been very quickly discovered.  On the basis of Mr Barrot’s success in business, and my impression of him in the witness box, I find it surprising that he would adopt a strategy so obviously likely to fail unless he had some reason to think Mr Robinson would give Concord Park some support in its dispute with Bob Jane.  Mr Robinson’s own equivocation about the contact with Mr Barrot in July 2007, and how it came about, increases my concern about their discussions at that time and what may have been agreed between them.

21. Ultimately, and on any view of it, the evidence severely undermines Mr Barrot’s credibility.  However, it also causes me some concern about Mr Robinson’s credibility.

22. I was also left with serious concern about Mr Sampson’s credibility as a result of evidence he gave on two particular topics.

23. The first concerned an apparent decision by Mr Barrot to terminate the Adelaide logistics contract in December 2006.  Towards the close of Mr Sampson’s cross-examination, Concord Park gave further discovery of the minutes of internal Concord Park meetings.  On the basis of those minutes, Mr Sampson was asked whether Mr Barrot had given him an instruction in about Christmas 2006 to give Bob Jane notice terminating the Adelaide logistics contract.  Mr Sampson answered: “No”.  The question was put again and he answered: “Not to my recollection”.  He was asked whether there was any discussion about terminating the arrangement.  He answered: “Not at that time.  Not in that time, no”.  After he was given time to reconsider his answer, he replied: “Not to my recollection”.

24. However, minutes of the meeting of an advisory committee of Concord Park held on 22 December 2006 show that Mr Barrot was considering closing down the Cavan depot altogether and sharing a depot with another interstate haulage operator.  The minutes also show that Mr Barrot requested Mr Sampson to give Bob Jane notice terminating the Adelaide logistics contract.  The minutes recorded as the relevant action to follow that item “GS to comply”.  The initials GS refer to Geoffrey Sampson.

25. Mr Sampson was subsequently given an opportunity to view the minutes.  He said that, having refreshed his memory from the minutes, he accepted that he was given that direction but that he had no independent recollection of it.  I find it inherently improbable that Mr Sampson would forget an instruction of such obvious significance to Concord Park’s operations.  It is all the more improbable for its association with the dispute with Bob Jane.  Later, however, Mr Sampson said that he did have a recollection that early in the following year “there was a reconsideration of whether we should keep Bob Jane in Adelaide or not and the consideration was to keep it”.  That recollection contrasts sharply with his inability to recall the initial instruction.  Mr Sampson then testified that it was as part of that reconsideration that he emailed Mr Robinson in January 2007 asking him about Bob Jane’s intentions with respect to the Adelaide logistics contract following the termination of its Sydney counterpart.  I deal with that email further in [131] – [133] below.  Mr Sampson agreed that a termination of the Adelaide logistics contract may have affected Concord Park’s decision with respect to the Cavan depot.  He claimed, however, that he had no independent recollection of any discussion or personal thoughts along that line.

26. On 16 February 2007 there was a further advisory committee meeting.  It records that Mr Barrot again requested Mr Sampson to give Bob Jane notice terminating the arrangement.  The action is again recorded as “GS to comply”.  Mr Sampson testified that the minute was automatically reproduced from the December minutes and was not an affirmation of the earlier resolution to that effect.  As surprising as that explanation is, Mr Sampson’s evidence is supported to some extent by the way in which other items on the agenda were also reproduced.  Nonetheless, I am left with the impression that Mr Sampson did not disclose all that he recalled about the direction to terminate the Adelaide logistics contract because he apprehended that it would undermine Concord Park’s claim for damages for its early and unlawful termination.

27. The other concern which I have with Mr Sampson’s evidence emerged in the course of his cross-examination when he was questioned on his response to an enquiry by Concord Park’s solicitor about the existence of a costs model on which the Adelaide rates were calculated.  Mr Sampson emailed Concord Park’s solicitor saying that he could not find any such costs model.  In support of his contention, he forwarded an email which he had received from Mr Churchman and which referred to the absence of any costs model.  That email had been sent by Mr Churchman to inform Mr Sampson of the results of his review in January 2007 of the costs of servicing the Adelaide logistics contract.  The review suggested that the Adelaide logistics contract was not very profitable.  Mr Sampson deleted the results of the review from Mr Churchman’s email before forwarding it to his solicitors.  Mr Sampson testified that he did this, so that the part of the email in which Mr Churchman wrote that there was no Adelaide costs model might be more easily noticed by the solicitor.  However, the email was short; the solicitor would have quickly noticed the relevant sentence.  Moreover, simply underlining that sentence would have more easily served the same purpose.  I reject Mr Sampson’s explanation.  I suspect that Mr Sampson made a deliberate decision to delete the results of the review because he was concerned that the results were inconsistent with Concord Park’s claim for damages for early termination of the Adelaide agreement.

28. Having regard to my concerns about the testimonies of Mr Barrot and Mr Sampson, I am not prepared to find that it was a term of either the Sydney or Adelaide logistics contracts that they would continue for a three year term.  There was no reason to apply the three year term to Adelaide because Concord Park did not enter into a separate stand-alone lease to undertake that work.  The set up costs to Concord Park were not as great in Adelaide as they were in Sydney.  Concord Park obtained a substantial financial benefit from the storage rates it charged Bob Jane in Adelaide because they contributed to the rent of the Cavan depot which Concord Park was obliged to pay in any event to conduct its interstate haulage operations into and out of Adelaide.  Moreover, there was no reference to a three year term in the written proposal for the Adelaide logistics contract which it sent on 21 February 2006.

29. It is inherently unlikely that a three year term would have been agreed without a rates review mechanism being expressly included.

30. Whatever statement was made by Mr Barrot to the effect that the arrangement would be for a three year term, Mr Robinson did not reply in a way which could reasonably be taken as an assent to the inclusion of a fixed term of three years into the Adelaide logistics contract.  Mr Robinson may have acknowledged that Concord Park wished the arrangement to continue for that term.  However, even on Mr Barrot’s evidence, Mr Robinson’s acknowledgment that the arrangement could continue for that term was conditional on the rates remaining competitive.  The market for third party logistics is very competitive.  It would have taken an exceptional price offer to induce Mr Robinson to contract away the option to negotiate a cheaper arrangement for three years.  The rates offered by Concord Park were not of that order.

31. Even if I were to find that Mr Robinson and Mr Barrot both committed to a three year term, it is plain that, if asked at what rates the services would be provided over that term, neither of them would have asserted that the rates would not change.  Yet they had not agreed a formula or mechanism for reviewing the rates.  Even if they had committed to a three year term, the commitment could not, in the absence of such an agreement, have any contractual force.

32. I am not satisfied that there was any conversation which, viewed objectively, amounted to a contractual condition that the Adelaide logistics contract would continue for three years.

33. On the other hand, I am satisfied that Mr Robinson did tell Mr Sampson that he could work on stacking, on average, 24 tyres to a pallet.  Mr Sampson’s testimony that Mr Robinson so informed him is consistent with a number of objective circumstances.  First, at the time of the pre-contractual discussions, Bob Jane expected to import only passenger car tyres in the Xenon range.  At that time also, the number of four wheel drives imported by Bob Jane was relatively low.  Most importantly, however, Mr Sampson’s testimony that Mr Robinson made a representation to that effect is corroborated by the repeated references to the 24 tyres average in the meetings and the minutes of the meetings which were regularly held during 2006.

34. However, I find that Mr Robinson’s representations that Concord Park would be able to stack Bob Jane’s tyres 24 to the pallet were not, objectively viewed, warranties which were incorporated into the Adelaide logistics contract for the following reasons.

1. First, the discussion about the average which could be achieved did not proceed to a level of detail and certainty from which it could be inferred that the parties intended to be bound by the estimate as a term of the Adelaide logistics contract.  The representation was made in the course of a conversation before a contractual offer was made by Concord Park.  In effect, Mr Robinson’s representation influenced the contractual offer which was later made by Concord Park, but was not in itself a term of that contract.

2. Secondly, Concord Park itself does not appear to have so regarded it.  It did not refuse to accept the larger tyres during the term of the contract, it simply attempted to re-negotiate the contract when it discovered that the storage rate it was achieving was less than that which had been represented.

3. Finally, the representation was not included in the written proposal.

   Damages for contract misleading conduct claims

4. In support of its claim for loss resulting from the misrepresentation as to the number of tyres per pallet, Concord Park relied on the report of the accountant, Mr Fitzgerald.  Mr Fitzgerald calculated that loss to be $109,175.  He arrived at that result by first calculating the number of pallets used to store Bob Jane’s tyres by dividing the average number of tyres stored each week by 16.  He then calculated the revenue that would have been earned if those pallets, 467 in all, had each contained 24 tyres.  He calculated the storage revenue that Concord Park would have earned in those circumstances to be $326,825.  He then deducted from those hypothetical earnings the amount of $217,650 which was actually earned from the storage of tyres.  The difference is $109,175.

5. It can immediately be seen that the calculated loss is premised on Bob Jane providing more tyres for storage than it actually had.  The fallacy in that method is that Bob Jane was not contractually obliged to supply any more tyres than it in fact did.  Moreover, Concord Park did not adduce any evidence that it lost the opportunity to exploit the extra space taken by the additional pallets to earn other income.

6. The only sound basis upon which the effect on Concord Park’s financial position of the misrepresentation can be calculated is to have regard to the extra costs incurred in moving the extra pallets around.  On the calculations made by Mr Fitzgerald, approximately 160 “extra” pallets were required.  That, however, assumes that all tyres were placed in pallets and were not flat stacked.  There was some evidence of flat stacking at the Cavan depot.

7. Mr Churchman testified that it was necessary to move 60 pallets out every morning and to bring them back in at night.  He allowed a cost of $1 per pallet for that movement.  Mr Churchman claimed that for the per pallet figure he relied on an estimate given to him by Mr Hastie resulting in an additional weekly cost of $600.  However, Mr Hastie testified that he had provided an estimate of the time it would take to move the pallets and not the cost.  The basis upon which the cost of $1 per pallet was calculated is therefore left unexplained.  It is also significant that Mr Churchman made his calculations on the basis that 823 pallets were used daily for the Adelaide logistics contract.  That appears excessive having regard to Mr Fitzgerald’s calculations on which Concord Park relied.  Mr Churchman allowed a hire charge of $0.36 per pallet per day and accordingly calculated a weekly hire cost of $277 for all of the pallets used to store Bob Jane’s tyres.  If that calculation is sound, the additional cost incurred because of the lower tyre/pallet ratio is probably in the order of one third of that amount.

8. Mr Churchman calculated the weekly delivery cost of the Adelaide logistics contract to be $720.  He calculated the cost based on a delivery cost per pallet and the delivery of about 1,000 tyres per week.  He calculated an additional cost of $1,750 for overtime.  Mr Churchman estimated that one overtime hour daily was attributable to the volume of daily orders.  Mr Churchman accepted that there was some overlap between the delivery cost of $720 a week and the overtime component of $1,750 a week.  It is not obvious to me that any extra cost would be incurred in making deliveries because of the lower number of tyres per pallet.  Mr Churchman initially testified that delivery costs would have been reduced by 20 to 25 per cent if 24 tyres could be stacked to the pallet.  He later testified that it would be closer to a 10 per cent reduction.

9. Mr Churchman also allowed a sum of $400 for extra overtime involved in unloading boxes, picking orders and doing other loading.  That was related to the unloading of containers and was usually done after the 8 hour shift ended on Saturdays.  Mr Churchman thought that an administration charge of five hours a day, at a total of $300, would also be reduced if there were less pallets.  He attributed that to the time taken to deal with orders and complaints relating to Bob Jane tyres.  However, that cost could not be affected by the number of tyres which were stacked per pallet; it is purely a function of the total number of tyres delivered.  I find that no part of the container cost or the administration cost is attributable to the lower tyre/pallet ratio.

10. Doing the best I can, I find that the extra cost to Concord Park of providing its contracted services to Bob Jane by reason of the lower tyre/pallet average was about $400 per week.

11. However, for the reasons I am about to give, the reduced profit earned by Concord Park is not a loss.  Notwithstanding the increased costs involved in providing the logistics services to Bob Jane, the Adelaide contract remained profitable for Concord Park.  It could hardly not be so.  Concord Park had leased the premises in which it stored Bob Jane’s tyres for the purposes of its interstate haulage business.  The storage fees it charged Bob Jane were a contributor to the cost of the lease of the premises.  It was not suggested, and there was certainly no evidence, that there was any other opportunity available to Concord Park to exploit the space it had at the Cavan depot.  Plainly there were benefits achieved by sharing other overheads such as administrative costs and by co-ordinating the work of servicing the Adelaide logistics contract with the delivery of the interstate goods to various locations around Adelaide.

12. The primary principle in accordance with which damages are awarded for loss in both tort and contract is that the wronged party should, as nearly as possible, be restored to the position he or she would have occupied if the wrong had never been committed.  I shall refer to this principle as the compensatory principle.  The reason for the difference between awards of damages in contract and those in tort is that the “wrong” in each case is quite different.  In contract the wrong is the failure to fulfil a promise; damages for breach of contract are therefore awarded to place the innocent party in the position he or she would have enjoyed if the contractual obligation had been faithfully fulfilled.[2]  In tort, and commonly in the case of statutory duties, the wrong is conduct which breaches a pre-existing duty; the innocent party must therefore be placed in the position that he or she would have occupied if the breach of duty had never been committed.[3]

    [2]    Gates v The City Mutual Life Assurance Society Ltd (1986) 160 CLR 1 at 11-2 per Mason, Wilson and Dawson JJ; Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 80-2 per Mason CJ and Dawson JJ.

    [3]    Registrar of Titles v Spencer (1909) 9 CLR 641.

13. In Henville v Walker,[4] Hayne J derived the following propositions from s 82 of the Trade Practices Act 1974 (Cth):

    ·The section requires comparison between the position in which the appellants found themselves after the project was finished, and the position in which they would have been if, instead of relying on what they were told by the respondents, they had not undertaken the project.

    ·The Act directs attention to whether the contravening conduct was a cause.  It does not require, or permit, the attribution of some qualification such as “solely” or “principally” to the word “by”.

    ·On its face, the section permits recovery of the whole of the loss sustained by a person who demonstrates that a contravention of Pt V of the Act was a cause of that loss.

    ·Nothing in the text of s 82(1), or the Act as a whole, suggests that the carelessness of the person who suffers loss or damage as the result of contravention of the Act should be taken into account in deciding what was the amount of loss or damage actually suffered. Section 82(1) appears to confine attention to the limited question of the historical relevance of the contravening conduct to the loss or damage sustained.[5]

    [4] (2001) 206 CLR 459.

    [5]    Henville v Walker (2001) 206 CLR 459 at 510 [166].

14. In Murphy v Overton Investments Pty Ltd,[6] the High Court (Gleeson CJ, McHugh, Gummow, Kirby, Hayne, Callinan and Heydon JJ) held that the lessees of a unit in a retirement village who had entered into the lease relying on a representation that the weekly costs for outgoings were $55.71, when in fact they were a higher amount, had prima facie suffered a compensable loss. In that case, if the lessees had known the truth, they would not have entered into the lease even though there was no difference between the price they paid for the right to occupy the unit and its value. It was the revenue loss resulting from the higher outgoings which the High Court held was capable of amounting to a loss for the purpose of s 82 of the Trade Practices Act 1974.[7]

    [6] (2004) 216 CLR 388.

    [7]    Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388 at 408-9 [49]-[51].

15. The High Court explained the loss in these terms:

    [66]The appellants had been induced by the respondent’s conduct to undertake an obligation which may, but need not, have been more onerous than the respondent’s representation led them to believe.  When the respondent started to charge all the outgoings it was entitled to charge, the appellants suffered a loss.  The amount of that loss was not to be determined, as the majority of the Full Court held, only by comparing the financial position of the appellants according to whether they entered this lease or took some other accommodation.  The appellants did not contend that they had suffered loss in that way.  The appellants suffered loss because the continuing financial obligations they undertook when they took the lease proved to be larger than they had been led to believe. The question then became: how much larger was that burden?

    …

    [70]Secondly, once the contingency which had been hidden by the misrepresentation came to pass, it may be necessary to consider whether it was then reasonable for the appellants to continue to remain in the village rather than attempt to sell their interest and move elsewhere.  It would, however, be for the respondent to raise this issue, being, as it is, a matter going in answer to the appellants’ claim to damages.  Though we were taken to no pleading, evidence or argument advanced by the respondent along these lines, the issue was raised in par 1 of the respondent’s notice of contention.  In all the circumstances it is not appropriate that we resolve it.  As will be seen, we propose to remit the assessment of damages to the trial judge.  If the respondent wishes to persist with the issue of whether the appellants behaved reasonably, and if the trial judge, in the light of the course of proceedings, considers that it is open to the respondent to raise it, it may be investigated as part of the remitter.  The inquiry would, no doubt, have to give due weight to the then age of the appellants, their state of health and other matters affecting whether it was reasonable to expect them to confront the turmoil, cost and burdens associated with selling their residence, buying or renting another, and shifting to it.  The trial judge summarised, not unsympathetically, some evidence of the first appellant as to why he and his wife did not move out after the 18.37 per cent increase of 1 July 1994.  That evidence may also have relevance to the question of whether it was reasonable not to move out in 1997.  But if it were found that it was, or would at some later time become, unreasonable for the appellants not to sell their interest in the lease, the point at which they could be expected to sell the lease would mark the outer limit to the period for which they would be exposed to the obligation to pay more outgoings than they were led to anticipate.[8]  (citation omitted)

    [8]    Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388 at 413 [66], 414-5 [70].

16. Even though the appellants in Murphy had received fair value for the consideration they gave and the ongoing financial obligations they undertook, their outgoings were in fact greater than they were led to believe they would be, and to that extent they had prima facie suffered a compensable item of loss.  It is clear from its reasons that the Court did not proceed on the basis that, by reason of the misrepresentation, the appellants were entitled to continued occupancy of the units on the basis of the cost structure represented by the respondents.  An award of damages on that basis would have reflected the contractual measure of loss and would have exceeded the compensatory principle.  So much is clear from the remittal of the matter to the trial Judge for an assessment of damages so that the trial Judge could consider and determine such issues as a comparison between the costs charged and such additional costs as the appellants expected they might be charged in the future, whether or not it was reasonable for the appellants to continue to remain in occupation given the increased costs and their life expectancy.[9]  The High Court observed that it may even be the case that, having regard to these considerations, the appellants might not ultimately have proved any loss or damage.[10]

    [9]    Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388 at 413-4 [67]-[71].

    [10]   Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388 at 415-6 [74].

17. In my respectful opinion, the decision of the High Court in Murphy does not support the proposition that a business operator, who profits less than he or she anticipated in reliance on a misrepresentation, suffers a compensable loss for the purpose of s 82 of the Trade Practices Act 1974 (Cth). The evidence to which I now turn establishes that Concord Park continued to make substantial profits from the Adelaide logistics contract notwithstanding the misrepresentation as to the tyre/pallet ratio it could expect to achieve.

18. Mr Fitzgerald calculated the average weekly contribution to the revenue of Concord Park to be $5,079.  There was no dispute between Mr Fitzgerald and the expert retained by Bob Jane, Mr Holmes, in that respect.  There was a minor disagreement between them as to the commencement date of the three year term.  They both recognised that ultimately that was a matter for me to determine.  I have found that no three year term was agreed.  I find, however, that, in speaking of the need to recover costs over a three year period, Mr Barrot must have had in contemplation three years from the time when the tyres were transferred to Concord Park and it commenced to earn an income.  It is that assumption on which Mr Fitzgerald proceeded.

19. Mr Holmes and Mr Fitzgerald based the costs of earning the revenue largely on the advice given by Mr Churchman.  The quantum of the costs associated with the warehouse operation were taken to be:

    1.Handling $600.

    2.Pallet hire $200.

    3.Overtime $400.

    4.Administration $300.

    5.Allowance for additional variable costs $200.

20. Mr Fitzgerald estimated item 5, the additional variable costs, from other Concord Park records.

21. As to transport, both experts assumed a weekly delivery cost of $720 and overtime cost of $1,750.  Those costs had also been provided by Mr Churchman.

22. The differences between Mr Holmes and Mr Fitzgerald on the way in which the costs were treated are these.  Mr Fitzgerald did not allow an amount of $300 for administration costs.  He excluded that cost on the basis of Concord Park’s instructions that, although it correctly reflected the cost of the time spent by administrative staff in administering the Bob Jane contract, the same staff were necessarily employed for the same hours for Concord Park’s interstate haulage operation.  Mr Holmes, on the other hand, took the view that even if no extra employee hours were needed to service the Bob Jane contract, the time spent by the existing employees was a real cost.

23. If I had awarded damages, I would have adopted Mr Holmes’ approach on the administrative cost item.  In a sense, the time spent by the existing employees of Concord Park meant that there was a loss of an opportunity for them to spend that time on better performing their other work or in some other way maximising the value of their work for Concord Park.

24. The calculation of the profit does not take into account the fixed overhead cost of the space at the Cavan depot.  However, I am satisfied that there is unlikely to have been any other use for that space that could have been profitably exploited by Concord Park.

25. Mr Holmes considered two spreadsheets which purported to show the trading performance of Concord Park’s Adelaide operation.  Mr Holmes was unable to reconcile the figures in those spreadsheets with Mr Churchman’s calculations of Concord Park’s weekly costs of servicing the Adelaide logistics contract.  I too have reservations about the lack of substance behind Mr Churchman’s cost estimates.  They are not supported by any close analysis of the trading figures and, in particular, the cost items of Concord Park.  However, there can be little doubt that the income earned from the Adelaide logistics contract was a major contributor to the bottom line of Concord Park’s operation.

26. Mr Fitzgerald’s calculation resulted in a profit contribution of about $1,100 per week.  If I had found that Bob Jane unlawfully terminated the Adelaide logistics contract, I would have assessed damages on the basis of an annual loss of $40,000.  I would have discounted the loss estimate of Mr Fitzgerald by reason of the fragile factual foundation for the costs of the operation and the inability to cross reference those costs to the financial statements.

27. Notwithstanding the apparent profitability of the Adelaide logistics contract, Concord Park claims to have suffered a loss by reason of Mr Robinson’s misrepresentation as to the number of tyres per pallet.  That proposition is counterintuitive.  It would result in an award which was more than the compensatory principle to which I referred in [113] above could support.  Concord Park does not claim that, had it been told the true average, it would have successfully negotiated a contract with Bob Jane at a higher rate.  That is extremely unlikely.  Bob Jane insisted on and won a reduction in the rates first proposed on the basis of the Sydney costs model.

28. Nor does Concord Park claim that, if it had not entered into the Adelaide logistics contract with Bob Jane, it would have entered into a more profitable contract with another entity.  The recognition that lost opportunity is a proper head of damage for statutory misrepresentation is, in my view, the explanation for awards of damages for such misrepresentations which fall somewhere between the traditional measure of damages in tort and contract.  There is no such basis for Concord Park’s claim in this case.

29. I therefore find that Concord Park did not suffer any compensable loss as a result of Mr Robinson’s misrepresentation.  I dismiss that part of Concord Park’s counterclaim.

    Termination of Adelaide Logistics Contract – the lien claim

30. Mr Sampson testified that he sent the email to Mr Robinson asking for advice on whether or not arrangements would continue in Adelaide in January 2007 “because the Bob Jane contract in Adelaide contributed to the overall revenue of Concord Park Adelaide”.  Mr Robinson’s response that it was not on the radar was important to Concord Park because Bob Jane contributed revenue to South Australia.  Mr Sampson testified that, if Mr Robinson had responded differently, he would have spoken to Mr Robinson and ascertained just why they wanted to terminate the contract because the Adelaide logistics contract provided an important contribution to the costs of the Cavan depot.

1. Mr Sampson testified that he passed the email on to Mr Barrot.  He claimed that it played a part in Concord Park’s decision to continue with Bob Jane even though it was Mr Barrot’s prerogative to make that decision.

2. Mr Barrot gave evidence that he did see Mr Robinson’s email.  Mr Barrot discussed it with Mr Sampson.  They considered that it was plain that if they did not change the rates in Adelaide they would keep the business.  He continued “because Adelaide was a shared facility with shared costs and the revenue was quite good in Adelaide we decided that we would put up with the wrong mix”.  The “wrong mix” is a reference to the inconvenience caused to the interstate haulage operations.

3. Concord Park claims that Mr Robinson’s representation that a move was not on the radar was false and misleading.  I am not satisfied that Mr Robinson was actively considering terminating the Adelaide logistics contract at that time.  I accept that he had obtained a quotation from the logistics firm PetRock in March 2007.  Mr Robinson testified that that quote was received because PetRock had recently acquired the logistics firm which had succeeded Concord Park in Sydney.  I find that explanation plausible.  Be that as it may, the fact that Mr Sampson had obtained a quote in March 2007 does not show that he was actively considering a move from Concord Park in January 2007.

4. In any event, it was clear that by May 2007 Mr Robinson had not terminated the Adelaide logistics contract.  On 31 May 2007, just before his departure from Bob Jane, Mr Robinson sent an email to Mr Hamden enclosing the quote received from PetRock.  If Mr Robinson was actively considering a move in January, nothing came of it before he left.  However, as paradoxical as it may seem, I accept that, if the statement was false when made in January, and if Concord Park had acted on it to its detriment, it may be entitled to compensation for any losses resulting from the subsequent decision to terminate the Adelaide logistics contract even though that later decision was not connected with Mr Robinson’s earlier consideration of the question.

5. However, as I have said, I am not satisfied that Mr Robinson was thinking about terminating the Adelaide logistics contract if the rates remained the same.  Nor am I satisfied that Concord Park acted to its detriment on the strength of that representation.  The evidence of Mr Sampson was simply that he would have spoken with Mr Robinson to attempt to retain the contract.  However, because Mr Robinson did not terminate the contract, Concord Park has not suffered any loss as a result of losing an opportunity to put its case to Mr Robinson.  Nor did Concord Park conduct its business in any different way after receiving Mr Robinson’s intimation.  It did not incur any additional costs.

6. If Concord Park had known that Bob Jane was considering a move, it may possibly have increased its rates to maximise its weekly profit before the Adelaide logistics contract was terminated.  However, if Concord Park had so acted, it would have only lost the contract even more quickly, increasing, not reducing, its loss.

7. I accordingly dismiss Concord Park’s claim on that alleged representation on the basis that I am neither satisfied that it was made, nor that Concord Park acted to its detriment by relying on it.

8. On 21 June 2007 Bob Jane informed Concord Park that it intended to terminate the logistics contract.  The notification from Bob Jane was quickly communicated to Mr Barrot.  He sent an email expressing his disappointment and complaining that the agreement he had reached was for a three year term.  Bob Jane replied confirming its intention to terminate the arrangement and engage another third party logistics provider.

9. Mr Barrot telephoned Paul Smith, who was the state manager of Bob Jane.  Mr Smith told him that he wanted to collect the tyres on Monday 25 June.  Mr Barrot told him that he should not do so because someone might be hurt.  Mr Smith testified that the statement was made in a firm and intimidating manner.  In an email sent to Mr Barrot on 22 June 2007, the general manager (corporate affairs) of Bob Jane, Mr Chung, described the statement as a threat.  Mr Barrot responded by email on Monday morning informing Mr Chung that if Bob Jane employees attempted to retrieve the tyres he would call the police to prevent a breach of the peace or anyone getting hurt.  Some time later, in correspondence from Concord Park’s solicitor, a similar explanation was proffered for Mr Barrot’s statement to Mr Smith.

10. Mr Barrot repeated that explanation in his evidence in-chief.  I reject it.  There was nothing in any statement made by anyone from Bob Jane that should have caused him to fear that its employees would behave provocatively when collecting the tyres.  If Mr Barrot was concerned about the risk of an accident because the depot was very busy, I would have expected him to have immediately arranged an alternative and more convenient time with Mr Smith.  He did not do so.

11. On the basis of Mr Smith’s evidence, I find that Mr Barrot was deliberately threatening in the course of the telephone conversation because he was angry that Bob Jane had terminated the arrangement and he was anxious to attempt to persuade them to stay on.  The threat was part of a strategy to buy time in which to dissuade Bob Jane from terminating the Adelaide logistics contract.  Mr Barrot was no doubt motivated by the fact that Bob Jane’s Adelaide operations remained profitable for Concord Park.

12. A war of correspondence quickly ensued between Bob Jane and Concord Park.  Concord Park made many demands in addition to claiming the charges payable pursuant to the Adelaide logistics contract as a condition of the release of the tyres.  It demanded that a sum of $250,000 be paid into its solicitor’s trust account to satisfy the claim for damages for unlawful early termination of the Adelaide logistics contract.  Concord Park also claimed an amount for payment of fuel levy which Mr Barrot had very obviously agreed not to charge.  The fee claimed to pick out the stock from storage for the purposes of re-delivery to Bob Jane was twice the rate payable under the Adelaide logistics contract for picking out.  Concord Park also insisted that it would deliver the tyres to locations specified by Bob Jane at a charge to Bob Jane rather than allowing Bob Jane to pick up the tyres from the Concord Park depot with its own transport.

13. Concord Park did not actually identify the charges it claimed under the Adelaide logistics contract in any written demand.  Bob Jane’s solicitor managed, in the course of a telephone conversation with Concord Park’s solicitor, to identify some of those charges.

14. Until mid-July 2006 Concord Park continued to deliver tyres to retail outlets.  However, after that date that service was suspended whilst Concord Park pursued its demands for the payments which I have just described.

15. Eventually, after the solicitors traded many blows aimed at the opposing parties, and on occasion at each other, the chest beating came to an end.  On 8 August 2007 Bob Jane paid all outstanding fees and charges, other than the storage fees for the last week of July and the first week of August, by making a payment in the sum of $25,000.  Concord Park, for its part, first modified its claim for the payment of $250,000 on account of its damages claim to seek an assurance that Bob Jane had a capacity to pay, and eventually dropped any demand with respect to its foreshadowed claim altogether.

16. Notwithstanding the conduct to which I have referred, Concord Park insisted that it was entitled to detain Bob Jane’s tyres pursuant to the Warehouse Liens and Storage Act 1990 (SA). Sections 6 and 7 of that Act provide as follows:

    6—Lien

    Subject to this Act, an operator of a warehouse has a lien on goods deposited for storage in the warehouse (whether deposited before or after the commencement of this Act).

    7—Charges covered by lien

    The lien is for the amount of—

    (a)     lawful charges for storage and preservation of the goods; and

    (b)lawful claims for insurance, transportation, labour, weighing, packing and other expenses in relation to the goods; and

    (c)reasonable costs incurred in selling the goods pursuant to this Act and in giving notice of intention to sell, and advertising the sale, in compliance with this Act.

17. In my view, the statutory right to a lien given by those provisions can be modified or even abrogated by contract.  There is no provision of the statute which precludes any such contractual modification or abrogation.  Much commercial mischief would be caused if it were otherwise.  If parties to a warehousing agreement were to agree on a third party logistics arrangement which included seven day terms of credit, it would frustrate that commercial arrangement if the statute was so construed that the warehouse operator was entitled, after taking receipt of the goods, to insist on payment by way of cash on delivery.

18. By cl 2.6 of the rates proposal of 21 February 2006, Concord Park expressly provided that payment was to be by electronic transfer seven days from the date of the invoice.

19. Mr Barrot testified that Concord Park’s standard consignment notes were used when delivering tyres to Bob Jane’s outlets and to claim storage and handling charges.  Multiple copies of the consignment notes are generated.  A white copy is used for charging, a blue copy for proof of delivery, a green copy for the receiver and a pink copy for the sender.  The white copy is attached to the invoice sent to the customer.  The pink slip is retained for Concord Park’s records.  Final calculation and collation of invoices takes place on Monday and Tuesday.  The invoice is generally sent on Wednesday.

20. Mr Robinson testified that a proof of delivery was required by Bob Jane if there was a dispute about delivery from a T-Mart itself.

21. I find that the seven day credit period commenced from the delivery of the hard copy of the invoice based on the practice of Concord Park to which I have just referred.  However, I find that it was not a term of the credit arrangement that the seven day period only commenced on the provision of proof of delivery.  The practice of the parties does not demonstrate adoption of such a term.  Such a term would operate unfairly on Concord Park.  I doubt that a reasonable bystander would conclude that the parties had agreed that payment of the entire invoice would be deferred pending the resolution of a dispute over a single minor item charged on it.

22. I find that the credit term found in the written proposal together with the invoicing practice to which I have just referred by necessary implication modified the right given by s 6 of the Warehouse Liens and Storage Act 1990 (SA) such that Concord Park contractually waived its right to exercise the lien with respect to any charges which were the subject of an invoice which fell within the credit term. However, in my view the ordinary credit terms were intended to apply only during the currency of the agreement and in the ordinary course of dealings pursuant to the Adelaide logistics contract. An abrogation of the lien can be easily implied in those circumstances because, with respect to the charges for the delivery of a small proportion of the stock during the period covered by the invoice and the storage charges for the bulk of the stock, Concord Park retained more than adequate security for its charges. However, different considerations apply on the termination of the agreement and a request for delivery back of the whole of the stock warehoused by Concord Park. In those circumstances, an abrogation of the lien by implication from the seven day credit term would, in my view, work unfairly on Concord Park because it would be left without any security for the charges incurred until the point of re-delivery. It is unlikely that an abrogation of the lien in those circumstances was objectively intended by the parties.

23. I therefore conclude that, having regard to the express written terms of the Adelaide logistics proposal and the nature and subject matter of the Adelaide logistics contract, Concord Park agreed not to rely on the lien in the ordinary course of that contract.  However, on Bob Jane requesting the return of the tyres, Concord Park was entitled to claim a lien with respect to all outstanding charges whether or not the credit term which it had agreed to give Bob Jane had expired.  In those circumstances, it is strictly unnecessary to make further and detailed findings as to which of the charges in the period June through to 8 August 2007, if any, fell outside the credit term.

24. Concord Park also relied on a contractual lien based on conditions of cartage appearing on the back of the consignment notes to which I have referred.

25. The conditions included a clause which provided that Concord Park would have a lien on the consignment for all sums payable by the consignor.  Another clause provided that the company’s charges shall be deemed fully earned as soon as consignment is loaded and despatched from the consignor’s premises or accepted for storage.

26. In my view, the terms and conditions of cartage on the individual consignment notes simply had no application to Bob Jane’s tyres.  The mere fact that the terms and conditions appeared on the rear of consignment notes in fact used does not make them terms of the agreement.  Bob Jane and Concord Park agreed the terms on which the third party logistics would be provided in the discussions between Mr Robinson from Bob Jane and Mr Sampson and Mr Barrot from Concord Park.  There is no basis upon which it can be inferred that the parties intended to regulate their relationship by reference to the terms and conditions on the rear of the consignment notes.  They are inapplicable to the Adelaide logistics contract.

27. Because Bob Jane has paid all charges due until the last week of July, the only questions which arise on the lien claim are:

    1.Whether Concord Park is entitled to claim a fee for storage from and including the week ending 31 July 2007 until 4 October 2007.

    2.Whether Bob Jane can claim the sum of $7,385.48 which are costs it incurred in sourcing tyres for distribution in South Australia after Concord Park refused to deliver to its retailers.

    3.Whether Bob Jane is entitled to repayment of the amounts for storage it claimed from 21 June until the week ending 31 August 2007.

28. In conferring a right on warehouse operators by reference to the well known common law expression “lien”, the Warehouse Liens and Storage Act 1990 (SA) must, in my view, be construed as incorporating within it the common law incidents of a lien. The purpose of the legislation was to give to warehouse operators protection analogous to the workmen’s lien. There is no indication that it was intended to give warehouse operators what can only be described as a “super lien” which could neither be contracted away nor defeated by vitiating conduct recognised by the common law of liens.

29. In Albemarle Supply Co Ltd v Hind & Co,[11] Scrutton LJ said:

    It was next said that the lien for repairs was lost inasmuch as it was originally claimed for a larger amount and a different cause than the right one.  I have considered the numerous authorities cited, and in my view the law stands as follows: A person claiming a lien must either claim it for a definite amount, or give the owner particulars from which he himself can calculate the amount for which a lien is due.  The owner must then in the absence of express agreement tender an amount covering the lien really existing.  If he does not, unless excused, he has no answer to a claim of lien.  He may be excused from tendering (1.) if he has no knowledge or means of knowledge of the right amount; (2.) if the person claiming the lien for a wrong cause or amount makes it clear that he will not release the goods unless his full claim is satisfied, and that claim is wrongful.  The fact that the claim is made for more than the right amount does not matter unless the claimant gives no particulars from which the right amount can be calculated, or makes it clear that he insists on the full amount of the right claimed: see Scarfe v Morgan; Dirks v Richards; Huth & Co. v Lamport, per Lord Esher; and Rumsey v North Eastern Ry, per Erle CJ and Willes J.[12]  (citations omitted)

    [11] [1928] 1 KB 307.

    [12]   Albemarle Supply Co Ltd v Hind & Co [1928] 1 KB 307 at 318-9.

30. In my view, the claims made by Concord Park to which I referred in [143] above were wrongful.  Moreover, Concord Park unequivocally represented that the tyres would not be released unless the payments to which it had no entitlement were made.  In those circumstances, Bob Jane is entitled to damages in the sum of $7,385.48 for the costs it incurred in delivering tyres to its outlets from other sources.

31. In the course of final submissions, Bob Jane for the first time expressly sought as an item of its loss the payment of $25,000 it had made in August.  It had not expressly pleaded that payment as part of the damages it claimed.  I do not allow the claim.  It was made too late to be properly considered.  The payment is probably not properly classified as damages for Concord Park’s wrongful detention.  It was paid voluntarily after Bob Jane had received legal advice.  It was probably calculated to discharge any liability Bob Jane had under the Adelaide logistics contract.  It is not apparent to me that it was made as the result of any mistake.  The voluntary and informed nature of the payment makes it difficult to characterise it as a consequence of Concord Park’s wrongful conduct.  Moreover, wherever the tyres were stored, Bob Jane would have incurred a storage fee.  The evidence does not allow me to determine whether or not that fee would have been more or less if the tyres had been released.

32. It also follows from my finding that the lien was vitiated by Concord Park’s conduct that it is not entitled to storage charges from the last week of July until the tyres were released.

    Conclusion

33. I find for Bob Jane in the sum of $7,388.48 on its claim.  I dismiss Concord Park’s counterclaim.  I will hear the parties as to interest and costs.