Dunbrae Pty Ltd v Armani Restaurant Pty Ltd (No. 2)

[2023] NSWDC 25

District Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Dunbrae Pty Ltd v Armani Restaurant Pty Ltd (No. 2) [2023] NSWDC 25

Hearing dates:

5 July 2022
6 July 2022
7 July 2022
28 July 2022
29 July 2022
5 August 2022 (written submissions)
12 August 2022 (written submissions)
2 December 2022
5 December 2022 (written submissions)

Date of orders:

7 February 2023

Decision date:

07 February 2023

Jurisdiction:

Civil

Before:

Montgomery DCJ

Decision:

(1)   Judgment for the defendant/cross-claimant against the plaintiff/cross-defendant in the balance sum of $2,097.20.

(2)   Costs reserved (as requested by the parties).

Catchwords:

Contract – construction – parole evidence rule – “greater effect” of handwritten amendments - claims under warranty – need for expert evidence

ACL – acceptable quality – damages

ACL – misrepresentation - damages

Legislation Cited:

Civil Procedure Act 2005 (NSW) s 90(2)

Competition and Consumer Act 2010 (Cth), Sch 2 - Australian Consumer Law ss 18, 54, 236, 243

Evidence Act 1995 (NSW) s 136

Sale of Goods Act 1923 (NSW) s 19

Cases Cited:

Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337; [1982] HCA 24

Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64; [1991] HCA 54

Coshott Family Pty Ltd v Lyons [2022] NSWCA 216

CV Engineering Pty Ltd v Hamilton and Marino Builders Pty Ltd [2020] NSWCA 103

Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7

Fitzgerald v Masters (1956) 95 CLR 420; [1956] HCA 53

Ho v Akai Pty Ltd (in liq) [2006] FCAFC 159

Honeysett v R (2014) 253 CLR 122; [2014] HCA 29

Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8

Kodak (Australasia) Pty Ltd v Retail Traders Mutual Indemnity Insurance Association (1942) 42 SR (NSW) 231; (1942) 59 WN (NSW) 197

Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37

Pittmore Pty Ltd v Chan; Chan v Tan [2020] NSWCA 344

Robertson v French (1803) 4 East 130 at 136; 102 ER 779

Tagget v McLean Austquip Pty Ltd [2014] NSWSC 1310

Vautin v BY Winddown, Inc (formally Bertram Yachts) (No. 4) [2018] FCA 426

Wallaby Grip Limited v QBE Insurance (Australia) Limited & another (2010) 240 CLR 444; [2010] HCA 9

Ye v Chen [2022] NSWCA 219

Yebdoo v Holmewood [2021] NSWCA 110

Category:

Principal judgment

Parties:

Dunbrae Pty Limited, Plaintiff/Cross Defendant
Armani Restaurant Pty Ltd, Defendant/Cross Claimant

Representation:

Counsel:
Mr Kaufmann, Counsel for the Plaintiff/Cross Defendant
Mr Oakes, Counsel for the Defendant/Cross Claimant

Solicitors:
Rostron Carlyle Rojas Lawyers, Solicitors for the Plaintiff/Cross Defendant
Grove Lawyers, Solicitors for the Defendant/Cross Claimant

File Number(s):

2019/00016357

JUDGMENT

THE PARTIES

1. The plaintiff/cross-defendant sells, supplies, installs and maintains commercial kitchen equipment across Australia and trades as Global Food Equipment. The defendant/cross-claimant is the operator of the 500 seat Armani Restaurant in Parramatta, NSW. It is convenient to refer to the plaintiff/cross-defendant as “GFE”, without intending any discourtesy by not specifically naming the associated corporations in its substantial business involved here; and likewise to the defendant/cross-claimant as “Restaurant”.

PLEADINGS AND OPENINGS

2. Pursuant to a Sales Contract made 10 May 2015, GFE sold and supplied to Restaurant, substantial commercial kitchen equipment for $217,800.00 (the “Sales Contract”).

3. By Statement of Claim filed 16 January 2019 GFE sues Restaurant for payment of invoices for after sale servicing of the equipment pursuant to a contract, in these reasons identified as the Preventative Maintenance Service Contract made on 28 March 2017 or in the alternative 19 July 2017: SOC [3]. As the case was run, GFE relied on documentation, principally its quotation (revised) dated 19 April 2017 (Exhibit MD-3) and Restaurant’s email dated 19 July 2017 (Exhibit MD-4) accepting option 1 from within that offer, as the documentation of the Preventative Maintenance Service Contract. GFE also relies on a 30 day Credit Account Application (Exhibit MD-2), completed by Restaurant and accepted by GFE on 28 March 2017. GFE claims $23,876.75 on account of unpaid invoices for service callout and preventative maintenance work performed on the commercial kitchen equipment it sold and supplied to Restaurant, such work having been performed in the period after 12 April 2017 and up to 16 August 2018 when payment of those invoices became overdue. In SOC [10] GFE describes its claim against Restaurant as “being a debt owed by the Defendant to the Plaintiff for breach of the Contract”.

4. By its Amended Defence filed 18 September 2019, Restaurant pleads that pursuant to the Sales Contract, GFE agreed to a 5 year Parts and Labour warranty and that the whole of the jobs the subject of the invoices upon which GFE sues was covered by that warranty and Restaurant is not liable: AD [3] and [5]. Restaurant denies that the goods and services, the subject of the plaintiff’s invoices, were provided pursuant to a Preventative Maintenance Services Contract: AD [4].

5. By First Cross Claim filed 24 September 2019, Restaurant pleads for relief in damages pursuant to Competition and Consumer Act 2010 (Cth), Sch 2 - Australian Consumer Law, s 236 (“ACL”) and in the alternative pursuant to ACL, s 243 that GFE recover the appliances and equipment and refund the contract price. Restaurant also sues on the statutory implied condition of contract that the appliances and equipment would be reasonably fit for purpose – Sale of Goods Act 1923 (NSW), s 19(1); the statutory implied condition that the commercial kitchen appliances and equipment having being bought by description would be of merchantable quality (Sales of Good Act, s 19(2)); and pursuant to ACL, s 54 that the commercial kitchen appliances and equipment were guaranteed to be of acceptable quality. Restaurant sues in breach of contract for damages on account of invoices it paid for servicing of the equipment which servicing fell within the Sales Contract warranty. In a final alternative cause of action, Restaurant sues pursuant to GFE’s representation giving rise to a collateral warranty that the equipment was of a high quality suitable for use in Restaurant’s restaurant including ready access to parts in the event of breakdown and on the basis of GFE’s misrepresentations in contravention of ACL, s 18. In essence, the factual basis of Restaurant’s defence and cross claim is that the equipment misfunctioned and broke down excessively.

6. The invoices upon which GFE sues, are presented in a schedule to paragraph [24] of an affidavit of GFE’s Managing Director, Mr Dickenson made 14 October 2020 and are Exhibited at MD-6 to his affidavit. Exhibit MD-8, Mr Dickenson’s email to lawyers for Restaurant on 31 August 2018, shows, as it was GFE’s case during the hearing, that all of the claimed service charges making up the total of $23,876.75, were based on GFE’s assumption that the 5 year warranty “was conditional upon the completion of 6 monthly preventative maintenance services, for which [Restaurant] was required to pay” (the “conditional warranty”). Whereas GFE relies on the warranty in the terms and of the exclusions set out in the Preventative Maintenance Service contract, Restaurant maintains that the 5 year warranty was in the terms and of the exclusions expressed in the Sales Contract made 10 May 2015.

7. During opening GFE acknowledged, that, on a first observation basis, there appeared to have been a very substantial occurrence of repairs and service needed including provision of substantial parts which would often indicate a component cause of misfunction of the equipment during the period of the invoices upon which it sued; but said that there were other reasons for those equipment malfunctions: T 16. 44 – 17. 2. GFE amended its prayer for relief number 1 ASOC, from a pleading of debt in the specific sum of $23,876.75 to include “or such other amount as the court deems fit” so as to proceed for a reduced sum in the event that I determine a portion of the invoices on which it sues to be not a debt payable by Restaurant: T 17. 30. GFE alternatively described its case as not a claim for damages for breach of contract (note above regarding ASOC [10]) but rather “…a liquidated debt arising from the contractual terms”: T 17. 25. In a third description of its cause of action, during opening GFE referred to its “common money count suit on the invoices”: T 23. 49.

8. The parties agreed during opening that the Sales Contract including all handwriting on the GFE printed documentation of quotation and the attached handwritten Annexure A (Exhibit MD-1). It was further agreed that these documents evidence the way in which the parties initially contracted for the sale and supply of the equipment from GFE to Restaurant: T 21. 41 – 22. 24. The parties believed on 10 May 2015 that they had reached a contract: T 22. 26 – 34.

9. In opening, GFE explained that it relied on the Thirty Day Commercial Credit Account Application made between the parties on 28 March 2017 as “…the first way in which we say, leaving aside the common money count suit on the invoices, there was in any event, an agreement that arose whereby the [Restaurant] agreed to pay invoices issued by [GFE]. So, as a matter of contract, we submit a liquidated debt arose, upon the issuing of invoices, pursuant to that term”: T 23. 44 – 24. 2.

10. The Thirty Day Credit Account Application provided “[Restaurant] understand goods/services sold to [Restaurant] must be paid for within thirty (30) days from the month on which GFE issued each invoice.”: Exhibit MD - 2.

11. At the outset I observe that by the Credit contract the parties agreed not more than a time for payment. It does not support an action for debt prosecuted on the basis of an invoice for which GFE was not otherwise entitled to payment.

12. In regard to the Preventative Maintenance Service Contract documents (Exhibit MD-3) including the Quotation dated 19 April 2017, in particular the page headed “Warranty exclusions as per the manufacturer” (Exhibit MD-3 page 25) and “Quotation conditions” at page 27, GFE opened that, the parties agreed terms to “Give[s] some clarity to the words used in the notation to the [Sales Contract], whereby the warranty was to be expanded”: T 24. 50.

13. When asked, during opening, whether GFE was saying that by the Preventative Maintenance Service Contract (Exhibit MD-3) documents, the parties were entering into a new contract or a refinement of the Sales Contract by amendment, counsel for GFE responded: “well, we submit its difficult to work out what occurred here, but we would submit that its either a refinement of that 2015 agreement or it’s a variation or separate agreement to it.”: T 25. 35.

14. Following the morning adjournment, GFE re-stated its position in regard to the Preventative Maintenance Service Contract to be that it was “an independent agreement in its own right” and, with some apparent inconsistency to the Sales Contract. Plaintiff Counsel added that in regard to the Sales Contract warranty: “We don’t accept that there was a concluded agreement in the terms due to uncertainty really”: T 27. 11 – 35. I understood GFE to be saying that whereas on 10 May 2015 the parties agreed a Sales Contract for the supply of appliances and equipment for a price, that was all they agreed, and that the balance, of the terms, being provisions as to warranty, were uncertain and unenforceable: T 27. 35 (see also GFE closing T 226. 6 – 27).

15. GFE says that on 19 July 2017 the parties made the Preventative Maintenance Service Contract when Restaurant accepted the terms of GFE’s quotation dated 19 April 2017 by emailing its selection for acceptance of the option 1 scope of preventative maintenance service work: Exhibit MD-4; T 30. 10 – 20.

16. It was at this point, that Restaurant amended its defence by insertion of AD 3(f)(a) to plead that on 19 July 2017 Restaurant accepted an offer from GFE to provide preventative maintenance services solely: T 36. 21 - 34 (leave to amend unopposed and granted: T 38. 15).

17. Importantly, for determination of the issues in the case, Restaurant maintained that the servicing and repair of defects in the equipment fell within the Sales Contract 5 year warranty: AD [3(e)(f)]; T 36. 5 – 35; T 37. 5 - 16. In short, Restaurant’s position was to concede that it agreed to incur the cost of preventative maintenance services but not of services for repair and rectification of misfunction of the equipment which would otherwise fall within the terms of the Sales Contract warranty.

18. In response to the cross claim, GFE pointed to the absence of expert opinion evidence in Restaurant’s case and that the Court would not, in the absence of such evidence, conclude that the equipment was not fit for purpose, not of acceptable quality or was defective. Further, that the goods were sold by reference to the Angelo Po trade name and in any event were inspected by Restaurant such that the Sale of Goods Act, s 19 would not apply. Finally, that Restaurant does not put forward any evidence of any loss flowing from any such breach: T 41. 10. GFE pointed to the absence of evidence in Restaurant’s case, of any employee of the restaurant who worked with or used the equipment to establish how it was actually used and why it was not suitable.

19. During closing submissions the parties contested who bore the onus of proof. The first step in approaching the question of onus is to determine the construction of the Sales Contract and the Preventative Maintenance Service Contract and what the terms of warranty were. Both parties referred to Wallaby Grip Limited v QBE Insurance (Australia) Limited & another (2010) 240 CLR 444; [2010] HCA 9.

20. Finally, that Restaurant conceded that it did not attempt to sell the equipment and thereby mitigate loss which its claims: T 41. 35.

FACTS – EVIDENCE

21. Mr Krich is the sole director of Restaurant. Mr Marabani was the manager of Restaurant. In 2014, in the course of renovation and expansion of the restaurant, Restaurant engaged with GFE toward fit out of the commercial kitchen for servicing a seating capacity of 500 diners. Meetings occurred between Mr Robertson, then NSW Sales Manager of the relevant division of GFE and Messrs Krich and Marabani for Restaurant. Chef Maher Asaad also participated on behalf of Restaurant. Mr Robertson recommended Angelo Po brand commercial kitchen appliances. He was well familiar with those appliances having been employed as Managing Director of the Australian division of Angelo Po Kitchen Appliances for 8 years prior to his employment with GFE. During the course of approximately 15 meetings over several months, mainly at the Restaurant but once at GFEs showroom, Restaurant did consider other brands of kitchen equipment but ultimately settled mainly on the Angelo Po Brand; affidavit of Krich 12 November 2021 paragraphs [7] – [8]; equipment list in Sales Contract MD – 1, page 12 – 14.

22. The unchallenged evidence of Mr Krich (at paragraph [7] of his affidavit) is that during those fifteen or so meetings, he took the advice of Mr Robertson and was influenced by Mr Robertson’s recommendations as to the equipment to be chosen for the restaurant’s new kitchen. The unchallenged evidence of Mr Krich (paragraph [8] of his affidavit) is that he on one occasion attended GFE’s showroom “to inspect the equipment they had recommended for my new kitchen”. The evidence is no more precise than that. The inspection occurred at some time between late 2014 and May 2015. The Angelo Po equipment arrived in around September 2015 and was commissioned between December 2015 and February 2016. The evidence does not identify whether the type of every appliance and piece of equipment ultimately purchased was inspected or whether or not the appliance or equipment inspected was of identical model and specification as the appliance or equipment ultimately supplied.

23. At a meeting in late 2014, in response to Mr Marabani’s enquiry of the availability of spare parts, Mr Robertson stated, in effect;

“…We have a very large warehouse in Melbourne that holds all spare parts. Millions of dollars worth of equipment. Everything we need is available there. The waiting time is very short from Melbourne to Sydney.”

24. When cross examined about the choice of Angelo Po products and the kitchen installation, Mr Marabani was unshaken in his denial that Chef Maher made the choice. He said that Chef Maher, who had previous experience with Angelo Po equipment, was content with the selection and purchase of those products but he did not influence the selection: T 191.

25. Mr Marabani confirmed that GFE did not perform the plumbing work and installation and that Restaurant retained builders to perform work between May 2015 (the month the Sales Contract was made) and the delivery of the equipment including the installation of heating, ventilation, air conditioning and the exhaust hood in the kitchen: T 192. 30 – 41. In late 2016 GFE provided training to Restaurant staff in the use of the equipment including from Mr Noth of Angelo Po as to how to properly load the dishwasher (earlier, in about May 2016) after Restaurant experienced difficulties with it. Mr Marabani maintained that GFE was delayed in the delivery of cup racks but denied that that was because Mr Marabani was slow in providing the specifications for the racks: T 193.

26. On 10 May 2015, at a meeting at the restaurant, attended by Mr Robertson, Mr Krich and Mr Marabani, agreement was reached between the parties for the sale and supply of kitchen equipment from GFE to Restaurant. At the meeting, the parties agreed to a 5 year parts and labour warranty on Angelo Po appliances: see Robertson affidavit at [35]. The agreement was recorded in an undated document which listed the appliances and bore handwritten amendments and an annexure page headed “ANNEXURE A”. At the bottom of the list of equipment which was the subject of the sale and to which the parties made handwritten correction, handwritten words “SEE ATTACHED “ANNEXURE A”” and “5 YEAR PARTS & LABOUR WARRANTY ON ANGELO PO PRODUCTS” were inserted with other handwritten amendments. One handwritten insert was a notation that Robot Coope brand equipment was to be confirmed for 5 year warranty and another that installation was to be confirmed: Sales Contract MD – 1.

27. The whole of the handwritten marked amendments to the printed text and numbers on the pages of Exhibit MD-1 (see pages 12 – 14) were made by GFE’s Mr Robertson and record the agreed changes made at the meeting: Exhibit 2; defendant Closing Submission T 239. 15 – 20 and no counter argument put by plaintiff.

28. Restaurant promptly confirmed its acceptance of the contract that same day by email (MD – 1, page 16; OM – 1, pages 2 and 3) and paid a $100,000 deposit by direct deposit into GFE’s account (MD – 1, page 18).

29. Shortly before supply of the first of the equipment, Mr Robertson for GFE, on 1 September 2015, emailed Mr Krich for Restaurant a list of equipment sold and to be supplied. Mr Robertson’s email is consistent with the terms of the Sales Contract made on 10 May 2015. It listed the equipment sold and noted the deposit paid on 10 May 2015. Mr Robertson requested the balance payment prior to the impending delivery: OM – 2, page 12. The amount due was $117,800. Mr Robertson’s email made no mention of an agreement for preventative maintenance service of the equipment in connection with the Sales Contract.

30. GFE points to the Sales Contract warranty terms and conditions, where they appear without handwritten amendment, in the printed GFE sale contract documentation: see MD – 1, page 15. GFE focused on the provision for “36 Months” parts and labour warranty which there appears. GFE says that the handwritten terms for 5 year parts and labour warranty in the above quoted handwritten entries at MD – 1, page 14 and the words of Annexure A “Warranty is for 5 years in the terms and conditions in the contract – To be expanded for clarity, but within the same parameters as the contract.” are inconsistent with the printed terms of warranty.

24. Those unamended written terms at MD – 1, page 15 provide specifically for 36 months parts and labour warranty covering the FX101E3 Ovens which are an Angelo Po product included in the list of equipment. Those unamended written terms of warranty also provide that the Robot Coope products and Jackstack Products are covered by a 12 month parts and labour warranty

25. Accordingly, whereas GFE says the contract of warranty was void for uncertainty because of the disparity between the unamended printed term of 3 years warranty and the handwritten terms expressing 5 year warranty; Restaurant says that the handwritten amendments prevail such that, in accordance with Annexure A, the terms and conditions of the contract were preserved save that the term of the warranty was expanded to 5 years.

26. Adjusting the Sales Contract printed contract terms to provide for a warranty of 5 years in accordance with the above quoted wording from Annexure A would result in wording as follows: ([5 year] substituted for “36 Months”)

• “A [5 year] Parts & [5 year] Labour Warranty Applies which is valid for Warranty Work Done during Trades Business Hours of 8:30 am to 4:30 pm

• A [5 year] Parts & [5 year] Labour Warranty Applies to FX101E3 Ovens

• Robot Coope Products, Jackstack Products are covered by 12 Months Parts & Labour Warranty

• After Hours Warranty Work will be done on a normal hours rate and the After Hours Labour and Call out Cost’s Difference must be paid for by the customer

• Parts not covered under Warranty are Generally Consumable items Light Globes, Door Seals, Thermocouples and misuse by customer

• If any consumable item is found to be faulty upon commissioning it will be replaced under Warranty at no charge to the customer”

34. By early December 2015, kitchen equipment was being installed and in mid-December 2015 GFE, by its technician, commissioned equipment: Marabani affidavit paragraphs [23] – [25]. The restaurant commenced operating with the new dishwasher in around January 2016 and the new cooking line in around February 2016: Marabani affidavit paragraph [26].

35. Virtually from the time of installation, Mr Marabani made requests of GFE for service to correct operational issues with the equipment.

36. GFE’s case is as principally evidenced in the affidavit of its Managing Director, Mr Dickinson (affidavits 14 October 2020 and 14 July 2021 and oral evidence). It was his understanding (first affidavit, paragraph 10, limited to evidence of personal belief-s 136) that “as part of the sales agreement between Armani and Dunbrae, it was agreed that Dunbrae would provide a limited 5 years extended warranty on the Angelo Po products conditional on Dunbrae conducting preventative maintenance bi-annually at Armani’s costs”. Mr Dickenson was not present at the making of the Sales Contract. Mr Robertson was GFEs representative present at the making of the contract. The terms of Preventative Maintenance Service Contract for preventative maintenance bi-annually, being the contract upon which GFE sues for recovery of service and maintenance costs, is contained in its written offer documentation dated between 30 March 2017 (revised 19 April 2017), approximately two years after the sale contract and one and a half years after the equipment was commissioned. GFE relies on Restaurant’s email timed 12:48 pm on 19 July 2017 (MD – 4) as proof of acceptance. Restaurant denies acceptance of the terms of contract in the offer and say only specific preventative maintenance work was accepted.

37. Mr Robertson deposed at paragraphs [31] and [33 – 35] of his affidavit, not that there was a recorded term of the Sales Contract for preventative maintenance servicing by GFE; but rather, during early negotiations preceding the making of the Sales Contract and in response to Mr Krichs’ requests for a 5 year warranty, he said to Mr Krich words to the effect of “we will not agree to a 5 year warranty unless a percentage is applied on top of the equipment price to cover each appliance. We will also require a preventative maintenance service agreement with GFE’s Service Division”. There is no higher point in the evidence in GFE’s case for support of the proposition that it was a term and condition of the Sales Contract that Restaurant would agree a preventative maintenance service agreement with GFE or that there was then such an ancillary agreement.

38. Mr Robertson’s evidence that it was agreed that the 5 year parts and labour warranty was to operate in parallel with a preventative maintenance service agreement, to be provided by GFE’s Service Manager after the sale was finalised; was limited as to evidence of his state of mind only pursuant to Evidence Act 1995 (NSW), s 136.

39. That no term of the Sales Contract provided for a preventative maintenance service agreement is not an ambiguity of the language of the Sales Contract. The surrounding circumstances of things said in early negotiations, are not admissible to contradict the language of the Sales Contract, in the way GFE proposes. As was said by Mason J in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337; [1982] HCA 24 of pre-contractual negotiations: “…so far as they consist of statements and actions of the parties which are reflective of their actual intentions and expectations they are not receivable. The point is that such statements and actions reveal the terms of the contract which the parties intended or hoped to make. They are super seeded by and merged in the contract itself. The object of the parole evidence rule is to exclude them….”; see also Ye v Chen [2022] NSWCA 219 at [41] per Macfarlan JA at [40] (Meagher and Mitchelmore JJA agreeing). I repeat, in fact a preventative maintenance service contract was not proposed by GFE until 19 April 2017.

40. In mid-April 2017, Mr O’Reilly, GFE’s New South Wales State Service Manager between October 2016 and July 2017, attended the restaurant at Mr Marabani’s request so that he could “walk them through the various ongoing problems we were experiencing with the equipment.”: Marabani affidavit paragraph [60]. GFE was well aware of Restaurants unhappiness with the equipment (affidavit O’Reilly 10 December 2021, paragraph [11] – [16]) at that time. Mr O’Reilly confirmed (paragraph [20]) that he was not aware at any time of whether or not GFE had offered a service or maintenance agreement to Restaurant at the time of the Sales Contract. Mr Marabani deposed to the following conversation at that meeting. Mr Robertson does not recall the conversation. There is no evidence to the contrary:

“Mr O’Reilly: Glenn, have you arranged a preventative maintenance program for Armani?

Mr Robertson: No.

Mr O’Reilly: They’ve had the equipment for over a year?

Mr Robertson: I know. We haven’t set anything up yet because the manager responsible in NSW had left his position

Mr O’Reilly: Well, we need to get this organised for them ASAP. Omar, I will send you an email with proposal

Me: Okay. This is the first time I am hearing about such a program.

Mr O’Reilly: It’s very important. It will significantly reduce the number of problems you are experiencing here.”

41. In cross examination Mr Marabani was unshaken in his recollection and evidence of having said during the above conversation in April 2017 that it was the first time that he had heard about a preventative maintenance program: T 193. 25 – 194. 10. He was challenged that when he received Mr O’Reilly’s quotation for the Preventative Maintenance and Service Contract by email on 19 April 2017, he did not then immediately respond that Restaurant had never agreed to a preventative maintenance program. His plausible response was that at the April meeting he had informed “them on-site that this was the first time Restaurant had heard of it and their reply was “if you do not take over this maintenance, you will lose your warranty””: T 194. 20 – 49. This evidence was consistent with his affidavit. During cross examination he said that he did tell Mr Robertson of his shock from receiving the 19 April 2017 quotation: T 195. 5 and 195. 45. Mr Marabani rejected the proposition that responding by accepting the first option quoted, was consistent with him having been informed at the making of the Sales Contract of the need for preventative maintenance as a condition of warranty. Mr Marabani stating that the acceptance was because in April 2017, GFE informed Restaurant that if it did not accept the maintenance contract, Restaurant would lose its warranty: T 195. 50 – 196. 24.

42. Mr O’Reilly’s email which forwarded GFE’s quotation on 19 April 2017 described its subject as “Revised Preventative Maintenance program for extended warranty”. It advised Restaurant to pay particular attention to the exclusions discussed with Mr O’Reilly and Mr Robertson previously. Other than the above referred to mid-April 2017 discussion, from the evidence of Mr Marabani, there is no evidence of the content of such a discussion. Mr O’Reilly’s email stated “I trust that this programme meets with your approval to allow us to move forward in enacting our agreement concerning your extension of conditional warranty. If you could please indicate which option you would like to proceed with, by return email by the end of this week, we can lock this all in for you.” The GFE document of quotation, forwarded with Mr O’Reilly’s email was dated “March 30 2017 (revised 19/04/17).”

43. The title of O’Reilly’s 19 April 2017 email (OM – 29) was not restricted to preventative maintenance and servicing. It read: “Re: Quotation for preventative maintenance & break down services at the Armani Restaurant – Parramatta” (Exhibit MD-3, pages 22 – 27). Between April and July 2017 all service calls performed by GFE at the restaurant were “reactive” to Restaurant’s requests and did not include preventative maintenance work: O’Reilly affidavit paragraphs [22] – [23].

44. GFE’s quotation commenced:

“[GFE’s] new Sales Division supplied new cooking equipment to [Restaurant] in September 2015. Part of the sales agreement included an of (sic) a five-year limited extended warranty on the provision that GFE were contracted to perform bi-annual servicing for the entire five-year period.

This agreement includes: Warranty start 30/09/2015 – Warranty expires 30/09/2020”

45. On the evidence, Mr O’Reilly’s reference to inclusion in the Sales Contract of provision for contracting a preventative maintenance servicing contract for the five year period of the Sales Contract warranty, could only have been based on Mr Robertson’s belief at the time of making the Sales Contract. Mr O’Reilly’s email offered Restaurant to select either bi-annual or tri-annual preventative maintenance servicing programs which were priced differently. Accordingly, in my opinion, Mr O’Reilly’s email in fact provided an acknowledgment that content of preventative maintenance and servicing and cost of preventative maintenance servicing were not subject of any prior agreement because neither scope of work nor price had been agreed.

46. The email proposed wording of exclusions from warranty which were expressed in language which was more specific as to particular equipment and its parts than the wording of exclusions from the Sales Contract terms of warranty. The exclusions are set out at Exhibit MD-3 page 25, as follows:

1. Multifunction Combi Ovens – Electric – Door Seals, Light Globes, Light Globe Glass seal, use of Alternate Chemicals, Wire Racks/Grids, Food Pans (Not Supplied with Ovens) – Misuse

2. Smoker for Multifunction Combi Oven – Misuse

3. Blast Chiller Freezer – Door Seals, Evaporator Plastic Pan (Located under unit)

4. Open Burners – Gas – Thermocouples – For top burners & oven burner, Door Seals – Oven Doors – Blocked Pilot & Burner Nozzles (From Boil Overs), Gas Regulators (By Others), Misuse

5. Griddles – Gas – Thermocouples, Gas Regulators (By Others), Misuse

6. Char Grill - Gas – Thermocouples, Gas Regulators (By Others), Misuse

7. Target/Solid Top – Gas – Thermocouples, Gas Regulators (By Others), Misuse

8. Bain Marie – Electric – Misuse

9. Bratt Pan – Gas – Thermocouples, Gas Regulators (By Others), Misuse

10. Fryers – Fry Baskets, Oil (By Others) Misuse

11. Sink Unit & Base – Tapware and Drain system (Below sink to trap – By Others)

12. Hot Cabinet Under Target/Solid Top – Electric – Misuse

13. Pasta Cooker - Gas – Thermocouples, Gas Regulators (By Others), Misuse

14. Hot Cupboard – Electric – Misuse

15. Neutral Top S/Steel – Misuse

16. Dishwasher/Dryer – Electric, Plastic Curtains, Drain/Steam Pipes, 500 x 500mm Baskets, Misuse

17. Vacuum Packing Machine – Oil for unit, Sealing Strip, Rubber Gasket, Misuse

18. Salamanders – Gas – Piezo Ignition, Gas Regulator (By Others) misuse

19. Chip Scuttle – Electric – Misuse

20. Accessories – Pasta Baskets – Cracked Handles (unless cracked when new), wire racks, aluminium grids supplied, Polycarbonate Food Pans (Unless Cracked upon delivery), Water Filter Cartridges (Combi Ovens)

47. Because I do not know and it is not available on the evidence for me to find, what parts were “Generally consumable items” referred to in the Sales Contract (MD – 1, page 15), I cannot know whether or not the exclusions to warranty in the preventative maintenance service quotation were in fact more extensive than the exclusions to warranty in the Sales Contract.

48. Mr Marabani was shocked at the suggestion that the five year warranty was conditional upon a preventative maintenance and service contract and was surprised at the cost of that contract, which he calculated would be between $35,000 - $47,800 over the period of the warranty on top of the purchase price: Marabani affidavit paragraph [62].

49. On 13 July 2017, Mr Marabani received an email from Mr O’Reilly describing itself as “Importance: High”. Mr O’Reilly wrote (Exhibit OM-30):

“As you must be aware I am eager to finalise the outstanding matter of the PM Proposal.

Please note that the manufacturers warranty on all items of equipment other than the two combi ovens has now expired. This means that any warranty extension offered by [GFE] can only be provided if the equipment is serviced bi-annually as per the previously supplied PM proposal and your initial agreement Glen (sic) Robertson.

To ensure that you take advantage of the extended warranty offer, I will authorise the extension of our offer until COB Monday July 17, 2017.

If we do not receive a reply from you prior to the expiration date we will assume that you have not accepted our offer and will close this out of our system.

50. To understand Mr O’Reilly’s email of 13 July 2017, one must appreciate the common ground that the manufacturer’s warranty was for 2 years, not the 5 years provided for in the Sales Contract. Plainly the words “take advantage of the extended warranty offer” were premised on Mr O’Reilly’s assumption that it was a condition of the Sales Contract warranty that the restaurant would enter into a preventative maintenance service contract of unknown price and terms and conditions and which was inconsistent with the warranty in the Sales Contract.

51. GFE had not performed any preventative maintenance servicing as contemplated in Mr O’Reilly’s quotation emailed 19 April 2017 since commissioning of the appliances one and a half years earlier.

52. Again, on the whole of the evidence, Mr O’Reilly’s proposition of some 10 May 2015 understanding of a preventative maintenance agreement was based only on what Mr Robertson had told him and advanced without any reference to any legally binding communication between the parties.

53. On receipt of Mr O’Reilly’s email of 13 July 2017, Mr Marabani was concerned that Mr O’Reilly was stating that the five year warranty would only be honoured if Restaurant agreed to pay for progressive maintenance servicing. He deposed: “I felt there was no option but to accept the additional cost of the maintenance schedule as Mr O’Reilly was threatening to withdraw the extended warranty at a time when the equipment was constantly failing”: Marabani affidavit paragraph [63] – [65]. On 19 July 2017, two days after the deadline, informed by Mr O’Reilly’s email of 13 July, Mr O’Reilly emailed Mr Marabani asking for his written approval “for PM servicing” and stating that servicing of the equipment was “severely overdue”: OM – 31. One hour later, Mr Marabani emailed to Mr O’Reilly Restaurant’s acceptance of option 1, the cheaper bi-annual preventative maintenance program: OM - 31. Mr Marabani’s email response read:

“Thank you for your email.

We are happy to proceed with the PM servicing with option 1 of the services, 2 services a year.

In relation to the service we are happy to get it done ASAP to be up to date with the servicing can you arrange the earliest appointment to get it serviced.”

54. A contested issue is whether or not Restaurant’s selection of option 1 Scope of works for the preventative maintenance servicing at the rate of two services a year, one hour after receipt of Mr O’Reilly’s email seeking written approval for preventative maintenance servicing; was an acceptance of a revival offered by Mr O’Reilly of the 19 April 2017 offer of contract or merely acceptance of paying for preventative maintenance in accordance with “option 1”. In closing submissions Restaurant put that GFE’s offer of 19 April 2017 had expired on 17 July 2017.

55. To my understanding, wording of the scope of preventative maintenance works included only checks, calibration, adjustment, testing and recording and reporting issues found.

56. In my opinion the word “approval” in Mr O’Reilly’s email on 19 July 2017 strongly infers that Mr Marabani accepted the whole agreement not just the cost of servicing. The thing to be approved by acceptance was the quotation of 19 April because that is what they had been discussing. It would be artificial to interpret Mr O’Reilly’s short chase up offer email of 19 July as making a new offer for preventative maintenance service only. Indeed, this is consistent with what I understood Mr Marabani to mean when he gave oral evidence: T 195. 5 – 196. 24.

57. I turn now to the evidence of performance of the equipment at the restaurant.

58. In his affidavit of 24 January 2022, Mr Robertson deposed at [66]: “Generally speaking, I have never encountered the number of issues the Plaintiff has encountered with Armani in any other customer kitchen build that I have been a part of….”. At paragraph [68]: “In the past 25 years I’ve looked after large commercial kitchens such as Jamie’s Italian who also use the 900 series Angelo Po equipment globally. I didn’t (sic) have encounter the same degree of issues when dealing with those kitchens.” Evidence of similar effect was deposed by Mr Pickering who, as a long term GFE technician and, at the time of deposing his affidavit, National Product Technical Support and Training Manager for GFE, at [12(b)] of his affidavit 14 October 2020. Mr Sewell, a Field Service Technician for GFE who attended the restaurant approximately 50 times between April 2016 and July 2018 to assess and repair various pieces of the kitchen equipment, deposed in his affidavit of 14 October 2022, at [14]: “I have worked on this type and brand of equipment, being Angelo Po, for dozens of [GFE’s] clients and customers in the last approximate (sic) 10 years and have not seen the failure rate or damage experienced by [Restaurant] at any other venue.”

59. GFE operated a central system for logging all jobs of service and maintenance carried out by its technicians. Technicians entered notes of their attendances in that system. It is referred to in the evidence as “TSM” meaning The Service Manager System: Exhibit 1. TSM recorded the item, job type, job status, service request and work performed: Dickenson first affidavit paragraph [23]. Exhibit MD-5 of Mr Dickenson’s first affidavit is a TSM derived report of attendances at the restaurant. The document is of such small print and voluminous content that it is difficult to work with.

60. Exhibit B is an agreed schedule of repair works performed by GFE. It includes the parties’ submissions regarding each invoiced service job in contest. Highlighted entries are the work for which GFE sues. At my request, in closing the parties provided me with a document entitled “Schedule of repair invoices claimed by defendant on Cross-Claim” (MFI 10). It includes the parties’ submissions regarding each invoiced service the subject of Restaurant’s cross-claim. I will return to these documentary submissions when considering which service costs fell within and which fell outside warranty cover.

54. Mr Dickenson, GFE’s Chief Executive Officer was cross examined on his affidavits of 14 September 2020 and 14 July 2021. He was not personally involved in the negotiations for or the making of the contracts but offered the observation in cross examination that Angelo Po is a premium brand of commercial kitchen equipment and if looked after does not usually require monthly repairs. He explained the TSM recording system as follows:

• The service request is what was recorded as the customer having asked for;

• The work performed is the technicians record of what was done;

• The job note is an internally recorded entry for example that a call was received at the call centre; and

• The record should be reflective of all jobs undertaken.

62. Mr Dickenson’s evidence went to explaining entries such as “this job is warranty” (Exhibit 1/MFI 5 page 7) as being internally entered either by staff of GFE or on request from the customer. Where GFE’s manager determined work to fall within warranty a zero value for an invoice would be entered. Mr Dickinson explained the background fact that where parts required replacement and were covered under the Angelo Po manufacturer’s warranty, GFE would claim the parts under that warranty but itself pay for the labour. Because the Angelo Po manufacturer’s warranty was for 2 years, GFE bore the risk of the 5 year warranty: T 72. 39 – 46.

63. Mr Hill, during cross examination, explained that he did not have personal knowledge of Restaurant’s treatment of the equipment, his role being a managerial one. He commenced with GFE in July 2017. Until March 2018 he performed the role of NSW Service Manager, in which he was responsible for overseeing GFE’s service divisions for NSW, Australia and the Philippines. From March 2018 to March 2020 he acted as NSW/Australian Capital Territory State Manager for a division of GFE and from July 2019 as National Operations Manager for that division. The common evidence of Mr Hill and Mr Marabani is that the first preventative maintenance and service work occurred on 1 November 2017 and further preventative maintenance work was performed on 15 November 2017. Mr Marabani was of the view that the preventative maintenance service was not completed, which view he maintained during cross examination. Restaurant repeatedly directed what it considered to be performance issues concerning the equipment to management including Mr Hill, rather than use the regular GFE breakdown service and Mr Hill personally attended the restaurant at least six times between late 2017 and mid-2018.

64. Exhibit SH-6 to his affidavit was compiled by Mr Hill from his review of the TSM as at the 22^nd of August 2018. After approximately two and a half years, GFE had invoiced 104 jobs, of which Mr Hill identified 55 as falling under the terms of “the Conditional Warranty”, 31 jobs which “were originally charged as falling outside of the Conditional Warranty” and 18 jobs which had been invoiced at a zero value: Hill affidavit paragraph [24]. Mr Hill explained that SH-6 included his assessment of whether the job fell within a warranty, or a credit job and that he did so in association with dealing with his technicians: T 90. 30 – 36. It was his personal determination to allocate “a zero invoice/chargeable” where he formed the view that the job fell outside the warranty, but GFE was willing to give up a charge in order to try to achieve a settlement payment and Mr Hill referred to his meeting with the general manager of Restaurant (T 90. 45 – 50) which was a reference to the meeting between Mr Robertson and Mr Hill of GFE with Mr Krich and Marabani of Restaurant on 10 January 2018.

65. Mr Hill agreed that SH-6 shows that of the 55 repairs and service under warranty in that period of about two and a half years:

• 15 involved the deep fryer;

• 11 involved the dishwasher;

• 9 involved the combi oven; and

• 6 involved the pasta boiler.

66. When challenged that 55 warranty repairs in the space of 30 months was “certainly unusually high” for Angelo Po equipment, Mr Hill agreed but added it depended how the appliances and equipment were looked after and maintained and observed that GFE did not provide maintenance until after the preventative maintenance and service agreement in mid-2017: 91. 44 – 92. 22.

67. Mr Robertson also spoke of the importance of preventative maintenance because of wear and tear in a high use kitchen environment, from first delivery of the new equipment. His evidence was (T 105. 8 – 26; T 106. 1 - 7):

Q. And to your knowledge, were the products purchased by Armani newly manufactured?

A. Yes.

Q. By any measure, for brand new premium kitchen equipment, it’d be very unusual for that equipment to require 20 services in its first year of use. Wouldn’t it?

A. Depends on how it’s maintained.

Q. Sir, are you saying that brand new equipment on the day it arrives need to be maintained on the day that it is first installed?

A. Well, over that period of time, you’d expect some preventative maintenance to have been done because it’s a wear and tear item, it’s in high use, and it does need to be serviced in a preventative maintenance type of way, just like a - a car does when you buy it.

Q. But if I had purchased a car, I don’t need to put it into maintenance the day I purchased it. Do I?

A. Not the day you purchased. No.

……

Q. My question was, in its first year of use, is it your evidence that preventative maintenance is necessary from the moment a kitchen item of this nature are purchased?

A. After a period of time. Yes.

Q. And what period of time?

A. The first three months.

68. On 31 October 2017 Mr Marabani emailed GFE expressing Restaurant’s frustration with the performance of the appliances and equipment: Exhibit MO-61. He required the combi ovens to be removed and replaced with a new oven because “the current ovens are not operating properly stopping in service time with error codes, leaking chemical and water. Oil reaching into the motor, door seals and many other issues, we have paid for an oven to work not for it to stop In the middle of service on the busiest nights. We have been promised many times we been fixed even in the latest meeting we were promised that it will be done and nothing is finished yet.” He listed the many problems needing urgent attention as:

1. “Combi ovens and the water and chemicals that constantly leaking

2. Combi error codes message

3. Combi drip dry [tray] melted

4. Combi door seals

5. Combi oven door mechanism

6. Deep fryer automatic system not working on going for over three months not completed yet

7. Deep fryers leaking oil

8. Bamare (sic) not turning on or working

9. Door handles on many types of equipment need to be changed

10. Vacuum packaging wire needs replacement

11. Dishwasher spinning arm hooks need to be fixed”

69. Almost immediately, on 31 October 2017, Mr Hill of GFE replied by emails Exhibited OM-62 and OM-63 giving GFE’s update for outstanding parts and a schedule of status of jobs logged in the TSM over the prior 3 months. I am not required to analyse these trade technical communications other than to consider the parties arguments scheduled in Exhibit B and MFI 10. In the absence of expert opinion evidence, I would be unable to adequately do so.

70. Invoices, the subject of GFE’s claim for payment for services are in the date range 12 April 2017 to 16 August 2018.

71. In oral evidence Mr Marabani explained that whilst his usual hours were 9 am to 6 pm and he usually left before the completion of dinner service and before cleaning, he was regularly there for both: T 203. 16 – 29. Restaurant kitchen staff performed cleaning, and Restaurant also contracted external cleaners. There were at least 15 kitchen staff. There was no detailed evidence of the cleaning performed.

72. At [112] of his affidavit, Mr Marabani deposed that on 10 January 2018 Mr Robertson and Hill attended the restaurant and met with Mr Krich and himself. He deposed that Mr Hill said words to the effect: “I accept that many of the outstanding invoices should be covered under warranty. We are working on fixing all your outstanding repair issues. And you don’t need to pay any Global Food invoices that are not covered under warranty until all outstanding issues are dealt with”. In cross examination, Mr Marabani was unshaken in his recollection of Mr Hill having spoken to that effect: T 196. 25 – 197. 36. He was then challenged that Mr Robertson did not participate to the same effect as did Mr Hill in that conversation and Mr Marabani insisted that he did: T 197. 38 – 48. Mr Marabani denied that at the meeting he told Mr Hill that he would sort out and get all outstanding invoices paid provided Mr Hill wrote off some invoices in good faith: T 197. 49 – 198. 24. Mr Marabani’s evidence was that he told Mr Hill that Restaurant would pay invoices providing the equipment was fixed by GFE.

73. In his affidavit at [62] Mr Robertson deposed that he did not recall Mr Hill having made the concession deposed to by Mr Marabani. In his affidavit at [16] Mr Hill deposed that the meeting did attend the issues of outstanding monies owed by Restaurant for the service works which GFE considered not to fall under the “Conditional Warranty”.

74. The proposition that Mr Marabani spoke words that he would “sort out” and get all outstanding invoices paid, is Mr Hill’s summary impression of the conversation. His version was that he agreed to only write off “some invoices as being for warranty works in good faith”. After the meeting Mr Hill emailed the GFE’s Credit Manager requesting that he credit certain invoices back to Restaurant. His email of 10 January 2018 is a consequence of that determination reached within the offices of GFE. Mr Hill’s email at 1:39 pm that day (Exhibit SH-5) was internal to Mr Westbury, GFE’s Credit Manager. Exhibit OM-73 is Mr Hill’s email to Restaurant at 2:51 pm. It claimed to have attached invoices which Mr Hill was having “either fully or partially credited as they will be covered under warranty after consulting with staff as discussed.”, and he referenced invoice number 786211 as to be re-issued with only one hour for labour and cost of two halogen bulbs, the balance to be covered by the warranty “as per previous discussions”. Mr Marabani was unhappy that so few of the invoices were accepted as covered by warranty: Marabani affidavit at [113].

75. That there is disagreement between Mr Marabani’s recollection and the recollections of Mr Hill and Mr Robertson of the spoken terms of an arrangement approaching a degree of resolution on 10 January 2018 is not surprising because on the evidence, nothing clear or concrete was agreed. Mr Marabani made his claim, Mr Hill spoke of warranty coverage of many of the outstanding invoices and that nothing needed to be paid until all outstanding issues were dealt with. Certain and precise terms were not spoken. It was not put by either party as an accord having been reached. In my view the meeting of that day did not produce clarity approaching a binding agreement. In the end, Mr Hill’s email (Exhibit OM-73), represented GFE’s position and it was not acceptable to Restaurant.

76. Mr Marabani’s evidence of the 10 January 2018 meeting (T 197 – 198), as was his evidence generally, impressed me as given honestly and accurately. I do not find significant difference between the versions of that meeting as given by Mr Marabani and by Mr Hill (Hill affidavit paragraph [16], Marabani affidavit paragraph [112] and oral evidence of Marabani and Hill). Any difference in the versions of their evidence including after consideration of Mr Hill’s email to Mr Marabani of 10 January 2018 (see Marabani affidavit paragraph [113]) displays their different perceptions of the degree of accommodation and compromise in contemplation.

77. The history of disputed claims of GFE for payment of invoices and Restaurant’s responses that the equipment continued to break down and present problems is set out in the affidavit evidence, particularly of Mr Marabani for Restaurant and Mr Hill for GFE. On 1 June 2018 GFE issued a Final Notice requiring payment within 7 days or legal action would be taken. On 5 October 2018, Mr Hill informed Mr Marabani that GFE would no longer attend to service calls because legal proceedings were in progress: Marabani affidavit paragraph [146] OM-98 email from Mr Hill to Mr Marabani.

78. From 5 October 2018 Restaurant retained Gas Tech Solutions, City Tech Technicians, Caterer Repair Group and A1 Catering Repair Group to service the equipment. In around December 2020 and January 2021 Restaurant purchased two new ovens and in September 2021 purchased a new dishwasher to replace the Angelo Po equipment purchased in 2015 from GFE. There is no evidence of sale of or otherwise the residual value of the Angelo Po equipment which GFE supplied, and Restaurant replaced. There is no evidence of the cost to Restaurant expended on the replacement.

79. Between T 198. 40 and T 202 Mr Marabani was cross examined about his signing GFE’s invoices for services provided and challenged on his affidavit evidence that on 18 May 2018 GFE had not completed a single progressive maintenance schedule service. He was taken to the detail of invoices of 1 November 2017 and 15 November 2017 and the proposition was put to him that the invoices indicated that the work (particularly concerning gas appliances and electric preventative maintenance) was performed over those two days. He answered “yes” (T 201. 40); but, when challenged that his evidence of having made the statement on 18 May to Mr Robertson must be incorrect, Mr Marabani answered that he was not sure whether the servicemen had completed the maintenance or not: T 202. 4.

80. As I heard this evidence, it convinced me that Mr Marabani, as manager, signed invoices presented to him by GFE service personnel at their attendances but his signatures are not evidence that he possessed or employed the technical skill to assess or approve the work performed.

81. In the witness box Mr Marabani examined the invoice indicating work performed on 1 November and 15 November 2017 and observed that it did not state that the workmen completed the maintenance, whilst accepting, that by signing the invoice he indicated that the work recorded in it had been done: T 202. 30 – 36. In re-examination it was confirmed that his signature was entered on 1 November 2017 and not on the 15^th of November 2017, the second day of the work.

PRESENTATION OF THE TECHNICAL ASPECTS OF THE CASE

82. At several points during the hearing I raised with the parties my concern that examination of the Exhibit 1, TSM worker created record of work performed was likely to involve me in attempting to understand tradespersons technical descriptions of tasks, parts and components of equipment and that I would have difficulty, in the absence of expert opinion evidence, assessing whether cost for the work fell under warranty or not. The parties maintained their positions not to rely on expert opinion evidence. Specifically, I raised with the parties that methods of cleaning of a restaurant and considerations such as whether or not a hose should be used and where, was not within my worldly experience but would be appropriately addressed by expert opinion evidence. Similarly, that the capacity of appliances such as dishwashers and ovens to continue to operate in the work load environment of a 500 seat restaurant was beyond my worldly experience and expertise. I observed that 500 seat capacity, is within my lay knowledge of Sydney, very large for a restaurant and that there was no evidence before me of the numbers of patrons served in order for me to appreciate the work load on the equipment. I disclosed to the parties that in excess of 40 years ago I had worked, in bars, using dishwashers and refrigerators, and that these were quite wet areas (see T 41. 10 – 35; 108. 14 – 109. 35; 115. 10 – 118 – 28; 116. 25 – 27; 117. 40 – 118. 04; 120. 4 – 127. 2; 136. 22 – 138. 5; 176. 20).

83. As I have said, in closing submissions, the parties presented their arguments regarding the Exhibit 1 evidence of works performed by tradesman in schedules. Exhibit B is the Schedule of Repair Works including those for which GFE claims payment and MFI 10 is the Schedule of Repair Invoices for which recovery of payment is claimed by Restaurant in its Cross-claim. Exhibit B and MFI 10, in columns, include GFE’s position and Restaurant’s position as to whether or not the work fell within warranty.

84. Later in these reasons, when I come to detailed consideration of Exhibit B, it will be seen that I have been required by the parties to do so in the absence of expert evidence explaining what the nature of parts were and the nature of the labour service tasks performed were. Particularly, in regard to my consideration of the invoices upon which Restaurant relies virtually solely upon for evidence of its submissions in MF1 10, it will be apparent that the evidence often has not identified not only the nature of parts and of labour performed, to my confident understanding but also to identify what the fault, cause or defect rectified was and what connection the work identified in the invoice had with the warranty.

85. Whilst, Restaurant’s burden of proving that the work the subject of the claim fell within warranty is only to satisfy me of a prima facie presumption of that fact; nevertheless, I bear in mind as was said in Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at page 83 in relation to proof of contractual damages that (per Mason CJ) “mere difficulty in estimating damages does not relieve a court from the responsibility of estimating them as best it can”, but as also said at pages 124 – 125 (per Deane), that does not mean the Court should seek to guess what the damages might be because the plaintiff has failed to take reasonable steps to prove the damages it has suffered. Similarly, in relation to invoiced service work, GFE’s onus of proof at the standard of balance of probabilities, that the work fell outside of warranty cover, including as falling within exclusions from warranty is not assisted by expert opinion evidence.

EVIDENCE OF MISUSE DEPOSED TO BY GFE TECHNICIANS

86. Mr Charles Sammut, a First-Class Metal worker/Fitter, employed by GFE for 25 years assessing, diagnosing and repairing commercial kitchen equipment, made his affidavit on 14 October 2020. He was not cross examined. He attended the restaurant only twice. That was during mid-2018. He worked on the dishwasher. The TSM system identified the dates of those attendances as 22 May 2018 and 29 June 2018 and recorded that he found a guide bar broken off at the base and a guide bar out of shape, totally jammed up. He removed debris, found part of the metal ripped out and he welded it back in place. In his affidavit at [10] he recalled that the debris included large amounts of broken glass, crockery and plastics inside the dishwasher line. Weight of his opinion that “this type of equipment rarely has any debris of this type inside”, can logically be known only with evidence of whether or not breakages had occurred soon before his attendance and whether or not the dishwasher had been cleaned before his attendance. There was no such evidence. Worldly experience, in my opinion, weights against the proposition that instances of breakage of glass and crockery in commercial kitchen dishwashers is not normal. I consider evaluation of relevance of broken guide bars to be beyond my expertise. I am unable to understand the reach of Mr Sammut’s evidence as indicating a causal connection of misuse to the debris or of the contribution of the debris to any failure of the dishwasher. At [11] he deposed that of the metal breakages he worked on, “he had never seen broken on a dishwasher before”. He did not in his affidavit depose to how many other Angelo Po dishwashers, if any, he had worked on. He did not depose to more about the breakages, except for his having not seen it before. I consider it beyond my expertise to make causal connections for breakages and guide bar distortion which I find missing from his affidavit evidence.

86. Mr Brett Bagnall, deposed by affidavit made 14 October 2020 that between August 2016 and December 2016 he was Acting Branch Service Manager of GFE in Sydney, during which period he received calls from GFE’s technicians on several occasions and from “clients” to assist with managing the ongoing relationship between Restaurant and GFE. He spoke to Mr Marabani on several occasions. His affidavit does not add weight or substance to GFE’s allegations of misuse.

87. Mr Brenton Pickering, whose affidavit was made 4 October 2020, was National Product, Technical Support and Training Manager for GFE with a background of having worked as a field service technician, Technical Manager Food Equipment and acted as the senior contact and expert on all technical matters relating to diagnosis and repair of failures on commercial kitchen equipment supplied or supported by GFE. He was also a qualified electrician. Between 2015 and mid-2019 he was frequently called by GFE’s technicians to assist them in troubleshooting, diagnosing and correcting a range of failures with the commercial kitchen equipment at the restaurant. He was advised by others that the failure rates experienced by Restaurant were “abnormally high”. On 15 February 2017 he attended the restaurant with Mr Noth, the technical representative for Angelo Po products, based in Modena, Italy. Over one and one half hours he and Mr Noth discussed with Mr Marabani the high failure rate of the door seals and other components of the Angelo Po equipment and he noticed that the combi ovens were on standby the entire duration of the visit at almost the highest temperature, whilst not being used. Mr Pickering was not cross examined.

88. Nothing in his affidavit, to my understanding, indicates his observation or awareness of misuse of the equipment by Restaurant. That the failure rate of the equipment was abnormally high, is common ground but it is the cause of the failures which is at issue. His evidence does not explain how the combi ovens should have been operated during standby on that single attendance. There is no evidence, for instance, of the kitchen’s expected use of these ovens on that day.

89. By affidavit also made 14 October 2020, Mr Bradford Sewell, a Field Service Technician employed by GFE deposed that he attended the restaurant approximately 50 times between April 2016 and July 2018 to assess and repair various pieces of kitchen equipment. In about July or August 2018 he entered in the TSM system, in relation to carrying out repairs to a dishwasher: “issue caused by moisture in motor from cleaning and/or condensate from exhaust hood above equipment”. He observed that the drying fan motor showed signs of rust and “continually tripped”. He considered, based on his experience, that signs of rust were consistent with excessive moisture and he “became aware that the hood was not externally vented, and was only vented into the ceiling cavity.” His observation was that the equipment was “often noticeably dirty during food service” and water droplets and water pooled inside various pieces of equipment where water should not be present, such as in the deep fryer and oven. On several occasions he saw restaurant staff hosing the area which contained the dishwasher. On another occasion he found rusted metal door hinges on a gas oven and observed that the insulation inside the door assembly was wet with clear signs of water ingress. On one occasion he found that the computer board on a deep fryer had failed, which he considered to be a very rare failure. As already observed, he commented that he had not observed such a high failure rate or damage to Angelo Po products during his 10 years servicing customers, as he did at the restaurant.

90. I consider it beyond my expertise to evaluate Mr Sewell’s observations of moisture in equipment and of cleaning. I note that the dishwasher, in proximity of which he observed hosing, was 10 meters from cooking equipment. There is no evidence upon which I would conclude that it was misuse to use a hose during the course of cleaning. His observation of kitchen equipment being dirty was made during food service, not after cleaning following operation. He did not identify the cause to water droplets and water pooling in “various pieces of equipment where water should not be present” and therefore there is not a suggestion of misuse identifiable by me. Likewise for his rusted gas oven hinges and wetness from water ingress in the insulation and the deep fryer computer board observations.

91. On the assumption that water can be used for cleaning in normal commercial kitchen operations, Mr Sewell’s evidence does not permit me to identify whether or not the equipment failed due to inadequate design or manufacture or from such cleaning. His evidence does not satisfy me, when considered with all the evidence that the cleaning employed was misuse.

92. In his affidavit, Mr Hill refers to disputing with Mr Marabani, whether cooktops getting blocked was an equipment issue or a cleanliness issue. There is sparse to nil evidence of the cleaning methods employed by the Restaurant in the evidence. He referred also to Mr Sewell having expressed to him his opinion that condensation from the exhaust hood from the dishwasher “may be causing the issues” reported by Restaurant and of his (Mr Hill’s) understanding that Restaurant had engaged its own contractors to design, engineer, supply and install the exhaust system including the exhaust hood. That knowledge arrived from an earlier discussion he had had with Mr Robertson. Mr Hills evidence in these regards was admitted with the limitation of belief based on conversations with Mr Sewell and Mr Robertson but not evidence of specialised knowledge or expert opinion of Mr Sewell and, not evidence of truth of the facts of design, engineering, supply and installation of the exhaust system.

93. There is no evidence before me of Mr Sewell’s specialist knowledge in the design or construction of exhaust systems through the building from the exhaust hood. Indeed, Mr Hill’s affidavit frankly stated that Mr Marabani disagreed that the exhaust from the hood ventilation above the dishwasher was inadequate to draw moisture and/or steam from the area and was a cause of the issues. Frankly, it is in my opinion, a matter of specialist knowledge as to whether or not drips from the exhaust hood appliance caused any of those problems and I would assume that any expert inspection would require examination and assessment of the exhaust ducting beyond the exhaust hood appliance, visible to Mr Sewell.

94. In addition to the parties closing submissions in the form of schedules based on the TSM, Exhibit A contains GFE’s invoices for repairs it claims to be outside of warranty. Invoices upon which Restaurant sues in its cross-claim are continued in OM – 101. In addition, the Restaurant tendered:

1. Exhibits 3 and 4 which include a collection of emails on 31 October 2017, internal to GFE personnel including Messrs Sewell, O’Reilly, Pickering and Dickenson attaching referred to communications with Ms Triticiano of Angelo Po, Italy. The emails confirm that there had been multiple door seal failures on the Angelo Po combi ovens and as commented by Mr O’Reilly, “…there have been a significant number of seals failing on these ovens across Coles etc so it doesn’t appear to be an isolated incident.” GFE’s sales department was not prepared to assist Restaurant which, Mr O’Reilly found to be “completely unintelligent”. He informed Mr Pickering by email at 9:05 am on 31 October 2016 “I guess what I’m really asking is how hard do you want me to go on challenging the customer on warranty?”. Later that morning, Mr O’Reilly emailed Ms Triticiano a photograph “as proof of a new door seal appearing to warp with the heat only 3 x days after being installed as new.” Mr Pickering informed Mr O’Reilly and Ms Triticiano early that afternoon that Anglo Po had released “all new seals” which he asked be ordered for Restaurant. His email described differences between the old and the new door seal parts including different part numbers and that the new seals were a “new design”.

2. Exhibit 5 includes emails between Mr Noth, Mr Robertson and Mr Pickering. Mr Noth expressed his “horror” on finding, when he inspected the restaurant with Mr Goldberg, cracked knobs on appliances which would be replaced under warranty. He referred to there being a problem with the “hood” which assumedly is the exhaust hood above the dishwasher.

3. Exhibit 6 is email correspondence between Messrs Pickering, Sewell and O’Reilly of November 2016 concerning a dishwasher motor which had already been replaced under warranty, with a motor of local origin, because the Angelo Po equipment had been delivered with an electric motor suitable for European voltage but not for Australian voltage and a replacement “special version of the motor” was to be organised. The email regarding the inspection of 1 November also referred to the dishwasher conveyer stalling, the drive clutch slipping and that the manual/automatic setting could not be adjusted for fear of breaking the unit with no spare on hand. Angelo Po agreed to replace the dishwasher motor with the “special version” motor suitable for Australia, under warranty.

DISCERNMENT – SALES CONTRACT (AND PREVENTATIVE MAINTENANCE SERVICE CONTRACT)

96. GFE’s action for recovery of payment of its invoices (MD – 6) the subject of its detailed submissions in relation to the work billed (Exhibit B) is fundamentally premised on there being no legally enforceable contractual warranty between GFE and Restaurant contained in the terms of the Sales Contract made 10 May 2015. GFE’s action is premised on the basis that the only contractual warranty was in the terms of the Preventative Maintenance and Service Contract made 19 July 2017. Throughout GFE’s responses in MFI 10 to Restaurant’s cross claim for payment of invoices (OM – 101) for recovery of cost of work under warranty, GFE relied on only that Preventative Maintenance Services Contract warranty. Restaurant’s case is essentially based on the parties having validly made the Sales Contract warranty.

97. It is convenient to first deal with GFE’s submissions challenging the legal effect of the 10 May 2015 Sales Contract warranty.

98. GFE’s starting point (T 220. 40) is by reference to Mr Robertson in the early stages of negotiation of the Sales Contract having responded to Mr Krich’s request for a 5 year warranty, having stated that GFE would not agree unless a percentage was added on top of the price of each appliance and Restaurant enter into a preventative maintenance service agreement with GFE’s service division. I have already determined that evidence, as a matter of principle, to be of no assistance in determination of the construction of the Sales Contract. I make the following further observations:

• The essential condition of the value of the percentage on top of the otherwise price was never discussed.

• There is no evidence whatsoever that Restaurant agreed to conditions of contract of that nature.

• The stark observation is that Mr Robertson, when present on 10 May 2015 participated in the making of the Sales Contract and indeed made hand written amendments to the GFE Standard Terms which recorded the parties’ agreement for a 5 year parts and labour warranty.

• In the Sales Contract neither GFE’s printed document wording, nor the hand written amendments agreed between the parties made mention of the warranty being conditional upon the parties agreeing a preventative maintenance service agreement, or whatsoever of preventative maintenance.

• Even if Mr Robertson’s evidence of his having made that statement to Mr Krich during early negotiations was admissible evidence in some way on the question of construction of the contract, such as if it were admissible evidence of context and background knowledge of each of the parties; there is still no evidence of the parties having agreed the essential term of percentage price mark up or of the terms of the contract for preventative maintenance service – indeed, Mr Robertson’s handwriting on the contract documentation (MD – 1, page 14) shows that prices proposed by GFE in its printed documentation were agreed to be marked down.

• GFE’s quotation dated 19 April 2017 bearing terms proposed by it for a Preventative Maintenance Service Contract is evidence illustrating the detailed content of a contract of that nature, and the evidence of the making of the Sales Contract including that which was said by Mr Robertson in early negotiations shows that the parties never development negotiation of a contract of that detail prior to the making of the Sales Contract.

99. It follows from the above, that GFE’s submission (T 220. 45) that the preventative maintenance service agreement quotation of 19 April 2017 “is consistent with” Mr Robertson’s early negotiations stages statement to Mr Krich, must be rejected. In any event, the submission is inaccurate as to fact. The preventative maintenance service quotation provided for costs of service at specified rates and not as a percentage mark up on top of the price of each piece of equipment sold.

100. I return to GFE's submission that there is an internal inconsistency amongst the express terms of the Sales Contract warranty. The Annexure A (MD – 1, page 17) handwritten amendment “Warranty is for 5 years in the terms and conditions of the contract – To be expanded for clarity, but within the same parameters as the contract”, referred only to expansion of the term for duration of the warranty from “36 Months” (MD – 1, page 15), and only to warranty of Angelo Po products. The handwritten insertion “ATTACHED ANNEXURE A” beside “5 YEAR PARTS & LABOUR WARRANTY ON ANGELO PO PRODUCTS” (MD – 1, page 14) immediately following the adjusted list and pricing for equipment and preceding the handwritten revisions which differentiate provisions warranty about the products including Robot Coope brand, require this construction of that Annexure A wording. Earlier I set out as the printed terms of warranty appear after application of that correction to five year warranty.

101. In further response to GFE’s submission, I observe that if an agreement in the terms of its 19 April 2017 preventative maintenance and service quotation had been in the minds of the parties at the time of making the Sales Contract, it would be an absurd proposition that Mr Robertson would have delivered the printed GFE documentation to the meeting and then participated in the amendment of it by handwriting in order to reach agreement on 10 May 2015 in the absence of him insisting on a provision for preventative maintenance. Indeed, his active participation in the making of the contract is unavoidable evidence to the contrary.

102. On 10 May 2015, the parties expressed the terms of their agreement with the focus and care of making those handwritten amendments and should be found to have intended to incorporate the whole agreement in those terms. In my opinion GFE puts an entirely unconvincing submission that the words “to be expanded” in Annexure A of the Sales Contract documentation should be construed to mean that they were making reference for future inclusion of terms inconsistent with their agreement. Terms that the 5 year the warranty was conditional upon entering into a preventative maintenance service contract would be so inconsistent.

103. The above referred to evidence of negotiations and of the parties sitting down together to make the documented contract is context further evidencing their having purposefully made the handwritten amendments to make the 5 year warranty labour and products agreement. GFE, by Mr Robertson’s actions at the making of the contract on 10 May 2015 achieved the sale by acceding to Restaurant’s demand for a 5 year warranty which Restaurant had repeatedly advanced: Fitzgerald v Masters (1956) 95 CLR 420; [1956] HCA 53 per Dickson CJ and Fullager J at [4].

104. Finally, but of no less significance, is the straightforward observation that the parties’ handwritten amendments outweigh the printed text. The law recognises that “words superadded in writing” upon a printed form have a “greater effect attributed to them than to the printed words” because “the written words are the immediate language and terms selected by the parties themselves for the expression of their meaning”: Pittmore Pty Ltd v Chan; Chan v Tan [2020] NSWCA 344 at [108] adopting the observation of Lord Ellenborough in Robertson v French (1803) 4 East 130 at 136; 102 ER 779 at 782.

105. Before coming to the express exclusions, I observe that the promise to repair or replace equipment or parts must be construed in the context of the whole agreement by giving it business efficacy. In Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 the Court said at [35]:

“this court has reaffirmed the objective approach to be adopted in determining the rights and liabilities of parties to a contract. The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean.

…

unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption “that the parties … intended to produce a commercial result”. A commercial contract is to be construed so as to avoid it “making commercial nonsense or working commercial inconvenience”.”

106. The Court further considered the meaning of reasonableness at [41]:

“This was explained by Mason J in Hospital Products, which concerned a sole distributor’s obligation to use “best efforts” to promote the sale of a manufacturer’s products. His Honour said:

The qualification [of reasonableness] itself is aimed at situations in which there would be a conflict between the obligation to use best efforts and the independent business interests of the distributor and has the object of resolving those conflicts by the standard of reasonableness … It therefore involves a recognition that the interests of [the manufacturer] could not be paramount in every case and that in some cases the interests of the distributor would prevail.”

107. Not every component of each piece of the equipment, to the objective reader of the contract in the position of the parties, would reasonably be expected to be of 5 years active service operational life. For example, whilst the Preventative Maintenance Service contract (the terms of which are set out in GFE’s quotation dated 19 April 2017 (MD – 3), is not relevant to construction of the Sales Contract made two years before it; it is evidence of the fact that “filters” are to be regularly changed (see Scope of Works (general) MD – 3, page 23). But for that evidence, and the evidence of Invoices, I would not have even been aware that the equipment or some of it contained filters. Again, there is no expert evidence available to assist me in these considerations. Nevertheless, that filters are to be changed if required at bi-annual servicing, strongly infers that filters are consumable items. It follows that the cost of the work in an invoice will fall within warranty when the labour and parts is prima facie identifiable with that commercially reasonable and efficacious construction of the scope of the warranty cover.

108. With reference to Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640 at [35] I have determined that in order to give the 5 year warranty business efficacy, the express exclusion from warranty of “Generally Consumable items…” (MD – 1, page 15) in the context of the long term of 5 years of operation, means that the 5 year warranty for Angelo Po equipment covered all components for their reasonably expected life and reasonably expected performance. For illustration I have referred to the direct evidence of the periodic requirement for changing of “filters” provided for in GFE’s 19 April 2017 quotation for preventative maintenance service work. GFE being a commercial kitchen equipment supplier and Restaurant being a large commercial restaurateur, means that business like interpretation producing a commercial result avoiding making commercial nonsense or working commercial inconvenience is to be implied. That construction warrants reasonable expected performance of the equipment and its components during the 5 year warranty term.

1. Item 14 – City Technicians Invoice 100120 – 10/1/2020 – refit drive unit to dishwasher conveyor, to organise welding and new bearing for drive unit – replace door seal on number 2 combi oven – used Rational 20 tray seal cut and made to suit. The cost of the door seal is not pressed by Restaurant, assumedly because it was a consumable item. GFE submits that damage to motors and welding infers misuse. GFE submits that the requirement for motor replacement in the earlier item 7 infers that this repair was of “similar work” done by an outside contractor 9 months before. In my opinion, the mere fact of damage to the drive unit does not on the balance of probabilities satisfy me that the cause was misuse. However, unlike as was the case for GFE’s Exhibit B records, the City Technicians Invoice and the whole of the evidence does not address fault or cause for the work. In the absence of evidence of fault or cause and Restaurant’s failure to differentiate the item 7 work from this item 14 work, I am not satisfied of the prima facie presumption that the work fell within warranty.

2. Item 15 – City Technicians Invoice 140220 – 14/2/2020 – replace door seal on combi oven – replace 2 x 10 amp fuses with 10 amp mini circuit breakers. On the evidence it is not available for me to understand whether or not 10 amp fuses prima facie fall within warranty. My worldly experience based understanding is that old fashion (say 30 years ago) 10 amp electrical fuses were consumable and required replacement following an electrical fault but that fuses of more recent design are not because after an electrical fault they are reset. But, I simply do not understand “fuses” as the subject here. Restaurant does not press the cost of the door seal assumedly because it was a consumable item. GFE says the electrical items were excluded from warranty but did so by wrongly referencing the 2017 Preventative Maintenance Service Contract. In any event, for the reason given, I am not satisfied of the prima facie presumption that work related to the fuses fell within warranty. The invoice speaks of replacement of the fuses with a part of a different description “circuit breaker” which on the evidence and at my lay level of understanding, was likely to be a different type of component. The evidence does not satisfy me of the prima facie presumption that the replacement work fell within warranty because I do not infer that original type of part was the subject of the service. On the evidence I am not satisfied of the prima facie presumption that the work fell within warranty.

Note

150. Restaurant ran the case on the basis of the warranty commencing to run from the time of making the Sales Contract, 10 May 2015. In accordance with the party’s supplementary written submissions, requested by me 2 December 2022 and received 5 December 2022, the term of the Sales Contract 5 year warranty should be construed as ending 5 years from the date of commission of the equipment. The equipment was commissioned between about December 2015 and February 2016, on the facts which I have above found. No claim is made by Restaurant under warranty beyond item 18 in MFI 10. Item 18 was work invoiced for August 2020. Accordingly, all work claimed in MFI 10 fell within the term of the Sales Contract warranty.

Consideration of MFI 10 (continued)

1. Item 16 – City Technicians Invoice 170320 – 17/3/2020 – replace 2 gas value control thermostats on flat plate. GFE’s submission relies on an exclusion under the 2017 Preventative Maintenance Service Contract, which contract I have found to not apply to this warranty claim. But the number 5 of those exclusions referred to by GFE refers to gas regulators. From this, I understand GFE to state that “gas valve control thermostat” to be some sort of gas regulator which requires bi-annual checking (see preventative maintenance and service list of checks at MD – 1, page 24) which infers after 4 and a half years of operation that the gas valve control thermostat was potentially a generally consumable item within the terms of the Sales Contract warranty exclusion. The evidence does not explain to me what the part is. The evidence simply does not, on my lay understanding, prima facie identify the part replaced as falling within warranty. Again, recognising that it is GFE’s onus to prove the part fell within an exclusion to the warranty, not for Restaurant to prove that it did not; nevertheless, the evidence does not satisfy me of a prima facie presumption that the part was within warranty. I simply do not understand, on the evidence, what it was. Worldly knowledge indicates that thermostats are often consumables.

2. Item 17 – A1 Catering Equipment Repairs Invoice 200720 – 20/7/2020 – replace drive unit for conveyor or dishwasher – stripped and reassembled. To my lay understanding, the item 17 work of substantial strip down and replacement of the drive unit for the dishwasher conveyor and reassembling follows only about 6 months after the work by City Technicians of similar description of major refitting of the drive unit to the dishwasher conveyor. To my lay understanding that infers that the item 17 work was a repair of the work of that other contractor, City Technicians. Nothing in the City Technicians invoice for item 14 or the A1 Catering Equipment Repairs Invoice in this item describes that the refitting employed GFE supplied parts. In fact, the item 14 invoice details shows that City Technicians used a door deal replacement which had to be cut to fit, inferring that City Technicians were not using original specification or GFE supplied parts. GFE submits that refitting of motors after 6 months infers misuse. There is no evidence of fault or cause for the service. On the evidence I am not satisfied of a prima facie presumption that the work fell within warranty.

3. Item 18 – Cater Repair Invoice 10921 – 4/8/2020 – hi limit fault of small flat top grill linked out – thermostat switching off and incorrect temperature requiring “new eurosit valve” – pasta boiler and pilot not holding – fitted new pilot and thermocouple – found gas pressure low requiring new regulator – large flat top grill needs new ignition starter – brat pan needs to be manually lit requiring full assessment. My first observation is that on the evidence I do not understand what the parts and work supplied were. The evidence does not identify or explain what a “hi limit faulty linked out” is. Again, my lay understand is that a thermostat can be a consumable item. The evidence does not permit me to identify or understand what a “eurosit valve” is. The inference is that eurosit is a brand other than a part GFE supplied. The cost of the thermocouple to the pasta boiler is not claimed by Restaurant, assumedly because it was a consumable. I note the “pilot” was not “holding” but there is no evidence of what that means or of the cause of the misfunction. GFE had not provided service to Restaurant for approximately 2 years preceding this work. Most of the cost is for labour and the narrative of the invoice suggests mainly that checks were performed. Parts charged for were the “pilot assembly” and the thermocouple. GFE submits that the evidence makes is unclear whether or not the works fell within warranty. On the evidence, I am not satisfied of the prima facie presumption that the work fell within warranty.

   151. Total allowed for defendant/cross claimant claim for repair, costs under warranty: $3,206.02.

CROSS CLAIM – ACL RELIEF

Restaurant’s primary cross-claim case properly under warranty

152. In closing submissions, Restaurant described its claims for relief pursuant to the ACL and as an “alternative argument” (T 248. 16), its “primary case” being its claim for recovery of payment of invoices for services which Restaurant alleged were for warranty work (T 250. 38), as set out in its submission MFI 10 (T 250. 38). Neither party suggested there was any challenge as to whether or not those invoices had been paid.

153. Restaurant submits that on the evidence the equipment was not of “acceptable quality” within the meaning of ACL, s 54(2). The submission was not put forward on the basis that specific pieces of equipment themselves were to be considered separately as not of “acceptable quality”.

154. Mr Marabani deposed that in February 2020 he arranged to have the oven door seals replaced for both ovens using an alternative manufacturer’s parts and that those door seal remained intact for almost a year (Marabani affidavit at [149]). His evidence also was that in November 2020 one of the combi ovens completely stopped working and that the second combi oven was continuing to “give us a lot of trouble at the time” (the screen constantly failing, stopping in the middle of service, faulty washing cycle, does not reach temperature): Marabani affidavit at [150]. There was no evidence before me permitting me to identify whether or not the first oven ceased to work because of a defect and if so, what that defect was. There was no evidence before me permitting me to understand whether the problems Mr Marabani complained of in relation to the second combi oven were caused by a defect and if so what the nature of that defect was. The ovens had by then been serviced by contractors other than GFE for some time. Thereafter Mr Marabani deposed, and I comment, as follows:

“[151] In December 2020 and January 2021 [Restaurant]…purchased two new ovens at a total cost of $59,222.10.”

Comment: There is no evidence before me identifying the specification for, capacity of and technical comparison of the replacement ovens for the ovens sold and supplied by GFE pursuant to the Sales Contract. The invoice annexed (OM – 99) does not, to my lay understanding, provide that information. There is no evidence as to the performance of those replacement ovens in comparison to the performance of the subject ovens over time.

“[152] We considered selling the old ovens but decided against doing so to avoid creating ongoing problems for any new owner.”

Comment: There is no evidence before me as to the residual value of the ovens supplied by GFE.

“[153] On September 2021 [Restaurant]…purchased a new dishwasher at a cost of $61,444.35”

Comment: As for [151] above, there is no evidence before me by which I can compare the replacement with the GFE supplied dishwasher.

155. As a general observation in relation to Mr Marabani’s paragraphs [150] – [153], concerning combi ovens and the dishwasher, it would not be available on the basis of my lay understanding, to compare the items by price paid. Indeed, so far as I am able to understand it; the prices Restaurant paid for the replacement appliances were much higher than those ascribed for the subject items in the Sales Contract made 10 May 2015. But that lay observation may not only be of no value, it may even be misleading, so I do not move on the basis of it. Neither party addressed the observation of difference of price in their submissions.

156. In closing, Restaurant conceded that the factual considerations under s 54 upon which “acceptable quality” is to be assessed, would “generally speaking” be proven by expert evidence. Restaurant elected to proceed in this case without expert evidence. Restaurant asks that inferences be drawn from the following factors:

• The abnormally high raw numbers of services, repairs and misfunctions;

• The Angelo Po equipment was “high end kitchenware”;

• The equipment was for use in a large commercial kitchen;

• GFE represented that the equipment was of high quality and suitable for use in a large commercial kitchen; and

• The equipment was sold and supplied with a 5 year warranty.

157. Each of these points is common ground.

158. Restaurant points to the fact that largely repairs and servicing was covered by GFE under warranty; but, that does not in itself infer that the equipment was defective or of unacceptable quality both because the evidence shows that on occasions GFE did not render invoices for work for which warranty cover was questionable for reasons of goodwill and because to some measure not better defined by expert opinion evidence, repair and servicing of the equipment in the very high use of the commercial kitchen to the 500 seat restaurant was to be expected (T 105. 12 – 106. 7). Mr Roberts’s evidence was:

OAKS

Q. By any measure, for brand new premium kitchen equipment, it’d be very unusual for that equipment to require 20 services in its first year of use. Wouldn’t it?

A. Depends on how it’s maintained.

Q. Sir, are you saying that brand new equipment on the day it arrives need to be maintained on the day that it is first installed?

A. Well, over that period of time, you’d expect some preventative maintenance to have been done because it’s a wear and tear item, it’s in high use, and it does need to be serviced in a preventative maintenance type of way, just like a - a car does when you buy it.

Q. But if I had purchased a car, I don’t need to put it into maintenance the day I purchased it. Do I?

A. Not the day you purchased. No.

HIS HONOUR: Let’s move away from cars.

OAKES: Yes. That--

HIS HONOUR: It’s [an] entirely different prospect.

OAKES: Back to the--

HIS HONOUR: In fact, I wouldn’t find any assistance from the general proposition of a car, but there’s nothing, [of] similarity, in worldly experience between a car and, for instance, a pressurised espresso machine.

OAKES: Your Honour’s quite right and I won’t seek to--

HIS HONOUR: No. I’m just letting you know--

OAKES: --maintain this analogy.

HIS HONOUR: --you can ask the questions, but I wouldn’t [find it to be of] the use in the answers. Yes. Go on.

OAKES

Q. My question was, in its first year of use, is it your evidence that preventative maintenance is necessary from the moment a kitchen item of this nature are purchased?

A. After a period of time. Yes.

Q. And what period of time?

A. The first three months.

159. Restaurant points to the follow specific matters of repair to which I provide my observations:

• That there was a breakdown of the dishwasher on 2 February 2016 before it was even commissioned (T 251).

Observation: The evidence however, which in my opinion is against a finding that for this reason alone the dishwasher was not of acceptable quality, was that the defect was immediately rectified and on the later discovery that the motors within the dishwasher were not for Australian specification, new motors were provided. Obviously, the old motors rendered the equipment at first instance not of acceptable quality, but under warranty that was a matter properly corrected.

• That the door seals required replacement on 28 October 2016, 11 January 2017, 9 February 2017, 16 March 2017, 25 August 2017 and 30 October 2017 and that, the evidence of the Preventative Maintenance Contract Warranty is in favour of finding that the consumable life of a door seal ought to have been 12 months.

Observation: A submission (T 248. 45) focused on the instance of a single problematic door seal. The facts are however, that door seals were replaced, and that Angelo Po introduced a new design. Whilst a door seal defect, if it was the cause of door seals as a component being of unacceptable quality for a period, was to be singled out; in my opinion, because of the warranty cover, that did not render, the ovens themselves to be not of acceptable quality.

General Observation: Throughout the case, the fact upon which Restaurant most relied was the raw statistic of 104 services of the equipment in the two and three quarter years up until 22 August 2018. As a matter of pure math, that calculates to less than one service per week, to all of the equipment supplied, in the context of this 500 seat capacity commercial kitchen restaurant. There is no evidence of the actual work load. Again, there is no expert opinion evidence assessing whether or not that was performance of equipment of “acceptable quality”. The common evidence of an abnormally high call out for service to the restaurant upon GFE, I have found does not persuade me of either of the competing inferences for which the parties contest. Whereas Restaurant says that it infers that the equipment was not of “acceptable quality”, GFE says that it indicates that the equipment was not well enough maintained and/or was misused. Without rehashing the bulk of the evidence, and recognising that a chef, fifteen kitchen staff and professional cleaners attended to the equipment at the restaurant; I remain of the view that without the assistance of expert opinion evidence assessing that performance, I am not satisfied on the balance of probabilities to make the inference Restaurant argues for.

160. GFE maintained throughout the case that in the absence of expert opinion evidence, the Court could not be satisfied that the equipment was not fit for purpose and within s 54 not of “acceptable quality”. Specifically, that in the absence of expert opinion evidence, the Court could not conclude that the equipment was defective in materials or workmanship. That in the absence of expert opinion evidence, the Court could not conclude that the equipment was not of a high quality suitable for use in the restaurant.

161. GFE submitted that Restaurant “effectively admits to having not mitigated its loss by deciding not to sell the equipment.”: T 41. 10 – 39.

162. Each of GFE’s submissions is properly made in my opinion. I have observed that there is no evidence of the cleaning protocols, equipment operation and systems employed, nor is there any evidence of what cleaning services ought reasonably to have been employed. It is simply unavailable for me on the evidence to determine what the significance of the high service call out was and what its causes were. There is no expert opinion evidence of the cause of faults in contemplation of operation of the equipment in that environment of a commercial kitchen servicing a 500 seat restaurant. In the absence of expert opinion evidence, I am unable to determine whether or not the frequency and nature of occurrence of services in that environment infers a fact of misuse or a deficiency in the equipment. I repeat, as I put to the parties, a starting point for such consideration, even by an expert, would likely to be informed of the work load upon the equipment. As I have already observed, there is no evidence of that either.

163. The test of “acceptable quality” under s 54 includes that the equipment was free from defects as well as being fit for all of the purposes for which it would be commonly applied in such a kitchen: Vautin v BY Winddown, Inc (formally Bertram Yachts) (No. 4) [2018] FCA 426. The Vautin Case exemplifies the value of expert opinion evidence in cases such as the present, where sophisticated or technical goods are concerned. That case concerned a very large ocean-going sport and pleasure motor yacht. In this case, the equipment is sophisticated and highly technical appliances for a commercial kitchen. In Vautin, that the composite fibre glass structure of the hull of the vessel was defective was not in issue. The question of “acceptable quality” turned on analysis of the defect and what various propositions for repair of the defect would deliver in terms of the fitness for purpose of the vessel. In the present case (except for the dishwasher motor and oven door seal items which I have dealt with), whether or not the equipment was defective is not addressed in specific terms and there is no expert opinion evidence analysing the causes of the invoiced services performed. There is no expert opinion evidence of ongoing serviceability of the equipment and its fitness for the purpose of servicing the 500 seat restaurant. In this regard, I notice, but neither party made a pointed submission about it, that Mr Marabani’s evidence amounted to the ovens having been replaced at more than five years of operation and the dishwasher at more than five and a half years of operation.

164. Restaurant’s claim is under ACL, s 243 for recovery for the whole of the purchase price of all of the equipment, not just the ovens and the dishwasher. Assumedly, all of the other equipment remains in operation well beyond five years.

160. Section 54(2) defines “acceptable quality”. Goods are of acceptable quality if they are:

1. Fit for all purposes for which goods of that kind are commonly supplied;

2. Acceptable in appearance and finish; and

3. Free from defects; and

4. Safe; and

5. Durable.

166. Restaurant submitted that its case is primarily put under s 54(2)(a) – fitness for purpose, and (e) – durability.

167. The starting premise for valuation of those matters under s 54(2) is to adopt the objective perspective of a reasonable consumer fully acquainted with the state and condition of the goods (including any hidden defects of the good) and what they would regard as acceptable having regard to the matters in s 54(3). The matters within s 54(3) are to be viewed as if from a reasonable consumer objectively assessing the fitness for purpose in their trade of operation of a commercial kitchen for such a large restaurant.

168. In that regard I make the follow observations regarding the s 54(3) considerations:

1. The nature of the goods was that they were highly technical appliances and equipment for operation of a commercial kitchen in a very high volume restaurant, of a seating capacity for 500 patrons at any one time; and

2. In regard to the price of the goods (if relevant); other than to observe the common ground that these were high end kitchen products, there is no evidence before me upon which to make a price comparison between the goods and other equipment in the market in 2015; and

3. Statements made about the goods includes the important consideration, it being common evidence, that GFE was informed by Restaurant and was aware that the goods were for use in the large commercial kitchen to the restaurant. Whilst GFE raised an argument that Mr Krich for Restaurant inspected Angelo Po equipment on one occasion in a show room and the equipment provided months later from Italy would not have been identical; again, there is nothing before me to indicate the extent, if any, of the difference, if any, between the equipment; and

4. The common ground is that GFE was aware of Restaurant’s purpose for the equipment, and that it represented the equipment was fit for that purpose by selling it with a 5 year parts and labour warranty.

169. Having taken each of the s 54(3) matters into consideration, doing the best that I can with the evidence and in the absence of expert opinion evidence, I am not satisfied on the balance of probabilities that the equipment was not fit for all purposes for which goods of that kind are commonly supplied, or that the equipment was not durable.

170. The final way in which Restaurant put its case in the cross claim was on the basis of misrepresentation under ACL, s 18. The argument is based on Mr Marabani’s evidence (affidavit at [14]) that Mr Robertson represented prior to sale that the equipment was “up to the job”, “second to none” and that GFE had a “very large warehouse in Melbourne that holds all the spare parts” was misleading and deceptive. Restaurant refers to the many complaints by Mr Marabani in support of the proposition that those representations were misleading. Reference in Restaurant’s written closing submission (MFI 11) raises specially the Exhibit 6 GFE internal documentation concerning the original dishwasher motors being of European specification and not suitable for the Australian 415-volt specification.

171. In my opinion, the representations must properly be considered with the terms of the Sales Contract. The contract itself contained representations. That early event concerning the dishwasher motors was a matter properly rectified under warranty and accordingly, on that item alone, in my opinion, the dishwasher was up to the job. Restaurant has not identified a specific damage flowing from any failure under warranty. I am not satisfied on the balance of probabilities that GFE made the misrepresentations alleged except for its claim of payment of invoices for warranty work, with which I have separately dealt.

172. Generally, I do not find myself in a better position to assess whether or not the representation of the equipment being “up to the job” was misleading or deceptive, than I am in to assess “acceptable quality”, on the evidence and in the absence of expert opinion evidence to which I have referred.

173. In closing written submissions, Restaurant sought the following relief by way of its cross-claim:

“Proposed orders

Order pursuant to s 236 and s 243 of the Australian Consumer Law that the Plaintiff refund to the defendant the sum of $217,000 plus interest.

Alternatively, order that the Plaintiff pay to the defendant damages in the sum of $17,719.66 (or, if limited warranty applies, the sum of $29,243.95 – being $3,571.70 plus $25,672.25) plus interest.”

174. Restaurant has failed in its claims under the ACL and I am not prepared to make the orders pursuant to s 236 and s 243. The alternative claim for damages is based on Restaurant’s claim for recovery of payment of invoices for services which it claims ought to have been covered by GFE under the Sales Contract warranty plus $3,571.70 for oven hire which Mr. Marabani deposed as being required when the combi ovens malfunctioned: Marabani affidavit paragraph [160]. I have given my reasons for determination of the invoice based claim. The claim for cost of hiring replacement ovens must also fail because there is no evidence of the causal fault so that consideration might be given to connection between the warranty and the need for hire.

175. The final alternative way GFE put its case was to claim recovery for the amounts claimed in the invoices as if pleaded as a common money count. Counsel for GFE relied on Tagget v McLean Austquip Pty Ltd [2014] NSWSC 1310. Unlike in that case, here there was a contract between the parties. It was the Sales Contract. Unlike that case, here, there was not a dispute as to the rates of charge for labour or as to the cost of parts. Here, there was no dispute as to the reasonableness of the amount claimed in the invoices, on those bases. GFE’s putting the case in this way is misconceived, the circumstances being, indeed as it pleaded in its statement of claim, the invoice work and amounts claimed were governed by contract and specifically by the warranty agreed between GFE and Restaurant. I have found that the Sales Contract warranty prevailed whereas GFE sued on the Preventative Maintenance Service Contract only; but that does not change my point. In the presence of the contractual relationship governing the performance of work invoiced, there can be no qualifying or vitiating factor, which would be the essence of the cause of action GFE proposes: Coshott Family Pty Ltd v Lyons [2022] NSWCA 216 at [20] – [22] per Kirk JA (Meagher JA and Griffiths AJA agreeing).

CONCLUSIONS

176. Each of the parties conducted their cases on the basis of multiple claimed avenues for recovery. GFE relied centrally on the Preventative Maintenance Service Contract but did so on the several alternative bases with which I have dealt. Restaurant relied on the Sales Contract claiming that the agreement made 19 July 2017 was for acceptance only of preventative maintenance work at the specification in Option 1 of the 19 April 2017 quotation, but ultimately conceded the force of the proposition that there was a separate Preventative Maintenance Service Contract. It was apparent during the hearing that the central motivating dispute between the parties was anchored in their opposed positions – for GFE that the equipment was misused and for Restaurant that the equipment was defective or not fit for purpose. That dispute arose from the volume of call outs for servicing of the equipment. Taking their opposed positions on that central issue is what gave rise to the parties’ dispute in their countervailing claims for payment of invoices. At the end of these reasons, in the course of which I have endeavoured to deal with the multitude of arguments and alternative arguments advanced between the parties, I have determined that very modest recovery has been won by each of them and only on the invoice claims.

177. I list my summary of conclusions as follows:

1. On 10 May 2015 the parties entered into the Sales Contract pursuant to which all of the equipment was supplied.

2. The Sales Contract provided for the sale and supply of commercial kitchen equipment to the 500 seat capacity restaurant known as Armani operated by Restaurant.

3. Much of but not all of the equipment sold under the Sales Contract was of the premium brand Angelo Po.

4. The parties joined in the Sales Contract on the basis of GFE’s representation that the high end Angelo Po equipment was fit for the purpose of use in the restaurant.

5. The 5 year parts and labour warranty on Angelo Po equipment provided for in the Sales Contract included the express exclusions appearing in the GFE printed documentation as amended in handwriting.

6. The parties did not enter into any contract or legally binding arrangement for preventative maintenance servicing of the equipment until on 19 July 2017, when Restaurant accepted GFE’s (revised) quotation dated 19 April 2017 for the provision of that service and thus the Preventative Maintenance Service Contract was then made.

7. Even if I am wrong in (6) above; whether on 19 July 2017 Restaurant accepted the whole of the terms of GFE’s quotation of 19 April 2017 or made a counter offer for Option 1 scope of servicing only which was accepted by GFE on the delivery of preventative maintenance service; it was a separate and stand-alone contract for that servicing.

8. The Sales Contract 5 year warranty continued unaffected by the Preventative Maintenance Service Contract made two years later.

9. The term “Generally Consumable” amongst the exclusions to the five year Sales Contract warranty is properly construed to exclude components objectively to be understood by these commercial parties to be of life service performance dictating that it was reasonable to expect their periodic replacement within the 5 year term.

10. In the absence of expert opinion evidence, I am not persuaded to the balance of probabilities that the abnormally high call out for services and repairs of the equipment was because it was defective in some way or, not of acceptable quality, not fit for purpose or other than as represented by GFE, that being high end products suitable for use in the restaurant.

11. In the absence of expert opinion evidence, I am not persuaded that Restaurant misused the equipment causing the high call out for services and repairs.

12. The competing claims based on invoices are, as I have endeavoured to do, to be determined on the basis of the Sales Contract 5 year warranty.

RESULT

178. I have determined that the parties are entitled to relief on their competing claims as follows:

1. For the plaintiff against the defendant in the sum of $1,108.82; and

2. For the defendant/cross-claimant against the plaintiff/cross-defendant on the cross-claim in the sum of $3,206.02.

179. Pursuant to Civil Procedure Act 2005 (NSW), s 90(2)(a), judgment for the balance only of the sums of money to which I have determined the parties are entitled on their respective claims, is appropriate.

ORDERS

1. Judgment for the defendant/cross-claimant against the plaintiff/cross-defendant in the balance sum of $2,097.20.

2. Costs reserved (as requested by the parties).

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Amendments

17 February 2023 - Removed 7 February 2023 Hearing Date (originally added in error)

Decision last updated: 17 February 2023