Drilling Australia Pty Ltd v WBH Drilling Pty Ltd - [2012] FMCA 739

FEDERAL MAGISTRATES COURT OF AUSTRALIA

DRILLING AUSTRALIA PTY LTD v WBH DRILLING PTY LTD

[2012] FMCA 739

COMPETITION AND CONSUMER LAW – Claim relating to federal and non-federal claims – federal claim of unconscionability – summary dismissal of federal claim as having no reasonable prospect of being successfully prosecuted – whether non-federal claims which survive are trivial or insubstantial aspects of the dispute.

Competition and Consumer Act 2010 (Cth), ss.20, 21, 22, 224, 236 & 237
Federal Magistrates Court Rules 2001, r.13.10
Federal Magistrates Act 1999
Federal Court Rules
Federal Court of Australia Act 1976
Trade Practices Act 1974 (Cth), ss.51AA & 51AC
Australian Securities and Investments Commission Act 2001, s.12CC

Maxton & Maxton Australia Pty Ltd v Port Village Accommodation Pty Ltd [2012] FMCA 143
Ladakh Pty Ltd v Quick Fashion Pty Ltd & Anor [2010] FMCA 919
Spencer v Commonwealth of Australia [2010] HCA 28
Australian Securities and Investments Commissions v National Exchange Pty Ltd [2005] FCAFC 226
Australian Competition and Consumer Commission v Simply No-Knead (Franchising) Pty Ltd (2000) 104 FCR 253
Matheson v Findex Australia Pty Ltd [2011] FMCA 135
Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (2000) 104 FCR 564
Fencott v Muller (1983) 152 CLR 570
Australian Competition and Consumer Commission v Berbatis Holdings (No.2) (2000) 96 FCR 491
Australian Competition and Consumer Commission v Keshow [2005] ATPR (Digest) 46-265
Australian Competition and Consumer Commission v Radio Rentals Ltd [2005] FCA 1133
Hurley v McDonald's Australia Ltd [2000] ATPR 41-741
Qantas Airways Ltd v Cameron(1996) 66 FCR 246

Applicant:

DRILLING AUSTRALIA PTY LTD

Respondent:

WBH DRILLING PTY LTD

File Number:

MLG 436 of 2011

Judgment of:

Lindsay FM

Hearing dates:

8 & 9 August 2012

Date of Last Submission:

9 August 2012

Delivered at:

Perth

Delivered on:

9 August 2012

REPRESENTATION

Counsel for the Applicant:

Dr J Walsh

Solicitors for the Applicant:

Darroll Nelson & Co

Counsel for the Respondent:

Ms T Comer

Solicitors for the Respondent:

Avon Legal

ORDERS

That pursuant to Rule 13.10(a) of the Federal Magistrates Court Rules 2001, the claim of the applicant in its federal aspect, that relating to unconscionability pursuant to s.21 of Schedule 2 of the Competition and Consumer Act 2010 (Cth), is summarily dismissed.
That the balance of the claim, being in relation to the non-federal aspects of claim for moneys due and unjust enrichment, is dismissed for want of jurisdiction.
That the respondent do file and serve written submissions in relation to costs within twenty-one [21] days.
That the applicant do file and serve a responsive submission within a further twenty-one [21] days therefore.
That the question of costs be adjourned to a date and time to be advised in writing by the Registry.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT PERTH

MLG 436 of 2011

DRILLING AUSTRALIA PTY LTD

Applicant

And

WBH DRILLING PTY LTD

Respondent

REASONS FOR JUDGMENT

These proceedings commenced by way of application filed in the Melbourne Registry of the Court on 29 March 2011. In the final orders sought in that application, the applicant company sought that the respondent company pay it the sum of $166,546.60, costs and interest on the sum sought.
The grounds of the application were specified. It was said to relate to the construction of material on trucks and the delivery of the trucks so constructed in September and October of 2010, the rendering of an invoice, the failure to pay the invoice, the use of the trucks following the collection of them and then paragraph 6 says that the respondent, in refusing to pay for the support truck tray, air truck tray and tanks is engaging in unconscionable conduct within the meaning of s.22 of Schedule 2 of the Competition and Consumer Act 2010 (Cth) (“the Act”).
The orders sought do not specify any pecuniary penalty or any damages or any compensation in terms of ss. 224, 236 or 237 of the Act.
The matter was directed to proceed on pleadings and on 23 May 2011 a Statement of Claim was filed which recited, essentially, the same facts, absent the claim for interest, and it was then said that the matters set out in paragraphs 6 and 7 of the Statement of Claim – by reason of those matters – the respondent had engaged in unconscionable conduct within the meaning of what was described as the Australian law.
The Statement of Claim elicited a Defence, of course, and that, in turn, elicited a Reply. I do not propose to traverse all the matters addressed in the Reply but the reference to s.22 of Schedule 2 of the Act is repeated, one of the unconscionability provisions, and paragraph 5 of the Reply contains a claim to compensation by way of damages and then asks for the balance of the invoice to be paid and there is a claim for interest again.
The expression used is “compensation by way of damages”; it is unclear whether that is a compensation claim or a damages claim and whichever it is, it is still bereft of any reference to any particular provision of the Act, which is said ground such a claim.
That is the state of the relevant pleadings in relation to the claim itself. It has been augmented by a summary of argument but I think it is fair to observe, at this point in these Reasons, that neither the federal aspect of the claim nor the non-federal aspects were clearly articulated in those documents.
Subsequently, the proceedings were transferred from the Melbourne Registry to the Perth Registry of the Court and shortly after the proceedings commenced yesterday and following a colloquy between myself and counsel, the respondent made application for summary dismissal of the federal aspect of the claim, the federal aspect of the claim being the claim relating to unconscionability and, inferentially, a claim for damages or compensation in relation thereto.
The application is made pursuant to Rule 13.10 of the Rules of Court which provides that:
The Court may order that a proceeding be stayed, or dismissed generally or in relation to any claim for relief in the proceeding, if the Court is satisfied that:
(a) the party prosecuting the proceeding or claim for relief has no reasonable prospect of successfully prosecuting the proceeding or claim.
There are some other provisions relating to the claim being frivolous or vexatious or claim for an abuse of process but counsel for the respondent made clear that the application for summary dismissal of the federal aspect of the claim was being promoted under Rule 13.10(a).
That is a provision that mirrors a similar provision in the Federal Magistrates Act 1999 and that Act and our Rules, in turn, mirror the relevant provisions in the Federal Court of Australia Act 1976 and Federal Court Rules. It was formerly the case that the test provided for in the Act and Rules was that the proceeding or claim for relief had to be “bound to fail”. That is no longer the test; the test is whether there is “no reasonable prospect of successfully prosecuting the proceeding or claim” and many decisions of this Court and of the Federal Court have made it clear that that is a lower hurdle than the hurdle which was provided by the way in which the test was formerly articulated in the Rule.
It might be a lower hurdle but it is still a significant hurdle and I have had occasion to consider the exercise of the power to summarily determine cases of this nature recently in a case of Maxton & Maxton Australia Pty Ltd v Port Village Accommodation Pty Ltd [2012] FMCA 143 and I am not going to repeat today passages from that decision, but I reserve the right to augment these Reasons when I settle them and it may be that passages in that decision and in other decisions to which I will refer will be more fully set out in the settled version of these Reasons but I note, at this stage, the reference to Ladakh Pty Ltd v Quick Fashion Pty Ltd & Anor [2010] FMCA 919, a decision of Riley FM in the Melbourne Registry of the Court, which summarises the authorities in relation to the test for summary dismissal. That summary appears at [5] to [10] of her judgment.
Most relevantly, there is the decision of Spencer v Commonwealth of Australia [2010] HCA 28 and in [6] to [10] of my decision in Maxton (supra), I set out the relevant passages from Spencer (supra). An important passage appears at [24] of the decision in Spencer (supra) where French CJ and Gummow J have this to say about the exercise of the summary dismissal power:
The exercise of powers to summarily terminate proceedings must always be attended with caution. That is so whether such disposition is sought on the basis that the pleadings fail to disclose a reasonable cause of action or on the basis that the action is frivolous or vexatious or an abuse of process. The same applies with such a disposition as sought in the summary judgment application supported by evidence. As to the latter, this Court in Fancourt v Mercantile Credits Limited said:
The power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried.
At [25], this being a reference to the relevant part of the Federal Court Act (and that it is expressed in essentially the same terms as the relevant provision of our Act and of our Rule), their Honours have this to say:
Section 31A(2) requires a practical judgment by the Federal Court as to whether the applicant has more than a "fanciful" prospect of success. That may be a judgment of law or of fact, or of mixed law and fact. Where there are factual issues capable of being disputed and in dispute, summary dismissal should not be awarded to the respondent simply because the Court has formed the view that the applicant is unlikely to succeed on the factual issue. Where the success of a proceeding depends upon propositions of law apparently precluded by existing authority, that may not always be the end of the matter. Existing authority may be overruled, qualified or further explained. Summary processes must not be used to stultify the development of the law. But where the success of proceedings is critically dependent upon a proposition of law which would contradict a binding decision of this Court, the court hearing the application under s 31A could justifiably conclude that the proceedings had no reasonable prospect of success.
As I have indicated, there are difficulties in relation to the articulation of the claim and the various documents that I have referred to but it is clear that the claim has federal and non-federal aspects.
The federal aspect is this claim in relation to unconscionability, although the remedy sought in relation to that is not terribly clear but the other aspect to the claim is the non-federal aspect. It is a claim for moneys due for services and goods provided and that has been augmented by a claim for which leave was given to amend in relation to unjust enrichment. So they are the two non-federal aspects of the claim. It should be noted, too, that following the institution of the proceedings, a sum of approximately $80,000 was paid by the respondent to the applicant, so the claim for moneys due and services rendered is in respect of a lesser but still significant sum that in respect of which the proceedings originally related.
I should note that in determining this claim for summary dismissal, I will be determining it only on the applicant’s case. There are circumstances in which it is appropriate to have regard to material to which a respondent would be referring in evaluating a summary dismissal claim. These are not such circumstances though. This claim will only be summarily dismissed if, on the applicant’s own case, there is no reasonable prospect of success. So I will be having regard only to the affidavit material that has been filed by the applicant and that, essentially, is two affidavits by officers of the plaintiff.
The first is a Mr Cameron Fredrickson, who is a director of the applicant and the second is a Mr Troy Higgins, who is also a director of the applicant. I should indicate too, I am proceeding on the basis that these affidavits are constitutive of the evidence-in-chief of these witnesses. I take that to be implicit in the orders that were made by Lucev FM on 30 January 2012 and then again on 27 March 2012 when he extended the time for the filing of the affidavits.
Mr Fredrickson’s affidavit sets out the nature of the relations between the two companies, the engagement for the work that was to be done in respect of the two trays and the two tanks, the amount that was communicated, he says, by the applicant to the respondent in relation to what is described as the “basic build”. Then there was a whole series of additional works that were not included in the basic build which, he says, were to be charged additionally. It addresses the fact that the completion date was intended to be the end of August but owing to some delays, which he says were not the responsibility of the applicant, that was not possible.
In paragraph 13 he notes that one truck was picked up by the respondent on or about 14 September without payment and the second truck was picked up by the respondent on or about 8 October without payment. We are not told any more about that. It is certainly clear on the applicant’s own case that no insistence on payment was made prior to the collection of the two vehicles. There is no criticism of the applicant for that, but that appears to be something that is plain on its own case. In any event, we know from paragraph 15 of Mr Fredrickson’s affidavit that the invoice in the amount of $166,546.60 was only presented on or about 22 October, so about a fortnight after the collection of the second truck.
Mr Fredrickson’s affidavit goes on in paragraph 15 to refer to the rendering of that invoice. He says:
In or around November 2010 WBH responded by phone stating that they were not happy with the invoice and required a breakdown of how the costs were accrued. After further phone conversations I received a call from Courtney Hessess of WBH stating that if we supplied that breakdown it would be paid in full.
He goes on in paragraph 16 to say he supplied a simplified breakdown of costs and he annexes that. At paragraph 17 he says that:
WBH stated they were not satisfied and continued to refuse to pay.
He gave a further breakdown on 18 January, and again, that is annexed.
Paragraph 18 says that:
On or around 24 January 2011 Steve Brown from WBH Drilling wrote to us offering to pay $81,400 in full settlement of the amount they owed us.
The letter itself is not dated, but Mr Fredrickson tells us it was received on or around 24 January and that letter is annexed as Exhibit CF4 to the affidavit. I have had the opportunity to read that carefully. It is plain from that letter that the quality of the work performed is not in dispute. But there is a clear dispute on the face of that document as to the quantification of the costs associated with it and especially in relation to matters that were additional to what I have described as the basic build.
Mr Higgins’ affidavit corroborates the essentials of Mr Fredrickson’s affidavit. It goes into some further detail in relation to how it was that instructions were received for certain additional works, how, at the insistence of the respondent, certain additional works had to be carried out and it ends in paragraph 16 by saying:
We want what WBH owe us for the work that we did for them, and we don’t think it’s fair that they used our property to make a profit, so we ask for damages in the amount the Court determines for unjust enrichment.
In determining this application, I have had no regard whatsoever to the affidavit material that has been filed on the behalf of the respondent and I have indicated my reasons as to why I think it is appropriate to proceed in that way.
As I have indicated, the pleadings were augmented by an outline of submission that was filed on 25 July 2012. That outline of submission is headed “Unconscionable conduct within the meaning of Schedule 2 of the Competition and Consumer Act (Cth) 2010”. Then s.21 is referred to and then s.22 of the Act, and I will be coming to these in more detail in a moment, is also referred to. Specific aspects of s.22 are relied upon as grounding the claim for unconscionability. Then there is a separate paragraph of the outline headed “Unjust enrichment” which deals with that particular aspect of the non-federal claims.
As far as the federal aspect is concerned, it is plain that the application relies on s.21 of Schedule 2 to the Competition and Consumer Act 2010. This Schedule and, indeed, the Act became operative on 1 January 2011. Section 21 is a provision that deals with the same subject matter as was formerly dealt with by s.51AC of the Trade Practices Act 1974 and s.22 is a reflection of matters that were to be found, essentially, in s.51AC(3) of that Act.
An important difference between the provisions of the Trade Practices Act 1974 and s.21 of the Act is that the Trade Practices Act 1974 provisions did not apply to other than personal or domestic or household goods supplied or acquired prior to the commencement of the Competition and Consumer Act 2010.
Section 21 provides, in subsection (1), that:
A person must not, in trade or commerce, in connection with:
(a)the supply or possible supply of goods or services to a person (other than a listed public company); or
(b)the acquisition or possible acquisition of goods or services from a person (other than a listed public company);
engage in conduct that is, in all the circumstances, unconscionable.
Subsection (2) goes on to provide that:
This section does not apply to conduct that is engaged in only because the person engaging in the conduct:
(a) institutes legal proceedings in relation to the supply or possible supply, or in relation to the acquisition or possible acquisition; or
(brefers to arbitration a dispute or claim in relation to the supply or possible supply, or in relation to the acquisition or possible acquisition.
Subsection (3) provides that:
For the purposes of determining whether a person has contravened subsection (1):
(a) the court must not have regard to any circumstances that were not reasonably foreseeable at the time of the alleged contravention; and
(b) the court may have regard to conduct engaged in, or circumstances existing, before the commencement of this section.
Subsection (4) under the heading “Parliamentary Intention” says that:
It is the intention of the Parliament that:
(a) this section is not limited by the unwritten law related to unconscionable conduct; and
(b) this section is capable of applying to a system of conduct or pattern of behaviour, whether or not a particular individual is identified as having been disadvantaged by the conduct or behaviour; and
(c) in considering whether conduct to which a contract relates is unconscionable, a court’s consideration of the contract may include consideration of:
(i) the terms of the contract; and
(ii) the manner in which and the extent to which the contract is carried out;
and is not limited to consideration of the circumstances relating to the formation of the contract.
Section 22 describes the matters that the Court may have regard to for the purposes of s.21 and, relevantly here, it is subsection (2) that is engaged. It provides that:
Without limiting the matters to which the Court may have regard for the purposes of determining whether a person, (the acquirer) has contravened section 21 in connection with the acquisition or possible acquisition of goods or services from a person (the supplier), the court may have regard to:
and then there is a series of matters that are referred to. They are obviously, in terms of the section, not exhaustive. The summary of argument to which I have referred makes specific reference to some of the matters that are set out in subsection (2), and I will come to those in a moment.

The significant feature of s.21 is the explication of Parliament’s intention. The cases, though, that had been determined under s.51AC had already discerned that the unconscionabiltiy to which s.51AC was directed was not limited by the unwritten law in the way that s.51AA was or in the way that s.20 of Schedule 2 to the Competition and Consumer Act still is.
As an example of the way in which the Court was already regarding the provisions of such sections as not being limited by the unwritten law, there is the decision of the Full Court of the Federal Court in Australian Securities and Investments Commissions v National Exchange Pty Ltd [2005] FCAFC 226, in particular at [30]. It was dealing there with a provision of the Australian Securities and Investments Commission Act 2001, s.12CC, but as the passage I am about to cite makes clear, it was intended to operate as a mirror provision to s.51AC of the Trade Practices Act 1974 so everything the Court has to say about that provision applies equally to the unconscionability provision that was the immediate predecessor to s.21. The passage I want to cite is at [30], where the Full Court say:
In our view, his Honour erred in approaching the question of unconscionable conduct on the basis of the limitations that the general law imposed on that concept. It is evident from [3.7] of the Explanatory Memorandum to the Financial Services Reform (Consequential Provisions) Bill 2001 (Cth), which concerned the proposed s 12CC of the ASIC Act, that this section was intended to operate as a “mirror” provision to s 51AC of the Trade Practices Act 1974.
and a reference is then made to the debates in ministerial statements and the second reading speech.
The Court goes on:
There is no foundation in the language or purpose of s 12CC to impose limitations from the unwritten law, such as the necessity to identify a specific or particular person. Authority on s 51AC supports the proposition that the prohibition in s 12CC is not to be read down by limiting its operation only to circumstances where the common law would grant relief in respect of unconscionable conduct.
Reference is then made there to Australian Competition and Consumer Commission v Berbatis Holdings (No 2) (2000) 96 FCR 491 and Australian Competition and Consumer Commission v Keshow [2005] ATPR (Digest) 46-265. The Court goes on:
It is equally clear both from the actual language of s 51AC and of s12CC and from the extrinsic materials relating to s 51AC that these provisions were intended to build on and not to be constrained by common law case law.
Then there is a reference to Australian Competition and Consumer Commission v Radio Rentals Ltd [2005] FCA 1133 and Debates. The Court goes on:
The language must be given its ordinary meaning and must not be qualified by pre-existing constraints on liability.
There is a reference then to Australian Competition and Consumer Commission v Simply No-Knead (Franchising) Pty Ltd (2000) 104 FCR 253 and then to some of the literature.
I am raising these matters because it was a matter that was pressed to some extent in the submissions that were made by the respondent. Even if s.51AC still applied, the task that is set to the Court in terms of adjudicating on the unconscionability would not be materially different or the tasks significantly more difficult.
The argument that was proposed relied, in any event, on s.51AC being the applicable law and that would only be the case if I was to regard the conduct as being limited to that conduct which occurred prior to the commencement of the operation of Schedule 2, that is, prior to 1 January 2011 and that would in turn only be possible if I constrained myself to considering the conduct to be related to that which was more or less contemporaneous with the delivery of the two vehicles.
But it is plain, I think, from the material on which the applicant relies that the conduct is alleged to extend well beyond those dates. It is firstly alleged to extend to the time at which some part payment was made, which I understand to be May 2011. In respect of the balance of the moneys, it is conduct that is alleged to be occurring right up until today. It is not entirely clear that that is the conduct to which the application relates, but for the purposes of dealing with the application, I am prepared to make the assumption that it is and accordingly there would be no basis for limiting the invigilation by the Court of the conduct only to periods of time that occurred prior to 1 January 2011.
But as I have taken the trouble to indicate, I am not certain that the task that would be set by the legislation would be materially different in any event.
So the next matter to which I have to turn my attention is to determine what is meant in s.21 by the reference to unconscionable conduct. In Australian Securities and Investments Commissions v National Exchange Pty Ltd (supra) – although was a significantly different set of factual circumstances – (the unconscionable conduct related to offers to acquire the shareholding of persons in recently demutualised companies at a value significantly less than that which it was expected they would trade at upon the demutualisation), the Court says this at [33]:
“Unconscionable conduct”, on its ordinary and natural interpretation means doing what should not be done in good conscience.
Then that same paragraph goes on to describe the conduct of the respondents in that case. Assistance in terms of understanding what the section is getting at is also provided by the Full Court decision of Australian Competition and Consumer Commission v Simply No-Knead (Franchising) (supra) at 264, the judgment of Sundberg J, in particular [30].
The decision in turn refers to and follows the decision of the Full Court of the Federal Court in Hurley v McDonald's Australia Ltd [2000] ATPR 41-741 and there is a passage set out at [30] of the judgment of Sundberg J from that Full Court decision, and it is as follows:
For conduct to be regarded as unconscionable, serious misconduct or something clearly unfair or unreasonable, must be demonstrated.
Then there is a reference to Qantas Airways Ltd v Cameron(1996) 66 FCR 246:
Whatever “unconscionable” means in sections 51AB and 51AC, the term carries the meaning given by the Shorter Oxford Dictionary, namely, actions showing no regard for conscience, or that are irreconcilable with what is right or reasonable.
There is reference again to Qantas Airways Limited v Cameron (supra).
The various synonyms used in relation to the term unconscionable import a pejorative moral judgment.
Then Sundberg J goes on in [31] to say:
Whatever might be the position with s 51AB, in my view “unconscionable” in s 51AC is not limited to the cases of equitable or unwritten law unconscionability the subject of s 51AA.
His Honour then goes on to the matters that point to that enlarged notion of unconscionability. The summary of argument, as I have said, identifies specific provisions of s.22 that are set to instance the unconscionability in this case.
The first is s.22(2)(b). Again just to remind myself: these are matters the Court may have regard to in determining whether there has been a contravention of section 21. Subsection (b) says:
Whether, as a result of the conduct engaged in by the acquirer, the supplier was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the acquirer
It is said in the outline of submissions that in failing to pay the invoice once it was delivered or by that action the supplier was forced to carry the burden of the costs of the work done for six-and-a-half months and then the cost of the remaining portion of the debt after 9 May 2011. So I understand what is being put there, but I cannot apprehend that as an instance of the imposition of a condition by the acquirer.
Reference is also made to subsection (e), the amount for which in the circumstances in which the supplier could have supplied identical or equivalent goods or services to a person other than the acquirer. The summary says:
The costs of the truck modifications covered materials, design and labour. These costs did not depend on who the acquirer was, and the supplier could not, as a commercial reality, have supplied identical or equivalent goods or services to any other person for a different amount or in different circumstances.
I have looked at that provision and the summary a number of times and I am unable to understand the way in which it is said that assists me in determining unconscionability in the circumstances of this particular case.
Subsection (i) is also referred to. It deals with the extent to which the acquirer unreasonably failed to disclose to the supplier any intended conduct of the acquirer that might affect the interests of the supplier. This really is the gravamen, I think, of the claim of the applicant in this regard. The summary goes on to say:
The acquirer failed to disclose its intention not to pay the invoice for the modifications to the trucks. This clearly affected the interests of the Plaintiff as the supplier, as it was without the benefit of the money owed and had to carry the costs associated with the modifications.
So if that was an argument that was capable of being sustained, that is, that the acquirer failed to disclose its intention not to pay the invoice, (which in turn, of course, would have to be grounded on the establishment of an intention not to pay the invoice) then it is a matter that certainly is capable of bearing upon the question of unconscionability. I bear in mind, I am addressing myself solely to the evidence upon which the applicant is proposing to rely.
If I go to Mr Fredrickson’s affidavit and to Mr Higgins’ affidavit, it is not possible to identify any facts or circumstances which are alleged, which would go any way towards establishing that proposition, that is, that there was an intention not to pay the invoice once it was rendered. Indeed, quite to the contrary, the affidavit of Mr Fredrickson contains material suggestive of an altogether different intention, that is, an intention to pay an appropriate price for the work that was performed, albeit that the respondent’s position in relation to what is the appropriate price might ultimately turn out to be unwarranted.
But paragraph 15 of the affidavit of Mr Fredrickson indicates that following the receipt of the invoice in or around November 2010, WBH responded by phone stating that they were not happy with the invoice and required a breakdown of how the costs were accrued. Then, of course, there is the reference in paragraph 18 to the letter that was sent via Mr Brown on behalf of the respondent.
Again, if one gives attention to the terms of that letter what one sees is a contention that the costs that have been sought by the applicant for the work that has been performed are inappropriate or excessive. Now, I am not expressing any view one way or the other as to whether that is a position that will be ultimately sustained in the adjudication of the dispute relating to the claim for moneys due under the contract, whatever the contract was, but it is a materially different contention than one that is indicative of an intention not to pay at all.
The only other specific provision of s.22 that is referred to in the summary of argument is (l) and it is the reference to the extent to which the acquirer and the supplier acted in good faith and obviously here the focus is upon whether or not the acquirer acted in good faith. The summary goes on to say:
The supplier made the modifications requested. They were outside of the originally planned timeline, due in part to having been given incorrect information about the size of the trucks, and last minute changes asked for by the Defendants. Although the final invoice was higher than originally contemplated, this was as a result of the extra work the Defendant requested, and the Plaintiffs always made it clear that they could not provide an accurate quote as the specifications requested changed.
The acquirer continued to request changes to be made to the trucks up to and after the original completion date. After taking the trucks they refused to pay any part of the invoice while enjoying the benefit of the use of them and allowing the Plaintiffs to carry the costs of modifying them. It is submitted that this demonstrated a lack of good faith in the transaction.
But in my view, on the applicant’s own case that contention cannot be sustained. We know on the applicant’s own case that both the arrangements for the basic work and for the modifications were performed on the basis of an oral contract. There was not even a written quotation.
There was basic work to be performed and a cost was estimated in relation to that. There was additional work to be performed, and an hourly rate was quoted in relation to that. On the applicant’s own case they are the circumstances in which these parties entered into contractual relations.
What has happened is – and again at the risk of repeating myself, I am focusing only on the evidence that is being adduced by the applicant – there has been a dispute that has arisen as to the quantum of the work that has been performed in relation to the additional matters.
The basic work has essentially been paid, following the institution of proceedings, but there is a significant dispute as to the cost that has been charged in respect of the work that is done in relation to the additional work, and this is all in circumstances where delivery up of the vehicles was facilitated without there being any request for payment.
The invoice was rendered, on the applicant’s own case, some fortnight after the delivery up of the second of the vehicles. Now, this kind of dispute is hardly novel; it bears all the hallmarks of being an ordinary commercial dispute engaged with the kind of disputes that are not uncommon, where the parties have not reduced the terms of their contractual relations to writing, and as I have indicated ultimately at the adjudication of that claim for moneys due and owing, one of the parties may be found to have little or no justification for the position they have adopted in relation to the quantification of those costs, and that party may be the respondent. If that is the case at the hearing of the application, judgment will be entered for the applicant. But my task here is to identify where in the circumstances of these contractual relations, as they have been explicated by the evidence, is the unconscionability to be found?
As I have indicated, the dispute has every appearance of an orthodox dispute as to the terms upon which the parties entered into contractual relations, and the amount properly owing for work done and services supplied. Where is the element of lack of good conscience alleged or even particularised in the pleading?
All that is relied upon in the final analysis is what is said to be the inference that should be drawn from the failure to pay the invoice when it is rendered. The intention not to pay the invoice at all is a matter that is simply averred. There is no evidence in the affidavits and there is no particularisation in the pleadings as to that allegation.
There must be more than a simple refusal to pay; there must be more about the transaction than a simple refusal to pay before real issues arise – real as distinct from imaginary issues arise in relation to the question of unconscionability.
On the applicant’s own case, especially in the annexure to the affidavit of one of the directors, the concerns of the respondent in relation to the quantification of the costs are raised almost immediately, and the annexure indicates that the concerns in relation to the quantification of costs are articulated and reasoned – as I say, it is a different question altogether as to whether ultimately the respondent’s position with respect to the quantification of costs will carry the day, but there is nothing about the way in which the respondent has conducted itself on the applicant’s own case in relation to the querying of the amounts relating to the quantification of the costs for the work done, which in my view, is capable of giving rise to an inference of unconscionability.
The letter that was received by the applicant on or about 24 January 2011 from the respondent is not suggestive of unconscionability at all, but simply of a disagreement with respect to the calculation of the costs. There has to be more about the applicant’s case than a hope or expectation that the evidence, and especially the cross-examination of the respondent, will impugn the motives and conduct of the respondent once the evidence is in.
The unconscionability associated with the way in which the respondent conducted itself must be articulated at the outset of the action, and having, I hope, paid careful attention to the evidence that I am told will be adduced on behalf of the applicant, I am unable to identify any aspect of the matter that would give rise to a reasonable inference of unconscionability, and accordingly I am satisfied for that reason that there is no reasonable prospect of success of the claim for unconscionability succeeding, and I would propose to summarily determine that aspect of the claim.
That leaves the non-federal matters, the claim for moneys due and owing augmented by the claim that has been made in respect of unjust enrichment. Once again, the matter gives rise to a very similar issue that which arose in Maxton (supra). How it is that the Court has a jurisdiction to deal with the non-federal aspects of the matter is a matter that is discussed in that decision and has been the subject of Federal Court decisions going back to the 1980s.
At this stage, all I propose to do is refer to my discussion of the authorities at [77] and [78] of Maxton (supra), as providing an explication of the so-called accrued jurisdiction that this Court, as a Federal Court has. I am certainly satisfied that the Court has an accrued jurisdiction.
Then in [79] and [80] of Maxton (supra) I address the other important issue, and that is that the non-federal aspects of the matter can survive the demise of the federal aspect of the matter. That is a matter that was discussed by Lucev FM in the Matheson v Findex Australia Pty Ltd [2011] FMCA 135 which is referred to in [79] where I say:
Importantly though, and authorities in relation to this proposition are referred to in paragraph 13(d) of the decision of Lucev FM in Matheson v Findex Australia Pty Ltd (supra), the Court retains jurisdiction even if the matter which attracted jurisdiction is dismissed, lost, struck out, found unnecessary to be decided, cannot be substantiated, or is displaced by some countervailing claim or assertion.
Then in [80] to [82] of Maxton (supra) I provide the explanation as to how it is that the non-federal matters survive. That is provided by French J as he then was in that case of Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (2000) 104 FCR 564 which is referred to in those paragraphs.
Simply because the federal aspect of the matter has failed does not mean that a proper engagement of the accrued jurisdiction has not been made. But here, as in Maxton (supra), the summary determination of the federal aspect of the claim provides an occasion for the reconsideration as to whether or not the accrued jurisdiction was properly attracted in the first instance, and the important passage from that decision of French J in Johnson Tiles Proprietary Limited & Esso Australia (supra) is [84] of his Honour’s judgment, and I set it out in full:
The judgment to be made in assessing the scope of the accrued jurisdiction extends to the relationship between the federal and non-federal claims said to fall within it. Further, the federal claim must be a substantial aspect of the controversy if that controversy is to attack federal judicial power.
And then there is a passage set out from Fencott v Muller (1983) 152 CLR 570 as follows:
A federal claim which is a trivial or insubstantial aspect of the controversy must, of course, itself be resolved in federal jurisdiction, but it would be neither appropriate nor convenient in such a case to translate to federal jurisdiction the determination of the substantial aspects of the controversy from the jurisdiction to which they are subject in order to determine the trivial or insubstantial federal aspect. Again, impression and practical judgment must determine whether it is appropriate and convenient that the whole controversy be determined by the exercise of federal judicial power.
And his Honour goes on to note this:
It is to be noted that the characterisation “trivial or insubstantial” is not an absolute attribute of the federal claim or a description of its strength or weakness but rather a description of its relationship to the controversy in respect of which jurisdiction is invoked.

The decision in Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (supra) goes on to refer to two other decisions of judges of the Federal Court, and they are set out at [86] and [87] of Maxton (supra). As I have indicated, it seems to me that all along from the date of the inception of these proceedings, it has truly been a dispute about whether or not the applicant should succeed in its claim for its entitlement to be paid in the terms set out in the invoice it rendered on 22 October 2010, and other matters related thereto in relation to interest and in relation to unjust enrichment.
That is what the claim has always been about. There has been a notional engagement of the federal aspect of the matter relating to unconscionability, but in a sense, and on the pleadings that I began these Reasons by reading out, the federal aspect of the matter itself was only faintly pressed in the sense that there was no articulation of the kind of damages that were sought, whether damages or compensation were sought, or whether the imposition of a pecuniary penalty was sought.
This is a claim about the terms on which the applicant was engaged to provide goods and services to the respondent. Any purported engagement of the federal jurisdiction as it relates to unconscionability is, in my view, accurately described as trivial and insubstantial.
For those reasons I make orders as set out at the beginning of these Reasons.

I certify that the preceding seventy (70) paragraphs are a true copy of the reasons for judgment of Lindsay FM

Date: 23 August 2012