Booth v Spardini Pty Ltd - [2009] FMCA 213

FEDERAL MAGISTRATES COURT OF AUSTRALIA

BOOTH v SPARDINI PTY LTD & ANOR

[2009] FMCA 213

TRADE PRACTICES – Fair Trading Act 1987 (NSW) – Misleading or deceptive conduct – Misrepresentation – whether second respondent made statements to the applicant that were misleading or deceptive or likely to mislead or deceive – whether the applicant had goodwill that he could sell – whether statements made by the second respondent to the applicant were true – whether the conduct of the second respondent was conduct only of the first respondent – Unconscionable conduct – whether applicant was subject to special disadvantage – whether the respondents took advantage of the applicant’s special disadvantage and bought the applicant’s business at an undervalue – whether first respondent in breach of ss.51AA, 51AC, 52 of the Trade Practices Act 1974 (Cth) – whether second respondent in breach of s.42 of the Fair Trading Act 1987 (NSW).

Fair Trading Act 1987 (NSW), ss.42, 68
Trade Practices Act 1974 (Cth), ss.51AA, 51AC, 52, 79, 82

Watson v Foxman (2000) 49 NSWLR 315
Re Credit Tribunal (SA); Ex parte GMAC (1977) 137 CLR 545
Hornsby Building Information Centre Ltd v Sydney Building Information Centre Pty Ltd (1978) 140 CLR 216
Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191
Yorke v Lucas (1985) 158 CLR 661
ACCC v CG Berbatis Holdings Pty Ltd (2003) 214 CLR 51
Louth v Diprose (1992) 175 CLR 621

Applicant:

DAVID GREGORY BOOTH

First Respondent:

SPARDINI PTY LTD (ACN 002 419 678) T/AS LARKIN BROS

Second Respondent:

BRIAN GEORGE LARKIN

File number:

SYG 1636 of 2008

Judgment of:

Emmett FM

Hearing dates:

16 February 2009, 17 February 2009, 18 February 2009

Date of last submission:

20 February 2009

Delivered at:

Sydney

Delivered on:

18 March 2009

REPRESENTATION

Counsel for the Applicant:

Mr C. Taylor

Solicitors for the Applicant:

Mr K. James, Campbell Paton and Taylor

Counsel for the Respondent:

Ms P. Lane

Solicitors for the Respondent:

Mr R. Hood, Messenger and Messenger

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG 1636 of 2008

DAVID GREGORY BOOTH

Applicant

And

SPARDINI PTY LTD (ACN 002 419 678)T/AS LARKIN BROS

First Respondent

BRIAN GEORGE LARKIN

Second Respondent

REASONS FOR JUDGMENT

Overview

The Applicant (“Mr Booth”) claims damages from the Respondents arising out of alleged contraventions of ss.51AA, 51AC and 52 of the Trade Practices Act 1974 (Cth) (“the TP Act”) by the First Respondent (“Larkin Bros”), and alleged contraventions of s.42 of the Fair Trading Act 1987 (NSW) (“the FT Act”) by the Second Respondent (“Mr Larkin”).
The alleged contraventions are said to arise from statements made to Mr Booth in August 2006 by Mr Larkin, as a director of Larkin Bros and in his own right, and the circumstances surrounding the sale of Mr Booth’s alleged transport business to Mr Larkin at an alleged under value of $144,000.00. Mr Booth seeks damages in that amount pursuant to s.82 of the TP Act and s.68 of the FT Act.
Mr Larkin was at all times a director and owner of Spardini Pty Ltd (ACN 002 419 678), which traded as Larkin Bros. Relevantly, Larkin Bros had an arrangement with the carrier, Toll Transport Pty Limited (previously, TNT) (“Toll”) to receive, store and deliver Tooheys beer to customers in Bathurst and Cowra and an arrangement with Carlton United Breweries (“CUB”) to receive, store and deliver Carlton beer to customers in Bathurst and Cowra. Larkin Bros had no contractual right to future work from either Toll or CUB.
The beer deliveries were made on behalf of Larkin Bros for the most part by subcontractors, such as Mr Booth, who had their own trucks. There were no written contracts in respect of the delivery work done by the subcontractors for Larkin Bros. From 1998 until 2006, Mr Booth delivered beer in Bathurst and Cowra as a subcontractor to Larkin Bros.
In June 2006, Mr Booth injured his back. Following his injuries, he placed an advertisement in a local newspaper offering his “local beer run” for sale. Mr Booth contends that he had a transport business to sell comprising his truck, his beer deliveries for Larkin Bros and various back runs he did on the return trip following delivery of beer for Larkin Bros.
Mr Booth claimed that he had an agreement to sell his business for $265,000, which, he claimed, would have gone ahead but for alleged misleading or deceptive conduct reflected in two alleged statements made by Mr Larkin to Mr Booth and the unconscionable conduct which led to the purchase by Mr Larkin of Mr Booth’s truck and business for $121,000.
The statements were alleged to have been made by Mr Larkin to Mr Booth in August 2006 in response to Mr Booth informing Mr Larkin that he had agreed to sell his delivery business to a third party. Mr Larkin said he became aware of an advertisement placed by Mr Booth to sell his “local beer run” and truck and that, subsequently, he discovered that Mr Booth had agreed to sell his business. The statements alleged to have been made by Mr Larkin are as follows:
i)“The business is not yours to sell. Your delivery run remains the property of the breweries – it’s not yours – you can’t just go and sell it.” (“the First Statement”)
ii) “I have been advised by TOLL that, there’s a simple solution to this situation – I can give you two weeks notice and give you the sack.” (“the Second Statement”)
(together “the Statements”)
Mr Booth asserted that, as a result of the alleged Statements, he called off the sale to the third party. Shortly thereafter, following the intervention of Mr Booth’s brother with Mr Larkin, Mr Larkin bought Mr Booth’s truck and “business known as Nuthin 2 Serious Transport” for $121,000 pursuant to an agreement negotiated between Mr Larkin and Mr Booth’s brother at the instigation of Mr Booth’s brother with Mr Booth’s consent, drawn by Mr Larkin, signed by Mr Booth and Mr Larkin and dated 23 August 2006 (“the Agreement”).
Mr Booth alleges that the Statements were representations made by Mr Larkin on behalf of Larkin Bros and on his own behalf in the course of trade and commerce which were misleading and deceptive and upon which Mr Booth relied to his detriment.
Mr Booth also alleges that Larkin Bros and Mr Larkin took advantage of the special disadvantage of Mr Booth in the subsequent purchase by Mr Larkin of Mr Booth’s truck and business. The particulars in support of this contention are that at the time of the Agreement:
i)Larkin Bros and Mr Larkin knew that Mr Booth had an urgent need to sell the business because of Mr Booth’s medical condition;
ii)Mr Booth did not obtain any legal advice in relation to the Agreement;
iii)Larkin Bros and/or Mr Larkin deprived Mr Booth of any real choice but to enter into the Agreement;
iv)Larkin Bros and/or Mr Larkin failed to act in good faith;
v)Larkin Bros and/or Mr Larkin acted in a manner that was irreconcilable with what was right and reasonable;
vi)Larkin Bros and/or Mr Larkin engaged in unfair tactics in having made the First and Second Statements to Mr Booth and then offering to purchase Mr Booth’s business at a substantially lower price.
The Respondents deny any contraventions of ss.51AA, 51AC and 52 of the TP Act and s.42 of the FT Act.
The Respondents contend that Mr Booth delivered beer in Bathurst and Cowra for Larkin Bros at will; that there was no goodwill capable of transfer in respect of the beer deliveries done by Mr Booth for Larkin Bros; that Mr Booth had only his truck to sell; that the Larkin Bros paid Mr Booth $121,000 for his truck, in circumstances where its value was, at most, $100,000. Mr Larkin asserted that he paid Mr Booth more than the value of the truck as an ex gratia payment to reflect the long association he had had with Mr Booth.

The Facts

Where I have referred to facts or evidence below I make findings in accordance with those facts and evidence. Where there is a conflict in the evidence, I make findings as identified below.

The McGovern purchase

In January1998, Mr Booth paid $20,000 to Mr Thomas McGovern for a “beer delivery business” which was made up primarily of beer deliveries for Larkin Bros. That agreement included a non-competition clause. The agreement also included special condition 2 which stated as follows:
“It is acknowledged by the parties hereto that there is no written contract relating to the said beer delivery business. The arrangements with Larkin Bros. Carriers of 45 Upfold Street, Bathurst are oral arrangements and subject to termination without notice at any time. [emphasis added] Those arrangements provide that the said Thomas Arthur McGovern will deliver Tooheys beer to Cowra and in respect of those deliveries Larkin Bros. is responsible for paying the said Thomas Arthur McGovern for the said deliveries. Payment for delivery of Carlton and United beer to Cowra is made by the recipients of those deliveries.”
Mr Booth agreed that he understood that Mr McGovern could not give him an assurance of work from Larkin Bros when he entered into the agreement with him in 1998.
Mr Larkin stated that he was not aware of any purchase by Mr Booth from Mr McGovern of “goodwill” for the beer delivery run. He thought Mr Booth was buying Mr McGovern’s truck.

Goodwill in Nuthin 2 Serious and Nuthin 2 Serious Transport back runs

Mr Booth said that, after he commenced doing beer deliveries for Larkin Bros, he picked up further beer orders for Tooheys and Carlton beer at various hotels and clubs in Bathurst and Cowra for the benefit of Larkin Bros, in addition to those customers to whom Larkin Bros already delivered beer. Whilst Mr Booth said that he increased the number of customers for delivery of beer in Bathurst and Cowra, he agreed that the price for the delivery of Tooheys or Carlton beer was negotiated by Larkin Bros with the customers.
Mr Booth carried out his duties as a sole trader in a truck owned by him with the words “Nuthin 2 Serious” painted on it.
Mr Booth was a member of a band called “Nuthin 2 Serious” and also the owner of a registered business name “Nuthin 2 Serious Transport”.
Mr Larkin said he was aware that Mr Booth had a band with the name Nuthin 2 Serious which he knew was also painted on his truck.
From March 2005, Mr Booth invoiced Larkin Bros directly in respect of all deliveries of beer collected from Larkin Bros for delivery by Mr Booth. Prior to 2005, Mr Booth had invoiced Larkin Bros directly in respect of Tooheys beer, and had invoiced the Carlton customers directly, although he would invoice Larkin Bros in respect of his delivery charges for Carlton beer.
Mr Booth agreed that the major part of his work was his beer delivery runs for Larkin Bros. Mr Booth gave evidence that he would deliver hay, feed and other product on his back runs.
Payment to Mr Booth by Larkin Bros was made in the following way. Mr Booth provided Larkin Bros with a blank docket book for completion by Larkin Bros for beer delivered. Mr Booth gave evidence that the pages of the docket book were stamped “Nuthin 2 Serious”. When the matter was first explored in cross examination with Mr Larkin, at first he denied that the docket books were stamped with Nuthin 2 Serious and suggested that Mr Booth could have readily stamped the docket book later. Ultimately, Mr Larkin conceded that, whilst he had no specific recollection that the docket book was stamped in the manner alleged by Mr Booth, it was possible. In the circumstances, I accept that the docket book was stamped as alleged by Mr Booth.
It is common ground that Mr Booth was entitled to conduct deliveries for his own benefit for other parties on his return runs following delivery of beer to the regional centres. Mr Booth said he was well known in the regional towns where he delivered beer for Larkin Bros, particularly because of the distinctive name on his truck.
Mr Booth asserted that he carried out his beer deliveries and work he picked up on his back runs under the business name Nuthin 2 Serious Transport. In cross examination, Mr Booth said that he had not advertised the business Nuthin 2 Serious Transport and stated that Nuthin 2 Serious Transport consisted of himself and his truck.
In cross examination, it was apparent that Mr Booth did not appreciate any distinction between Nuthin 2 Serious and the registered business name Nuthin 2 Serious Transport. Mr Booth said that Nuthin 2 Serious Transport was the delivery business that he had. He said “I drove a truck so it was a transport – so Nuthin 2 Serious Transport is the business”. However, Mr Booth was unable to explain why the stamps on the docket books that he gave to Larkin Bros were stamped with the name, “Nuthin 2 Serious”. Ultimately, the Applicant stated that he was conducting two businesses namely, Nuthin 2 Serious and Nuthin 2 Serious Transport, under one ABN. It was plain that Mr Booth did not understand that it was not possible to carry on two businesses under the one ABN.
I accept that Mr Booth regularly referred to Nuthin 2 Serious when referring to his band, his boat, his truck, his delivery run business and Nuthin 2 Serious Transport. Mr Booth did not appreciate the legal distinction between Nuthin 2 Serious and Nuthin 2 Serious Transport.
I accept that, in the circumstances, Mr Booth may have developed some goodwill in the registered business name, Nuthin 2 Serious Transport, even if known as Nuthin 2 Serious, in respect of his back runs. However, the reality was that Mr Booth was conducting one delivery business under two names.
There was no evidence of work done by Mr Booth using his truck other than the beer runs and some seasonal back runs from Cowra that Mr Booth conceded in cross examination were spasmodic. Mr Booth’s evidence as to the extent of any back run deliveries was vague and relatively unspecific. It was common ground that, when the Agreement was entered into, there was only one back run customer name provided by Mr Booth to Mr Larkin.
Moreover, there was no evidence tendered by Mr Booth of the value of the business of Nuthin 2 Serious Transport or the value of any back runs or other work conducted by Mr Booth with his truck.

Goodwill in relation to the beer run

Mr Larkin agreed that Mr Booth did the beer deliveries efficiently, was well-regarded by customers and was a reliable worker.
Mr Larkin agreed that whilst ever Mr Booth performed his job, and Larkin Bros had the work, it was reasonable that Mr Booth could expect his work for Larkin Bros to continue. There was no evidence to suggest that the work done by Mr Booth for Larkin Bros was work other than beer deliveries to Bathurst and Cowra. Mr Larkin stated that Toll and CUB could change their area of distribution and “they could change their mind tomorrow”. Mr Larkin said that he hoped the work would continue “but there was no guarantee”.
Mr Larkin gave evidence that it was the common and general understanding in the beer delivery industry that there was no goodwill in the delivery runs done for the major carriers and breweries. Mr Larkin said that it was common for trucks used for beer deliveries to be on-sold by subcontractors who would seek his consent to have their purchaser take over their beer run.
Mr Bennett, the site manager for Bevchain (formerly Toll), gave evidence that he had been involved in the distribution of alcoholic products and the management of subcontractors since 1984. He stated that any attempt to sell goodwill with delivery trucks used by subcontractors in the delivery of beer products was prohibited and not recognised by any parties concerned with the distribution of beer products.
Mr Booth agreed in cross examination that he could not give any purchaser of his truck an assurance that the purchaser would get work from Larkin Bros. Mr Booth also agreed that Mr Larkin never said to him that, if he sold his truck, the purchaser would get work from Mr Larkin. Mr Booth deposed that, “Notwithstanding I had worked for Larkin Bros since 1994 in a full time capacity and had had the beer run since 1998, I had no contract with Larkin Bros and in theory they could not engage Justin to undertake the work”. “Justin” was the name of the person, Mr Justin Edmunds, with whom Mr Booth alleged he had an agreement to sell his truck and business for $265,000.
When it was put to Mr Booth in cross examination that there was nothing to stop Mr Larkin terminating his services, Mr Booth gave the unresponsive answer, “Only my customers that would have told him that if I didn’t arrive down there with their beer they didn’t want it and they would have said that.” When it was put to Mr Booth that Larkin Bros did not have to engage him and could simply tell him not to turn up one day, he responded “They won’t, because they want their things delivered”. Neither answer was frank or responsive. However, relevantly, Mr Booth did not deny the propositions or even suggest that a reasonable notice period before termination would be appropriate.
I find that Mr Booth knew that Larkin Bros could terminate its arrangements with him at any time. In the circumstances, I find that Larkin Bros could cease to use Mr Booth’s services at any time. I also find that Mr Booth knew that any prospective purchaser of his truck and “local beer run” could not have an expectation of continuing work from Larkin Bros because there was no binding agreement that such work would continue.
Mr Larkin gave evidence that he did not have a written agreement with Toll or Carlton at the time of the Agreement. Mr Larkin said that he had no goodwill under his contracts of delivery and that, if he had no goodwill, then neither did Mr Booth. When it was put to Mr Larkin again that he had no basis for saying that Mr Booth did not have a business to sell, Mr Larkin said “I am a subcontractor to Toll. If I am a subcontractor and I haven’t got goodwill to sell, then how can someone subcontracting to me have goodwill to sell”.
I find that Larkin Bros did not have any goodwill in its contract with Toll to deliver Tooheys beer.
There is no evidence before me of any written contract between Larkin Bros and the CUB. Based on the evidence of Mr Bennett and Larkin Bros I have found that the industry practice is that, in the absence of any written agreement to the contrary, subcontractors such as Larkin Bros can be terminated at will. Accordingly, I find also that Larkin Bros did not have any goodwill in relation to the beer deliveries it undertook for CUB.
Accordingly, I find that Mr Booth’s arrangements with Larkin Bros to deliver beer was not a business in which there was goodwill. I also find that this type of arrangement was the common practice in the industry.

Circumstances surrounding the making of the Statements

On 29 July 2006, following a back injury in June 2006, Mr Booth placed an advertisement in the local paper that read, “LOCAL BEER RUN – very regretful sale, 3 days/week”.
As there was no evidence before the Court to suggest that Mr Booth had any “local beer run” other than the beer deliveries he made for Larkin Bros, I find that Mr Booth intended that the advertisement relate to the arrangements for making beer deliveries that then existed between Mr Booth and Larkin Bros.
Mr Booth stated that some time in early August 2006 he reached an agreement with Mr Justin Edmunds to sell his truck and beer run to Mr Edmunds for a price of $265,000. Mr Booth stated that he told Mr Edmunds that he had no contract with Larkin Bros and that, in theory, Larkin Bros could choose not to engage Mr Edmunds to undertake the beer delivery work.
There was no other evidence before the Court of the terms of any agreement between Mr Booth and Mr Edmunds, including how it was arrived at, or how and when Mr Edmunds would pay Mr Booth.
Mr Booth said that he then introduced Mr Edmunds to Mr Larkin at the premises of Larkin Bros. Mr Booth said that he told Mr Larkin that Mr Edmunds was a prospective purchaser of his business.

Mr Larkin said that he did not recall being introduced to Mr Edmunds as a prospective purchaser of Mr Booth’s business.
Mr Booth alleged that, sometime after his introduction of Mr Edmunds to Mr Larkin, Mr Larkin, in his capacity as director of Larkin Bros and in his own capacity, made the Statements, or words to the effect of the Statements, to Mr Booth.
Mr Larkin said that, although he cannot remember when he first saw the advertisement dated 29 July 2006 placed by Mr Booth for the sale of his truck and “local beer run”, he did become aware that Mr Booth was trying to sell the business of doing delivery work for Larkin Bros and that he was concerned by such a matter. He said that, upon becoming aware, he rang Mr Michael Blechynden at Toll and had a conversation with him along the following lines:
“Me: “Michael, on of my subbies [meaning subcontractor] is advertising a beer run for sale”
Blechynden: “He can’t do that, Brian”
Me: “We know that. Can I have something from you to show him what the position is?”
Blechynden: “Yes””
Mr Larkin deposed that shortly after his conversation with Mr Blechynden, he received by fax a letter dated 24 July 2006 from Mr Blechynden in answer to his request for something to show Mr Booth. Mr Larkin agreed that the letter did not reflect any written agreement he had with Toll. However, I understand the thrust of Mr Larkin’s evidence given both in chief, cross examination and in reply was that the letter reflected his understanding of the position relation to the absence of goodwill in beer deliveries done by Larkin Bros for Toll and CUB. Relevantly, the letter stated as follows:
“Before you decide to assign, both you and the prospective new contract carrier should carefully consider the following issues and obtain separate legal advice… The Agreement must be assigned to a company and Toll does not condone, nor does it endorse or acquiesce to monies paid as premiums or fees (whether called “goodwill” or otherwise) for the assignment of your Agreement… Toll needs to consent to the assignment of your Agreement and obtain Tooheys’ approval of the assignment… “goodwill” shall at all times remain the exclusive property of the company and can not be assigned, transferred or transmitted by the carrier to a third party… As part of this process Toll will request a copy of the Bill of Sale to ensure this condition has not been breached… the new contract carrier will not be allowed to commence work until you have received written authorisation from Toll approving the assignment.”
Mr Larkin deposed that he had no knowledge at the time he spoke with Mr Blechynden that Mr Booth was engaging in negotiations to sell his business to Mr Edmunds. Mr Larkin deposed to the following:
“If such negotiations were going on, I would have expected that Mr Booth, or Mr Justin Edmunds, would have approached me to determine what value if any, could be attributed to the fact that Mr Booth had been engaged by Larkin Bros as a contract driver, and to investigate the correctness of any statements that Mr Booth might have made in respect of the delivery work. No person approached me to make those enquiries. If Mr Booth informed Mr Edmunds that he worked for Larkin Bros full time that is incorrect in that he was only making deliveries in Cowra two or three days a week… I do not recall meeting a person whose name could have been Justin… At no time did anyone seek to discuss with me the nature and terms of the sub-contracting arrangements between the Applicant and Larkin Bros… It may well be that Mr Edmunds and the Applicant had discussions or came to the Larkin Bros depot… If anything had been said in my presence about Mr Booth’s entitlement to sell the delivery, I would immediately have informed them that there was no expectation that any delivery work would continue… I do remember having a conversation with Mr Booth at some stage in late July or August 2006. By that time I had received from Mr Blechynden at Toll transport the letter [dated 24 July 2006 and annexed to the Agreement]. I do remember that I did not ring him [the Applicant, Mr Booth] – the conversation happened in my office and we discussed his intention to sell his business. I said words to the effect, “You have no goodwill as sub-contractor to us. You have a copy of the letter from Toll dated 24 July 2006”. I also said, “you know that if you try to sell the truck with goodwill and I have knowledge of this I would be in breach of my contract with Toll.” He said to me, or words to that effect, “How would they know if someone else was doing the delivery? You pay the money for the work and they pay you no one needs to know.” I said to him, “You just cannot go and sell it, there is no business.””
Mr Larkin gave consistent evidence in cross examination that Mr Booth was trying to sell something that was not there. When it was put to him in cross examination that “somebody was prepared to buy it”, Mr Larkin responded “who”. Counsel for the Applicant stated “Mr Edmunds” and Mr Larkin replied “If Mr Edmunds wanted to buy it, why wouldn’t Mr Edmunds come and have a meeting with me in my office and discuss it with me, with Mr Booth”. Mr Larkin denied that he nipped any discussion in the bud and said that he found it amazing that he did not have a discussion with Mr Edmunds. I found this evidence of Mr Larkin to be compelling and I accept that, while he may have been aware that Mr Booth was proposing to sell something, he was not aware that Mr Edmunds was proposing to buy Mr Booth’s business for $265,000.
Further, there was no evidence before the Court as to the ability of Mr Edmunds to complete such a sale. Mr Edmunds did not give evidence at the hearing and was not subpoenaed by Mr Booth to attend the hearing to give evidence.
I accept that the circumstances that gave rise to the Toll letter were in accordance with the evidence given by Mr Larkin. Having regard to the paucity of the evidence of Mr Booth in relation to his alleged agreement with Mr Edmunds, where Mr Booth’s evidence departs from that of Mr Larkin in relation to their discussions about any prospective sale with Mr Edmunds, I prefer the evidence of Mr Larkin.
I accept the evidence of Mr Larkin that he never stopped Mr Booth from selling his truck and that Mr Booth could have sold it at any time. I also accept the evidence of Mr Larkin that he required Mr Booth to sign something saying there was no goodwill connected to the beer deliveries. He said that Mr Edmunds could have paid Mr Booth but he would have had to sign a letter of assignment stating there was no goodwill connected with the beer deliveries he may do for Larkin Bros. Mr Larkin repeated that Mr Booth could sell his truck to Mr Edmunds as long as he signed an agreement saying that there was no goodwill connected with Larkin Bros, TNT (Toll) or Carlton.

The First Statement

Mr Larkin admitted in his Response, filed 21 August 2008, that he said the words or words to the effect of the First Statement. However, Mr Larkin’s evidence was that in saying the First Statement, “there’s no business to sell”, he did not have regard to the back runs. He said that Mr Booth had never raised the issue of the back runs with him. Mr Larkin stated that, when he told Mr Booth that the business was not his to sell, he was talking only about the beer deliveries done for Larkin Bros. Indeed, Mr Larkin said that in his discussions with Mr Booth, Mr Booth never referred to any business other than the beer deliveries for Larkin Bros.
Mr Larkin stated that, the basis upon which he said to Mr Booth the First Statement, that he could not sell the business, was that Mr Booth could not sell the beer run because there was no goodwill connected with it. When asked in cross examination why he thought that, Mr Larkin answered “It’s common knowledge… everyone that does beer runs, they don’t sell them”. As stated above in these Reasons, I have already found that it was the common practice in the industry.
Mr Larkin said that, if he used the word “business”, which he admitted he could have done, he meant the truck. When Counsel for the Applicant put to him that he did not have in his mind, at the time he made the First Statement, any distinction between the business and goodwill in the business, Mr Larkin said there was no goodwill connected to the truck. Indeed, it was Mr Larkin’s mantra throughout his evidence that, if he had no “goodwill”, then Mr Booth had no “goodwill”.
In the circumstances, I find that Mr Larkin made the First Statement in the terms, or words to the effect, alleged.
I find that, in making the First Statement and telling Mr Booth that the business was not his to sell, Mr Larkin was referring only to the beer deliveries Mr Booth made for Larkin Bros and that, in the circumstances, it was not reasonable for Mr Booth to believe otherwise.
Mr Booth deposed that, after he had the alleged conversation with Mr Larkin, in which Mr Larkin allegedly made the Statements, he met with Mr Edmunds and had a conversation with words to the following effect:
“Me: Justin I have spoken again with Brian. Larkins won’t let (emphasis added) me sell the business to you.
Justin: Mate, that’s bullshit. I don’t understand it but if that’s the way it’s gotta be, that’s the way it’s gotta be”
There is no evidence that, after Mr Edmunds response, Mr Booth took any further steps with Mr Edmunds in relation to the proposed sale.
Even on Mr Booth’s own case, in neither the First Statement nor Second Statement, did Mr Larkin say that Mr Larkin would not let Mr Booth sell the business to Mr Edmunds. On Mr Booth’s own case, Mr Larkin said “The business is not yours to sell.” Telling Mr Booth that the business was not his to sell, in circumstances where Mr Larkin was referring only to the beer run, is quite different from Mr Larkin saying that he would not allow Mr Booth to sell his business.
I have already found that Mr Booth did not have any goodwill to sell in the beer delivery runs he made for Larkin Bros. Mr Booth’s entitlement to make beer deliveries was entirely at the discretion and will of the breweries. Larkin Bros had no entitlement to any continuation of the arrangements it had with the breweries. Accordingly, Mr Booth had no entitlement to a continuation of his arrangement with Larkin Bros.
In the circumstances, I find that the First Statement was true.

The Second Statement

In relation to the Second Statement, counsel for the Respondents stated that the words were not admitted. However, the evidence before the Court was that Mr Larkin conceded that, in the context of his conversations with Mr Booth at this time, it was possible that he said words to the effect that he could give Mr Booth notice and terminate his services. In relation to the words “I have been advised by Toll that there’s a simple solution”, I find that Mr Larkin did not say the words in the context alleged. Mr Booth, even on his own case, was not accurate in conveying information (see above). In the circumstances, where Mr Booth’s evidence departs from that of Mr Larkin as to the words used in making the Second Statement, I prefer the evidence of Mr Larkin. However, I accept that Mr Larkin may well have referred to the information in the Toll letter that confirmed the view he expressed to Mr Booth in the First Statement that he did not have a business to sell.
I am also not satisfied that the words in the second part of the Second Statement, namely, that Larkin Bros was entitled to give Mr Booth two weeks notice and give him the sack, were used. However, having regard to the concessions made by Mr Larkin in cross examination, I am prepared to accept words to the effect of the Second Statement were made.
Accepting that Mr Larkin may have said something to Mr Booth to the effect that he could terminate Mr Booth on two weeks notice, it was true that Larkin Bros was entitled to give Mr Booth two weeks notice and terminate the arrangement with him. Indeed, Larkin Bros was entitled to terminate its arrangements with Mr Booth at will.

Circumstances of the Agreement dated 23 August 2006

Mr Booth and Larkin Bros had a personal relationship as well as a business relationship in that Mr Booth used to be married to Mr Larkin’s wife’s sister.
Following Mr Booth calling off his alleged sale with Mr Edmunds, Mr Booth’s brother approached Mr Larkin to assist Mr Booth.
When Mr Booth was asked in cross examination whether he knew that his brother had asked Mr Larkin to help him, Mr Booth replied that his brother was concerned about his health and could not believe what was happening to Mr Booth because Mr Booth had a business. Mr Booth said that his brother told him he would ring Mr Larkin and see if he would buy his business. Mr Booth agreed that it was his brother who conveyed to him the offer of Mr Larkin to buy his truck.
Mr Larkin’s evidence was that he drew the Agreement without legal advice or assistance and following negotiations with Mr Booth’s brother, which were initiated by Mr Booth’s brother.
There is no evidence before the Court as to the exact role played by Mr Booth’s brother or the circumstances of the negotiations and preparation of the Agreement beyond the reference above.
Relevantly, the Agreement between Mr Booth and Mr Larkin stated as follows:
“1. It is proposed that the Mr Booth sell Nuthin 2 Serious Transport to Mr Larkin.
2. It is an essential term of this agreement that there is no goodwill attached to the sale as set out in the terms and conditions of the toll document as attached.
3. Mr Larkin will pay Mr Booth a total of $121,000.00 for the business known as Nuthin 2 Serious Transport if the present contract between Toll Tooheys and Toll Carlton continues. This amount is to be paid as follows:
4. $105,000.00 on 23August 2006. A following $16,000.00 if the contract with Toll Tooheys and Toll Carlton is renewed in February 2007 for a total truck price of $121,000.00. If in February 2007 the Carlton contract is not renewed and the work continues a further payment of $5,000.00 will be paid and a further payment of $5,000.00 in August 2007 and a further $6,000.00 in February 2008 for a total truck price of $121,000.00.
5. If at any time during this period the contract is renewed any outstanding payments will be paid.
6. If at any time the work carried out by Nuthin 2 Serious Transport at this time between Toll Tooheys and Toll Carlton ceases no further payment will be paid above the original price of $105,000.00.”
Mr Larkin said that, under the Agreement, he was giving Mr Booth extra money above the value of his truck “for all the years he had been with me, as a gesture of goodwill” and was not giving money for the purchase of any business.
Mr Booth agreed in cross examination that there was no non-competition clause in the Agreement and that, if one was selling a “business”, one would expect to see such a clause. Mr Booth also agreed that he did not transfer to Mr Larkin the numberplates on his truck “BEER4U”, although, he said that he had been prepared to sell them to Mr Edmunds for a further $10,000 to $15,000.
When asked in cross examination what his understanding of the term “Nuthin 2 Serious Transport” was in relation to the Agreement, Mr Booth gave the meaningless and oblique response, “I would say that’s a very clever way, play on words”.
Mr Larkin said that he was not aware of the business name “Nuthin 2 Serious Transport”. That evidence is not consistent with the Agreement drawn by Mr Larkin that specifically refers to that business name.
However, I do not regard that inconsistency as a matter going to the discredit of Mr Larkin. In my view, more probably than not, Mr Larkin had not turned his mind to any distinction between the name on Mr Booth’s truck and the business name until he came to prepare the Agreement in the course of discussions with Mr Booth’s brother. As he was cross examined about these names, and the meaning of “business” and “goodwill”, it was apparent that Mr Larkin did not have a clear understanding of the distinctions in the names Nuthin 2 Serious and Nuthin 2 Serious Transport or the legal meaning or relevance of the description in the Agreement of “the business [emphasis added] known as Nuthin 2 Serious Transport”.
When Mr Larkin was asked why he put in the Agreement a reference to buying “the business known as Nuthin 2 Serious Transport”, he answered “I don’t know why I did that”. In the circumstances, I reject the Applicant’s submission that Mr Larkin’s answer that he did not know why the words “the business known as Nuthin 2 Serious Transport” were in the Agreement and I find that answer to be consistent and frank.
Moreover, I accept that, whilst Mr Larkin wrote the Agreement, it was negotiated by Mr Booth’s brother on behalf of Mr Booth and at the instigation of the Mr Booth’s brother with the knowledge and acquiescence of Mr Booth. There is no other evidence before the Court as to how the words “the business known as Nuthin 2 Serious Transport” came to be incorporated into the Agreement.
Mr Larkin said that he did not wish to purchase Mr Booth’s truck and did so following the intervention of Mr Booth’s brother in order to assist Mr Booth.
Mr Larkin said that he paid Mr Booth more than the value of his truck because of the nine year business relationship they had and to reflect Mr Booth’s reliable work over that time.
I accept that Mr Larkin entered into the Agreement, following the approach from Mr Booth’s brother on behalf of Mr Booth, to seek genuinely to assist Mr Booth. I accept that, to that end, Mr Larkin paid Mr Booth more that he believed the truck to be worth in furtherance of his desire to assist Mr Booth.
As stated above, the evidence in respect of any back run business of Mr Booth was fairly unspecific and Mr Booth himself agreed they were seasonal. Further and most telling was that, at the time Mr Booth placed his advertisement on 29 June 2006, he was advertising only three days a week and mentioned only the beer runs.
There was evidence before the Court that the truck had a value of $88,000 to $100,000. Under the Agreement, Mr Larkin paid Mr Booth $121,000.
In the circumstances, Mr Booth received somewhere between $34,000 and $21,000 for any goodwill in the business Nuthin 2 Serious Transport and somewhere between $88,000 and $100,000 for his truck. Mr Larkin entered a value for the truck for the RTA upon the transfer of $100,000. That is the value on which stamp duty must have been paid.
In the circumstances, I find that under the Agreement, in addition to Mr Booth’s truck, Mr Larkin bought whatever back runs or other business was conducted by Mr Booth in the name Nuthin 2 Serious Transport.
As stated above in these Reasons, there is no evidence of the value of the business Nuthin 2 Serious Transport.
In the circumstances, even though Mr Larkin may have seen the payment to Mr Booth of at least $21,000 as an ex gratia payment, there is nothing before the Court to suggest that such sum did not adequately reflect any value in the goodwill of Nuthin 2 Serious Transport.

The Law

Misleading and deceptive conduct

Mr Booth alleges that Larkin Bros breached s.52 of the TP Act by the Statements made by Mr Larkin on behalf of Larkin Bros in the course of trade or commerce and which, in the circumstances, were misleading or deceptive or likely to mislead or deceive.
Whilst Mr Booth alleged that the Statements were made by Mr Larkin in his own right, as well as on behalf of Larkin Bros, no evidence was led to support such an allegation and no comprehensive submission was made to that effect. In the circumstances, to the extent that the Statements have been found to have been made, I find that anything said by Mr Larkin to Mr Booth was in his capacity as an employee of Larkin Bros and was made on behalf of Larkin Bros only.
Accordingly, there was no conduct engaged in by Mr Larkin that gave rise to any liability under s.42 of the FT Act. It was not suggested that Mr Larkin had any accessorial liability under s.79 of the TP Act.

Mr Booth has the onus to prove that the Statements were misleading and that he relied upon them. Where misleading conduct is alleged to be found in spoken words then those words must convey a misleading impression. The alleged words spoken must be proved “with a degree of precision sufficient to enable the Court to be reasonably satisfied that they were in fact misleading in the proved circumstances… All too often what is actually remembered is little more than an impression from which plausible details are then, often subconsciously, constructed” (Watson v Foxman (2000) 49 NSWLR 315 at 318-319 per McLelland CJ).
To be misleading, conduct must be objectively misleading in the context in which it is found to have occurred (Re Credit Tribunal (SA); Ex parte GMAC (1977) 137 CLR 545 at 561). However, I accept the submission by counsel for the Applicant that liability may exist even though the Respondents may have acted honestly and reasonably and even though there was no failure to take reasonable care (Hornsby Building Information Centre Ltd v Sydney Building Information Centre Pty Ltd (1978) 140 CLR 216 at 223 per Stephen J; Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 197 per Gibbs CJ; Yorke v Lucas (1985) 158 CLR 661 at 666). Intention is not a necessary element. Whether the conduct was misleading or deceptive is a matter for the Court.
The statements must be understood in the context of the relationship between the parties. Having regard to the findings I have made above, I accept that the relevant context is as identified by counsel for the Respondents in her written submissions as follows:
“There are two major customers for whom beer is carried in the Bathurst region – Tooheys through its contractor TNT, then Toll, then Bevchain, and CUB.
The terms on which beer is delivered have changed both as to process and remuneration for delivery over the course of years.
The business is very price-competitive, and Larkin Bros is regularly asked for quotations for continuing work as part of a competitive bidding process.
Larkin Bros typically contracts as a subcontractor to head contractors for carriage, but has in the past contracted directly with the brewery (most often CUB) for the right to deliver beer.
Larkin Bros has in the past had no written contract which sets out the terms of carriage with either brewery, the first such contract was entered into in 2005 with Carlton.
Larkin Bros has not in the past had any expectation that work will continue.
Larkin Bros engages subcontractors (“subbies”) to deliver beer from its depot to regional customers.
Each subbie has his or her own truck, which is loaded at the warehouse.
There is nothing to prevent subbies from doing delivery for other customers, or taking on back-load work.
There is no written agreement with any subbie which obliges Larkin Bros to continue to supply work to them.
Larkin Bros has no authority to represent that it has any expectation to continuing work
Where Larkin Bros carriage of beer is regulated by written contract, the terms of the contract specifically prevent Larkin from (a) charging a premium for the work, or (b) permitting others to represent or contract that there is any goodwill attaching to the work performed in delivering the beer.”
In the case before this Court, I have found that the First Statement is true. Similarly, to the extent that I have found that Mr Larkin may have said words to the effect of the Second Statement, again the content of the words is true. Accordingly, both the First and Second Statements were true in the context in which they were made.
Further, the Statements were made by Mr Larkin to Mr Booth in the context where Mr Larkin had arrangements with Toll and CUB to receive, store and deliver beer to Bathurst and Cowra. The common practice in the industry was that there was no goodwill attaching to such arrangements. The arrangement that Mr Booth had with Larkin Bros to deliver beer was on the same basis. Mr Booth was aware that his arrangement with Larkin Bros could be terminated at any time. Mr Booth was also aware that there could be no such expectation in any purchaser of his beer run. In the circumstances, there can have been nothing misleading or deceptive in the making of the Statements by Mr Larkin to Mr Booth to the effect that Mr Booth did not have a business to sell and could be terminated on two weeks notice.
Moreover, Mr Booth alleges that because of the Statements, he did not go ahead with an alleged agreement with Mr Edmunds to sell his business. Other than a negligible back run, the only business in which Mr Booth engaged with his truck was the beer delivery run to Cowra and Bathurst for Larkin Bros. I am far from persuaded that Mr Booth had an enforceable agreement with Mr Edmunds for the purchase of his business at $265,000. As stated above, Mr Edmunds was not called by Mr Booth to give evidence, nor was he subpoenaed. As I have found above, the words used by Mr Booth to Mr Edmunds in conveying the substance of the Statements made to him by Mr Larkin was not an accurate reflection of what Mr Larkin said in making the Statements.
The evidence before the Court is that, following his conversations with Mr Larkin in which the Statements were made, Mr Booth, without taking any other step either to discuss the matter further with Larkin Bros and Mr Larkin or to seek any advice himself, called off his agreement with Mr Edmunds.
In the circumstances, Mr Booth suffered no loss or damage as a result of any conduct on the part of either of the Respondents.
In the circumstances, there is no conduct in which Larkin Bros engaged that was misleading or deceptive or likely to mislead or deceive.
Accordingly, Mr Booth’s allegation of a breach of s.52 of the TP Act is not made out.

Unconscionability

Mr Booth alleged that Larkin Bros and Mr Larkin engaged in unconscionable conduct in breach of ss.51AA or 51AC of the TP Act. The unconscionable conduct is alleged to flow from an alleged special disadvantage of Mr Booth of which Larkin Bros and Mr Larkin took advantage.
Section 51AA of the TP Act is as follows:
“51AA - Unconscionable conduct within the meaning of the unwritten law of the States and Territories
(1) A corporation must not, in trade or commerce, engage in conduct that is unconscionable within the meaning of the unwritten law, from time to time, of the States and Territories.
(2) This section does not apply to conduct that is prohibited by section 51AB or 51AC.”
Section 51AA of the TP Act is focussed on the means by which an outcome is obtained rather than the outcome itself. It is not essential that the disadvantaged party should suffer loss or detriment by the bargain (ACCC v CG Berbatis Holdings Pty Ltd (2003) 214 CLR 51 (“Berbatis”) at 55).
Section 51AC of the TP Act is as follows:
“51 AC - Unconscionable conduct in business transactions
(1) A corporation must not, in trade or commerce, in connection with:
(a) the supply or possible supply of goods or services to a person (other than a listed public company); or
(b) the acquisition or possible acquisition of goods or services from a person (other than a listed public company);
engage in conduct that is, in all the circumstances, unconscionable.
(2) A person must not, in trade or commerce, in connection with:
(a) the supply or possible supply of goods or services to a corporation (other than a listed public company); or
(b) the acquisition or possible acquisition of goods or services from a corporation (other than a listed public company);
engage in conduct that is, in all the circumstances, unconscionable.”
Counsel for the Applicant submitted, and I accept, that unconscionable conduct is conduct which attracts a sufficient level of judicial opprobrium to support the grant of relief based on principles set out in specific equitable doctrines established by courts of equity. However, it is not sufficient to obtain relief that Mr Booth may have been in a weaker bargaining position or have made a poor bargain. As Gleeson CJ stated in Berbatis at 64:
“A person is not in a position of relevant disadvantage, constitutional, situational, or otherwise, simply because of inequality of bargaining power. Many, perhaps even most, contracts are made between parties of unequal bargaining power, and good conscience does not require parties to contractual negotiations to forfeit their advantages or neglect their own interests.”
Counsel for the Applicant submitted that:
“The period of the existence of the relationship and the things said to the Applicant gave the Applicant a reasonable expectation of the continuity of the informal arrangement between the parties and indeed that change-over to a new person would be acceptable.
Upon the prospective sale of the Applicant’s business the Respondent(s) deliberately, without (upon a close analysis) any sufficient foundation, undermined the capacity of the Applicant to sell his business by failing in its obligation to the Applicant (to meet the reasonable expectation it allowed to be created ie that for as long at it had a contract with “Toll” and others as the case may be, it would provide work to the Applicant and would continue to provide work to a person who took over).”
In order for the alleged conduct to be unconscionable there must be an absence of any reasonable degree of equality between the parties and the other party must have exploited that special disadvantage in a manner that is regarded as unconscionable (Louth v Diprose (1992) 175 CLR 621 at 637). Counsel for Mr Booth submitted that Mr Booth will have been under a special disadvantage if there are circumstances that seriously affect his ability to make a judgment in his own best interests.
In addition, counsel for the Applicant submitted that the Respondents “wilfully undermined the capacity of the Applicant to sell his business and then actually bought that business at their own price”. Counsel for Mr Booth submitted that the Respondents failed to act in good faith by undermining Mr Booth’s proposed sale of his business; taking advantage of his urgent need to sell his business because of his health; depriving Mr Booth of any real choice but to enter into the Agreement; and, engaging in unfair tactics resulting in the sale of the business to Larkin Bros and Mr Larkin and thereby breached s.51AC of the TP Act.
In addition to the reasons above, for the reasons set out below, none of Mr Booth’s allegations or contentions is made out.

Special disadvantage

In June 2006, Mr Booth injured his back. Mr Larkin stated that he was aware Mr Booth had a back problem, however, was not aware of the exact nature of his injury or condition or the extent to which it impacted on Mr Booth’s ability to conduct deliveries. Until the Agreement was entered into on 23 August 2006, Mr Booth continued to do beer deliveries for Larkin Bros. Mr Booth stated that he was medically advised to cease this work. However, there is no evidence before the Court that Larkin Bros and/or Mr Larkin were aware of any medical advice to that effect and no medical evidence was provided to the Court from Mr Booth.
Mr Booth stated that he signed the Agreement because he was “under a fair bit of duress” and that he had bills to pay. However, Mr Booth agreed that he was still conducting deliveries, although not carrying heavy loads. Mr Booth did not give any evidence of any particulars of duress placed upon him by Mr Larkin or Larkin Bros in relation to entering into the Agreement.
In the circumstances, I accept that Mr Booth did have an injury that caused him to seek to sell his delivery business. I also find that Larkin Bros and Mr Larkin were not aware at the time of making the statements and entering the Agreement of the extent of Mr Booth’s injuries and that Mr Booth, to their knowledge, was still undertaking deliveries.
In relation to Mr Booth’s contention that Mr Booth did not obtain legal advice, I accept the truth of that statement. However, the incontrovertible evidence before the Court is that Mr Booth could have obtained legal advice at any point in time prior to signing the Agreement, had he chosen to. There is no evidence whatsoever that he was prevented from doing so by any conduct of either Larkin Bros or Mr Larkin.
In relation to Mr Booth’s contention that Larkin Bros and Mr Larkin deprived him of any real choice but to enter into the Agreement, such a contention is not made out. Mr Booth could have pursued matters further with both Mr Larkin and Mr Edmunds and sought legal advice. There is no evidence of any impediment placed in the path of Mr Booth by either Larkin Bros or Mr Larkin in removing from Mr Booth “any real choice but to enter into the Agreement”. Indeed, the evidence before the Court is that the negotiations that led to the making of the Agreement were at the instigation of Mr Booth’s brother with the knowledge and acquiescence of Mr Booth. It was Mr Booth who chose to take no further action in relation to his rights following his conversation with Mr Larkin in which the First and Second Statements were made and prior to signing the Agreement.
For the reasons referred to above, Mr Booth’s contentions that “the Respondents acted in a manner that was irreconcilable with what was right and reasonable” or that Larkin Bros and Mr Larkin engaged in unfair tactics are not made out.
Further, I find that there were no circumstances that seriously affected Mr Booth’s ability to make a judgment in his own best interests that were created by conduct of either of the Respondents.
I accept the submission of counsel for the Respondents that Larkin Bros did not take any unconscientious advantage of Mr Booth in that: Mr Booth had no goodwill in the beer run: there was no expectation of continuing business from Larkin Bros which would be available to a purchaser of Mr Booth’s business; Mr Larkin bought Mr Booth’s truck for more than its value; and, Mr Booth has not sought to set aside the transaction in respect of the truck. I have also found that the Statements were made by Mr Larkin to Mr Booth in circumstances where Mr Larkin was not aware of any potential agreement by Mr Booth to sell his business to Mr Edmunds for $265,000.
Accordingly, I find that there was no special disadvantage of Mr Booth of which Mr Larkin took advantage in entering into the Agreement.
In the circumstances, no breach of s.51AC of the TP Act is made out.
In circumstances, where s.51AC of the TP Act does not apply, s.51AA of the TP Act may have application. However, for the reasons referred to above, neither of the Respondents breached s.51AA of the TP Act.

Conclusion

In light of the findings I have made above:
i)Larkin Bros and Mr Larkin did not engage in conduct that was misleading or deceptive or unconscionable.
ii)There was no contravention by Larkin Bros of the TP Act.
iii)There was no contravention by Mr Larkin of the FT Act.
None of the allegations pleaded in the Statement of Claim, filed 26 June 2008 are made out.
Although the Respondents contended that the Statements were not made in trade or commerce, having regard to the findings I have made that neither the First Statement nor the Second Statement was misleading or deceptive or likely to mislead or deceive, there is no need to determine that legal issue.
Further, in light of the findings and conclusions I have made, there is also no need to determine the legal issue in relation to the technical applicability of s.51AC of the TP Act raised by counsel for the Respondents in her written submissions as follows:
“The First Respondent did not act in connection with the supply or possible supply of goods or services to a person or the acquisition or possible acquisition of goods or services from a person. The person who acquired the truck was the Second Respondent, and the First Respondent neither supplied, nor acquired, any interest in the truck. The meaning of “supplier” (which includes an acquirer) provided in s.51AC(3) is, in respect of s.51AC(1), the corporation.
The Second Respondent did not act in respect of the supply or possible supply of goods or services to a corporation, or the acquisition or possible acquisition of goods or services from a corporation.”
Accordingly, the proceeding in this Court commenced by way of application filed on 26 June 2008 should be dismissed.

I certify that the preceding one hundred and twenty-eight (128) paragraphs are a true copy of the reasons for judgment of Emmett FM

Associate: S. Kwong

Date: 17 March 2009