Costa Produce Pty Ltd v La Stella Imports Pty Ltd

[2021] SADC 94

DISTRICT COURT OF SOUTH AUSTRALIA

(Civil)

COSTA PRODUCE PTY LTD v LA STELLA IMPORTS PTY LTD

[2021] SADC 94

Judgment of her Honour Judge Thomas  

12 August 2021

CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - FORMATION OF CONTRACTUAL RELATIONS - ACCEPTANCE

SALE OF GOODS - SALE OF GOODS LEGISLATION - FORMATION OF CONTRACT - PRICE

The wholesale seller of seven deliveries of almonds claimed payment in full for prices offered orally at the time of ordering and by the invoices dispatched with the goods and emailed separately.  The buyer accepted delivery of the goods and on-sold them, treating them as its own.  The buyer admitted a contract was formed for each delivery but denied price was agreed, discussed or negotiated at the time of order or delivery and claimed that, consistent with past dealings, reduced prices were agreed orally later between the principals of the buyer and seller.  When a dispute about payment arose, the seller offered to credit some of the unsold goods if returned.  The buyer returned only some of the unsold goods, which were credited at the invoiced price.

The seller claimed the payment terms on its invoices were incorporated into each contract, which the buyer denied. In the alternative, if there was no agreement made as to price or payment terms, the seller claimed from the buyer a reasonable price payable at the time of delivery of the goods under ss 8(2) and 28 respectively of the Sale of Goods Act 1895 (SA).

Held: 

1.  Consideration of the principles governing the objective determination of whether offers as to price and payment terms were accepted according to their terms where the buyer, with a reasonable opportunity to reject the offers made, has taken the benefit of the goods in circumstances indicating they were to be paid for in accordance with the offered terms.

2.   The buyer has not established any joint endeavour or mutual expectation based on past dealings of negotiating and agreeing price and payment terms after delivery contrary to the invoiced prices.

3.   The buyer has not established any oral agreement was made as alleged in October 2017 for reduced prices.

4.   In the circumstances of the second, fifth and sixth deliveries, price was orally agreed at the time of ordering.

5.   In the circumstances of the first, third, fourth and seventh deliveries, the buyer by its conduct in accepting these deliveries and dealing with them as its own by on-selling them, knowing the offer prices from being told them at the time of ordering and receiving the invoices specifying price by various means, indicated its assent to the prices offered and thereby accepted them.

6.   In the circumstances of each delivery, the buyer by its conduct in accepting these deliveries and dealing with them as its own by on-selling them, knowing the payment terms offered as stated in the invoices received, indicated its assent to the payment terms offered and thereby accepted them.

7. Consideration of the principles for determining the reasonable price payable under s 8(2) of the Sale of Goods Act 1895 (SA) where some of the goods delivered as part of the first delivery were not as ordered in the particular circumstances of this case.

Sale of Goods Act 1895 (SA) s 8(2), s 28, referred to.

Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523, applied.

Pacific Carriers Limited v BNP Paribas (2004) 218 CLR 451; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95; Film Bars Pty Ltd v Pacific Film Laboratories Pty Ltd (1979) BPR 9251; Laurel Race Course Inc v Regal Construction Company Inc 333 A 2d 319 (1975); Brambles Holdings Pty Ltd v Bathurst City Council (2001) 53 NSWLR 153; Tomko v Palasty [2007] NSWCA 258; Darzi Group Pty Ltd v Nolde Pty Ltd (2019) 100 NSWLR 394; Gardiner v Grigg (1938) 38 SR NSW 524; Woolworths Ltd v Sterling Henry Ltd (1967) 87 WN (NSW) 200, considered.

COSTA PRODUCE PTY LTD v LA STELLA IMPORTS PTY LTD
[2021] SADC 94

Civil

CONTENTS

PART A: INTRODUCTION

Overview

The Parties

The Parties’ Claims

The Trial and the Evidence

The Trial

Mr Costa

Mr Phillip Costa

Mr Capobianco

Mr Adi Astawa

Mr Jonathan Loe

Mr Brunton

PART B: FACTUAL FINDINGS

Almond Varieties, Sizing and Pricing

Past Dealings with Tony & Mark’s

Pre-order Discussions

Big Almond Tree

Big Almond Tree Contracts

La Stella as ‘Middleman’

Mr Astawa’s Authority

Ordering Generally

Invoicing Generally

First Delivery

Issues in Dispute

Price

Size Delivered

Payment Terms

Second Delivery

Issues in Dispute

Price

Payment Terms

Third Delivery

Issues in Dispute

Collateral Issues

Size Delivered

Price

Payment Terms

Fourth Delivery

Issues in Dispute

Size

Price

Payment Terms

Fifth and Sixth Deliveries

Issues in Dispute

As Ordered or Not

Price

Payment Terms

Re-issued Invoices

Seventh Delivery

Issues in Dispute

Price

Payment Terms

Alleged October 2017 Agreement on Price

La Stella Invoices to Big Almond Tree

Payment Follow Ups

Returned Stock

PART C: CONSIDERATION OF THE PARTIES’ CLAIMS

Contract Claim

Overview

Closing Submissions

The Applicant’s Case

The Defence Case

Contractual Principles

Genesis, Purpose and Object

No Joint Endeavour

No Expectation of Past Practices

La Stella as Additional Middleman

Agreement as to Price

The Second Delivery

The Fifth and Sixth Deliveries

Other Deliveries

Agreement as to Payment Terms

Sale of Goods Act Claim

CONCLUSION

INTEREST AND COSTS

PART A: INTRODUCTION

Overview

1. This dispute arises over the alleged short-payment of $163,718.75[1] of the total invoiced price of $812,418.75 for seven shipments of almonds of differing varieties[2] and sizes[3] delivered between May and August 2017. 

   [1]    Including GST.  All prices referred to in these reasons are GST inclusive.

   [2] Nonpareil and Carmel varieties, discussed below at [69].

   [3] Sizing refers to the number of nuts per ounce, discussed below at [71].

   The Parties

2. The applicant, Costa Produce Pty Ltd (Costa Produce), is the seller and carries on business wholesaling almonds grown on Costa family and other producers’ farms, typically processed by its related entity, Costa Bros Pty Ltd. The respondent, La Stella Imports Pty Ltd (La Stella), is the purchaser and carries on business as a wholesaler of fruit and vegetables. In these transactions, La Stella was essentially an additional ‘middleman’ in the supply chain and on-sold the almonds to a then newly-established wholesaler and trader of nuts and food ingredients in Melbourne, Big Almond Tree Pty Ltd (Big Almond Tree).

   The Parties’ Claims

3. It is common ground on the pleadings that separate contracts were formed between Costa Produce and La Stella for the seven shipments of almonds ordered by La Stella and delivered directly to La Stella’s customer, Big Almond Tree. Orders were placed by a series of telephone conversations between representatives of the seller, Costa Produce (Mr Tony Costa), and the purchaser, La Stella (Mr Adi Astawa). There is a dispute as to what was said about price and payment terms (if anything) during these conversations.

4. It is admitted that La Stella accepted delivery and, apart from returned stock for which a credit of $99,000 was later issued and a minor issue of stock damaged in transit, all the other almonds delivered by Costa Produce were on-sold by La Stella to Big Almond Tree.

5. La Stella admits that a contract for the sale of almonds was formed for each delivery but denies that at the time of ordering, Mr Costa told Mr Astawa any price at all, let alone discussed or agreed any price or payment terms. Despite invoices clearly specifying price and payment terms being issued by Costa Produce[4] at or about the time of each delivery and dispatched with the goods and emailed separately and (for the first six deliveries) later issued to La Stella at its request, La Stella denies the invoices form any part of the sale contracts. There is also dispute that some of the deliveries were not of the variety or size ordered.

   [4]    Invoices for the first six deliveries were invoiced to Big Almond Tree and later reissued to La Stella whilst only La Stella was invoiced for the seventh delivery.

6. La Stella further contends that prior to payments being made between November 2017 and January 2018, prices were discussed for the first time and agreed in telephone conversations between the principals of Costa Produce (Mr Tony Costa) and La Stella (Mr Mark Capobianco) in about October 2017, setting the wholesale price on average approximately $2.00 per kilogram below the invoiced price. During these telephone conversations, Mr Capobianco is said to have crossed out the prices on the Costa Produce invoices and handwritten the reduced prices allegedly agreed with Mr Costa item by item, invoice by invoice.

7. La Stella alleges that its payment of the reduced prices has fully discharged its contractual obligations to Costa Produce under the sale contracts and denies it owes anything further for the almonds delivered to Big Almond Tree on its account.

8. Central to La Stella’s case are its claims that supply was late and a large proportion of the almonds delivered were the incorrect variety, size and/or grade and not as ordered. It is pleaded that La Stella accepted delivery on the understanding that it would use its best endeavours to sell these almonds. Due to these supply issues not meeting customer expectations, Big Almond Tree allegedly experienced major difficulties in honouring its contractual obligations to its customers. The effect on Mr Astawa’s reputation in the almond industry is said to have been devastating. To preserve customer goodwill, La Stella told Big Almond Tree to tell its customers to take their time in paying because of the problems caused by Costa Produce supplying the wrong product. In this context, La Stella contends that the invoiced pricing was “way too high” and Mr Capobianco negotiated an agreed reduction of the invoiced prices prior to making payment.

9. Costa Produce denies any such agreement as to price was made in October 2017 (or at all) and presses for payment of its invoices in full based on the sale contracts formed at or about the time of each delivery. Apart from some relatively minor issues with supply, Costa Produce contends it delivered what was ordered. It submits that the complaints about supply are largely irrelevant and Big Almond Tree’s customer contracts and alleged reputational difficulties are also not relevant.

10. It is further submitted that La Stella had no obligation to order what it did, nor accept delivery of any almonds not to its satisfaction. However, having accepted delivery, La Stella was bound to pay the contracted price. There was no understanding between the parties that La Stella would use its best endeavours to sell the almonds in furtherance of commercial dealings between the parties. Further, there was no binding agreement for Costa Produce to deliver a fixed volume or variety of almonds within any timeframe.

11. In the alternative, if there was no agreement as to the invoiced prices or payment terms, Costa Produce seeks that La Stella pay a reasonable price under s 8(2) of the Sale of Goods Act 1895 (SA) (Sale of Goods Act) and claims the time for payment of its invoices is the time at which delivery was effected under s 28 of the Sale of Goods Act.

    The Trial and the Evidence

    The Trial

12. The trial took place over five days. Costa Produce called lay evidence from two of its directors, Mr Tony Costa and Mr Phillip Costa, and expert evidence from Mr Gerard Brunton as to the market prices for almonds at the relevant dates of supply. Mr Tony Costa[5] was cross-examined at length.

    [5]    In referring to Mr Costa below I mean Mr Tony Costa and I refer to his brother by his full name as Mr Phillip Costa.

13. La Stella called lay evidence from Mr Capobianco, the principal of La Stella, and Mr Astawa, an employee of both La Stella and Big Almond Tree. Both were cross-examined at length. La Stella also tendered a signed statement from Mr Jonathan Loe, the principal shareholder and managing director of Big Almond Tree. His statement was received subject to objection from Costa Produce as to its relevance. La Stella did not call any expert evidence to challenge Mr Brunton’s expert opinion and instead challenged his opinions on the basis that his assumptions were inapplicable.

    Mr Costa

14. Mr Costa’s evidence is critical to the formation and terms of the sale contracts. Each order was placed by Mr Astawa in telephone conversations with Mr Costa, who arranged dispatch and invoicing.[6] Mr Costa was also involved in discussions with Mr Capobianco and Mr Astawa about the possible supply of almonds to their new venture, Big Almond Tree, before any orders were placed. Mr Capobianco dealt with Mr Costa regarding payment and reissue of the first six invoices to La Stella and is alleged to have agreed reduced prices with him in telephone calls in October 2017.

    [6] See below at [105105].

15. I found Mr Costa to be an honest witness, although at times his memory of detail (such as dates and the substance of what was said) was poor, which he openly admitted. On the key issues regarding formation and terms of the sale contracts, whilst his evidence was imprecise and generalised, it is mostly consistent with Mr Astawa’s account. Mr Costa’s evidence that he would tell Mr Astawa what he had available in terms of variety, sizing, price, quantity and grade is also supported by the limited contemporaneous emails about stock availability and, in the case of the fifth and sixth deliveries, about price and payment terms. Mr Costa’s evidence is also consistent with common commercial dealings.

16. On these issues, where Mr Astawa’s evidence diverges from that of Mr Costa, I prefer Mr Costa’s evidence for the reasons set out below on the topic of Mr Astawa’s evidence.

17. There is a direct conflict between the evidence of Mr Costa and Mr Capobianco regarding the alleged October 2017 agreement to reduce the invoiced prices, which I discuss below. I prefer Mr Costa’s evidence over that of Mr Capobianco on this issue given my findings below as to the general unreliability of Mr Capobianco’s evidence.

18. La Stella submits that Mr Costa’s evidence was severely compromised by his evidence regarding the third delivery.[7] I have rejected Mr Astawa’s evidence that this delivery was not received for the reasons discussed below on the topic of the third delivery. I therefore do not find Mr Costa’s credibility on this issue compromised as submitted. I also find that Mr Costa made appropriate concessions as to clerical errors in the accounts receivable paperwork. Further, and as also discussed below, I do not consider the discrepancies between the Virginia Farm Produce[8] and Costa Produce invoices undermine Mr Costa’s credit on this topic or generally.

    [7]    Respondent’s Closing Submissions [79]-[97].

    [8]    The grower from whom Costa Produce purchased the almonds for the third delivery.

19. Mr Costa’s credit was also challenged on the complaint that the third delivery included fumigated almonds, as disclosed in the Virginia Farm Produce invoice discovered in November 2020, shortly before trial.[9] I accept there is a distinction between almonds ‘grown without pesticides’ and those ‘fumigated’ in the processing and packing stage and do not consider Mr Costa’s evidence on this topic was dishonest, as was submitted by La Stella’s counsel.

    [9] Tab 101; Respondent’s Closing Submissions [82].

20. Mr Astawa’s evidence that he would not have accepted almonds that were fumigated because his clients only wanted almonds grown without pesticides is not relevant to any issue in dispute. The complaint was not pleaded and since Mr Astawa by his own admission did not see the Virginia Farm Produce invoice until trial (not that there was any reason for him to see it), he did not know the almonds were fumigated. As to the conflict on the irrelevant issue as to what Mr Costa told Mr Astawa about fumigation, I prefer Mr Costa’s evidence given my findings below on the reliability of Mr Astawa’s evidence generally. 

    Mr Phillip Costa

21. Mr Phillip Costa’s dealings with Mr Capobianco and Mr Astawa were limited to seeking payment for the seven shipments in late 2017 and early 2018. I accept his evidence as reliable. His evidence is important in so far as his conduct and approach to the dispute with La Stella over payment of the debt to Costa Produce is inconsistent with any understanding that there had been an agreement reached between Mr Tony Costa and Mr Capobianco for reduced prices, and his denial that Mr Capobianco told him that he had agreed reduced prices with his brother.[10]  I accept his evidence in this regard and prefer it to that of Mr Capobianco.

    [10] T188.26.

    Mr Capobianco

22. Mr Capobianco was not a director of La Stella in 2017, although he is now and gave the instructions for La Stella’s defence. He accepted he was “the boss of La Stella” and clearly in charge and I find, as such, he was a de facto director of La Stella at all relevant times.

23. Mr Capobianco’s recollection of details of times, places, the sequence of events and the substance of what was said during key discussions was generally poor. He contradicted himself, often within a short period of time, and, at times, when a difficulty with his evidence was brought to his attention.

24. For example, on the key issue as to when he first discussed price with Mr Costa, Mr Capobianco said it was in October, the “middle to end October”.[11]  His evidence was that he and Mr Costa discussed each of the seven Costa Produce invoices in turn and he marked down the prices in handwriting, in two telephone calls in October 2017.[12]  For the third delivery, he again confirmed that discussion took place in October.[13]  However, for the fourth and sixth deliveries, he changed his evidence and said he marked down these invoices in November.[14] No explanation was given for this inconsistency in his evidence on such an important issue, particularly when Mr Capobianco was responsible for instructing La Stella’s defence that the alleged agreement for reduced prices was made in October 2017.

    [11] T231.37.

    [12] T231.33-T232.4.

    [13] T237.13-T238.21.

    [14] T239.33; T240.7.

25. Anomalies of this sort ordinarily would not warrant criticism given the passage of time and the peripheral relevance of some detail. However, for the following reasons, these inconsistencies led me to doubt the reliability of Mr Capobianco’s evidence in significant respects, including as to whether the alleged agreement was made at all, noting other serious deficiencies in his evidence.

26. Early in examination-in-chief, I formed the view that Mr Capobianco was content to give the impression that he had a greater knowledge of matters than he did. Later in cross-examination, when his earlier evidence was challenged, his evidence as a whole became confused or contradictory and, at times, in explaining matters he supposedly knew and had confidently spoken about in his earlier evidence, he ultimately said he did not really know or had assumed matters.

27. For example, Mr Capobianco repeatedly insisted that there were major supply and quality problems. These complaints went to the heart of the defence case because the “heartache”[15] and major problems with sizing and “only on one occasion”[16] delivering “only a few tonne”[17] of 22/24s[18] were used to justify a reduction in the invoiced prices,[19] not only for Nonpareil[20] 22/24s, but for all almonds supplied. He said variously: “we weren’t getting what we were supposed to be getting”,[21] “we weren’t getting the right size” because “…our customers only wanted the 22/24s”[22] and we “…didn’t order anything smaller than 22/24s.”[23]

    [15] T232.9.

    [16] T232.11.

    [17] T232.12.

    [18] A specific almond size, as discussed below at [71].

    [19] T233.12: “We’ve got to keep our customer happy, we’re not getting the right size that we’re giving them.”

    [20] An almond variety, as discussed below at [69].

    [21] T269.22.

    [22] T269.28; T224.5.

    [23] T272.9.

1. Mr Capobianco also said that Big Almond Tree was getting a bad name in Melbourne and customers could sue if they did not deliver.[24] To maintain customer goodwill, Big Almond Tree customers were told to take their time in paying.[25] When Mr Astawa gave evidence later, he directly contradicted Mr Capobianco and said he did not tell customers not to pay.[26]

   [24] T227.29-T229.36.

   [25] T242.9.

   [26] T336.18.

2. Ultimately, I have concluded that the complaints about supply were overstated and reflect adversely on the reliability of Mr Capobianco’s evidence in general for many reasons.

3. First, I have found there was no agreement for any fixed volume of any variety, grade or size to be supplied by Costa Produce, which Mr Capobianco first denied,[27] then could not remember[28] and was unsure about[29] until finally he could not answer.[30]

   [27] T270.28.

   [28] T272.3.

   [29] T278.11-T278.13.

   [30] T278.21.

4. Secondly, whilst aware of a general complaint by Mr Astawa that he could not get enough Nonpareil 22/24s, Mr Capobianco admitted he did not know the details of any order made by Mr Astawa until he saw Costa Produce’s invoices in August 2017.[31]  Nor did he know the basis of the deal for the second delivery of blanched almond meal (a completely different product to whole table almonds)“because Adi and Tony worked that out among themselves”.[32]  He also could not remember what tonnages were involved in the third delivery, nor was he “a hundred-per-cent sure” about the actual sizes supplied but he said were supposed to be 22/24s.[33] 

   [31] T231.12-T231.23; T228.38.

   [32] T220.7.

   [33] T220.21-T220.34.

5. When pressed in cross-examination to agree that Big Almond Tree did not have to order anything smaller than 22/24s, he said: “They didn’t order anything smaller than 22/24s.”[34]This was just not correct and contradicted by Mr Astawa’s evidence.[35]   When it was put to him that Mr Astawa had ordered other varieties and sizes, he disavowed involvement in the ordering and said he did not know because he was not there.[36]  Later he conceded he was not aware that Mr Astawa sourced plenty of almonds that were not 22/24s from Costa Produce.[37]

   [34] T272.9.

   [35] T313.32-T313.34.

   [36] T272.15.

   [37] T272.35.

6. Mr Capobianco did not have any direct knowledge of what Mr Astawa had ordered because he was not involved in the ordering.[38]  He said his understanding was based on what Mr Astawa told him at the time.[39] However, given his generally poor recall of detail, I doubt at trial he recalled the detail of anything he may have been told in 2017. His evidence of complaints about quality and supply issues was generalised, as well as incorrect in material respects. As I have found, Mr Astawa ordered sizes and varieties other than Nonpareil 22/24s and there was no agreement for Costa Produce to supply any fixed amount of any variety or size.

   [38] T213.35-T213.38: T272.10-T272.16: “They deal between them two, that’s something I don’t know [i]f I wasn’t there”.

   [39] T215.3; T217.4; T218.13; T220.25.

7. In this regard, Mr Capobianco’s evidence reflects the contents of an email Mr Astawa sent him (and Mr Loe) in April 2018[40] after the dispute about short payment had arisen and similarly overstates the position. That is, in response to Mr Capobianco’s request for details of the “almond issues”, Mr Astawa summarised in most general terms his view of Costa Produce sending the “wrong size” almonds or “almonds not within the agreed grade and size”.[41]  I infer Mr Capobianco asked for details because he did not know the details when he asked.

   [40] Tab 83.

   [41] Emphasis supplied.

8. I have therefore concluded that Mr Capobianco’s evidence on these topics was informed by hindsight (including the April 2018 email) and reconstructed from a mistaken belief that Mr Astawa only ever ordered Nonpareil 22/24s,[42]  which was not the case.

   [42] T272.9.

9. In his evidence on the topic of the commercial embarrassment arising from the major supply problems experienced by Big Almond Tree, Mr Capobianco emphasised the contracts that Mr Astawa had secured in early 2017 for the supply of Nonpareil 22/24s that needed to be honoured, the terms of which he said he was familiar with.[43]  He thought the agreed volume was 75 tonnes[44] (it was 45). He could not recall the price, although he said he knew it then.[45]  When shown the contracts and the volumes, Mr Capobianco changed his evidence to say the figure of 75 he had mentioned earlier was “related to [what] Adi was hoping” to sell to other customers they were hoping to get.[46]  Mr Capobianco nevertheless spoke confidently when he said he discussed with Mr Costa the delay in delivering 22/24s and how “You’ve got to get Adi off my back. We have these contracts...”[47]  to honour. I found his confidence unconvincing.

   [43] T215.4.

   [44] T215.15.

   [45] T215.20-T215.24.

   [46] T217.11-T217.17.

   [47] T216.10.

10. Mr Capobianco’s evidence in this regard is not supported by the only objective evidence of Big Almond Tree customer sales. The sales history annexed to Mr Loe’s statement[48] shows that Big Almond Tree had more than the two contract customers constantly referred to in evidence. According to these records, it supplied a variety of customers a range of sizes, grades and varieties at various prices. Notably, Big Almond Tree only sold just over half of the Nonpareil 22/24s shown in these records to the two contract customers who were claimed to be putting pressure on Mr Astawa and threatening to sue due to delay and inadequate supply of the correct product. A material volume (about 3,000 kilograms) was sold to other customers at the higher price of $10.20 per kilogram and priority was apparently not given to supplying the contract customers.

    [48] Exhibit R4.

11. On the topic of La Stella’s invoicing Big Almond Tree,[49] Mr Capobianco’s evidence was particularly unsatisfactory. He started by saying: “I recall I invoiced Big Almond Tree in, could be in October, September-October, that’s when I recorded those prices,”[50] referring to his earlier evidence about marking down the prices on the Costa Produce invoices during telephone calls with Mr Costa. He then identified the relevant La Stella invoices for each delivery in turn, and gave evidence variously that two invoices were created in September,[51] then another “Same as the other ones, all around those dates, October – September, October”[52]  finally insisting they all were: “The same time, all the same time.”[53] Mr Capobianco said the telephone calls occurred in October (or November) 2017.

    [49] See below at [206]-[208].

    [50] T247.11; emphasis supplied.

    [51] T247.19 (second delivery); T247.26 (fourth delivery).

    [52] T248.19 (fifth delivery).

    [53] T249.9.

12. When I asked why one invoice was dated earlier (14 July) and why another had an August due date if created in September or October, it became apparent that Mr Capobianco had not created these invoices at all. Contrary to his earlier evidence, he then told me that his wife, Mrs Melly Capobianco, created them.[54]

    [54] T248.25.

13. When the La Stella invoice for the seventhdelivery was shown to him, Mr Capobianco first assumed (incorrectly) that it was dated as per the Costa Produce invoice.[55] He later acknowledged in cross-examination that there was not a Costa Produce invoice for that date and he did not know why.[56]  It was clear that Mr Capobianco could only assume what his wife had done, although he maintained that he saw and approved every invoice before it was sent out.[57] Ultimately, he acknowledged that his memory of these invoices was “Very light”.[58]

    [55] T249.4-T249.7.

    [56] T264.5-T264.17.

    [57] T249.29.

    [58] T249.34.

14. Mr Capobianco later changed his evidence as to when the La Stella invoices were prepared. In cross-examination, he was asked about how Mrs Capobianco had prepared these invoices in September without knowing the cost of the almonds being on-sold to Big Almond Tree. He first said that she did know. He then immediately contradicted himself and said she did not know.[59]  When he realised his evidence on this topic did not fit with his evidence about the key issue of the alleged agreement to reduced prices that he said was agreed later in October (or November), his response was unconvincingly emphatic and, given his earlier evidence, unpersuasive: “No. I don’t believe these invoices were put together before November, no way before November.”[60]

    [59] T263.1-T263.7.

    [60] T263.18.

15. There were other aspects of Mr Capobianco’s evidence that were similarly unconvincing. Notably, there is his evidence about the reissue of the La Costa invoices to La Stella in August 2017 and his surprising explanation that he did notice the prices, but thought they were Big Almond Tree’s selling prices and did not say anything to Mr Costa about price until the October telephone calls several months later.[61]  It is not credible that an experienced trader would ever think a supplier invoice specified an end customer resale price.

    [61] See below at [184]-[188].

16. Then there was his evidence about discussing deferred payment terms with Mr Costa possibly when he discussed and agreed price in October 2017,[62] that did not fit with the clear evidence that Costa Produce was chasing payment of its invoices from as early as August 2017. Similarly, his evidence about what he meant by his comment: “I really thought Adi and yourself where [sic] on the same page with the pricing of the almonds and the sizing we received” in the 11 November 2017 email was most unconvincing.[63]  He said he did not mean that he had left Mr Astawa and Mr Costa to discuss price. Rather, he was referring to Mr Astawa’s discussions with Mr Costa about Big Almond Tree’s selling price, not Costa Produce’s selling price, which Mr Astawa did not have authority to discuss despite his (and not Mr Capobianco’s) responsibility being ordering and customer sales.[64]  It is not plausible that, in ordering, Mr Costa discussed with Mr Astawa an end-customer resale price and not his own selling price.

    [62] See below at [210].

    [63] Tab 50.

    [64]  T269.30-T270.13.

17. Further, I found Mr Capobianco’s inability to explain in cross-examination why the January 2018 credit note was issued for the invoiced price of $9.00 per kilogram if a reduced price of $7.00 per kilogram had been agreed, further undermined his evidence that there was agreement for reduced prices.[65]

    [65] T278-T279.

18. For these reasons, I found Mr Capobianco to be an unsatisfactory and unreliable witness in key respects. Where Mr Capobianco’s evidence diverges from that of another witness or a contemporaneous document, I prefer that evidence.

    Mr Adi Astawa

19. Mr Astawa first met Mr Capobianco many years ago when he worked for a supplier to a business run by Mr Capobianco and his brother. In 2016, Mr Astawa moved to Adelaide and worked for Mr Capobianco as an employee of La Stella and was held out as such by a La Stella business card. Mr Astawa used a “stellafood” email address until June 2017 and a “bigalmondtree” one thereafter. Mr Astawa did not have a specific job title and, according to Mr Capobianco, was authorised to sell for La Stella.[66]

    [66] T254.17-.26.

20. Mr Astawa also had an interest in a company JMA Pty Ltd with Mr Capobianco and Mr Loe that is not relevant to this dispute.

21. Mr Astawa was a careful witness. Again, not unsurprisingly, his recall of dates and certain transactional detail and events that occurred over four years ago was at times imprecise and generalised. However, at times I found in cross-examination his inability to recall certain matters all too convenient and motivated to avoid answering difficult questions.

22. For example, in cross-examination, he said he “flicked” invoices to Mr Capobianco and did not discuss price with Mr Costa. When pressed about how he could do his job setting sell prices if he did not know his buying price, he said Mr Capobianco would tell him the price and he would add about 50 cents on top.  Despite saying he was continually discussing price with Mr Capobianco but not Mr Costa throughout, he then could not recall when Mr Capobianco told him how to set prices: “It was too long ago”.[67]

    [67] T333.23-T333.38; T335.25-T335.30.

23. At times, I found his evidence rehearsed and as such unpersuasive. Key examples were Mr Astawa’s evidence about supply difficulties when there was no binding supply agreement and the pressure from his customers for not meeting contractual demands.

24. Ultimately, I had difficulty accepting that Mr Astawa was completely candid with the court. Mr Astawa has been in the fruit and nut trading business for a very long time, more than 40 years. He has worked for multiple employers. I have no doubt that he is an experienced and astute trader. Accepting his daily practice of telephoning major suppliers and customers to ascertain the market price,[68] it is not credible that Mr Astawa ordered almonds to supply customers with whom he had agreed fixed sale prices without knowing his buying price or, if excessive prices to market were mentioned by Mr Costa as La Stella claims, he did not protest.

    [68] T320-321.

25. It is also not credible that in setting Big Almond Tree selling prices from March 2017, Mr Astawa relied on Mr Capobianco to tell him the buy price for almonds and he would then “put about 50 cents on top” and he did that throughout for each buy and sell transaction,[69] given Mr Capobianco’s evidence that he did not discuss price with Mr Costa until October 2017.

    [69] T333.29-T334.1.

26. Finally, I also do not accept that Mr Astawa would make daily inquiries of other suppliers as to price but did not once “discuss” price with the very supplier with whom he placed orders, Mr Costa.

27. Mr Astawa’s evidence on this point was critical to La Stella’s case. However, ultimately, I found his evidence about not “discussing” price (ever)[70] unconvincing and not just because of these reservations. Critically, in cross-examination, Mr Astawa conceded that Mr Costa “probably mentioned” price[71] but never “discussed” it with him.

    [70] T327.11-T327.12.

    [71] T327.16-T327.17.

28. His evidence on this issue was further undermined by a close examination of the evidence concerning the email[72] offering Carmel and Monterey stock at $9.00 per kilogram that was relied on by La Stella as contemporaneous evidence that Mr Astawa did not “discuss” price. It was emphasised by La Stella that consistent with his evidence, Mr Astawa forwarded Mr Costa’s email to Mr Capobianco for him to negotiate price and terms, because he was told not to negotiate price.[73]  Mr Capobianco made a lower offer by return email that was rejected by Mr Costa replying to both Mr Capobianco and Mr Astawa as follows:

    “Hello Mark and Adi, the only way the grower will come to the price $$ is quick payment in 14 days. Otherwise he wants around $9/kilo.[74]  Let me know what you can do? 

    Also what do you want them packed into?”[75]

    [72] Tab 22.

    [73] T309.34-T311.4.

    [74] Tab 22.

    [75] Ibid.

29. However, this was not the end of the matter, contrary to Mr Capobianco’s evidence[76] and La Stella’s submission that it was.[77]  A later email shows that Mr Astawa (not Mr Capobianco) took responsibility for coming back to Mr Costa about the Carmel and Monterey almonds still available.[78]  Several weeks later, Mr Astawa ordered 23,000 kilos of Carmel almonds from the still available stock. These were the subject of the fifth and sixth deliveries[79] which Mr Astawa said he ordered to “help” out Mr Costa and to “show [him] that I’m capable of selling almond[s].”[80]  They were invoiced at the initial offer price of $9.00 per kilogram and the option of a lower price on quick payment terms was not taken up by Mr Astawa, given he did not discuss terms (quick or otherwise) with Mr Costa.

    [76] T222.21-T222.28.

    [77] Respondent’s Closing Submissions [73].

    [78] Tab 23.

    [79] See below at [173]-[183].

    [80] T314.8-T314.14; T315.16-T314.19.

30. I consider that Mr Astawa’s evidence-in-chief that he did not discuss price or terms with Mr Costa prior to receiving either of the fifth or sixth deliveries[81] is unconvincing considering his involvement in these email discussions about price and terms and that he later ordered the Carmels on offer, accepting as he does that Mr Costa probably mentioned price again to him when he was ordering.

    [81] T315.1-T315.6; T315.20-T315.24.

31. Mr Astawa’s evidence that he did not discuss price or terms with Mr Costa for the almond meal the subject of the second delivery is similarly unconvincing, as discussed below on the topic of this specific delivery,[82] since discussion on price was required to make this special deal.

    [82] See below at [133]-[138].

32. I find that, like Mr Capobianco, Mr Astawa’s evidence reflected the consistent narrative of being let down by Costa Produce’s continued failure to deliver the correct size and variety of almonds as ordered and agreed, to justify reduced prices. As I have said,[83] I found these complaints overstated in circumstances where there was no contractually binding agreement to supply any volume, variety or grade by any date, nor any obligation on La Stella to order and take delivery of any of the almonds on offer that Mr Astawa ordered. Nor was there any obligation on La Stella to accept delivery of any almonds not required if, on delivery, they were not as ordered. Instead, every delivery was accepted, and apart from the returned stock the subject of a credit not in issue, not returned.

    [83] See above at [29]-[37].

33. I was particularly unconvinced by Mr Astawa’s explanation in cross-examination that he had a definitive supply agreement with Costa Produce because Mr Costa had “promised” he would get the almonds he wanted.[84]  This is not credible given Mr Astawa’s expertise and experience as a nut trader nor consistent with his earlier evidence that he could not recall whether Mr Costa had guaranteed delivery of Nonpareil 22/24s or would simply do his best.[85]

    [84] T332.23-T333.3.

    [85] T332.25- T332.29.

34. In the end, the entirety of his evidence presented too many unresolved difficulties to be credible. For example, given price is an essential element of any trade, if Mr Astawa did not get involved in setting prices with Mr Costa, what possible “green light” could Mr Costa have given him to sign his customer contracts in March 2017?[86]  Why did Mr Astawa supply other customers with Nonpareil 22/24s in preference to the contract customers if he was under so much pressure to fulfil these two contracts?  Why did he not seek supply from other suppliers if the pressure from customers was so great and he was threatened with law suits in August 2017?  How was Big Almond Tree in breach in August 2017 given it had 12 months to supply the contracted Nonpareil 22/24s from first deliveries made in May and June 2017? 

    [86] T294.18-T294.23.  See below at [89]-[91].

35. Accordingly, I have serious reservations about the reliability of Mr Astawa’s evidence on the key issues in dispute and generally.

    Mr Jonathan Loe

36. Mr Loe is the managing director and a 50% shareholder in Big Almond Tree.

37. I received a sworn statement of Mr Loe subject to an objection as to relevance. It annexed customer sales records for almonds extracted from Big Almond Tree’s accounting system on the basis that Costa Produce was the only supplier of almonds. This sales data was not relevant to the question of the selling price agreed as between Costa Produce and La Stella or, as I have found,[87] the reasonable price payable by La Stella under s 8(2) of the Sale of Goods Act. However, as referred to above, this data undermined the credibility of the complaints made by Mr Capobianco and Mr Astawa about Big Almond Tree not honouring its customer contracts because of major supply issues caused by Costa Produce.

    [87] See below at [322].

    Mr Brunton

38. Mr Brunton has been involved in trading almonds for 36 years, has presented at numerous international and domestic nut conferences and is a member of, or involved in, numerous industry bodies. In 1999, he and a business partner established GB‑Commtrade Pty Ltd, a specialist trader in dried fruit and nuts. As its managing director, Mr Brunton trades daily as well as managing his company’s export almond business. He has collected statistics on almonds (and other nuts) for more than 30 years.

1. Mr Brunton’s qualifications as an expert were ultimately accepted by La Stella.[88]

   [88] T164.32.

2. In support of its secondary claim under the Sale of Goods Act, Costa Produce relied on Mr Brunton to express an independent expert opinion on the Australian wholesale market price for the almonds delivered by Costa Produce to La Stella on the relevant supply dates between May and August 2017. His “Historical Almond Pricing Report” dated 18 March 2020 (Mr Brunton’s Report) was tendered and received without objection

3. I found Mr Brunton’s Report and his oral evidence clearly expressed, well-reasoned and balanced. He provided useful background evidence and I accept his evidence as to the Australian wholesale market price in the relevant period without reservation. I make further comment on Mr Brunton’s evidence below in considering the question of what is a reasonable price under s 8(2) of the Sale of Goods Act.

   PART B: FACTUAL FINDINGS

   Almond Varieties, Sizing and Pricing

4. The sales transactions in issue were for the Nonpareil or Carmel variety of almonds of varying sizes. Nonpareil is the more valuable variety, with a thinner and lighter skin compared to the Carmel’s thicker and tobacco-like colour.[89]

   [89] Applicant’s Closing Submission [50]; T305.13-T305.15.

5. Grade in the almond trade refers to quality and, according to Costa Brothers Packed Finished Product Specification,[90] ranges between the highest quality “extra”, to “supreme”, then “FAQ” (fair average quality) to “broken” and “shrivelled”, depending on the percentages of dissimilar varieties, doubles, chips and scratches or other defects.

   [90] Tab 3.

6. Sizing in the almond trade refers to the nut count per ounce. A 22/24 count is a larger-sized almond than a 24/27 and, usually, the larger the almond the higher the price for the almond.[91]  For example, Mr Brunton gave expert evidence that in June 2017, the difference in the Australian wholesale market price[92] for 22/24 (larger) and 24/27 (smaller) Nonpareil almonds (supreme grade) was approximately 15 cents a kilogram: that is, $9.95 per kilogram for the larger size compared with $9.80 per kilogram.[93]

   [91] Mr Brunton’s Report, Exhibit A2 page 9.

   [92] That is, reasonable market values in AUD $ per KG, assuming FIS/DDP & 30-day terms.

   [93] T165.31- T166.1.

7. Mr Brunton’s unchallenged evidence was that Australian production in 2018 was approximately 6.2% of the global supply of almonds. California is the largest global almond producer and determines international market pricing.[94] Australian almond processors and sellers establish prices offered in the domestic market based on the prevailing international price (usually the Californian offered prices), and on local supply, availability and competition.[95]

   [94] Exhibit A2 page 3.

   [95] Exhibit A2 page 4.

8. The international pricing used in the Australian almond industry is commonly known as Import Parity pricing.[96]  It is calculated from the FOB[97] price by adding freight and insurance, converting to Australian dollars, then adding landing and clearing, duty, delivery and finance costs and an importer’s margin (being the profit margin for the importer). Mr Brunton conservatively used a 3% importer’s margin in his Import Parity calculations, which he considered to be the minimum for the relevant transactions between May and August 2017 (as compared to 4% to 5%).[98]

   [96] Ibid.

   [97] “Free on board vessel”.

   [98] Exhibit A2 page 4.

9. Local almond pricing (whilst based on or guided by Import Parity prices) reflects the competitive domestic market where most buyers will seek several offers from various suppliers before buying.[99]  Other factors, such as payment terms, long distance freight and volume might affect price in any given transaction.[100]

   [99] Exhibit A2 page 9.

   [100] T171 -T174.

10. Mr Brunton concluded from his investigations that almond prices did not vary greatly between May and August 2017[101] and prices did not vary extensively for all the different grades during this period.[102]

    [101] Exhibit A2, page 9.

    [102] T167.10-T167.20.

    Past Dealings with Tony & Mark’s

11. The Costa family had been supplying the Capobianco retail stores (Tony & Mark’s and its predecessor Adelaide Fresh) since the 1980s. When Mr Costa’s uncle retired in the 1990s, Mr Costa began dealing exclusively with Mr Capobianco. Their relationship was informal and involved the supply of between 10 and 15 tonnes of almonds per annum to the Tony & Mark’s retail stores.

12. At trial, La Stella submitted that price was not agreed at the time of order by Mr Astawa, leaving the price of any goods ordered and delivered to be negotiated between Mr Costa and Mr Capobianco consistent with the way in which Mr Costa and Mr Capobianco had dealt historically. This informal course of dealing was submitted by La Stella to have worked well and was based on a mutual trust.

13. This course of dealing was not pleaded and I admitted evidence on this topic subject to an objection as to relevance. Having heard all the evidence, I do not consider there was a mutual expectation that the price of almonds ordered by Mr Astawa for Big Almond Tree would be negotiated and agreed after delivery as between Mr Costa and Mr Capobianco for the reasons discussed below.[103]

    [103] See below at [256]-[263].

14. As such, I regard this evidence as largely irrelevant. It did confirm that at the outset there was a good working relationship between Mr Costa and Mr Capobianco, built over the long history of dealings between their family businesses. I find Mr Costa’s trust in Mr Capobianco explained why he accepted telephone orders from Mr Astawa for significant volumes of almonds on credit, having been introduced to him by Mr Capobianco as an employee of La Stella and involved with Mr Capobianco in their new venture, Big Almond Tree.

    Pre-order Discussions

15. There were differing recollections as to the number and timing of meetings between Mr Costa, Mr Capobianco and Mr Astawa in late 2016 and early 2017, however recollections as to what was discussed were broadly consistent. Ultimately, these differences in detail do not matter because it is common ground that these discussions did not give rise to any contractually binding obligations for the supply of almonds and are only relevant to give context to the later sale of goods transactions.

16. The early discussions were for the purposes of Mr Capobianco introducing Mr Astawa and their new venture in wholesaling almonds into the Melbourne market to Mr Costa and necessarily general. There were differing recollections of the possible volumes they hoped to be able to sell and as to when the name “Big Almond Tree” was first mentioned. I accept that Mr Astawa told Mr Costa he was mainly looking for Nonpareil 22/24s[104] and that Mr Costa gave positive assurances that he would supply as much as he could such that Mr Astawa and Mr Capobianco were confident of supply. However, as Mr Costa acknowledged, every customer wanted Nonpareil 22/24s.[105]

    [104] T67.32; T108.3.

    [105] T110.14-T110.17.

17. I do not accept, however, that in these discussions Mr Costa guaranteed or promised to supply any specific volume of Nonpareil 22/24s within any timeframe. These discussions occurred before the 2017 almond harvest had begun or processing was under way and I accept Mr Costa’s evidence that he could not predict what product would become available as a matter of common sense. I also accept that Mr Costa had existing customer commitments to juggle but genuinely expected to meet their demands by supplying as much as he could possibly get off a new block coming on.[106] Mr Astawa, as an experienced nut trader, would have known availability depended on harvest and understood how long it took to pick, process and test almonds before they could be ready for dispatch.

    [106] T67.35-T68.8.

18. On the topic of price, Mr Costa’s evidence was to the effect that whilst there had been no detailed discussion, they had discussed it loosely, always leaving it as around market price.[107]  The timing of these pre-order discussions provides important context in reaching this conclusion. They took place before harvest and processing, and as experienced nut traders, it was premature to discuss anything other than market prices.

    [107] T105.5- T105.19.

    Big Almond Tree

19. Big Almond Tree operated from an office and warehouse facility at Wantirna South, Victoria from about March 2017[108] despite being formed in 2014. It is common ground that all seven shipments of almonds ordered by Mr Astawa for La Stella were delivered there.

    [108] Exhibit R4 - Loe [3].

20. Big Almond Tree was a trader selling to wholesalers. It sat in the middle of the supply chain, after the grower and processor and before the wholesaler and retailer. The relevance of its position in the supply chain was the subject of submissions by both parties to justify the commerciality of their respective positions, as well as what would constitute a reasonable price within the meaning of s 8(2) of the Sale of Goods Act.[109]

    [109] See below at [304]-[327].

21. Mr Capobianco’s financial interest and involvement in Big Almond Tree was not clear. I accept Mr Costa’s evidence that he did not fully appreciate the ownership or control of Big Almond Tree until there was dispute over short- payment and a company search was undertaken in December 2017. I accept that he thought of it as a venture between Mr Capobianco, Mr Astawa and Mr Loe, with Mr Capobianco handling the finance and payments, and Mr Astawa, sales and ordering. His understanding in 2017 is consistent with the terms in which Mr Capobianco spoke about his involvement in Big Almond Tree in his evidence, often referring to what “we” (Big Almond Tree) hoped for getting its brand name known or customer sales and the like and the problems caused for “our” customers by the supply of the incorrect size and variety of almonds.

22. The informality of Mr Costa’s past dealings with Mr Capobianco and the trust reposed in him explain why Mr Costa did not question the formalities of the business structure of the Big Almond Tree venture. The lack of clarity as to precise legal relationships was engendered by Mr Astawa’s introduction to Mr Costa as an employee of La Stella, and Mr Astawa using a La Stella business card and a La Stella email address to conduct business for La Stella and Big Almond Tree.

    Big Almond Tree Contracts

23. Mr Astawa’s evidence was that at a meeting at the Brickworks in about March 2017, Mr Costa told him he could supply up to 100 tonnes of Nonpareil 22/24s. Price was not discussed on his version.[110]

    [110] T294.3-T295.24.

24. Mr Astawa said Mr Costa gave him a “green light” in this meeting to enter into written contracts on behalf of Big Almond Tree with NSM Food Wholesalers and AbSoulutely Wholesale. Mr Astawa then secured two contracts:

    ·One with NSM Food Wholesalers for 15,000 kilograms of Nonpareil 22/24s spread over 12 months from the first delivery with no specified commencement date, at a price of $9.90 per kilogram.

    ·Another (unsigned one) with AbSoulutely Wholesale for 30,000 kilograms of Nonpareil 22/24s, also spread over 12 months from first delivery with no specified commencement date, at a price of $9.85 per kilogram.

25. Mr Astawa said he had locked in price for 12 months despite a variable market price to secure the opportunity to supply. For the AbSoulutely Wholesale contract, Mr Astawa matched the price of another supplier, otherwise he said there was no chance of supply. Mr Astawa then said by way of explanation as to the commerciality of such a deal where he had locked selling price, he would “go back to our supplier”.[111] 

    [111] T345.7-T345.22.

26. Mr Astawa’s explanation strained the credibility of his evidence that when ordering Nonpareil 22/24s to fulfil his contracts, he did not “discuss” price with Mr Costa, despite having set his contract prices and making daily inquiries of market price of other suppliers. It was a significant admission of his willingness to take the risk and rely on the prevailing market price in buying to supply his contract customers at set prices.

27. Since there was no definitive commitment made by Mr Costa as to the volume or timeframe of supply of Nonpareil 22/24s, any commercial pressure Mr Astawa was under due to Costa Produce’s inability to supply what was promised were entirely of his own making.

    La Stella as ‘Middleman’

28. Ultimately, it was common ground that each of the seven contracts for sale of almonds was made between La Stella and Costa Produce. Mr Astawa ordered each delivery from Mr Costa by telephone for La Stella[112] and each order was delivered directly to Big Almond Tree’s Wantirna South warehouse as directed by Mr Astawa.

    [112] T327.25-T327.29.

29. For the first six deliveries, Costa Produce invoiced Big Almond Tree at the time of shipment. In early August 2017, Mr Capobianco asked Mr Costa to reissue his invoices to La Stella, which was done. Because of the time of order, the seventh delivery was only invoiced once, to La Stella.

30. A related entity, Bianchini Pty Ltd, short-paid Costa Produce’s invoices for La Stella and invoiced Big Almond Tree for each delivery.

31. Mr Capobianco gave evidence that when Mr Costa said he would rather deal with him, he thought that was strange and told Mr Costa he would need to make his “little margin on it,” to which Mr Costa did not respond. [113]  I found it odd for Mr Capobianco to say that Mr Costa did not respond to such a proposal, particularly given Mr Costa’s evidence on this issue.

    [113] T213.25-T213.31.

32. Mr Costa denied requesting, let alone insisting, that La Stella be the ‘middleman’ or that there was any discussion about Mr Capobianco taking a cut. Mr Costa said in response to counsel for La Stella’s proposition that Mr Capobianco said he would need to take his cut:[114]

    A.     No. Then why would I do the deal? If he’s involved in the business because it was their partnership, why would I take a cut to give him extra, if they were all in business together, it’s their venture. So someone’s double dipping somewhere.

    [114] T102.11-T103.1.

33. I accept there was a discussion between Mr Costa and Mr Capobianco about Mr Costa’s preference to deal with Mr Capobianco because he knew and trusted him and he did not know Mr Astawa and Big Almond Tree. I also accept Mr Costa’s evidence that it was not the case he did not want to deal directly with Big Almond Tree and was prepared to invoice them directly (as he did for the first six deliveries), even if he “didn’t know what their money was like.”[115] His conduct is inconsistent with Mr Costa insisting on involving La Stella as ‘middleman’ as claimed by La Stella.

    [115] T102.5.

34. Accordingly, I prefer Mr Costa’s evidence on this issue. I accept that Mr Costa would not have been prepared to take a cut for La Stella’s involvement or at all. This conclusion is strengthened by the evidence regarding the fifth and sixth deliveries where Mr Costa offered $9.00 per kilogram,[116] because the grower had set a price Mr Costa needed to meet and Mr Costa rejected Mr Capobianco’s counter-offer.

    [116] Tab 22.

    Mr Astawa’s Authority

35. La Stella’s case at trial was to the effect that Mr Astawa was only authorised to buy and sell almonds but not set prices, despite his specialist expertise and experience as a nut trader as compared to Mr Capobianco. In setting Big Almond Tree selling prices, Mr Astawa’s evidence was that throughout the year, he discussed prices with Mr Capobianco and relied on him to tell him what price he could buy for and added on about 50 cents in selling.[117]  For buying, Mr Capobianco would tell Mr Astawa the price he had to pay.[118]

    [117] T333.29-T333.32.

    [118] T333.31.

36. I have concluded that Mr Costa was not told Mr Astawa was not authorised to negotiate or agree price. Whilst he knew that Mr Astawa worked for Mr Capobianco and naturally deferred to him as his boss, Mr Costa was only told that Mr Capobianco was overseeing finance and payment and Mr Astawa was handling sales.[119] Whilst Mr Costa knew the deliveries were for Big Almond Tree, he had no knowledge of the proposed arrangements between La Stella and Big Almond Tree for them.

    [119]T102.31-T103.28; T66.27-T66.30.

37. Nonetheless, Mr Astawa was solely responsible for ordering. As I have found and discuss below, Mr Costa sent Mr Astawa the stock lists.[120]  All orders were placed by Mr Astawa, including the fifth and sixth deliveries the subject of emails discussing price involving Mr Astawa.[121] Whilst it was Mr Capobianco who attempted to negotiate a lower price in one email, it was Mr Astawa (not Mr Capobianco) who got back to Mr Costa and ordered them, knowing the offer price was $9.00. I do not accept that these emails objectively convey any limitation on Mr Astawa’s authority to agree price. For the second delivery, it was Mr Astawa (not Mr Capobianco) who worked out the special deal to buy and sell the almond meal.[122]

    [120] See below at [106].

    [121] See below at [173]-[183].

    [122] See below at [133]-[138].

38. On Mr Capobianco’s evidence, he did not seek to negotiate price again with Mr Costa until the October (or November) 2017 telephone calls. Further, Mr Capobianco’s 11 November 2017 email[123] acknowledges Mr Astawa’s authority for both the pricing[124] and specification of the product ordered.

    [123] Tab 50. See above at [43].

    [124] Emphasis supplied.

39. In these circumstances, I do not accept La Stella’s case that Mr Astawa was authorised to sell but when ordering to sell (buying) he was not authorised to negotiate or discuss price with Mr Costa, despite price being integral to purchasing goods for re-sale. I find Mr Astawa was held out to Mr Costa as having full authority to order for La Stella including to agree price with Mr Costa.

    Ordering Generally

40. The telephone discussions in which the seven deliveries were ordered involved Mr Costa and Mr Astawa.  Both gave evidence to the same effect that the ordering process was essentially the same for the various deliveries. There were additional communications concerning the second (a special deal for almond meal), the third (Nonpareil 22/24s shipped directly from the grower, Virginia Farm Produce) and the fifth and sixth deliveries (Carmels), which I address separately on the topic of the relevant delivery.

41. Mr Astawa was primarily interested in purchasing Nonpareil 22/24s and was in regular telephone contact with Mr Costa from at least late March 2017 pressing for availability of this almond. It is uncontentious that Mr Costa told Mr Astawa the details of the stock on hand (varieties, sizes and quantities) by telephone from time to time as well as emailing him, including by sending stock on hand lists. The stock lists[125] show that the size of Nonpareil stock on hand packed in Big Almond Tree cartons was mainly smaller than the 22/24 size.

    [125] Tabs 11 and 17.

42. Mr Costa’s evidence was that these conversations occurred before packing, because he needed Mr Astawa’s approval to pack them into Big Almond Tree cartons. Mr Costa would then advise Mr Astawa on the completion of packing when the almonds were ready for dispatch. Mr Astawa in cross-examination said he may have been given information in these telephone conversations about what product was available from time to time[126] and I find he was given this information, consistent with his email correspondence with Mr Costa.

    [126] T326.30.

43. As to price, Mr Costa’s evidence was that most of the ordering was done by telephone with Mr Astawa, whom he said knew the price because he always made sure he told Mr Astawa a price, even though Mr Astawa would say to him that Mr Capobianco was “handling the finance”.[127]

    [127] T70.22-T70.33.

44. Mr Astawa’s evidence was that he did not “discuss” price or payment terms with Mr Costa prior to any delivery.[128]  He said so repeatedly as he was taken through each of the seven deliveries in examination-in-chief. In cross-examination, Mr Astawa conceded that Mr Costa probably “mentioned” price when discussing the availability of different stock although he never “discussed” it with him since it was not his role to negotiate.[129]

    [128] T315.3-T315.6 (fifth delivery); T315.20-T315.24 (sixth delivery).

    [129] T327.16-T327.20.

1. I do not accept Mr Astawa’s evidence in this regard as entirely candid and prefer Mr Costa’s evidence. I find that each time Mr Astawa ordered almonds from Mr Costa, he was told Mr Costa’s offer price for the variety, grade, size and quantity of almonds available. When ordering, I find that generally Mr Astawa was silent about price and did not expressly say he accepted or rejected the price mentioned or anything that would reasonably be understood as not accepting the price he was told by Mr Costa. It is in this sense, I find that generally Mr Astawa did not “discuss” price.

2. La Stella submitted in closing that Costa Produce by its written submissions conceded that the effect of Mr Costa’s evidence was that he appropriately conceded that Mr Astawa deferred to Mr Capobianco on pricing.[130] 

   [130] Applicant’s Closing Submissions at [94] and [247.4].

3. I do not find any such concession on the evidence, objectively considered. I find that by Mr Astawa’s saying: “Mark is handling the finance”, he was not communicating any objection to the price mentioned by Mr Costa or that he was not authorised to agree price. Objectively, this meant that Mr Capobianco would be responsible for making payment since he was handling finance. Naturally, Mr Costa would have expected Mr Astawa to defer to any instructions given to him by Mr Capobianco because he knew he was his boss. However, since he was never told about Mr Astawa’s instruction not to discuss or negotiate price, this is not relevant.

4. I do not consider the statement “Mark is handling the finance” implied that price must only be discussed and agreed with Mr Capobianco and, given my findings regarding the alleged past dealings with Tony & Mark’s stores,[131] there was in the circumstances no reasonable expectation that Mr Costa should agree price with Mr Capobianco if he wanted to fix price before delivery.

   [131] See above at [76]-[79].

5. Further to the evidence as to ordering generally, there were additional matters that lead me to find that price was expressly discussed with Mr Costa for the second, fifth and sixth deliveries, contrary to Mr Astawa’s evidence. My reasons for these findings are discussed below on the topic of these deliveries.

6. As to payment terms, save for the second, fifth and sixth deliveries, I find that there was no discussion between Mr Costa and Mr Astawa at the time of ordering other than the statement made by Mr Astawa that “Mark is handling the finance”.

   Invoicing Generally

7. It was Mr Costa’s evidence that, generally, he prepared the invoice from the shipping manifest at the time of dispatch.[132] According to Mr Costa, the invoice, shipping manifest and certificates of conformance were fixed to the pallets when they were packed for dispatch from Costa Bros’ processing facility[133] and shortly thereafter emailed to Mr Astawa, so he would know what product was on its way.[134]  Mr Costa’s evidence is supported in part by the shipping manifest for the firstdelivery that bears an “emailed” stamp and the handwritten date “22/5” and “by: ML”. I was told “ML” is Ms Michelle Linke, Costa Produce’s accounts clerk.  

   [132] T73.22-T74.15.

   [133] T64.4-64.19; T72.1-T72.3.

   [134] T72.4-T72.9; T73.10-T73.19; T74.6-T74.15.

8. The documents sent to Mr Astawa by email and the copies attached to the pallets delivered to Big Almond Tree’s warehouse were not in evidence. Mr Astawa’s evidence was contradictory on this issue. First, he said it was possible that he received the shipping manifest and invoices by email from Mr Costa or his office.[135] He said when he did, he probably forwarded any Costa Produce invoices received to Mr Capobianco because he was going to take care of payment.[136]  When pressed about whether he saw the documents attached to the pallets, he could not say what documents there were because he was not necessarily present when deliveries arrived in the warehouse, so he did not see them.[137]  Mr Astawa did accept that they would have been passed by the warehouse storemen to, and retained in, the Big Almond Tree office[138] but he also could not say whether the Big Almond Tree office passed them to Mr Capobianco,[139] even though Mr Capobianco was handling payment.

   [135] T327.38-T328.5.

   [136] T328.6-T328.13.

   [137] T328.19-T328.29; T329.1-T329.4.

   [138] T328.30-T328.38

   [139] T329.5-T329.8.

9. Later in cross-examination, he said he did not read invoices received by email from Mr Costa and “flicked” them to Mr Capobianco.[140] In re-examination, Mr Astawa back-tracked and said he forwarded a single Costa produce invoice to Mr Capobianco, without identifying which one.[141]

   [140] T333.23-T333.25.

   [141] T346.1-T346.5.

10. I accept Mr Costa’s evidence about Costa Produce’s invoicing and dispatch practices generally and find that for the deliveries packed and dispatched by Costa Produce directly to Big Almond Tree, based on the practice shown for the first delivery, the relevant invoice, shipping manifest and certificates of conformance were attached to the relevant pallets and copies emailed to Mr Astawa, who had ordered for La Stella. The email stamp on the first shipping manifest supports Mr Costa’s evidence as to this general practice, which is standard commercial practice.

11. Of Mr Astawa’s contradictory evidence, I accept the part to the effect that he received the invoices by email, although I do not accept he did not read the invoices before he “flicked” them to Mr Capobianco. This qualification to his answer was self-serving, as was his later evidence in re-examination. His evidence that he received them, and forwarded those emailed to him to Mr Capobianco, was consistent with the latter’s responsibility for payment and Mr Costa’s evidence that he always emailed Mr Astawa prior to delivery, as is confirmed by the documentary evidence for the first and seventh deliveries.

12. Ultimately, I am satisfied Mr Astawa received an invoice for each delivery by email and forwarded each of them to Mr Capobianco for payment.

    First Delivery

    Issues in Dispute

13. On 22 May 2017, the first delivery of 18,000 kilograms of Nonpareil 22/24s was invoiced to Big Almond Tree at a price of $9.90 per kilogram and dispatched to Big Almond Tree’s warehouse. The invoice issued to Big Almond Tree,[142] shipping manifest[143] and certificates of conformance[144] for this delivery consistently record the detail as to size and characteristics of the almonds. A second invoice[145] for this delivery was issued to La Stella in identical terms, at Mr Capobianco’s request on 7 August 2017.[146]  Only the invoices specify the price of $9.90 per kilogram and payment terms “Nett 21 days”.

    [142] Tab 37 page 64 is a copy of the original sent with the delivery to Big Almond Tree.

    [143] Tab 8.

    [144] Tab 88, pages 156 to 158

    [145] Tab 6.

    [146] See below at [184]-[188].

14. There is no dispute that this delivery was accepted and on-sold by La Stella to Big Almond Tree. Despite a complaint that Big Almond Tree’s customer had returned 4,000 kilograms to Big Almond Tree for being undersize and “more to size of 24/27”, [147] none of the almonds from the first delivery were returned to Costa Produce. The dispute between the parties over this delivery is about price, the size of the Nonpareil almonds delivered and payment terms.

    Price

    [147] Tab 20 and Tab 21.

15. As to price, in accordance with the findings I have made as to ordering generally,[148] I find that Mr Costa told Mr Astawa his selling price for Nonpareil 22/24s in a telephone conversation on about 22 May 2017 when Mr Astawa placed the order for the first delivery for La Stella. Shortly after this telephone conversation and on 22 May 2017, Mr Costa arranged for 18,000 kilograms of Nonpareil 22/24s to be dispatched to Big Almond Tree’s warehouse and prepared the Costa Produce invoice for this delivery from the completed shipping manifest. He priced the almonds at $9.90 per kilogram, as is evident from the invoice.

    [148] See above at [105]-[115].

16. Given the close proximity in time between Mr Costa telling Mr Astawa his selling price and preparing the invoice issued to Big Almond Tree for the first delivery, I consider it inherently unlikely that Mr Costa would have recorded in the invoice a different price from the one he had just told Mr Astawa. There was no reason for him to do otherwise.

17. Accordingly, I find the price Mr Costa told Mr Astawa at the time of ordering the first delivery was the invoiced price, $9.90 per kilogram.

    Size Delivered

18. As to the size of the almonds delivered, accepted and on-sold by La Stella to Big Almond Tree, Costa Produce’s documentation consistently records the size as 22/24s. The invoices are supported by the certificates of conformance, referrable to each pallet recorded on the shipping manifest as referenced in the invoice.

19. Mr Costa gave detailed evidence about the quality assurance in place to differentiate Costa Produce from its competitors, including the extra processing step of hand sorting, by setting higher and tighter specifications. I accept Mr Costa’s evidence as to the relatively tight quality control processes in place at the time generally, and find the certificates of conformance would reliably record the characteristics of the almonds tested. Quality assurance testing is based on sampling, and whilst I accept it as a generally reliable indicator of the characteristics of any batch sampled, of course it is not assurance as to the size of every almond in a pallet. There will naturally be variation in any batch sampled.

20. The contemporaneous emails for the first delivery refer to a customer of Big Almond Tree returning 4,000 kilograms as being “more to size of 24/27” as confirmed by further sampling of four cartons (50 kilograms) by Big Almond Tree’s quality assurance person as 24/27s, apparently using the method advised by Mr Costa.[149]  I accept these complaints were genuinely made and, on the basis that 4,000 kilograms of the first delivery were rejected by Big Almond Tree’s customer as being smaller than 22/24s, despite the certificates of conformance, I find that 4,000 kilograms were of the smaller size 24/27s, and not 22/24s as invoiced. However, the evidence of the further sampling done by the Big Almond Tree’s quality assurance person is insufficient to support a finding contrary to the certificates of conformance for the balance of the delivery. Accordingly, I find the balance of the first delivery (14,000 kilograms) was Nonpareil 22/24s, as invoiced.

    [149] Tab 20 and Tab 21.

21. Relying on Mr Capobianco’s evidence, La Stella submitted that the firstdelivery of almonds was destined to fulfil part of the contracts with Big Almond Tree’s customers and therefore needed to be 22/24s.[150]  Consequently, the customer complaint about the smaller size almonds was said to have caused serious commercial embarrassment to Big Almond Tree, not only because were they late in delivery, but 4,000 kilograms were returned as being the wrong size and they all seemed smaller.[151] 

    [150] Respondent’s Closing Submissions [57].

    [151] Respondent’s Closing Submissions [69].

22. I find these complaints by La Stella overstated. Not only was there no time agreed for delivery of any volume or variety of almond pre-order[152] so that the first delivery could not be ‘late’, but Big Almond Tree’s sales records for Nonpareil 22/24s do not show the first delivery of 22/24s being immediately on-sold to the contract customers to fulfil those contracts. Rather, the Big Almond Tree sales records show that on receipt of the first delivery only 4,000 out of 18,000 kilograms were immediately on-sold to one of the contract customers, AbSoulutely Wholesale, and another month passed before 3,000 kilograms were sold to the second contract customer, NSM.[153]

    Payment Terms

    [152] See above at [80]-[82].

    [153] Annexure A to Exhibit R4.

23. In accordance with the findings I have made as to ordering generally, Mr Costa and Mr Astawa did not discuss payment terms at the time of ordering the first delivery.

    Second Delivery

    Issues in Dispute

24. The second delivery was for 2,637.5 kilograms of almond meal delivered directly from The Nutshell Marzipan (the blanching processor) in Melbourne to Big Almond Tree on 2 June 2017. The invoice issued to Big Almond Tree dated 2 June 2017, specifies price as $8.50 per kilogram and payment terms as “Nett 21 Days”.[154] A second invoice for this delivery was issued in identical form to La Stella at Mr Capobianco’s request on 7 August 2017.[155]  Mr Capobianco was not involved and unsure how that came about because “Adi and Tony worked that out among themselves.”[156]Price and payment terms are disputed.

    Price

    [154] Tab 37 page 61.

    [155] Tab 12.  See below at [184]-[188].

    [156] T220.6-T220.8.

25. This was a special deal that required discussion on price to conclude it. Mr Costa asked Mr Astawa if he was interested in some rejected stock he had contracted The Nutshell Marzipan to blanch and process into meal. The order was placed after Mr Astawa found a buyer by making a few calls to help Mr Costa move it.[157]  Accepting Mr Costa’s evidence that he always told Mr Astawa his selling price when discussing a sale and that he also did so for this order, and Mr Astawa’s evidence that he mentioned price at the time of ordering,  I find that Mr Astawa accepted the offer price by saying “he’d like to take it”.[158]  Mr Costa’s evidence that they discussed and agreed that payment as COD (cash on delivery) confirms that agreement on price was made although he invoiced it “Nett 21 days.”[159] 

    [157] T303.

    [158] T75.28-T75.29.

    [159] T75.29-T75.31.

26. Mr Astawa’s commercial objective was to make a profit on the trade. It follows that Mr Astawa could only conclude the deal with the buyer he had found on the one hand, and Mr Costa on the other, if he had an agreed buying price that was less than his selling price. Otherwise, there was no reason for Mr Astawa to make this special deal without knowing whether he would make a profit from this trade.

27. Accordingly, I find that on about 2 June 2017, when the deal for the second delivery was finally brokered in a telephone conversation between Mr Costa and Mr Astawa, price was expressly discussed and agreed.[160] Since Mr Costa invoiced the almond meal at $8.50 per kilogram[161] shortly after he agreed price with Mr Astawa, I consider it inherently unlikely that Mr Costa would have recorded in the invoice a different price from the one agreed. If he had, given Mr Astawa had transacted with his buyer based on the agreed price, he would have complained when he received the invoice by email from Mr Costa, before “flicking” it on to Mr Capobianco for payment. He did not complain.

    [160] T303.2-T303.17.

    [161] Tab 37.

28. Accordingly, I find the price Mr Costa discussed and orally agreed with Mr Astawa for the second delivery of almond meal was $8.50 per kilogram.

    Payment Terms

29. Whilst COD payment terms were orally agreed at the time of ordering, the second delivery was invoiced on “Nett 21 days” terms. Costa Produce cannot rely on the oral agreement it waived by invoicing on more generous terms.

    Third Delivery

    Issues in Dispute

30. The dispute between the parties over the third delivery is confined by the pleadings to the agreed price, payment terms and size of an unquantified proportion of the almonds delivered to Big Almond Tree and invoiced[162] by Costa Produce as 18,000 kilograms of “extra” Nonpareil 22/24s at $9.90 per kilogram.  The invoice issued to Big Almond Tree is in near identical terms to the invoice reissued to La Stella:  the difference being that the former specifies payment terms of “Nett 21 Days” whilst the latter, “Net 30 days”.

    Collateral Issues

    [162] Tab 18. 

31. Before I address price, size and payment terms, it is necessary to address some collateral issues.

32. La Stella formally admits that on about 7 June 2017 Mr Astawa, for and on behalf of La Stella, ordered by telephone from Mr Costa 18,000 kilograms of 22/24s Nonpareil almonds for delivery to Big Almond Tree.[163]  Delivery, acceptance of delivery and that none were returned are formally admitted.[164] 

    [163] Defence [11].

    [164] Defence [11.5] and [11.8].

33. In closing, La Stella submitted that if the third delivery took place at all,[165] it was for a different quantity (11,000 kilograms) and size (smaller than 22/24s) than invoiced.[166] The challenge to the delivered quantity is contrary to its pleaded defence and, as La Stella’s counsel properly conceded, La Stella is bound by its admissions as to the delivery, acceptance and non-return of 18,000 kilograms of Nonpareil almonds in the third delivery.[167]

    [165] Emphasis supplied.

    [166] Respondent’s Closing Submissions [84] and [94].

    [167] T378.24-T378.33.

34. However, La Stella submitted that based on Mr Astawa’s evidence about the third delivery not being received and anomalies in the documentary evidence, the credibility of Mr Costa’s evidence was severely undermined. For the following reasons, I do not reach the same conclusion as counsel for La Stella urged upon me and, whilst the evidence regarding the third delivery is unsatisfactory given its incompleteness, I do not find Mr Costa’s credit compromised.

35. Contrary to La Stella’s pleaded admissions, Mr Astawa’s evidence in examination-in-chief was that there was no delivery of 18,000 kilograms of Nonpareil 22/24s to Big Almond Tree on about 7 June 2017.[168] Nor did he recall any delivery of Nonpareil almonds from Mr Costa in plain boxes, contrary to Mr Costa’s evidence.[169]  Further, he did not receive a shipment of almonds matching the description in the Virginia Farm Produce invoice that Mr Costa relied on as the source being Virginia Farm Produce.

    [168] T307.1-T307.7.

    [169] T307.12-T207.14.

36. I do not accept Mr Astawa’s evidence on this issue. His evidence was not only contradicted by Mr Costa, but also by both Mr Capobianco and Mr Loe. Mr Astawa’s evidence on this issue is particularly unconvincing, recalling his evidence about the documents attached to the pallets delivered to Big Almond Tree’s warehouse that he said he did not see because he was not present when deliveries were made and hardly ever in the office.[170]  Further, his denial that he received Nonpareils in plain boxes was contradicted by the photographs of plain 10-kilogram cartons delivered as part of the seventh delivery.[171] 

    [170] T328.22-T328.29.

    [171] Tab 41 pages 80 to 81.

37. Mr Astawa said that if a delivery of 18 tonnes of Nonpareil 22/24s had been received, he would have delivered them to his client who had been waiting.[172]  I find this explanation also unconvincing and an attempt to bolster his evidence that he did not receive the third delivery. As I have said, the Big Almond Tree sales records show that he had supplied many other customers in preference to his “waiting client” by this date, contrary to his evidence that he needed Nonpareil 22/24s urgently to supply the contract customers.

    [172] T307.8-T307.11.

38. La Stella submitted that if the third delivery had been received, they would have been sold and would have appeared in Big Almond Tree’s sales records.[173] I do not accept this submission since I am not satisfied about the completeness of the information about Big Almond Tree’s sales in the limited records in evidence. These records did not include sales for the almond meal in the second delivery or the Nonpareil 24/27s in the first delivery. And this submission is of no assistance in determining the only relevant issues as to the size, price and payment terms of the almonds delivered.

    [173] Annexure A to Exhibit R4.

39. La Stella submitted that there was no evidence as to the size of the almonds in the third delivery other than the invoice itself[174] and there “is some doubt that the invoice is a contemporaneous record.”[175]  For the following reasons, I reject both submissions.

    [174] There two invoices, one to Big Almond Tree that was reissued in identical form to La Stella.

    [175] Respondent’s Closing Submissions [84].

40. To prove size for the third delivery, Mr Costa’s evidence was that he purchased stock Costa Brothers had processed and packed for a grower, Virginia Farm Produce, into plain boxes.[176] He relied on an exchange of emails with the purchasing and marketing director of Virginia Farm Produce attaching an invoice for 17,000 kilograms of broken, medium and large Nonpareil almonds, of which 14,000 kilograms (medium and large) were recorded as being in 10-kilogram cartons, and the rest (broken) in bulk bags.[177]  The email did not refer to Big Almond Tree but sought confirmation of transport without indicating to where or for whom. Mr Costa said he arranged for Virginia Farm Produce to ship directly to Big Almond Tree to save freight.[178]

    [176] T77.14-T77.36.

    [177] Tab 101.

    [178] T78.7-T78.12.

1. Consistent with my findings at to ordering generally,[287] Mr Costa told Mr Astawa his selling price at the time of the ordering of these deliveries and I have concluded he told him the same price of $9.00 per kilogram as offered in his emails and as invoiced contemporaneously with ordering. Mr Astawa did not discuss or negotiate the price offered orally by Mr Costa and, in this sense, was silent as to price.

   [287] See above at [105]-[115].

2. By his conduct in placing the order for the fifth and sixth deliveries and his silence in response to the offer price he was told at the time of ordering, considered against the background of the pre-order emails in which Mr Costa made clear he needed a price of $9.00 per kilogram and his knowing the price offered orally was the same as offered in the earlier emails, Mr Astawa has indicated La Stella’s assent to the price offered and thereby accepted it. I have therefore concluded that agreement on price was made at the time of ordering for the fifth and sixth deliveries at $9.00 per kilogram.

3. La Stella’s further conduct in accepting delivery of the fifth and sixth deliveries and on-selling them to Big Almond Tree and continuing silence as to price, knowing the offer price (from the pre-order emails, from Mr Costa telling Mr Astawa at the time of ordering and from the invoices affixed to the pallets for the deliveries and separately emailed to Mr Astawa), further signalled La Stella’s acceptance of the price offered.

4. Again, Mr Capobianco’s request in August 2017 that these invoices be reissued to La Stella without querying price is a significant admission against La Stella that the invoiced prices for these deliveries were agreed by it. 

   Other Deliveries

5. For the first, third, fourth and seventh deliveries, in accordance with my findings as to ordering generally, Mr Costa told Mr Astawa his selling prices at the time of ordering and I have concluded that these prices were the same as invoiced contemporaneously with ordering.

6. Mr Astawa did not discuss or negotiate the price offered orally by Mr Costa and, in this sense, was silent as to price.

7. By his conduct in placing the orders for the other deliveries and his silence in response to the offer price he was told at the time of ordering, knowing Mr Costa’s offer prices, Mr Astawa has indicated La Stella’s assent to the prices offered and thereby accepted them.

8. La Stella’s further conduct in accepting each of these deliveries and on-selling them to Big Almond Tree and its continuing silence as to price, knowing the offer prices (from being told them by Mr Costa at the time of ordering and being sent the invoices in various ways) further signalled La Stella’s acceptance of the prices offered.

9. Again, the reissuing of these invoices[288] to La Stella at Mr Capobianco’s request in August 2017 without him querying price, is a significant admission against La Stella that the invoiced prices were agreed by it.[289] 

   [288] All but the seventh since it was ordered after Mr Capobianco’s request that the current invoices be reissued.

   [289] The invoice for the third delivery was in evidence both as issued to Big Almond Tree and La Stella.  See Tab 18.

10. In early November 2017, La Stella had not paid any of the invoices and Costa Produce was chasing payment, Mr Capobianco promising he would make payment soon. In this context, La Stella was offered the opportunity of returning unsold stock, Carmels and 16,000 kilograms of Nonpareil 27/32s in the fourth delivery and being issued a credit. Instead of returning all the unsold stock, La Stella elected to sell the Nonpareil 27/32s through Big Almond Tree and returned the Carmels only.

11. By its conduct in electing not to return the Nonpareil 27/32s for a credit, La Stella took the benefit of the fourth delivery knowing the invoiced price and Costa Produce’s expectation of full payment, having had a further opportunity to reject the unsold stock at the invoiced price. In these circumstances, a reasonable person would conclude that La Stella accepted the offer price of $9.90 per kilogram as invoiced for the fourth delivery. In my view, it would be commercially unreasonable for La Stella to reject Costa Produce’s offer to return this stock and not be regarded as having accepted the full invoiced price in circumstances where La Stella knew the invoiced price and the expectation of full payment at the invoiced price.

12. In reaching these conclusions, I have considered whether it is significant that the invoices issued at or about the time of delivery for the first six deliveries were addressed to Big Almond Tree (Big Almond Tree invoices), and not La Stella.  In my view, it is not significant because La Stella has conducted itself as if the Big Almond Tree invoices communicated offer prices to it, as is evident from the following matters:

    ·the Big Almond Tree invoices confirmed offers made orally by Mr Costa to Mr Astawa, whom the parties accepted was ordering for La Stella;

    ·in the case of the fifth and sixth deliveries, the Big Almond Tree invoices confirmed offers made in writing in emails by Mr Costa to Mr Capobianco and Mr Astawa, whom the parties accepted were dealing for and on behalf of La Stella;

    ·the Big Almond Tree invoices were received by Mr Astawa and Mr Capobianco, whom the parties accepted were dealing for and on behalf of La Stella;

    ·it was the parties’ expectation that La Stella would be involved as the ‘middleman’ between Costa Produce and Big Almond Tree;

    ·La Stella accepted each delivery and treated the goods as its own by re-selling them to Big Almond Tree, knowing the Big Almond Tree invoices were not addressed to La Stella;

    ·Mr Capobianco requested the Big Almond Tree invoices be reissued to La Stella, and accepted the reissued invoices without objection to the prices at the time; and

    ·Mr Capobianco marked down the Big Almond Tree invoices for some deliveries[290] and invoices issued to La Stella for others.[291]     

    [290] For the first, second, fourth, fifth and sixth deliveries.

    [291] For the third and seventh deliveries.

    Agreement as to Payment Terms

13. As I have found, save for the second, fifth and sixth deliveries, there was no discussion between Mr Costa and Mr Astawa at the time of ordering other than the statement made by Mr Astawa that “Mark is handling the finance”.

14. For the second delivery, despite agreement that payment would be on a COD (cash on delivery) basis, Costa Produce invoiced the delivery “Nett 21 days” and let the goods go out on that basis.[292]  As I have said, Costa Produce cannot rely on an oral agreement to COD payment terms having invoiced the goods on different terms that are more generous.

    [292] T75.29-T75.31.

15. For the fifth and sixth deliveries, the suggestion of quicker payment terms for a lesser price was not taken up.

16. The invoices issued to Big Almond Tree for the first six deliveries specify payment terms as “Nett 21 Days” as do the invoices issued to La Stella for those deliveries, save for the third delivery.  The invoices to La Stella for the third and seventh deliveries specify payment terms as “Net 30 Days”. There is no explanation for this difference between the payment terms in the two invoices for the third delivery.  

17. La Stella submitted that it was not given clear notice of the payment terms stated on each invoice. First, it was argued there was no documentary evidence showing the invoices were sent to Mr Capobianco before 7 August 2017. Secondly, interest had never been charged in the past dealings between the Costa family and Tony & Mark’s.

18. I do not accept these submissions. As I have said, past practices are not relevant to the dealings in this case as a matter of fact or according to the pleaded defence. As to receipt of Costa Produce invoices, I am satisfied on all the evidence La Stella did have clear notice of the payment terms clearly stated on each invoice. Since La Stella was the contracting party (not Mr Capobianco) and there was no relevant limitation of Mr Astawa’s authority to bind La Stella made known to Mr Costa, it was sufficient for Mr Astawa to see the invoices and I find he did. My conclusions in this regard are fortified by my findings that Mr Capobianco was also sent the invoices before 7 August 2017 by Mr Astawa, as I have found.

19. Contrary to counsel for La Stella’s submission, there is documentary proof of the invoices being emailed for the first and seventh deliveries. Mr Astawa then “flicked on” the invoices to Mr Capobianco for payment.  Invoices were sent to Mr Astawa and Mr Capobianco in various ways, as I have found above.[293] 

    [293] See above at [116]-[121].

20. La Stella took the benefit of the deliveries knowing from each successive invoice and copy received what the expected payment terms were, with reasonable opportunity to reject the payment terms offered or not accept the deliveries on that basis or at all.  Instead, La Stella accepted the deliveries and on-sold them, dealing with the goods as its own.  La Stella’s request that the invoices be reissued without protesting the payment terms clearly stated on each invoice, further signalled acceptance of the payment terms offered on the invoices issued to Big Almond Tree for the first six deliveries.

21. Since Costa Produce invoiced La Stella on more generous terms than the agreed “Nett 21 Days” for the third delivery, it cannot rely on the stricter terms and I consider it is bound by its indulgence of 30 day terms.

22. Accordingly, I find that there was agreement that payment was due within the payment terms specified on the relevant invoice issued to La Stella for each delivery.

    Sale of Goods Act Claim

23. In the alternative to its claim in contract, Costa Produce seeks that La Stella pay a reasonable price and the time for payment is the time at which delivery was effected under sections 8(2) and 28 of the Sale of Goods Act respectively.

24. Section 8(2) of the Sale of Goods Act provides:

    Where the price is not determined in accordance with the foregoing provisions, the buyer must pay a reasonable price. What is a reasonable price is a question of fact dependent on the circumstances of each particular case.

25. Section 28 of the Sale of Goods Act provides:

    Unless otherwise agreed, delivery of the goods and payment of the price are concurrent conditions, that is to say, the seller must be ready and willing to give possession of the goods to the buyer in exchange for the price, and the buyer must be ready and willing to pay the price in exchange for possession of the goods.

26. I have concluded that price and payment terms were agreed for each delivery at the price offered orally at the time of ordering and at the price and payment terms offered in writing by the relevant invoices. It is therefore only necessary to consider Costa Produce’s alternative case on reasonable price under s 8(2) of the Sale of Goods Act for the first delivery, where not all the goods delivered were as ordered, and as such no relevant price was offered and thus agreed.

27. As I have found, 4,000 kilograms of the first delivery of Nonpareil almonds delivered to Big Almond Tree were of the smaller size 24/27s and not 22/24s as ordered or invoiced.[294] 

    [294] See above at [126]-[132].

28. It is uncontroversial that what is a reasonable price for the purposes of s 8(2) of the Sale of Goods Act is a question of fact dependent on the circumstances of the particular case. The relevant circumstances to be considered are not defined in the Sale of Goods Act and are not limited by the language of that Act.

29. Costa Produce submitted that market price is often adopted as reasonable for the purposes of s 8(2) of the Sale of Goods Act, describing market price as the price at which other sellers might have offered to sell.[295]  However, market price is not necessarily reasonable price and a price that is fair and reasonable and just to both parties and would not necessarily be reasonable in the circumstances of every case.

    [295] Applicant’s Closing Submissions [278] citing Woolworths Ltd v Sterling Henry Ltd (1967) 87 WN (NSW) 200.

30. Costa Produce submitted[296] that relevant factors would include:

    ·the quality and characteristics of what was supplied;

    ·the history of prices paid;

    ·the invoiced price where it was clear the seller expected the buyer to pay that price and the buyer accepted that price and dealt with the goods as the buyer’s own; and

    ·costs associated with the sale or the seller’s business generally including prices paid to buy the goods for on-sale.

    [296] Applicant’s Closing Submission at [281].

31. Costa Produce adduced expert evidence of wholesale market prices from Mr Brunton, accepting that his evidence was relevant although not determinative of reasonable price because it was directed to the market price, rather than the specific circumstances of the relevant transactions.

32. La Stella emphasised the following factors favouring a lower reasonable price in this case:

    ·delays in supply;

    ·failure to supply the indicated amount of Nonpareil 22/24s;

    ·the effect of delay and failure to supply on the business of Big Almond Tree and the reputation of Mr Astawa;

    ·the mis-description of the nuts delivered;

    ·the unorthodox supply chain known to Costa Produce, including La Stella’s involvement as an additional ‘middleman’; and

    ·that Big Almond Tree was newly established and transacting on different dates to those of the supplies to La Stella (as assumed by Mr Brunton).

33. La Stella challenged Mr Brunton’s evidence as to market price based on his assumptions which it described as “questionable” because he was not instructed to consider the specific circumstances of this case favouring a lower price. It was argued that the best evidence of market price was the price Big Almond Tree sold almonds for as disclosed by its sales records[297] and that price should be discounted for all the other relevant factors.

    [297] Annexure A to Exhibit R4.

34. La Stella’s closing submissions compared the prices achieved by Big Almond Tree with the report of Mr Brunton and the (reduced) price paid to Costa Produce by La Stella. Nonpareil 24/27s were described as follows.

    Actual Prices Achieved

Stella Food Purchase Price	Actual Price Realised by Big Almond Tree	Notes
NP Undersized	$7.00 - $7.50	$8.31	Deliveries 1, 3 and 4 Brunton’s [sic] was not instructed that undersized almonds were supplied as part of Deliveries 1 and 3. His price of $9.35 - $9.50 is higher than that achieved by Big Almond Tree, but doesn’t take into account that these sizes weren’t what Big Almond Tree or any of its customers were after

1. There were no sales for Nonpareil 24/27s in Big Almond Tree’s sales records.[298] “NP undersized” appears to include smaller Nonpareil 27/32s and 24/27s and the basis of the average actual price realised was not explained.

   [298] Ibid.

2. In the circumstances of this case and the evidence as I have found it, I do not consider the price of $7.00 to $7.50 as contended by La Stella a reasonable price for the smaller Nonpareil 24/27s delivered in the first delivery. Instead, I have concluded that a reasonable price for Nonpareil 24/27s is $9.75 per kilogram for the following reasons.

3. First, considering the history of prices paid, La Stella by its conduct accepted a price of $9.90 per kilogram for Nonpareil 22/24s or larger for the first, third and seventh deliveries.

4. Secondly, La Stella’s price for Nonpareil 22/24s was consistent with Mr Brunton’s conclusions in his report as to the wholesale market prices of between $9.70 and $9.95 per kilogram between 22 May and 2 August 2017.

5. The agreed price for Nonpareil 22/24s was therefore a reasonable starting point. Given smaller almonds are slightly cheaper than larger ones and I accept Mr Brunton’s evidence that in 2017 the difference between a Nonpareil size 22/24 and 24/27 was approximately 15 cents less a kilogram for the smaller almond,[299] I would therefore reduce the $9.90 price agreed by La Stella for Nonpareil 22/24s by 15 cents to the $9.75 per kilogram.

   [299] T165.31-T166.1.

6. In testing the reasonableness of this price, I have considered Big Almond Tree’s selling prices for Nonpareil 22/24s, although I am not persuaded that Big Almond Tree’s selling price is relevant to the selling price between Costa Produce and La Stella for reasons that follow later. There was no evidence of the price for which it sold Nonpareil 24/27s. Notably, Big Almond Tree’s average selling price for Nonpareil 22/24s was also in Mr Brunton’s range of wholesale market prices, although it sold some at the higher price of $10.20 per kilogram. Accordingly, I do not consider this evidence supports a further reduction to achieve a reasonable price.

7. As to relevance generally, I do not consider the Big Almond Tree selling prices as a reasonable price as between Costa Produce and La Stella. Big Almond Tree was a newly established entrant in the market. To secure the opportunity to supply, Mr Astawa locked in competitive prices before ordering any almonds. He agreed to a price of $9.85 per kilogram to match a competitor.

8. Whilst I accept Mr Brunton’s conclusions as to wholesale market prices did not factor in the unorthodox supply chain in this case, I do not consider the interposition of La Stella as an additional ‘middleman’ in the supply chain a factor requiring further adjustment to the reasonable price I have calculated.

9. First, La Stella’s involvement was of no real benefit to Costa Produce in lessening the credit risk of dealing with a new customer whose credit history was unknown. Secondly, there appeared to be no genuine need for La Stella to be interposed in the supply chain and take a ‘cut’ at Costa Produce’s expense given Mr Capobianco’s close involvement in Big Almond Tree’s affairs. It is not reasonable for La Stella to “double dip” as Mr Costa described it at the expense of Costa Produce’s margin. Most significantly, it is in my view not reasonable for Costa Produce to reduce its price for La Stella to achieve its ‘cut’ of $2.25 to $2.75 per kilogram[300] when the evidence showed Costa Produce made $0.40 per kilogram in re-selling the medium and larger size Nonpareil almonds it purchased from Virginia Farm Produce for the third delivery.

   [300] I.e. $9.75 less either $7.50 or $7.00 being the price La Stella’s paid for undersized Nonpareils.

10. I do not accept La Stella’s submissions that a reasonable price in this case should reflect La Stella’s complaints about delays in supply since I have concluded that there was no contractually binding agreement between Costa Produce and La Stella to supply any volume, variety or grade of almonds within any timeframe and the complaints about supply problems were generally overstated. Any alleged difficulties arising from Mr Astawa’s inability to fulfil his contractual promises were of his own making and not the result of 4,000 kilograms of the first delivery being smaller than ordered. This is particularly so considering that the Big Almond Tree sales records do not show Mr Astawa giving priority in supplying his contract customers, as I have previously discussed.

11. Complaints about other deliveries are not relevant in any event to the question of what is a reasonable price for the smaller Nonpareil 24/27s in this first delivery.

12. Finally, I have considered the short delay in getting more Nonpareil 22/24s to resolve the short supply between the first delivery (22 May 2017) and the third delivery (7 June 2017). I conclude it does not warrant any further discount since the wholesale market value for Nonpareil 22/24s had increased since the first delivery to $9.95 per kilogram according to Mr Brunton’s report but Costa Produce held its selling price for this variety and size almond.[301]

    [301] Page 10.

    CONCLUSION

13. There will be judgment in favour of the Applicant, Costa Produce, in the amount of $163,118.75, excluding pre-judgment interest and costs.

1. This amount is calculated by deducting from the Applicant’s claim of $163,718.75 the amount of $600 for the reduction in price of 15 cents per kilogram I have determined for the 4,000 kilograms of Nonpareil 24/27s in the first delivery.

   INTEREST AND COSTS

2. I will hear the parties on the question of pre-judgment interest and its calculation as well as costs.