Chung v Kilpatrick Holdings (NSW) Pty Ltd ACN 167311435

[2025] NSWDC 14

District Court

New South Wales

• Amendment notes

Medium Neutral Citation:	Chung v Kilpatrick Holdings (NSW) Pty Ltd ACN 167311435 [2025] NSWDC 14
Hearing dates:	2 – 6 September 2024
Date of orders:	14 February 2025
Decision date:	14 February 2025
Jurisdiction:	Civil
Before:	Cole DCJ
Decision:	See [289] – [292]
Catchwords:	CONTRACTS – Breach of contract – lease of premises – co-operation in export of scrap metal – allegations of breaches of lease and agreement – allegations of breach of duty as a bailee of goods
Legislation Cited:	Storage Liens Act 1935 (NSW)
Cases Cited:	Port Jackson Stevedoring Pty Ltd v Salmond and Spraggon (Australia) Pty Ltd (1978) 18 ALR 333
Category:	Principal judgment
Parties:	Tung Hui Chung (First Plaintiff) THC Holding (NSW) Pty Ltd (Second Plaintiff) Kilpatrick Holdings (NSW) Pty Ltd (First Defendant) Paul Kilpatrick (Second Defendant) Kate Oliver (Third Defendant)
Representation:	Counsel: E Cox SC and C Street (Plaintiffs) N Kirby (Defendants) Solicitors: Norton Wilson Lawyers (Plaintiffs) Bartier Perry Lawyers (Defendants)
File Number(s):	2022/150971
Publication restriction:	Nil

JUDGMENT

Introduction

1. The plaintiff, Mr Tung Hui Chung (‘Mr Chung’), owns a property at Port Kembla (‘the Premises’) which he leased to the first defendant, Kilpatrick Holdings (NSW) Pty Ltd (‘KH P/L’). The term of the lease began on 1 July 2020 and ended on 30 June 2021 (‘the lease’). The second defendant, Mr Paul Kilpatrick (‘Mr Kilpatrick’), and the third defendant, Ms Kate Oliver (‘Ms Oliver’), were guarantors for KH P/L under a term which was set out in the lease. At all relevant times, the Premises were used as a scrap metal yard.

2. Between May and October 2020, KH P/L and the second plaintiff, THC Holding (NSW) Pty Ltd (‘THC’), entered into a verbal agreement regarding the storage, export and sale of scrap metal (‘the Scrap Export Agreement’). Before the commencement of the lease, the parties had co-operated in relation to the export of scrap metal on the “Thorco Lanner”. Within the term of the lease, a single further export consignment was arranged, which involved the loading and export of scrap metal on the “Stamina”.

3. These proceedings concern disputes which have arisen between the parties with respect to the lease and the Scrap Export Agreement. The plaintiffs set out their claims in the Statement of Claim and the second defendant, KH P/L, has filed a Cross-Claim.

4. The lease ended on 30 June 2021 and KH P/L vacated the Premises.

5. The plaintiffs rely upon an affidavit of Mr Chung of 14 February 2023 and a further affidavit of Mr Chung dated 16 September 2023 (together with the exhibits to those affidavits) and Mr Chung gave oral evidence. Mr Bilal Omar, a property manager, Mr Matthew Clenton, a project manager and Mr Grant Kelleher, the principal of GCK Electrical also gave oral evidence in the plaintiffs’ case.

6. The defendants rely upon affidavits of Mr Kilpatrick dated 5 May 2023, 24 May 2024 and 3 September 2024 (together with the exhibits and annexures to those affidavits). Mr Kilpatrick gave oral evidence. Mr Robbie Miners, the principal of Lylec Electrical Solutions also gave oral evidence in the defendants’ case.

7. The plaintiffs bear the onus of proof in relation to the allegations in the Statement of Claim. The cross-claimant, KH P/L, bears the onus of proof in relation to the allegations in the Cross-Claim.

Background

8. Mr Kilpatrick and Mr Chung began discussing the possible lease of the Premises in about April of 2020. The tenant of the premises at that time was East West Metal Trading Pty Ltd (‘East West’), and the director of East West was Mr John Ward. East West had made arrangements to vacate the Premises.

9. On 26 June 2020, Mr Chung, his son Mr Eugene Chung, Mr Kilpatrick and Mr Ward met on the Premises. At that meeting, a stock inventory list for the premises was read and discussed. A copy of the stock inventory list spreadsheet was emailed by Mr Ward to Mr Kilpatrick on 7 July 2020 (p 58, Exhibit PK1 to Mr Kilpatrick’s affidavit of 5 May 2023).

10. It was Mr Kilpatrick’s evidence that, during the meeting on 26 June 2020, he told Mr Chung that he was not happy with the current state of the Premises, and that Mr Chung said that Mr Ward still needed to clean it up.

11. KH P/L took possession of the Premises on 26 June 2020. On the same day, MMJ Real Estate took photographs of the Premises. These were exhibited to Mr Kilpatrick’s affidavit of 5 May 2023 at Exhibit PK 1 p 59 – 95.

12. A lease was executed on 1 July 2020, with Mr Chung as the lessor, KH P/L as the lessee and Mr Kilpatrick and Ms Oliver as guarantors. The lease is part of Exhibit THC 1 to the affidavit of Mr Chung of 14 February 2023 at p 2 – 49.

13. KH P/L paid the security deposit of $50,000 required under the lease to Mr Chung.

14. Mr Kilpatrick took further photographs of the Premises on 10 July 2020, which are at Exhibit PK 1 p 96 – 97.

15. At the commencement of the lease, there was a considerable quantity of scrap metal already on the land. Mr Kilpatrick, in his first affidavit, said that he saw the following:

1. A large stockpile located at the back of the Premises. This stockpile included:

1. EW [ie, East West] scrap purchased by THC Holding (NSW) Pty Ltd (THC) and weighing approximately 393.68 tonnes;

2. Scrap metal owned by Liberty Industrial Pty Ltd (Liberty) and weighing approximately 577.82 tonnes; and

3. Scrap metal owned by Kilpatrick and weighing approximately 1443.98 tonnes.

2. Skulls owned by THC;

3. Steel rolls owned by THC;

4. Steel plates owned by THC.

16. Skulls are a metal byproduct of steelmaking.

17. It was Mr Kilpatrick’s evidence that he asked Mr Chung several times to ask Mr Ward to come back and clean up the site, but Mr Ward did not do so.

Statement of Claim and Defence

18. The Statement of Claim alleges breaches of the lease. It also alleges that some of the plaintiffs’ goods were taken from the Premises by KH P/L or Mr Kilpatrick in the course of the lease and either destroyed or detained and converted by KH P/L or Mr Kilpatrick.

19. The allegations in the Statement of Claim, and the gist of the pleading in the Defence in relation to the allegations, are set out below, in summary, together with the relevant evidence in relation to the allegations.

Alleged Breach of the Lease and Guarantee Agreement in 2021

The allegations

20. It is alleged that, at the end of the term of the lease, KH P/L did not yield up the Premises in a “state of good repair and condition” as required under clause 30.1 of the lease.

21. It is further alleged that, prior to the termination of the lease, KH P/L or Mr Kilpatrick damaged or removed certain chattels, plant, equipment and fixtures without consent. This is said to be a breach of clause 30.1 of the lease.

22. Mr Chung claims that he has suffered loss and damage arising from the breaches of the lease. The Statement of Claim lists the following expenses:

i.   Plumbing – Col Evans Plumbing and Civil.

ii.   Electrical works – GCL Electrical and Lylec Electrical Solutions.

iii.   Weighbridge repairs – AWS t/a Weigh More Solutions and Port Kembla Gateway Pty Ltd.

iv.   Clean up – Worldwide Demolitions.

v.   Dirt/Soil leftover – Liberty Industrial and T&D Metals and Demolitions.

vi.   The costs of the above repairs and works undertaken by the first plaintiff was $88,523.20 plus GST.

vii.   Letter from Norton Wilson Lawyers to the first defendant dated 28 February 2022 and enclosures.

viii.   Further particulars to be provided following the service of evidence.

23. Mr Chung claims, in paragraph 17 of the Statement of Claim, that the guarantors, Mr Kilpatrick and Ms Oliver, are liable under clause 9 of the lease to him for the following:

i.   Cost of repair and works:   $88,523.20 plus GST.

ii.   Goods taken unlawfully:   $1,510.80 plus GST.

iii.   Goods bailed and destroyed:   $19,600.00 plus GST.

iv.   Goods bailed and detained:   $55,000.00 plus GST.

v.   Letter from Norton Wilson Lawyers to the first defendant dated 28 February 2022 and enclosures.

24. Mr Chung claims interest under the lease with respect to the loss allegedly suffered.

The Defence

25. In the Defence, the defendants say, in summary, that the Premises had been subject to “significant wear and tear and impairments” prior to KH P/L taking possession.

26. The defendants further say that, under clause 30.2(c) of the lease, they are not responsible for the fair wear and tear of the Premises throughout the lease.

27. The defendants say, in paragraph 12 of the Defence, that the previous tenant of the Premises left “a significant amount of solid waste” in a corner of the site.

28. The defendants say that the weighbridge was operational at the end of the lease.

29. The defendants deny that the plaintiffs are entitled to the damages claimed.

Evidence and consideration

30. The lease is part of Exhibit THC 1 to Mr Chung’s affidavit of 14 February 2023 (pp 83 - 130).

31. The lease contains the following clauses, which are relevant to this part of the plaintiff’s claim:

30.1   The Lessee shall keep the Premises and the Lessor’s fixtures and chattels situated in the Premises in good repair and working condition throughout the Term and shall on expiry or termination of this Lease yield up the Premises to the Lessor in the state of repair and condition as is specified in this clause.

30.2   The Lessee is not responsible for:

(a)   Structural Repairs, unless the need for repair occurred through the conduct or at or omission of the Lessee or of persons for whose conduct the Lessee is legally liable, or through the Lessee’s use and occupation of the Premises or the use of the Facilities, fixture, plant and machinery in the Premises.

(b)   the condition of the Premises at the commencement of this Lease;

(c)   fair wear and tear since the commencement of this Lease, throughout the Term;

(d)   repairs required as a result of natural disasters, deliberate damage or accident, such as fire, flood, storm, earthquake, explosion, which are beyond the Lessee’s responsibility or control, unless the damage occurred as a result of or was substantially contributed to by the Lessee’s acts or omissions.

30.3   In addition to the Lessee’s obligations under clause 30.1, the Lessee shall throughout the Term, notwithstanding clause 30.2 (which does not apply to the matters listed in this paragraph), carry out the following repair and maintenance:

(a)   promptly repair or replace all broken, cracked or damaged glass in the Premises, with glass of the same or similar gauge and quality, unless the damage was caused by the Lessor or the Lessor’s trade persons;

(b)   promptly repair or replace all damaged, broken or faulty light globes, fluorescent lights, power points, light switches, heating, fighting and electrical appliances, services and wiring in the Premises;

(c)   promptly repair and keep in proper working order and free from blockage plumbing fittings, drains, water pipes, sewerage pipes, toilets and sinks, to the extent to which they are situated in or under the Premises and provide Services or Facilities to the Premises;

(d)   maintain and repair all door and window locks and fittings in the Premises; and

(e)   repair any damage or breakage to the Premises, to the Lessor’s Fixtures and property in the Premises and to Services and Facilities in the Premises, caused by lack of care or misuse by the Lessee or by its employees or agents.

32. The invoices relied upon in relation to this claim are contained in Exhibit THC 1 to Mr Chung’s affidavit of 14 February 2023.

The Plumbing Invoice

33. The invoice from Col Evans Plumbing and Civil is for $1,830 (‘the plumbing invoice’). It is dated 7 July 2021. It lists the following works:

Repair 3 damaged hose taps in yard and supply new taps and fittings

Re secure taps and piping

Repair hot water system and replace tpr valve

Repair water leak in concrete on western side fence

Supply and fit new basin tap and replace pressure limiting valve

Includes parts and labour

6 hours labour.

34. On the face of the plumbing invoice, the works set out in the plumbing invoice could constitute routine maintenance works. There is no evidence to suggest that the “3 damaged hose taps”, or any of the other things which were repaired, had stopped working.

35. The obligation upon the lessee in clause 30.1 must be read in the context of the use of the Premises as a scrap metal yard. The obligation to “keep” the fixtures “in good repair and working condition” does not mean that the fixtures had to be in perfect condition at all times. Clause 30.1 does not oblige the tenant to improve the fixtures. There is no evidence of the nature or extent of the “damage” to the hose taps or any of the other things which were repaired. There is no evidence as to when the damage occurred, the extent of the damage, or whether the repairs were necessitated by fair wear and tear. The work appears to have been done on the seventh day after the departure of KH P/L from the site.

36. The plaintiffs have not established, on the balance of probabilities, that these works were works which KH P/L was required to perform under the lease. KH P/L is not liable for the plumbing invoice.

The GK Electrical invoice

37. The invoice of GCK Electrical is dated 7 July 2021 and is for a total of $947 (‘the GCK invoice’). The following works are listed, together with a callout fee of $77 and time of $170 (2 hours at $85 per hour):

Bathroom Light

Supply and install new 1200mm Led fitting in bathroom area   $140

Switchboard

Inspection of crib room sub board and supply and install

of new Residual Current Device and 4 x subcircuits         $460

Light Repairs

Repairs of 2x crib room lights, 2x back room lights         $100

38. Mr Grant Kelleher, the principal of GKC Electrical, gave evidence in the plaintiffs’ case.

39. Mr Kelleher said, in evidence, that there was an issue with the electrical circuits in the switchboard which was causing the power to trip on and off within part of the office building on the site. He changed the breakers to get the power back on and working properly. He replaced the switchboard because, he said, “the switches that were there were very old and they were unrepairable”.

40. Mr Kelleher said that the light in the bathroom that he replaced was missing a cover and was all rusted. He said “It didn’t look like it had worked for a long time”. He was asked to replace it, and he did so. As to the other light repairs, in relation to four lights, that was simply the supply of tubes (lightbulbs) and starters. It was not the replacement of fittings.

41. I accept all of Mr Kelleher’s evidence.

42. It was apparent from his oral evidence that Mr Chung had no knowledge of the circumstances of the electrical work in the GKC invoice apart from his understanding of what the invoice said.

43. Mr Kelleher performed the electrical work the subject of the GKC invoice on the seventh day after KH P/L had left the site.

44. The obligation of KH P/L under clause 30.1 is an obligation to “keep” the fixtures “in good repair and working condition”. There is no evidence that the power to the office building on the premises was tripping on and off prior to 7 July 2021. There is no evidence that it was happening in the course of the tenancy of KH P/L. Likewise, there is no evidence that the four lights replaced in the crib room and the back room required replacement during the tenancy.

45. Mr Kelleher indicated that the bathroom light that he replaced was rusty and looked as if it had had not been working for a long time. There is no evidence as to whether or not this light was working when KH P/L took possession of the Premises. Although there is an item for lights/power points in relation to some rooms on the Routine Inspection Report signed by Mr Chung and Mr Kilpatrick on 17 July 2020, there is no such item for the bathrooms. It has not been shown that KH P/L is liable for the replacement of the light under clause 30.1 of the lease.

46. I have considered whether KH P/L is liable under clause 30.3(b) of the lease, but, given that clause 30.3(b) requires that the tenant “promptly repair damaged, broken or faulty light globes”, I do not think that it was intended to apply to a fixture which was broken at the beginning of the lease and needed to be replaced entirely. I am not satisfied, on the balance of probabilities, that the bathroom light stopped working during the term of the lease. There is simply no evidence of when the bathroom light stopped working. It has not been proven that KH P/L is liable for the GCK invoice.

Lylec Electrical Solutions Invoice

47. The invoice of Lylec Electrical Solutions is dated 18 July 2021 (‘the Lylec invoice’).

48. The Lylec invoice is for a total of $4,500. It lists the following items:

6 x Warehouse Highbay replacement to 120 W LED

supply + install @ 280ea                  $1680

6 x Yard Light Flood 120 W LED supply + install @ 470ea      $2820

49. The Routine Inspection Report signed by Mr Chung and Mr Kilpatrick on 17 July 2020 noted, under “External Power Points & Lights”, “Wardie to fix lights”. “Wardie” is Mr John Ward of East West.

50. In evidence in chief, Mr Chung agreed that, shortly after KH P/L took possession of the premises, he had a conversation with Mr Kilpatrick in which Mr Kilpatrick referred to the broken floodlights and Mr Chung said that “Wardy” was arranging an electrician to fix the broken floodlights.

51. For the first time, in the course of cross-examination, Mr Chung said that “Wardy” was responsible for breaking one of the floodlights and Mr Kilpatrick was responsible for breaking the other. This did not appear in his affidavits or his pleadings.

52. Mr Chung said, in cross-examination, that the Routine Inspection Report said “Wardie to fix light”. He said that there was only one broken floodlight for which Mr Ward was responsible (transcript p 78).

53. In his affidavit of 5 May 2023, Mr Kilpatrick said that he attended a routine inspection of the Premises with Mr Chung on 17 July 2020. He said that, in the course of that inspection, he identified, among other things “Damage to three spotlights caused by East West when loading an export vessel in May 2020, prior to Kilpatrick’s occupation of the Premises”. Mr Kilpatrick said that he wrote “Wardie to fix lights” on the Routine Inspection Report.

54. The note on the Routine Inspection Report clearly says “Wardie to fix lights”.

55. Mr Chung could not recall how many light poles there were outdoors in the Premises. He eventually said that there were two poles, and one light mounted on the roof. Mr Chung inferred from the Lylec invoice that three lights were replaced, and he did not know whether they were all on the same pole.

56. At first, Mr Chung said “... one light was damaged by Wardy. We pay that one. We sort it out with him and we only claim him the lights he damaged”. However, Mr Chung then said that he “just waive” the payment for one of the lights and did not seek payment from Mr Ward on account of his good relationship with Mr Ward. Mr Chung said that he was claiming $3,000 of the $4,500 Lylec invoice from KH P/L.

57. The following exchange took place in cross-examination:

Q.  Mr Chung, if you would just please listen to my question and just attend to the question.  What I'm saying to you is that as you sit here now, you do not know one way or another whether the six yard lights, which are said to have been replaced by Lilac Electrical, were in relation to the three which you say were broken or six, variously, that needed replacement all around the yard.  You just don't know one way or the other, do you?

A.  I don't know.

Q.  But you've just decided that because Wardy broke one and Kilpatrick, you say, broke two that you were just going to pro rate it where Kilpatrick would pay you for two‑thirds of that invoice and you would absorb the rest of the cost.

A.  Yes.

58. Mr Chung was shown a photograph dated June 2020 which showed a light pole with two floodlights dangling from the top, below the location in which they ought to have been mounted (Court Book p 620). On the same page, there is a photograph of the undamaged light pole with three floodlights mounted in place. Mr Chung agreed that the first photograph was a photograph of the damaged lights as they were at the beginning of the lease. However, he said that the two dangling lights were working at the time of the loading of the Stamina (see transcript p 89). He then agreed, however, that he was not present when the Stamina was loaded. He agreed that he did not know when the floodlights were damaged (transcript p 90).

58. The plaintiffs have not proven, on the balance of probabilities, that the floodlights the subject of the Lylec invoice were working at the time that KH P/L took possession of the Premises. Mr Chung simply does not know. Mr Kilpatrick, on the other hand, has a clear recollection of observing that the three lights on one of the poles were damaged before the lease commenced, and he made a note which is consistent with that observation in the Routine Inspection Report. His observation is also consistent with a contemporaneous photograph.

59. There was speculation as to whether the loading of the scrap metal on the site into export bins for loading on the Stamina could have taken place safely if the damaged lights were not working. No evidence supported this speculation. Mr Kilpatrick, in examination in chief, said that the damaged lights could not be turned on at the time of the loading of the Stamina in October 2020. He said that loading for the Stamina took place on the Premises at night with the use of the working floodlights and the lights on the plant and equipment. The speculation as to the safety of the process adopted does not assist in deciding the issue concerning the floodlights.

60. The plaintiffs have not established on the balance of probabilities that the defendants are liable for the Lylec invoice.

Weighbridge invoices

62. Exhibit THC 1 included three invoices with respect to the weighbridge. WeighMore Solutions submitted three invoices to Mr Chung, one dated 30 July 2021 for $2,475 (‘the first WM invoice’) and the other two dated 6 August 2021 for $8,431.50 and $1,721.50 respectively (‘the second WM invoice’ and the ‘third WM invoice’). A fourth invoice, from Port Kembla Gateway Pty Limited, dated 3 July 2021, appears to be for the use of a weighbridge by THC on other premises, and its relevance to the present matter was not the subject of any evidence, so I will not take it into account.

63. No explanation for the WM invoices was given in either of Mr Chung’s affidavits.

64. The first WM invoice is for:

Additional Service after inspection of the site as quoted

Supply & install of New cables, nuts & bolts and extra parts as required.

65. The second WM invoice is for :

Supply & Install Ezyweigh V6 and on site admin/operator training

1   $6,500      WMS – EZYWEIGH Weighbridge Management

Locally hosted SQL database

1   $640      Installation kits – installation of Ezyweigh version 6

1   $480      WMS POS Printer

1   $45      USB to DB9M RS232 converter

66. The third WM invoice is for:

Preventative Maintenance and Verification Service – Service Date 14.7.2021

The service includes the following Jack up weighbridge and grease and check all load cells and top and bottom cups. Test junction box and check wiring. Adjust buffer stops. Test indicator and all buttons. Check remote display if one is on site. Check overall quality of weighbridge deck and all steel beams. Fill in full preventative maintenance report. Verification Service. Test and Calibrate as per NMI regulations using Certified Weight Reports will be sent at the time of invoicing.

67. In evidence, Mr Chung said Mr Kilpatrick had taken everything out of the office, including tables and the computer.

68. In cross-examination, Mr Chung was shown a photograph taken on 1 July 2021, a day after KH P/L vacated the Premises. It showed a computer screen, a “Gedge” and a table and chair in the office. Mr Chung accepted that the photograph depicted the office as it was on 1 July 2021.

69. A photograph dated 29 June 2021 at 2:11pm, taken by Mr Kilpatrick, which showed that the weighbridge was registering weight on the outside display was tendered in the defendants’ case (Exhibit D9).

70. Mr Chung agreed that, if the weighbridge was disconnected from the computer in the office by the removal of the cable from the computer, the external monitor would show a series of dashes. This was what the external monitor was showing in early July when Mr Chung inspected the Premises.

71. Mr Bilal Omar, a property management consultant, who acts for THC, gave evidence. Mr Omar inspected the Premises with Mr Kilpatrick and Mr Rikki Kelleher of THC (who was an employee of THC and is not to be confused with Mr Grant Kelleher) on 1 July 2021 and Mr Omar took photographs of the Premises.

72. There was a photograph of a computer “tower” in an upstairs office of the Premises among Mr Omar’s photographs.

73. It was Mr Kilpatrick’s evidence, in summary, that, during the term of the lease, he used his (or KH P/L’s) own computer and software to interface with the weighbridge, and not THC’s. Further, when Mr Kilpatrick (and KH P/L) left the Premises, he left the computer tower in the upstairs office and the screen and the Gedge in the location shown in the photograph taken on 1 July 2021 (p 620, Court Book). All of the elements belonging to THC which were needed for the weighbridge to function were therefore left on site at the end of the lease. Mr Kelleher said that the weighbridge could function without a computer. The weight would be shown on the Gedge and could be written down, rather than being recorded by software (transcript p 219 to 220).

74. I accept Mr Kilpatrick’s evidence on the topic of the weighbridge and the computer equipment.

75. On the basis of the evidence, it is likely that the fact that the weighbridge could not weigh anything on 1 July 2021 is attributable to the fact that it was not then properly connected, KH P/L’s computer having been disconnected from it. The fact that it still had an illuminated display means that it was still connected to electricity.

76. Mr Chung inferred from the removal by KH P/L of its radiation monitor that some wire may have been cut in that exercise which caused the weighbridge to stop working. There is no factual basis for that inference.

77. The plaintiffs have not proven, on the balance of probabilities, that the weighbridge or any computer equipment associated with it was damaged, not capable of functioning or had been removed from the Premises.

78. There is no evidentiary basis upon which I could find that the plaintiffs are liable for the WM invoices.

Worldwide Demolitions, Liberty Industrial and T & D Metals and Demolitions invoices

79. Exhibit THC 1, at p 92, includes an invoice dated 5 July 2021, from Worldwide Demolitions to THC Holding, for $1,370 (‘the Worldwide Demolitions invoice’). The description is:

Customer:   THC Holding

Delivery Date:   5/7/2021

Bin delivered:   15mh

Material:   General Waste

To address:   Kilpatricks Old Port Rd Port Kembla

80. Exhibit THC 1, at p 67, includes an invoice dated 31 December 2021 from Liberty Industrial (‘Liberty’) to Mr Chung for $61,942.10 (‘the Liberty invoice’). This invoice refers to an invoice dated 22 December 2021 to Liberty from Bulk Transport Solutions (‘BTS’) for the same amount (‘the BTS invoice’). The BTS invoice describes the work performed as “Transport and Dispose Restricted Solid Waste”. The invoice indicates that 168.76 tonnes of restricted solid waste was removed from the site on 16 December 2021 and disposed of. It seems that Liberty arranged for BTS to undertake work for Mr Chung.

81. There are two invoices from T & D Metals and Demolitions Pty Ltd (‘T & D’) to Mr Chung at pages 69 and 70 of Exhibit THC 1. Both have the same date, 14 February 2022, the same description of work and the same invoice number, INV-0322. One is for $7,590 and the other is for $7,414. The difference is accounted for by an increase in the unit price in relation to “16 tonne of mixed waste” from $320 to $330. The work description on the invoices is the same, and only the amount for the “16 tonne of mixed waste” is different. The invoice for $7,414 says:

Description	Quantity	Unit Price	GST	Amount AUD
16 tonne of mixed waste	16.00	330.00	10%	5,120.00
Transport one load of waste	1.00	440.00	10%	440.00
4 hours excavator hire ex Port Kembla Yard	4.00	295.00	10%	1,180.00
Subtotal	6,740.00
TOTAL GST 10%	674.00
TOTAL AUD	7,414.00

82. In cross-examination, Mr Chung asserted that T & C “…come to do the first one, can’t finish. Come back again to do another one”. It was suggested to Mr Chung that this answer was false, in response to which he said “…I can’t remember every invoice”.

83. I reject Mr Chung’s explanation. He conceded that he could not remember. He simply constructed a story around the invoices. The fact that they have the same invoice number means that they are for the same work.

84. In re-examination, Mr Chung was taken to a redacted copy of a bank account in his name (not in the name of THC) (Exhibit P6). The bank statement shows that Mr Chung paid T & D $7,414 on 15 February 2022. I accept that this was the payment of the invoice set out above at [81]. Also highlighted on the bank statement is a payment to T & D of $7,716.50 made by Mr Chung on 27 January 2022. This is clearly not the payment of the other invoice dated 14 February 2022, because it pre-dates it and is for a different amount. A further invoice from T & D was then produced, dated 24 January 2022, for the same amount as the payment by Mr Chung on 27 January 2022. This invoice is not mentioned in the Statement of Claim or in Mr Chung’s evidence. There is nothing on the face of the invoice to tie it to the Premises.

85. In his affidavit of 14 February 2023, at paragraph 26, Mr Chung asserted that all of the invoices set out above together, totalling $78,316.10, comprised “costs incurred by the First and/or Second Plaintiffs for the removal of dirt/soil and other material from the Port Kembla Scrap Yard at the end of the Lease and Guarantee Agreement” from the premises. No further information was given in the affidavit about the nature of the work covered by the invoices.

86. I note that the lease between THC and KH P/L ended on 30 June 2021. It is apparent from the BTS invoice that the Liberty invoice relates to work performed on 16 December 2021, which is five and a half months after the end of the lease. The T & D invoice is dated 14 February 2022, so the work it relates to is likely to have been performed in early February 2022, more than seven months after the end of the lease.

87. In his affidavit of 14 February 2023, Mr Chung claimed both of the T & D invoices from KH P/L, but, as I have said, because they both have the same invoice number, and the same description of work, it can be inferred that they are for the same work, and the one set out above is the correct invoice.

88. No further evidence was given as to what the Worldwide Demolitions invoice related to. Mr Chung said, in cross-examination, that he cleaned up the Premises “for many months”, but he said that he could not remember if there was any clean up in July 2021 (see transcript p 117 – 118).

89. It is common ground that there was a pile of dirt, scrap metal and other material in the eastern corner of the Premises at the commencement of the lease.

90. Mr Kilpatrick said, in his affidavit of 5 May 2023:

27   On or around 1 July 2020, while attending the Premises I observed that there was a significant amount of stock at the Premises, including:

a.   A large stockpile located at the back of the Premises. This stockpile included:

i.   EW scrap purchased by THC Holding (NSW) Pty Ltd (THC) and weighing approximately 393.68 tonnes;

ii.   Scrap metal owned by Liberty Industrial Pty Ltd (Liberty) and weighing approximately 577.82 tonnes; and

iii.   Scrap metal owned by Kilpatrick and weighing approximately 1443.98 tonnes.

b.   Skulls owned by THC;

c.   Steel rolls owned by THC;

d.   Steel plate owned by THC.

…

29   I also observed that significant dirt and contamination had formed around the skulls, rolls and steel plate. This evidenced to me that the skulls, rolls and steel plate had been stored at the Premises for some time without being moved.

91. Exhibit PK 1 contains photographs of the Premises taken on 26 June 2020, which was the day that KH P/L took possession of the site (p 455 – 491 of the Court Book). At p 492 - 493 of the Court Book, there are photographs of the Premises taken on 10 July 2020. The photographs show that some indoor areas of the site have broken and apparently abandoned items stored in them, including a shopping trolley, furniture and toys. The ground of much of the yard is covered in concrete which, in turn, is covered with a fine layer of black dirt and trails of scrap metal. The piles mentioned by Mr Kilpatrick in his affidavit are shown in the photographs.

92. Mr Chung gave inconsistent evidence as to the condition of the site and as to whether Mr Kilpatrick told him about his concerns about the dirt and rubbish on the Premises at the commencement of the lease. Mr Chung was taken to the photographs referred to at [91] and said that he considered the state of the Premises shown in the photographs to be acceptable.

93. I accept that the Premises were in the state shown in the photographs referred to in [91] at the commencement of the lease, which is consistent with Mr Kilpatrick’s evidence in his affidavit.

94. It was Mr Kilpatrick’s evidence that he told Mr Chung that the yard of the Premises was dirty and that a lot of rubbish had been left behind by Mr Ward on 3 July 2020 when they inspected the Premises together. In cross-examination, in relation to the conversation on 3 July 2020, Mr Chung said that “he” that is, Mr Kilpatrick, “may say so, but in a scrap yard, it’s quite acceptable” (transcript p 52 – 53).

95. Mr Chung, in cross-examination, said that, in May 2020, after the Thorco Lanner shipment, Mr Ward used a machine to sweep dirt and scrap metal into the eastern corner of the yard at the Premises (transcript p 65).

96. In cross-examination, Mr Chung was taken to some photographs of the Premises taken near the commencement of the lease, which form part of PK 1. The following exchange occurred:

Q.   … You bought some scrap off East West?

A.   Yes. Leftover when he vacated the yard, and anything leftover I buy – I bought it from East – John Ward in order to contribute – to put together with Kilpatrick as well, Liberty scrap and my scrap together so we would have enough tonnage to export.

97. Mr Chung was taken to the photographs at pages 471 and 630 of PK 1. On close examination, he agreed that the easternmost pile was processed scrap and the northeastern pile was unprocessed (transcript p 70).

98. Whilst Mr Chung was being cross-examined, he had the following exchange with me:

Q.   Can you just tell us on what day you gave up occupation of the site to a new tenant after Kilpatrick. You don’t need to say who or under what conditions, but on what day?

A.   Okay. After he left – that’s 30 June – and we surveil the condition of the yard with many tradesmen and it took – just a guess – probably five, six months to clean it up, because I can’t just go ahead to clean up without Kilpatrick’s knowledge. I did notify him, “You have such scrap” – dirt –

Q.   You’re digressing now. You took five or six month, and then did the new tenant come in?

A.   Yes, and then I have a new tenant. Yes.

Q.   Some five or six months after –

A.   Some five or six months, yeah.

99. In re-examination, Mr Chung was shown an email chain. He then said that it had prompted his recollection that Liberty had used the yard in around November/December 2021. He said:

A.   … Liberty had a demolition job with BlueScope steel and some of the steel there can’t quickly take it direct to the BlueScope steel. They took it to our yard, and I forget about it, and I didn’t – because Liberty, we don’t charge him the rent. He just bring into our yard, and on the track we sell to BlueScope Steel because I’m a broker of the Liberty Industry.

100. Mr Chung said that he received a brokerage fee from Liberty but not rent. He said that Liberty processed the steel themselves on the Premises.

101. Mr Clenton, who was the demolition supervisor for Liberty in the second half of 2021, gave evidence in the plaintiff’s case.

102. Mr Clenton said that Liberty used the Premises to receive and process scrap from the Port Kembla Seawall Project from “July, August 2021”. Mr Clenton said that Liberty had about six staff at the Premises for this purpose. Semi-trailer loads of “redundant piles from the wharf construction” were brought to the Premises and weighed on the weighbridge at the Premises. The processing took two to three months. The waste metal was processed on the Premises. The processing involved cutting the poles in half with “an oxy cutter” and then further processing by mechanical means with the shear attachment on the excavator. The following exchange took place in examination in chief:

Q.   At the conclusion of the processing, was any steps taken to clean up any dirt or residual contaminants left behind after the processing?

A.   There was steps taken to clean up our mess, yeah.

Q.   What did you do? What did staff under your supervision do?

A.    So we cleaned that up and then disposed of the material.

Q.   Where did you dispose of it?

A.   The material was disposed of – BTS, I think it was.

Q.   What is BTS?

A.   They’re a transport company that takes dirt and material, recycling.

Q.   What did you do with the steel piles after they had been processed?

A.   The steel piles are then taken to BlueScope for recycling.

Q.   Was any material left on site so far as you were aware after the processing and removal of the processed steel was done, to your knowledge?

A.   No.

103. In cross-examination , Mr Clenton clarified that the steel being processed by Liberty was steel pipes filled with concrete.

104. Mr Clenton further said that the use of the Premises by Liberty for the Port Kembla Seawall project continued until “around the end of 2022”.

105. An email chain was tendered as Exhibit P8 (see [99]). It included a document entitled “Liberty Port Kembla Seawall Terminal FINAL STAGE” which set out an accounting in relation to steel and copper scrap from the Port Kembla Seawall Project from 14 October 2021 to 17 March 2022.

106. Also tendered in the course of the re-examination of Mr Chung was a bundle of documents relating to the waste classification of the material in the eastern corner of the yard to the Premises, which appears to have been obtained by Liberty and provided by Liberty to Mr Chung on 25 October 2021. The documents comprising the analysis of the material are dated in September and October 2021.

107. In cross-examination, Mr Chung was asked if he could identify, from the photographs of the site taken by Mr Oman, what the waste was that was the subject of the Worldwide Demolitions invoice. Mr Oman could not identify the waste from the photographs, and he could not describe the waste beyond the description on the invoice, which was “General Waste”.

108. In cross-examination, Mr Chung was asked what the waste the subject of the BTS invoice (and therefore the Liberty invoice) consisted of. The following exchange took place (transcript p 129):

Q.   Do you know what that waste—

A.   It’s called contaminated waste.

Q   Yes, but do you know where it came from in the yard?

A.   It’s from the tenant.

Q.   How do you know that?

A.   Who is – where was the last one, he is the last one, vacant the yard and we clean up. It’s his – it’s leftover.

Q.   Why was it not taken until December?

A.   It – this is classified as contaminated waste. Apart from we need to inquire from whoever can take this waste. I also have to notify him – Kilpatrick, say, “This is contaminated one. Do you want to do anything?” And, of course, he don’t reply to us. Then we have to choose whoever we can take it to. It’s not normal, like general waste. You can take it to one particular area. This one can only – some nominated area can receive this waste.

109. Mr Chung went on to agree that there was a pile of dirt on the site after the loading of the Stamina which was from the co-mingled piles of scrap metal belonging to THC, Liberty and KH P/L. Mr Chung agreed that THC and Liberty had 4,000 tonnes of scrap on the Stamina and KH P/L had about 5,000 tonnes. He said that he thought that Mr Kilpatrick’s scrap (meaning KH P/L’s) was “more lower grade, mix grade” and “That’s why it … bring more dirt into the yard”. It was put to Mr Chung, again, that Mr Kilpatrick told him on many occasions that the East West pile, which Mr Chung had bought from East West, was seriously contaminated with dirt. He said that he could not remember.

109. Mr Kilpatrick said that there was a pile of dirt in the eastern corner of the yard of the Premises at the end of the lease. This was dirt left over from the loading of the Stamina, and Mr Kilpatrick said that much of it came from the East West pile of scrap, which had been stored in the same location. In addition, there was a pile of skulls on the site belonging to Mr Chung, which had been there since before the commencement of the lease. There was a sign, or part of a sign, saying “T & D Metals”, which belonged to Mr Chung and some steel rails, also the property of Mr Chung.

110. It was Mr Kilpatrick’s evidence that his staff weighed the pile of dirt in the eastern corner in his presence, and that it weighed 40.54 tonnes. I note that Mr Omar’s letters of 26 August 2021 and 1 September 2021 say that the pile is estimated to contain 400 tonnes of material, but this estimate has not been substantiated, and Mr Omar was not asked about it when he gave evidence. I reject the suggestion that the pile weighed 400 tonnes. It weighed less than that prior to the loading of the Stamina.

111. I find that, at the end of KH P/L’s lease of the Premises from Mr Chung on 30 June 2021, there was a pile of material in the eastern corner of the yard left over from the loading of the Stamina, a pile of skulls which belonged to Mr Chung and other scrap metal which belonged to Mr Chung. The skulls and other scrap metal had been there since before the commencement of the lease. Most of the pile of material in the eastern corner of the yard had also been there since before the commencement of the lease, except, perhaps, for a minor and unquantified contribution from the scrap collected on the site by Liberty, THC and KH P/L for export on the Stamina.

112. The lease provides, in clause 43:

43.   Lessee’s Obligation to Yield Up Premises

The Lessee agrees, immediately on the expiry or legally effective termination of this Lease, to yield up possession and control over the Premises to the Lessor, in the condition and state of repair as required under this Lease.

114. The lease does not describe the condition in which the yard of the Premises is to be left at the end of the lease. No obligation is expressly or impliedly imposed upon the lessee to remove material which was present on the yard of the Premises prior to the commencement of the lease.

115. Mr Chung gave evidence that, in his opinion, the Premises were in a fit condition at the commencement of the lease, given the use of the Premises as a scrap yard.

116. The scrap metal loaded onto the Stamina included scrap metal brought to the Premises by Liberty. It included scrap metal brought to the Premises by THC or Mr Chung. It included much of the pile left in the eastern corner by East West, the previous tenant of the Premises, which Mr Chung purchased from East West. It also included scrap metal brought to the Premises by KH P/L and Mr Kilpatrick.

117. In his affidavit of 16 September 2023, Mr Chung said:

35.   The terms of the Export Co-operative Agreement were:

…

i.   When scrap metal is delivered to the Port Kembla Scrap Yard THC Holdings issues a Purchase Contract between it and Kilpatrick by which THC Holdings purchases the scrap metal from Kilpatrick on agreed terms (THC Purchase Contract).

j.   On receipt of a Purchase Contract signed by Kilpatrick together with an invoice from Kilpatrick, THC Holding pays to Kilpatrick the amount set out in the Purchase Contract;

118. Several of the THC Purchase Contracts are in evidence. They provide for the purchase of the scrap metal by THC prior to October 2021.

119. The evidence is that THC purchased the scrap metal which belonged to KH P/L, and was brought to the Premises, shortly after its receipt at the site, upon receiving an invoice from KH P/L for a purchase price which was based upon the weight of the material recorded at the weighbridge on the Premises as the material arrived. By the time the Stamina was ready to be loaded, THC owned, at least, the scrap acquired from East West (the pile in the eastern corner of the Premises) and the scrap metal otherwise gathered for THC on the Premises for export, together with the scrap accumulated by KH P/L, prior to loading. There is no evidence of Mr Chung’s payment arrangements with Liberty for scrap contributed by Liberty.

120. There is no evidence of any agreement between Mr Chung or THC, on the one hand, and Mr Kilpatrick and/or KH P/L on the other, for Mr Kilpatrick or KH P/L to dispose of the residue of the cargo loaded onto the Stamina. That material was Mr Chung’s property (with, possibly, a small contribution from Liberty), and much of it had been stored on the Premises since before the commencement of the lease when Mr Chung found the condition of the Premises to be acceptable, having regard to its use.

121. It is pleaded, in the Statement of Claim, that the omission to remove the material from the Premises at the end of the lease was a breach of clause 30 of the lease. Clause 30.1 relates to the lessee’s obligation to “keep” the Premises, and the Lessor’s fixtures and chattels situated in the premises, in good repair and working condition throughout the term of the lease, and to yield up the Premises to the Lessor in the state of repair and condition “as is specified in this clause”. Clause 30.2 specifically says that the Lessee is not responsible for the condition of the premises at the commencement of the lease.

122. The allegation in clause 12 of the Statement of Claim of a breach of lease by KH P/L and Mr Kilpatrick on the basis that they did not “yield up the “Premises” in a state of good repair and condition” refers, by way of particulars, to a letter of Norton Wilson Lawyers to KH P/L dated 28 February 2022. The claims in that letter are simply asserted. No source of the obligation relied upon is referred to in either the Statement of Claim or the letter, and neither has it been identified in the course of the hearing.

123. There is no evidence as to what the “General Waste” the subject of the Worldwide Demolitions invoice comprised. Mr Chung did not know. It has not been established in fact or in law that the “General Waste” removed was waste which KH P/L or Mr Kilpatrick had an obligation to remove.

124. Likewise, there is no evidence of what the waste the subject of the T & D invoice comprised. The waste the subject of the T & D invoice was probably removed in early February of 2022, as the invoice is dated 14 February 2022. This was more than seven months after KH P/L left the site, and during the occupation of the site by Liberty, which was processing metal waste on the Premises.

125. The BTS invoice for $61,942.10 was for “Transport and Dispose Restricted Solid Waste”. The waste was taken from the Premises on 16 December 2021, during the occupation and use of the site by Liberty for the processing of metal waste. The BTS invoice was for the transport and disposal of 168.76 tonnes of waste. There is no evidence as to which part of the site the waste was taken from. A comparison of the aerial photograph of 1 November 2021 and 31 December 2021 shows that the pile of material in the eastern corner was removed between those two dates, but other material has also been removed or moved. The source of the asserted obligation to remove the material in the eastern corner of the Premises, which was the property of Mr Chung, has not been identified. I note that it was Mr Kilpatrick’s evidence that the material which remained in the eastern corner of the Premises after the loading of the Stamina weighed slightly more than 40 tonnes.

126. The plaintiffs have not established, in law or in fact, that KH P/L or Mr Kilpatrick are liable to them for the costs claimed in the Statement of Claim for the removal of material from the site.

Action in conversion and trespass in respect of goods taken unlawfully

The allegations

127. The plaintiffs claim, in paragraphs 23 to 26 of the Statement of Claim, that the following chattels, plant, equipment and fixtures, which are Mr Chung’s property, were present at the Premises when KH P/L took possession under the lease but were converted by KH P/L and/or Mr Kilpatrick to their own use and removed from the premises:

a.   Oricom UHF2390 2 Way Radio;

b.   HP computer and accessories;

c.   Metal Office Desk and Computer Study Table;

d.   Modem; and

e   Stationary.

128. The value of the items allegedly converted was said to be $1,510.80.

The Defence

129. In paragraph 23 of the Defence, the defendants say that the Oricom UHF2390 2 Way Radio, the metal office desk and the computer study table were the property of KH P/L.

130. The defendants further say that the HP computer and accessories remained at the Premises when the lease ended. Conversion of a modem and stationary is denied.

Evidence and consideration

131. The value of any stationary on the Premises has not been established. In cross-examination, Mr Chung indicated that, in his mind, it was a reference to paper for the computer.

132. In evidence, Mr Kilpatrick said that he did not remove a modem from the premises. No details of the modem are in evidence, though I note that it has been replaced at the cost of $206.95. Mr Kilpatrick, in his affidavit of 5 May 2023, said that Mr Rikki Kelleher, an employee of THC, took all of the office supplies and the modem on behalf of THC when he left the office in December 2020. There is no evidence to the contrary.

133. Mr Kilpatrick gave evidence, in his affidavit of 5 May 2023, that, in October 2020, the two way radio at the Premises stopped working. KH P/L took the radio out of its own excavator and used that instead. Later, it replaced the radio in the excavator. An invoice, which includes other work, was supplied at PK 1, p 248 at p 644 of the Court Book. When KH P/L left the site, its excavator and radio left with it.

134. Mr Kilpatrick gave evidence, in his affidavit of 5 May 2023, that Mr Ward gave him the study table and metal office desk at the meeting of 26 June 2020 during a walk-through of the Premises. There was no evidence to the contrary. In cross-examination, Mr Chung said that he remembered this (transcript p 160). On the Routine Inspection Report at the commencement of the lease, signed by both Mr Chung and Mr Kilpatrick, Mr Kilpatrick wrote “Desks furniture all Wards”.

135. It has been established that the HP computer and accessories were present on the site when THC and Mr Chung resumed occupation after the end of the lease.

136. The plaintiffs have not proven trespass or conversion in relation to the chattels set out in paragraphs 23 to 26 of the Statement of Claim. No other claim was pleaded.

Action in conversion in respect of goods bailed and destroyed

The allegations

137. In paragraphs 27 to 32 of the Statement of Claim, it was alleged that two export bins were present at the Premises at the commencement of the lease and available for use by the lessee. It was asserted that KH P/L, as the lessee, and/or Mr Kilpatrick, was/were the bailee of the two export bins, and that they had a duty to deliver the two export bins on demand, or at the termination of the lease, in the same order and condition as they were in at the commencement of the lease. It was alleged that, prior to the expiration of the lease, the two export bins had been destroyed by KH P/L and/or Mr Kilpatrick, in breach of their duty as bailee or, alternatively, that they had caused or permitted the damage to occur. In the further alternative, it was pleaded that they had converted the two export bins to their own use.

138. The loss pleaded was $19,600.00, which was said to be the “replacement value" of the two export bins. I note, however, that the invoice for the repair of both of the damaged export bins from SCF Industries, dated 26 July 2021, which is included in Exhibit THC 1 at p 88 (p 169 of the Court Book), gives the price of $21,560 for the repairs, which is $19,600 plus GST.

The Defence

139. In the Defence, at paragraph 27, the defendants say that the two export bins were present on the Premises at the commencement of the lease. Further, the defendants say THC requested that KH P/L store the two bins at the Premises, and KH P/L agreed to do so.

140. The defendants deny that they damaged the two bins. The defendants say that the two bins have remained at the Premises and are presently in the possession of THC.

Evidence and consideration

141. Mr Chung said, in his affidavit of 14 February 2023, that “at the end” of the lease, two export bins “which were located within the Port Kembla Scrap Yard had been destroyed”. However, Mr Chung also exhibited to his affidavit the quote for the repair of the two export bins (see [138]).

142. In evidence, Mr Chung said that he did not discover the damage to the export bins himself. I infer that staff of THC told him about the damage.

143. Mr Kilpatrick indicated, in evidence, that he did not know about the damage until after 30 June 2021.

144. Mr Kilpatrick, in cross-examination, said that, after the Stamina was loaded on 23 October 2020, four of the six export bins were taken to the PKC site and two were left on the wharf for four to six weeks and then returned to the Premises in about December 2020 or January 2021. The spreader bar was also taken to the PKC site.

145. I find that two of the export bins were left at the Port Kembla wharf until December 2020 or January 2021 after being used to load the Stamina. They were then returned to the Premises and were not used again during the course of the lease. At the end of the lease, they were found to have been damaged.

146. I find that KH P/L was the bailee of the two export bins during the loading of those bins with scrap metal to be loaded onto the Stamina and whilst being transported to the Port Kembla wharf. Once at the wharf, the two loaded export bins were handed over to the stevedores who were then the bailees of the two export bins during the loading of the Stamina. After the Stamina had been loaded, KH P/L again became the bailee of the two export bins, which remained on the wharf for four to six weeks before being returned to the Premises.

147. The bailee of goods has a duty to take reasonable care of those goods (see Port Jackson Stevedoring Pty Ltd v Salmond and Spraggon (Australia) Pty Ltd (1978) 18 ALR 333 at 375). In this case, the time at which the two export bins were damaged and the cause of that damage is simply unknown. It is possible that the bins were damaged during the loading of the cargo into the Stamina. I take into account Mr Chung’s evidence about the manner in which the export bins are unloaded. Mr Chung gave evidence that he did not think that it was possible for the bins to be damaged during unloading, but he agreed that repairs had been undertaken to export bins after the loading of the Thorco Lanner. I find that the possibility exists that the bins were pierced by scrap metal lying in the hold of the ship as they were tipped within the hold to release their load.

148. In the absence of any evidence about when or how the export bins were damaged, I am unable to find that KH P/L breached its duty of care as a bailee.

Action in conversion in respect of goods bailed and detained

The allegations

149. In paragraphs 33 to 40 of the Statement of Claim, an allegation of conversion in respect of a further four export bins and a spreader bar and lifting beam for export bins (the spreader bar), owned by the first and/or second plaintiff and present at the Premises at the commencement of the lease, is made against KH P/L and Mr Kilpatrick.

150. It is alleged that KH P/L and/or Mr Kilpatrick were the bailees of the four export bins and the spreader bar and that they had a duty to keep the equipment safe and return it to Mr Chung and/or THC on demand or at the termination of the lease. It was further alleged that, prior to the end of the lease, the items were removed from the Premises without the consent of the owners and detained.

151. It is further alleged in the Statement of Claim that the return of the four export bins and the spreader bar was requested by email on 11 January 2021, but the four export bins and the spreader bar were not returned. Subsequently, an indication was given at the hearing that the spreader bar had been returned.

152. The loss to Mr Chung and/or KH P/L is said to be the replacement value of the four export bins, being $55,000 plus GST.

The Defence

153. The defendants deny that they have converted the four export bins and the spreader bar.

154. The defendants plead, in their defence, that KH P/L stored the four export bins and the spreader bar at the PKC site from 23 October 2020 to 30 June 2021 at the request of Mr Chung on behalf of THC and with the knowledge of Mr Chung and THC, pursuant to a verbal agreement.

155. The defendants plead that KH P/L issued an invoice for $33,318.22 (including GST) to THC for the loading and transport of scrap steel. THC has not paid that invoice. On 27 November 2020, a notice under s 5 of the Storage Liens Act 1935 (NSW) was served upon Mr Chung and THC. The defendants admit that the plaintiffs demanded that the four export bins and the spreader bar be delivered up but deny the entitlement of the plaintiffs to make that demand.

Evidence and consideration

156. For the reasons set out at [277] – [288] below, I find that Mr Chung did not request KH P/L to store the four export bins at the PKC site.

157. The evidence as to the present location of the four export bins is unclear.

Cross-Claim

158. KH P/L filed a cross-claim against Mr Chung and THC on 17 August 2022. The cross-claim contained separate claims against Mr Chung and THC.

159. The allegations in the Cross-Claim, and the pleading in the Defence to Cross-Claim in relation to those allegations, are set out below, in summary, together with the evidence with respect to the allegations.

Claims against First Cross-Defendant Mr Chung

The allegations

Repairs to Premises

160. It is alleged in the cross-claim that the Premises were affected by significant “deficiencies and damage” when KH P/L took possession of them. In particular, it is alleged that an external door and a wall in the Premises were damaged. It is alleged that Mr Chung told KH P/L to arrange for repairs to be undertaken to the door and the wall, and for the builder to inspect other doors on the Premises to ensure that they were in adequate condition. It is alleged that Mr Chung undertook to reimburse KH P/L for the cost of any repairs.

161. The repairs were undertaken, and two invoices were presented in relation to those repairs:

i.   Tax invoice by Jason Zanatta Builder/Carpenter dated 14 September 2020 in the amount of $3,850.00 (incl GST).

ii.   Tax invoice by Jason Zanatta Builder/Carpenter dated 5 October 2020 in the amount of $7,111.00 (incl GST).

162. Those invoices were provided to Mr Chung by Mr Kilpatrick in about October 2020, but KH P/L has not been reimbursed by Mr Chung.

The Defence to Cross-Claim

163. Mr Chung does not admit that he told KH P/L to arrange for repairs to be undertaken to the wall and the door, or that he agreed to reimburse KH P/L for the cost of the repairs, and denies that he is liable to reimburse KH P/L.

Evidence and consideration

164. In his affidavit of 5 May 2023, at paragraph 37, Mr Kilpatrick says that he had a conversation with Mr Chung in the course of the inspection of the Premises that they undertook together on 17 July 2020. Mr Kilpatrick said that part of that conversation was to the following effect:

I said:   There is also the rear external door issue. People can break in. And there is the bathroom wall issue which is rotten and needs urgent repair. How do you want to deal with that?

Johnny said:   Yeah, you arrange to get them fixed and I will pay you back.

165. The Routine Inspection Report signed by Mr Kilpatrick and Mr Chung on 17 July 2020 does not mention either the “rear external door issue” or the “bathroom wall issue”. The entries for “Toilet/Shower 1” and “Toilet/Shower 2” show that the signatories agreed that the walls and door jambs were in good condition and that the doors were in good working order. There is no mention of any issue with a bathroom wall.

165. In his affidavit of 5 May 2023, Mr Kilpatrick says that on about 24 August 2020, he had a further conversation with Mr Chung at the Premises to the following effect:

I said:   Hi Johnny. What do you want us to do about the repairs we have to get done at the yard?

Johnny said:   Hi Paul. Do you want to arrange the repairs to the door and wall? We’ll need to have a builder inspect other doors to ensure they are in adequate condition. I’ll reimburse you for the cost of any repairs.

I said:      Thanks Johnny. I’ll sort it out and then let you know.

167. Mr Kilpatrick said that he then had Mr Zanatta, a builder and carpenter, inspect the Premises. He said that he asked Mr Zanatta to fix the door, which he said was “rotten” and the wall. Mr Kilpatrick said that, in August 2020, Mr Zanatta repaired the wall and “faulty doors”. On 14 September 2020, Mr Zanatta issued an invoice to KH P/L for $3,850 “For material supplied to carry out works as instructed by client to date at Lot 1, Old Port Road, Port Kembla”. On 5 October 2020, Mr Zanatta issued a further invoice to KH P/L for $7,111 “For carpenter and labourer services provided” at the Premises and said that a carpenter was charged for 85 hours at $78.10 and a labourer was charged at 10.5 hours at $45 per hour (5 May 2023 affidavit paragraphs 41 – 44). The invoices form part of D1.

168. Mr Kilpatrick said that he handed the invoices to Mr Chung on 19 October 2020 and Mr Chung said that he would “fix them up”.

169. In cross-examination, Mr Kilpatrick said that the wall that was fixed was a wall between the bathroom and the locker room. He said that the wall was an external wall to the bathroom from the warehouse. He said that two doors were fixed. Other doors were “checked”. Mr Kilpatrick said that he was in and out of the Premises at the time and could not say how long Mr Zanatta was there.

170. Mr Chung recalled having discussions with Mr Kilpatrick in July 2020, but denied that he said the words attributed to him in Mr Kilpatrick’s affidavit (Mr Chung’s affidavit 16 September 2023, paragraphs 14 and 15).

171. I am not satisfied, on the balance of probabilities, that Mr Chung agreed that Mr Kilpatrick could arrange for a wall to be “fixed” and a door, or two doors, in the Premises, to be repaired, or that Mr Chung agreed to reimburse Mr Kilpatrick for, effectively, whatever those repairs cost. All of the evidence in relation to the business side of the lease and the Scrap Export Agreement suggests that Mr Chung has a keen eye to cost minimisation and a detailed approach to controlling expenditure. It is unlikely that he would have agreed to reimburse Mr Kilpatrick for whatever works Mr Kilpatrick saw fit to arrange with respect to the wall and door or doors.

Overpayment of outgoings

The allegations

172. The lease provided that KH P/L would pay outgoings by monthly instalments in advance.

173. Mr Chung issued tax invoices in respect of rent and outgoings during the term of the lease. KH P/L paid those tax invoices.

174. It is alleged in the cross-claim that the tax invoices issued by Mr Chung overcharged outgoings by $8,245.05.

175. Mr Chung has not reimbursed KH P/L for the overpayment. This is alleged to be in breach of clause 12.5(e) of the lease.

The Defence to Cross-Claim

176. In the Defence to Cross-Claim, Mr Chung admits that he issued invoices in respect of rent and outgoings during the term of the lease, and that these were paid.

177. Mr Chung further admits that he overcharged outgoings in the sum of $8,245.05 (paragraph 32 of the Cross-Claim and paragraph 32 of the Defence to Cross-Claim).

178. Mr Chung pleads, at paragraph 33 of the Defence to Cross-Claim, that he is not in breach of clause 12.5(e) of the lease, and that he “is entitled to set off the amount of any overpayment of outgoings against his claims in these proceedings”.

Evidence and consideration

179. The lease provides, in clause 12.5(e):

Within thirty (30) days after the receipt by the Lessee of an itemised statement, the parties shall adjust and pay any balance due from the Lessee or overpayment for contributions paid to the Lessor for the Outgoings Year to which it relates.

180. The source of any entitlement in the plaintiffs to retain an overpayment of money charged on account of outgoings by way of a set off against other claims has not been identified in the plaintiffs’ case. The lease does not provide for such an entitlement.

181. Mr Chung is liable to pay $8,245 to KH P/L on account of payment withheld.

Refund of Security Deposit

The allegations

182. KH P/L paid Mr Chung the Security Deposit of $50,000 required under clause 8.1 of the lease on about 8 July 2020.

183. It is alleged in the cross-claim that Mr Chung has no right to retain the security deposit. Mr Chung has not repaid the security deposit. It is alleged that Mr Chung is, therefore, in breach of clause 8.1 of the lease.

The Defence to Cross-Claim

184. Mr Chung admits that KH P/L paid the Security Deposit of $50,000 under clause 8.1 of the lease on or about 8 July 2020.

185. Mr Chung denies the allegation that he is not entitled to retain the security deposit. Mr Chung relies on paragraph 8.m of the Statement of Claim, which says:

m.   The first defendant agreed to pay a security deposit to the first plaintiff prior to the Commencement Date in the amount of $50,000.00 (the Security Deposit) (clause 8.1) which, on the proper construction of the Lease and Guarantee Agreement:

i.   was to be held as security for the benefit of the first plaintiff for the due performance by the defendants of their obligations under the Lease and Guarantee Agreement; and

ii.   was available to be retained, applied and drawn down by the first plaintiff to meet or reduce any liability of the defendants in the event of a default by them of their obligations under the Lease and Guarantee Agreement with any remaining balance thereafter to be returned to the first defendant.

186. Mr Chung pleads that the defendants admitted paragraph 8 of the Statement of Claim in the Defence. The defendants do admit the whole of paragraph 8 of the Statement of Claim in the Defence.

187. Mr Chung denies that he is in breach of clause 8.1 of the lease in retaining the Security Deposit.

Evidence and consideration

188. The lease provides, in clause 8.1:

The Lessee will pay a security deposit to the Lessor prior to the Commencement Date of $50,000.00. This amount will not increase during the term of the Lease or any period of renewal or holding over and must be refunded in full to the Lessee within 7 Days of the Lessee vacating the Premises on the expiry or lawful termination of the lease.

189. Clause 8 of the lease is in Part 3 of the lease, which is entitled “Lessee’s Financial Obligations”, and the clauses in that Part deal with the lessee’s financial obligations under the lease. Whilst it is implicit in the term “security deposit” that the security deposit is to be kept to protect the landlord against loss incurred on account of the tenancy, the lease does not set out the circumstances in which the lessor may keep all or part of the security deposit. Clause 8 expressly provides that the security deposit “must” be refunded in full to the lessee within seven days of the vacation of the premises upon the expiry of the lease. KH P/L vacated the premises on 30 June 2021, so the security deposit should have been repaid on 7 July 2021, subject to any claim on it validly made by Mr Chung under the lease.

190. There is no evidence that Mr Chung has given notice to KH P/L of what loss, precisely, he has retained the whole of the security deposit on account of. The loss has not been described or quantified.

191. KH P/L is entitled to the return of the security deposit of $50,000.

Claims against Second Cross-Defendant THC Holding (NSW) Pty Ltd

The Scrap Export Agreement

The allegations

192. It is alleged that, between May and October 2020, prior to entry into the lease, KH P/L and THC entered into the Scrap Export Agreement in the following terms:

a.   The second cross-defendant owned a stockpile of scrap metal which was stored at the Premises (East West Pile);

b.   The second cross-defendant and the cross-claimant would enter into a joint endeavour to store and export scrap metal;

c.   Both parties would store scrap metal at the Premises (the Parties’ Scrap Metal);

d.   The second cross-defendant would pay the cross-claimant $5 per tonne delivered to the Premises for administration (including weighing, recording and sending dockets in respect to the delivery);

e.   The second cross-defendant would pay the cross-claimant a further $5 per tonne for storage of the scrap metal;

f.   The cross-claimant would also store scrap metal at the premises;

g.   The second cross-defendant would arrange for the sale and export of the Parties Scrap Metal;

h.   The respective parties’ contribution to the total scrap metal shipment would be ascertained by the following formula:

Cross-claimant’s scrap = Total Shipment (as weighed by the ship’s draught survey) – second cross-defendant’s scrap (as weighed at the Premises).

i.   The second cross-defendant would pay the cross-claimant at the scrap’s purchase price less 5% commission;

j.   The second cross-defendant would pay the cross-claimant for transport of the second cross-defendant’s scrap for export at $4.85 + GST/tonne; and

k.   The second cross-defendant would pay the cross-claimant for material handling (including machine hire and labour) in relation to loading the second cross-defendant’s scrap for export.

Particulars

i   The agreement was wholly verbal and made in conversations between Paul Kilpatrick and the first cross-defendant;

ii   The agreement as to the price for transport of the second cross-defendant’s scrap at $4.85 + GST/tonne was made in about October 2020;

Iii   The East West pile weighed about 393.68 tonnes.

193. In about October 2020, THC arranged for the sale and ocean freight of scrap metal owned by KH P/L together with scrap metal owned by THC. The arrangement involved the scrap metal being loaded onto a ship in Port Kembla.

194. Both KH P/L’s scrap metal and THC’s scrap metal was loaded onto the ship from about 20 to 23 October 2020 by KH P/L. In the course of loading, Mr Colin Harvey, a representative of THC, noticed that the scrap metal was contaminated by dirt, and directed that a magnet be used to extract the metal from the pile. This was done. After the metal was extracted, about 40.54 tonnes of “dirt and rubbish” remained on site at the Premises.

The Defence to Cross-Claim

195. THC admits, in the Defence to Cross-Claim, that a Scrap Export Agreement was entered into prior to entry into the lease.

196. THC admits paragraphs 37.a, b, c, f, g, h and j.

197. In relation to paragraph 37.d of the cross-claim, THC admits that $5.00 per metric tonne was payable by THC to KH P/L for processed metal delivered to the premises by THC and, further, that $5.00 per metric tonne was payable to THC by KH P/L for unprocessed metal delivered to the Premises when that scrap metal is exported.

198. THC denies paragraph 37.e of the cross-claim, which is the alleged $5 per tonne storage charge, but then, in denying the alleged material handling charge in paragraph 37.k (see [200] below), says that material handling was included in the storage charge.

199. In relation to paragraph 37.i of the cross-claim, THC admits “that it would pay” KH P/L the amount of the purchase price of the scrap metal less 5% commission.

200. In relation to paragraph 37.k of the cross-claim, THC denies that it agreed to a material handling charge and says that material handling was included in the $5 per tonne of scrap metal storage charge payable to KH P/L by THC (see paragraph 37.d of the cross-claim).

201. THC admits that it arranged for the loading of the ship at Port Kembla.

202. THC says that it arranged and paid for stevedoring.

203. THC pleads, at paragraph 40 of the Defence to Cross-Claim, that a ship was loaded with scrap metal in October 2020. The ship was chartered by THC to carry 9,000 metric tonnes of scrap metal from Port Kembla to an overseas destination. However, KH P/L was not able to provide 9,000 metric tonnes of scrap metal to be loaded on the ship. In addition, the cargo loaded by THC contained impurities.

204. THC denies that 40.54 tonnes of dirt and rubbish was left on the Premises after the loading of the ship.

Evidence and consideration

205. The terms of the Scrap Export Agreement are considered below, in the context of the claims in the cross-claim.

Overpayment of the second cross-defendant

The allegations

206. It is alleged that THC was credited with 393.68 tonnes of scrap metal with respect to the metal in a pile on the site which THC had bought from the previous tenant, East West (“the East West pile”).

207. The East West pile was the location in which the 40.54 tonnes of “dirt and rubbish” remained after the extraction of the metal.

208. It is alleged in the cross-claim that THC was overpaid pursuant to the Scrap Export Agreement, because the 40.54 tonnage of “dirt and rubbish” which remained on site was paid for as if that tonnage was scrap metal which was exported on the ship in October 2020. The amount of the overpayment was $18,831.60 (including GST).

The Defence to Cross-Claim

209. In the Defence to Cross-Claim, THC denies that it was overpaid.

210. In the alternative, THC pleads that it is entitled to set off any overpayment against its claims in these proceedings.

Evidence and consideration

211. In essence, this is an allegation that the tonnage attributed to THC in the reconciliation of the payments due after the sale of the cargo on the Stamina was inflated because the calculation included 40.54 tonnes of “dirt and rubbish” which, in fact, were not loaded onto the Stamina, but were left on the Premises.

212. The difficulty with this claim is that no direct evidence has been adduced which provides the basis for the calculation by which the figure of 488.22 tonnes for THC, which is attributed to it in the reconciliation of payments (see p 535 of the Case Book), was arrived at.

213. This claim has not been proven on the balance of probabilities.

Underpayment of the cross-claimant

The allegations

214. KH P/L claims that the weight of its scrap metal was to be determined by reference to the ship’s draught survey for the purposes of the oral Scrap Export Agreement.

215. It is alleged that KH P/L and THC entered into a series of contracts in relation to the sale of the scrap metal (‘the THC contracts’). KH P/L claims that the amount due to KH P/L from THC for the scrap metal under these contracts was to be ascertained as to weight from the ship’s draught survey.

216. It is alleged in the cross-claim that, in breach of the Scrap Export Agreement and the THC contracts, THC paid KH P/L for KH P/L’s scrap metal by reference to the weight recorded at the weighbridge at the Premises and not by reference to the ship’s draught survey.

217. KH P/L claims damages of $11,241.36 (including GST).

The Defence to Cross-Claim

218. THC agrees that the THC contracts were entered into.

219. At paragraph 47 of the Defence to Cross-Claim, THC admits that it was a term of the THC contracts that the final amount due from THC, or to be refunded by KH P/L is calculated as follows:

the Quantity to be invoiced for the Balance Payment is the quantity loaded on board the vessel ascertained by Draught Survey.

220. The claim that KH P/L is entitled to damages of $11,241.36 is denied.

Evidence and consideration

221. In his affidavit of 5 May 2023, Mr Kilpatrick relates a conversation he had with Mr Ward on about 26 June 2020, in which Mr Ward told Mr Kilpatrick that he had weighed the pile in the eastern corner of the yard on the weighbridge at the Premises after selling it to Mr Chung, and it weighed approximately 392.68 tonnes. This is the only evidence of the weight of the pile prior to the loading of the Stamina. I take it that the weight relates to the entire pile of material and not the steel alone, because there is no evidence that Mr Ward separated the steel from the other material in the pile and then recombined them, and it would have made no sense for him to do so.

222. In oral evidence, in his affidavit of 24 May 2024 and in an email to Mr Chung of 29 October 2020 at p 532 of the Court Book, Mr Kilpatrick asserts that the weight of the Stamina assessed in the draught survey (a calculation of the weight of the ship’s cargo by the comparison of the draught of the ship before and after unloading (corrected for known variables)) was 8,899 tonnes. I accept that evidence, as there was no cross-examination in relation to it, no other figure was put forward, and the figure would be well-known to the parties.

223. KH P/L’s case is that the contracts for the sale of the scrap metal between THC as the purchaser and KH P/L as the vendor provided for the calculation of KH P/L’s sale price to be made using the draught survey figure as the figure for the whole cargo provided by KH P/L, THC and Liberty. This was important to KH P/L, on the evidence of Mr Kilpatrick, because, although all of the scrap contributed by THC and Liberty to the Stamina shipment had been weighed on the weighbridge at the Premises and was therefore known, some of the scrap metal contributed by KH P/L had not been weighed. In his affidavit of 24 May 2024, Mr Kilpatrick said that scrap brought to the yard by the public and scrap purchased by KH P/L at auction had not been weighed. Mr Kilpatrick had perceived no need to weigh that scrap metal because of the calculation he expected to take place based on the draught survey.

224. In their defence, Mr Chung and THC admit that the THC contracts provide for the calculation of the weight of KH P/L’s portion of the Stamina’s cargo in the manner claimed by the plaintiffs.

225. The calculation made by Mr Chung in the reconciliation of what was due in relation to the cargo of the Stamina appears on the document at Court Book p. 535. That calculation has not used the weight from the draught survey, but has, instead, used the total weighbridge figures for the cargo of each participant. As a result, KH P/L has not been paid for any scrap metal which has not been weighed by the weighbridge at the Premises.

226. The calculation of the tonnage attributable to KH P/L on the Stamina, using the draught survey figure, is, in tonnes, 8,899 – 488.22(THC tonnage) = 8,410.78 – 3,341.02(Liberty tonnage) = 5,069.76. This is consistent with the email from Mr Kilpatrick to Norton Wilson Lawyers on 27 May 2021.

227. THC has omitted to pay KH P/L for 24.2 tonnes of its cargo on the Stamina. Mr Kilpatrick’s calculation in the email of 27 May 2021 of the amount owing, which uses the rates used by Mr Chung on the reconciliation at p 535 of the Court Book, results in a figure of $11,241.36 inclusive of GST. THC is liable to pay KH P/L $11,241.36.

Storage of Scrap Steel on behalf of the Second Cross-Defendant

The allegations

228. It is alleged in the cross-claim that THC was obliged by the Scrap Export Agreement to pay KH P/L $5 per tonne for the storage of THC’s scrap metal at the Premises.

229. On or about 27 May 2021, KH P/L issued an invoice for $21,060.82 (including GST) to THC for the storage of THC’s scrap metal at the Premises (‘the Storage Invoice’). The storage invoice was emailed to THC’s solicitors on 27 May 2021.

230. The storage invoice is unpaid, and KH P/L seeks an order for the payment by THC of the amount of the invoice.

The Defence to Cross-Claim

231. KH P/L’s claim to be entitled to storage costs in respect of the storage of scrap steel is denied by THC. THC says that it was a term of the THC contracts that the scrap metal was to be delivered to the Premises and stored by KH P/L at its own cost.

232. THC admits that the Storage Invoice was sent on 27 May 2021 and that the invoice has not been paid. THC denies that it is liable for the payment of the Storage Invoice.

Evidence and consideration

233. On 30 November 2020, Mr Chung emailed to Mr Kilpatrick a copy of an email previously received by Mr Chung from Mr Kilpatrick which Mr Chung had annotated with his comments (Court Book p 583).

233. In his earlier email, Mr Kilpatrick had written:

It was also agreed that the rate would be $5 per tonne for administration and $5 per tonne for storage to date we have only received $5.00 per tonne for a claim you say is for a handling fee. No provision has been made by you to allow for us loading the cargo, despite my machines working 24 hours a day for 4 days. As I mentioned last Friday our claim on this matter is significant.

235. Mr Chung, in his annotation, said:

I think this was something you may have mentioned but I hadn’t confirmed it as I have to ask Liberty if this is ok. We have always paid Wardie $5/mt for handing Liberty and Caltex tons in the past. However, we can pay you extra $5/t. …

236. My reading of Mr Chung’s annotation is that he is agreeing to pay two fees of $5/tonne. This is consistent with Mr Kilpatrick’s evidence in his affidavit of 23 May 2024 at paragraphs 57 to 60. Although it is clear that Mr Kilpatrick told Mr Chung several times that he wanted to be paid for the loading of the scrap metal into the export bins, it is also clear that Mr Chung never actually agreed to pay a loading fee.

237. An invoice dated 30 October 2020 was issued to THC by KH P/L in the following terms:

Storage of THC/Liberty cargo at yard at Port Kembla, at the agreed rate of $5.00 per tonne plus GST.

THC/Liberty cargo = 3829.24 tonne

$5.00 x 3829.24 = $19,146.20

Amount   $19,146.20

GST      $1,914.62

Total      $21,060.82

238. THC is liable to pay the sum of $21,060.82 to KH P/L on account of the storage of scrap metal stored in the Premises for THC and Liberty under the Scrap Export Agreement.

Export loading of the Second Cross-Defendant’s scrap metal

The allegations

239. It is alleged in the cross-claim that it was a term of the Scrap Export Agreement that THC would pay KH P/L for material handling, being machine hire and labour, with respect to the loading of THC’s scrap metal for export.

240. On 30 October 2020, KH P/L issued an invoice for material handling to THC for $33,318.22 (‘the Loading Invoice’). It has not been paid.

241. KH P/L seeks an order for the payment by THC of the amount of the invoice.

The Defence to Cross-Claim

242. THC denies that it agreed to pay for what is referred to in the cross-claim as the “Scrap Export Loading Charge”.

243. THC admits that the Loading Invoice was sent and is unpaid, but denies that it is liable to pay the Loading Invoice.

Evidence and consideration

244. The parties’ failure to enter into a written Scrap Export Agreement underlies many of the disagreements in this matter regarding fees. In evidence, reference was made from time to time to the agreement that THC had with East West when it was the tenant of the property. However, it is common ground that THC and KH P/L did not enter into an agreement in the same terms as the East West agreement. The Scrap Export Agreement was an oral agreement. Early in the arrangement, there seems to have been an expectation that a written contract would be arrived at, but a written contract was never agreed. The parties had co-operated previously on the Thorco Lanner shipment. However, for the Thorco Lanner shipment, East West was in occupation of the Premises and arranged for the loading of the scrap metal on the Premises to the ship. It was Mr Kilpatrick’s evidence that East West did not store KH P/L’s cargo for the Thorco Lanner and nor did East West handle KH P/L’s cargo for the Thorco Lanner (transcript p 242). It seems that Mr Chung and Mr Kilpatrick came to the arrangement which led to the Stamina shipment with a different set of assumptions about what the financial liabilities would be, and subsequent oral and written communication on financial liabilities was not often conducted in terms that were crystal clear. As a result, proving that specific liabilities formed part of the contract, in the absence of supporting texts, emails or other enduring evidence is challenging for both parties. Recollections of conversations which took place years or even weeks earlier is notoriously unreliable. Mr Kilpatrick sets out conversations in his affidavit but makes it clear that he intends to communicate a conversation “to the following effect” and not verbatim. I note that the speech attributed to Mr Chung in Mr Kilpatrick’s affidavit of 5 May 2023 does not resemble Mr Chung’s style of speech.

245. It is Mr Kilpatrick’s evidence that he mentioned to Mr Chung that he believed that a payment should be made for the loading of the scrap on the Premises. It is Mr Chung’s evidence, and he consistently asserted to Mr Kilpatrick, as evidenced in Mr Kilpatrick’s affidavit of 27 May 2024, that he agreed to only two $5 fees, being for administration and storage of scrap metal.

246. In these proceedings, KH P/L asserts an entitlement to payment of $33,318.22 (as set out in the Loading Invoice at p 529 of the Court Book) from THC as a term of the oral Scrap Export Agreement, and asserts, in effect, a breach of contract on account of THC’s failure to pay its invoice for the loading fee.

247. The Loading invoice charges THC for the following work:

Loading of 6 x bins onto trucks $200.00 per bin load fee   =   $1200.00

Transport of empty bin and lifting gear to No. Jetty      =   $500.00

Supply of Kilpatrick bin on wharf as required         =   $300.00

Hire or plant and equipment to load scrap steel at Port

Kembla  

2 x Sennebogens at $280.00 per hour x 82 hours      =   $45,920.00

1 x Cat 336DL with magnet at $225.00 per hour x 82 hours   =   $18,450.00

1 x Cat 962 Loader at $200.00 per hour x 20 hours      =   $4,000.00

TOTAL      $70,370.00

$70,370.00 divided by total cargo 8899 = $7.91 per tonne plus GST

THC/Liberty cargo = 3829.24 tonne

$7.91 x 3829.24 = $30,289.29

Amount   $30,289.29

GST      $3,028.93

Total      $33,318.22

248. There is no evidence of Mr Chung, or anyone else on behalf of THC, agreeing to pay the charges set out in this invoice.

249. On the evidence before me, I cannot be satisfied on the balance of probabilities that the parties agreed to a loading fee as charged in the Loading Invoice or at all. This part of KH P/L’s claim has not been established on the evidence.

Unauthorised Fees for Rental of Storage Bins

The allegations

250. On 29 October 2020, THC claimed, in an email to KH P/L, that it was owed $8,325.17 for the rental of storage bins at a rate of $1.50 per tonne.

251. THC held back the sum of $8,325.17 when it paid the money due to KH P/L under the Scrap Export Agreement. It did so purportedly on account of the storage bin hire charges.

252. In the cross-claim, KH P/L alleges that there has never been any discussion or agreement for the accruing of a storage bin hire charge.

253. KH P/L pleads that THC has withheld $8,325.17 without any entitlement to do so. KH P/L seeks damages or restitution of $8,325.17.

The Defence to Cross-Claim

254. THC admits that it informed KH P/L of $8,325.17 outstanding for the rental of storage bins by email on 29 October 2020.

255. THC also admits that it retained the sum of $8,325.17 when paying KH P/L the money due under the Scrap Export Agreement, being $1.50 per metric tonne for the use of scrap metal bins owned by THC and used by KH P/L to load its scrap metal on board the ship.

256. THC denies that it was not entitled to withhold $8,325.17 and denies that KH P/L is entitled to damages or restitution.

Evidence and consideration

257. In his affidavit of 16 September 2023, Mr Chung said that a bin hire fee of $1.50 per tonne was agreed at a meeting on 26 June 2020 between him, Eugene Chung and Mr Kilpatrick. Mr Chung said that the agreement was “recorded in the notes of that discussion” (‘the notes’) and referred to a document at p 308 – 309 of the Court Book. The document has some writing in black pen and some writing in blue pen.

258. Mr Kilpatrick, in his affidavit of 24 May 2024, said the following concerning the notes:

18.   … I say that the notes at pages 94 and 95 of Exhibit THC-2 did not accurately reflect what was discussed at this meeting of 26 June 2020. I recall that Johnny brought to this meeting a piece of paper with notes written in black pen already written on it and that those notes acted as a form of agenda for the meeting. I recall that Johnny was also writing notes on this piece of paper in blue pen during the meeting. …

20.   I did not consider the notes were intended to be a reflection of any agreement reached between the parties. The main purpose of this meeting was for the parties to discuss the lease and to understand the stock levels that were left over by John Ward of East West that THC Holding had purchased from East West.

259. Mr Kilpatrick’s characterisation of the notes is consistent with the content of the notes and their appearance. Neither party has relied upon the notes as recording any other term of the agreement between them. I am satisfied that the notes do not record the terms of an agreement between the parties.

260. The plaintiffs have not proven, on the balance of probabilities, that an agreement was reached between the parties for the payment by KH P/L of $1.50 per metric tonne for the use of the export bins.

261. No entitlement by THC to withhold $8,325.17 on account of export bin hire from the amount due to KH P/L under the Scrap Export Agreement has been established on the evidence.

262. There will be an order that THC pay $8,325.17 to KH P/L.

Storage of Export Bins on behalf of the Second Cross-Defendant

The allegations

263. It is alleged in the cross-claim that, on 23 October 2020, KH P/L and THC agreed that KH P/L would store THC’s six export bins at the PKC site at a rate of $300 per day (‘the Bin Storage Agreement’).

264. Four of the export bins have been stored by KH P/L on the PKC site since 23 October 2020 on an ongoing basis. The other two export bins were returned to the Premises in early November 2020.

265. By email on 4 July 2021, Mr Kilpatrick told THC that the price of storage would increase to $80 per bin per day.

266. On about 27 May 2021, KH P/L issued invoices to THC for $164,474.00 (including GST) for the storage of export bins at the PKC site (‘the Export Bin Invoices’).

267. THC has not paid the Export Bin Invoices.

268. KH P/L seeks damages with respect to the unpaid Export Bin Invoices.

269. KH P/L alleges that THC has obtained an advantage from KH P/L’s storage of the export bins and seeks restitution with respect to the storage of the export bins.

The Defence to Cross-Claim

270. THC denies that KH P/L is storing the four export bins under the Bin Storage Agreement or otherwise.

271. THC repeats the allegations in paragraphs 33 to 40 of the Statement of Claim which relate to the alleged bailment of the export bins and the allegations that KH P/L breached its duty as bailee and converted the export bins.

272. THC admits that it received an email from KH P/L on 4 July 2021.

273. THC does not admit that it received an invoice on 27 May 2021, but says that its solicitors, Norton Wilson Lawyers, received an email from KH P/L.

274. THC admits that the Export Bin Invoices remain unpaid and says that it is not liable to pay them.

275. THC denies that KH P/L is entitled to damages for breach of a Bin Storage Agreement.

276. THC says that KH P/L has not stored the export bins at the request of THC or with the consent of THC. THC denies that it has obtained any advantage, as alleged, or at all. THC says that it has demanded the return of the export bins. THC denies that KH P/L is entitled to restitution.

Evidence and Consideration

277. In his affidavit of 5 May 2023, Mr Kilpatrick alleged that he had a conversation to the following effect with Mr Chung on 23 October 2020 at the Premises:

I said:   Johnny, I have all this railway line coming in next week so I won’t be able to store the export bins at the yard because we have no way of unloading them and the yard fills up too quickly.

Johnny said   Can we store them at the PKC site?

I said:   Sure Johnny. We will have to start charging some storage? How does $300.00 per day sound for the costs for storing the export bins?

Johnny said:   Yes. That’s fine.

278. In his affidavit of 5 May 2020, Mr Kilpatrick says that “from on or around 23 October 2020 and to date” KH P/L has stored four export bins at KH P/L’s site (‘the PKC site’).

279. Mr Kilpatrick also says in that affidavit:

99.   In or around early November 2020, I arranged for transport of the other two export bins from the Jetty to the PKC Site.

As I understand it, this is no longer asserted. As I have said, above at [145], the other two export bins were taken from the Jetty back to the Premises and were later found to have been damaged. They were not stored at the PKC site.

280. At paragraph 74 of his affidavit of 16 September 2023, Mr Chung denies that the conversation set out above at [277] ever took place.

281. On 17 November 2021, at 7:20am, Mr Chung sent a text to Mr Kilpatrick, saying:

Hi Paul, good morning! Please bring back our shipping gear at No 6 Jetty and some bins in your yard. All must be back to our yard. It is part of job we already paid you. Kindly do it by this week. Thanks.

282. Mr Kilpatrick replied, two minutes later:

The shipping gear has been collected and is in the yard.

Mr Chung replied “Thanks”.

283. On 26 November 2020, Mr Kilpatrick, on behalf of KH P/L, sent a letter to Mr Chung asserting a lien over 4 export bins and “1 x Lifting Bar and Chains, Lifting Gear” (“the Goods”). The letter said that the items “are presently stored” at “the former PKC site”. The letter said that the Goods “were unloaded and stored with us on Friday, 23 October 2020”. It further said “Your employee, Mr Rikki Kelleher of THC agreed for the Goods to be delivered to our facility”. I note that Mr Rikki Kelleher passed away in December of 2023 and no evidence is available from him. The letter said:

Kilpatrick unloaded the Goods and as such a $250.00 forklift unload fee per bin plus GST. [sic]

The Storage rate charged is $50.00 per bin, per day plus GST which continues to accrue per bin, per day stored until paid in full. On overdue amounts interest continues to accrue until all accounts are settled.

284. I prefer Mr Chung’s evidence to Mr Kilpatrick’s evidence on this topic. In his text, set out at [281] above, by “your yard” he means the PKC site (or former site). By “our yard” he means the Premises. Mr Kilpatrick’s response, using “the yard” was ambiguous, and Mr Chung interpreted it to mean that the shipping gear had been returned to the Premises, which is where Mr Chung clearly expected it to be. In fact, the Goods were all at the PKC site.

285. The clear inference arises from the text exchange that it was Mr Chung’s expectation that the export bins and the loading gear would be returned to the Premises after the loading of the Stamina. Mr Chung would not have had that expectation had he agreed to the storage of the Goods by PKC. In oral evidence on this issue, Mr Chung pointed out that the export bins do not pose a storage problem, because they are stackable.

286. It is wholly inconsistent with Mr Chung’s approach to the conduct of his business, which, as I have said above, included a focus on cost minimisation and a detailed approach to controlling expenditure, for him to have agreed to the storage of the Goods at the PKC site for $300 per day, as alleged, and I do not believe that he agreed.

287. I note that the letter of 26 November 2020 does not assert that Mr Chung agreed to either the storage of the Goods to the PKC site or to the payment of storage costs. I note that the charges the subject of the letter of 26 November 2020 go beyond what it is alleged that Mr Chung agreed.

288. I find that there was no agreement with either Mr Chung or THC for the storage of the Goods on the PKC site. I find that Mr Chung did not agree that the Goods could be taken to the PKC site. THC is not liable for any storage charges in relation to the Goods.

Conclusion

289. As to the Statement of Claim, in the event that KH P/L has not returned the four export bins to THC, it will be liable to pay to THC the sum of $60,500, being the replacement cost of the bins.

290. The other claims in the Statement of Claim will be dismissed.

291. As to the Cross-Claim:

1. Mr Chung must pay $8,245 to Kilpatrick Holdings (NSW) Pty Ltd on account of overcharged outgoings under the lease between Mr Chung and Kilpatrick Holdings (NSW) Pty Ltd.

2. Mr Chung must pay $50,000 to Kilpatrick Holdings (NSW) Pty Ltd on account of the security deposit for that sum paid under the lease between Mr Chung and Kilpatrick Holdings (NSW) Pty Ltd and withheld by Mr Chung without lawful cause.

3. THC Holding (NSW) Pty Ltd must pay $11,241.36 to Kilpatrick Holdings (NSW) Pty Ltd on account of the underpayment by THC Holding (NSW) Pty Ltd to Kilpatrick Holdings (NSW) Pty Ltd under the scrap export agreement between the parties entered into between May and July of 2020.

4. THC Holding (NSW) Pty Ltd must pay $21,060.82 to Kilpatrick Holdings (NSW) Pty Ltd on account of the storage charge under the verbal scrap export agreement between the parties entered into between May and July of 2020.

5. THC Holding (NSW) Pty Ltd must pay $8,325.17 to Kilpatrick Holdings (NSW) Pty Ltd on account of the withholding of that sum by THC Holding (NSW) Pty Ltd for the rental of export bins without lawful cause.

6. The claims in the cross-claim will otherwise be dismissed.

292. I will hear the parties as to the form of the final orders, interest and costs.

**********

Amendments

07 March 2025 - Typographical errors corrected at [240] and [288].

Decision last updated: 07 March 2025