IAZ Logistics Pty Ltd ACN 646454846 as Trustee for IAZ Logistics Trust ABN 44957229252 v Deliver Group Pty Ltd

[2023] NSWDC 396

District Court

New South Wales

• Amendment notes

Medium Neutral Citation:

IAZ Logistics Pty Ltd ACN 646454846 as Trustee for IAZ Logistics Trust ABN 44957229252 v Deliver Group Pty Ltd [2023] NSWDC 396

Hearing dates:

29 August 2023
30 August 2023
31 August 2023
1 September 2023
2 September 2023

Date of orders:

29 September 2023

Decision date:

29 September 2023

Jurisdiction:

Civil

Before:

Waugh SC DCJ

Decision:

(1) Direct the parties to confer and attempt to reach agreement about the calculation of pre-judgment interest and costs within 7 days.

(2) Direct that in the event the parties are unable to agree as to the calculation of interest or costs, they are to provide submissions of no more than 5 pages to the Associate of Judge Waugh within 10 days.

(3) Stand the proceedings over for final submissions and the making of final orders before Judge Waugh at 9.30 a.m. on 13 October 2023.

Catchwords:

CONTRACTS – formation – acceptance of offer – implied terms – implied terms in fact

Legislation Cited:

Civil Procedure Act 2005 (NSW), s 100

Competition and Consumer Act 2010 (Cth), s 236

Evidence Act 1995 (NSW), s 64

Uniform Civil Procedure Rules 2005 (NSW), r 28.2

Cases Cited:

Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (in liq) (2000) 202 CLR 588

B.P. Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283

Byrne v Australian Airlines Ltd (1995) 185 CLR 410

Hawkins v Clayton (1988) 164 CLR 539

Texts Cited:

Cheshire and Fifoot Law of Contract (12th Australian edition, 2023)

Heydon on Contract (2019)

Category:

Principal judgment

Parties:

IAZ Logistics Pty Ltd ACN 646454846 as Trustee for IAZ Logistics Trust ABN 44957229525 (Plaintiff/Cross-Defendant)
Deliver Group Pty Ltd (Defendant/Cross-Claimant)

Representation:

Counsel:
Mr C Freeman (Plaintiff/Cross-Defendant)
Ms A Elizabeth (Defendant/Cross-Claimant)

Solicitors:
Roser Lawyers (Plaintiff/Cross-Defendant)
B2B Lawyers (Defendant/Cross-Claimant)

File Number(s):

2022/192647

Publication restriction:

Nil

JUDGMENT

Background and identification of issues

1. Both the plaintiff and the defendant are logistics and transport companies.

2. In early 2021, the plaintiff undertook some work for the defendant. The work mostly involved picking up and delivering goods in what the parties described as "the loop" from Sydney to Adelaide then to Melbourne and back.

3. On most occasions, the goods were being moved for VISY Recycling ('Visy'). When Visy needed some goods to be moved, it used a logistics agent to make the arrangements. The logistics agent then contacted the defendant, who in turn contacted the plaintiff.

4. The logistics agent was a company called Palmer Regional Logistics Pty Ltd trading as 'Save Logistics' ('Save Logistics'). Save Logistics was placed into liquidation on 13 October 2021.

5. The invoicing worked in the following way: after the plaintiff made a delivery, it invoiced the defendant; the defendant then invoiced Save Logistics, adding a profit margin; Save Logistics then invoiced Visy.

6. The first deliveries made by the plaintiff for the defendant under these arrangements took place on 17 February 2021, and continued until late March 2021.

The 17 February 2021 Agreement

7. It was common ground that those deliveries took place pursuant to a contract entered into by the plaintiff and defendant on or about 17 February 2021 ('the 17 February 2021 Agreement'). It was also common ground that the terms of the contract included the terms set out in a document entitled 'Transport Rate Schedule'. It provided that:

"Trading terms are strictly 40 days from invoice date."

8. The defendant asserted that there were further written terms found in 'terms and conditions' mentioned in the Transport Rate Schedule and incorporated by reference. A copy of those terms and conditions was exhibited to an affidavit read in the proceedings and therefore became part of the evidence, but I was informed by counsel for both parties that nothing turned on those terms and conditions and neither of the parties took me to them during the course of the hearing. Consequently, I have had no regard to them. In the way the parties have conducted the case, it has been unnecessary for me to determine whether or not those terms and conditions formed part of the contract.

9. The defendant asserts that the terms of the contract included an additional express oral term or, in the alternative, an implied term that the plaintiff 'would provide the services only as sub-contractor and not directly to Save Logistics for a period of 6 months'. The plaintiff denies that this was a term of the contract. Whether it was is particularly relevant to the defendant's cross-claim.

Alleged Non-Disclosure Agreement of 2 March 2021

10. The defendant also asserts that the plaintiff and defendant entered into a second contract on 2 March 2021 (the 'Alleged Non-Disclosure Agreement of 2 March 2021').

11. This contract is said to be in writing and to contain a term, amongst other things, prohibiting the plaintiff from dealing directly with or soliciting work from the defendant's customers.

12. The plaintiff denies entering into this second contract. Whether the parties did so, and if so, whether the plaintiff breached it are issues raised by the defendant's cross-claim.

Alleged misleading or deceptive conduct

13. The defendant also asserts that in order to induce it to enter into the 17 February 2021 Agreement, the plaintiff represented to it that the plaintiff would:

‘act in respect of work provided to Palmer Regional Logistics Pty Ltd trading as Save Logistics only as the Cross-claimant's sub-contractor in compliance with the Agreement and would not, once engaged as sub-contractor, seek to be engaged directly by Palmer Regional Logistics Pty Ltd trading as Save Logistics, for a period of 6 months'.

14. The representation was said to have been made in December 2020 and re-confirmed and acknowledged in a subsequent meeting in or about March 2021.

15. The plaintiff denies making the representation, and this too is an issue raised by the defendant's cross-claim.

The relevant pleadings

16. The relevant pleadings are the Amended Statement of Claim filed 20 March 2023, the Amended Defence filed 20 March 2023, the Further Amended Statement of Cross-Claim filed 14 August 2023 and the Amended Defence to the Further Amended Statement of Cross-Claim filed 21 August 2023. I will refer to those documents as the Statement of Claim, Defence, Cross-Claim and Defence to Cross-Claim respectively.

The plaintiff's claim

17. By its Statement of Claim, the plaintiff claims that it is owed the sum of $108,523.06 for work done pursuant to the 17 February 2021 Agreement, before adding pre-judgment interest pursuant to s 100 the Civil Procedure Act 2005 (NSW) ('CPA').

18. The defendant accepts that $93,823.03 of the sum claimed by the plaintiff has not been paid and is properly owing.

19. The amount in issue is about $14,700 and centres upon the sums claimed in three invoices in particular: invoice 164, invoice 167 and invoice 176.

20. I have been asked by the parties not to attempt to calculate pre-judgment interest in this judgment, but to make a finding as to when interest runs having regard to the terms of the contract and the parties will then make the calculations (T302-303).

The defendant's cross-claim

21. By its Cross-Claim, the defendant seeks damages for misleading or deceptive conduct pursuant to s 236 of the Competition and Consumer Act 2010 (Cth) ('CCA'), and alternatively damages for breach of contract.

22. There are, in effect, two claims for damages for breach of contract. One for breach of the alleged oral express or implied term in the 17 February 2021 Agreement - being the term I have referred to in paragraph 9 above. Another for breach of the Alleged Non-Disclosure Agreement of 2 March 2021.

23. I have already set out the alleged representation said to be the basis for the misleading or deceptive conduct claim at (par 13 above). As I have also mentioned, the representation was said to have been made in December 2020 and re-confirmed and acknowledged in a subsequent meeting in or about March 2021. In particulars (Cross-Claim par 6), it is said that that the representation was oral and was made by Mr Daniel Spyrou, who was a director of the plaintiff, in conversations with Mr Benjamin Holmes, who was the General Manager of the defendant, and Mr Jakub Folty, who was an employee of the defendant.

24. The alleged oral express term of the 17 February 2021 Agreement is said arise out of the substance of the conversations at the same December 2020 meeting.

25. Affidavits affirmed by Mr Spyrou and Mr Folty were read at the hearing and both were cross-examined. Mr Folty's actual surname is Foltynowicz. Unusually, Mr Folty was called as a witness for the plaintiff, even though he had been an employee of the defendant at the relevant time.

26. Although both parties had filed and served affidavits of Mr Holmes, neither affidavit was read. I refused the plaintiff's application to tender one of Mr Holmes' affidavits under s.63 of the Evidence Act 1995 at the start of the last day of the hearing for the reasons I gave in a separate judgment at the time. Neither party has asked me to draw a Jones v Dunkel inference for the failure to call Mr Holmes, and I do not do so.

27. The implied term of the 17 February 2021 Agreement is said to be implied from all the relevant circumstances and in order to give business efficacy to the agreement.

28. The gravamen of the defendant's complaint against the plaintiff on the Cross-Claim is that the plaintiff either agreed or represented that it would act only as a subcontractor to the defendant and it would not cut out the defendant and deal directly with Save Logistics, or as it was put in submissions, it would not poach the defendant's client, being Save Logistics.

29. The plaintiff denies these allegations. It denies that it made the representations said to be the basis for the misleading or deceptive conduct claim. It denies that there was an express oral or alternatively implied term of the 17 February 2021 Agreement. It denies that it entered into a separate non-disclosure agreement with the defendant on 2 March 2021.

30. An order was made by Andronos SC DCJ on 11 August 2023 pursuant to r 28.2 of the Uniform Civil Procedure Rules 2005 (NSW) ('UCPR') that all issues arising in the proceedings other than the quantification of damages under the Cross-Claim be determined separately from and before any other question in the trial of the proceedings. I am not, therefore, concerned with the quantification of damages under the Cross-Claim.

31. I will now address the three disputed invoices in respect of the plaintiff's claim, before returning to the issues raised by the defendant's cross-claim.

The Plaintiff’s Claim: The three disputed invoices

Invoice 164

32. The outstanding issue in relation to Invoice 164 is whether or not the plaintiff was entitled to charge the defendant for 'waiting time'.

33. Invoice 164 is dated 26 March 2021. The relevant work was done for Linfox, not Visy. It involved the plaintiff collecting goods from Smiths at Regency Park in South Australia and delivering them to Coles at Truganina in Victoria.

34. The amount in issue is $1,775.40. The defendant submits that the plaintiff is not entitled to claim this amount because the 17 February 2021 Agreement did not allow for the plaintiff to charge waiting time, essentially because it was not provided for in the Transport Rate Schedule. The Transport Rate Schedule provides for a fee of $7,175 per round trip inclusive of fuel surcharge and there is no reference in it to waiting time.

35. The defendant also points to the fact that Mr Spyrou (the director of the plaintiff) conceded in cross-examination that no rates for waiting time were provided for in the Transport Rate Schedule and the plaintiff and defendant had never agreed rates for waiting time (T63).

36. There were some contemporaneous text messages in evidence about Invoice 164 (Exhibit C), but they said nothing about waiting time and Mr Spyrou readily conceded as much in cross-examination (T63:45-50). He claimed that he had discussed the matter on the phone with an employee of the defendant at the time (T63:47).

37. Ms Elizabeth of counsel, who appeared for the defendant, submitted that there were no text messages or emails passing between the plaintiff and the defendant to the effect that the plaintiff could charge for waiting time and this was not disputed by Mr Freeman, of counsel, who appeared for the plaintiff. This is a relevant consideration because in some other instances which might be thought not to be covered by the Transport Rate Schedule there was evidence of text messages and or emails passing between the parties.

38. In the absence of any contemporaneous business records or an admission by the defendant, I am not satisfied on the evidence that the plaintiff was entitled to charge for waiting time generally or in respect of the services provided the subject of invoice 164. On that basis, I find that the plaintiff is not entitled to the disputed amount in respect of invoice 164.

Invoice 167

39. Invoice 167 is dated 27 March 2021 and it is for the sum of $4,675 inclusive of GST. The whole amount of the invoice is disputed.

40. The defendant submits (Defendant's Written Closing Submissions at par 12) that this invoice is not payable because proof of delivery for the trip was provided too late. It was provided too late, it is submitted, because whilst the invoice was issued on 27 March 2021, the invoice had a typographical error in that it had an incorrect job reference number which, as I understand the submission, meant that the defendant could not marry up the job reference number with its records to satisfy itself that the goods the subject of the invoice had in fact been delivered.

41. It would seem that the evidence shows that the typographical error was not corrected until the plaintiff's solicitors corrected it in a letter to the defendant on 20 December 2022, after these proceedings were commenced. Invoice 167 referred to a load number T0005236243 (CB467), which the letter stated had too many digits and should have read T000536243 (par12 l): CB263). The letter went on to state: "We attach herewith POD for T000536243". "POD" is shorthand for proof of delivery.

42. As I understand it, the defendant accepts that provision of the information contained in this letter rectified the typographical error, and provided proof of delivery.

43. Counsel for the defendant frankly conceded in closing submissions that it was not disputed that the plaintiff had delivered the goods at the request of the defendant (T293:30 & 45; T294:46).

44. Nevertheless, the defendant submits that the invoice is not payable because this proof of delivery was provided too late. It submits that a proof of delivery was required to be provided within 60 days in order to allow the defendant to invoice Save Logistics. It further submits that an invoice is only 'valid' and 'payable' when the proof of delivery has been provided with the correct information and signed accordingly. The submission goes on to say that if incorrect information is provided on the invoice or proof of delivery it will be rejected by Visy and because of this it could not be and was not invoiced to Save Logistics by the defendant. The rhetorical question is then asked, who wears the cost of the mistake, being in this case the provision of the wrong trip number? The defendant suggests that the plaintiff should 'wear the loss' because it was its error that occasioned the loss.

45. To my mind, this asks the wrong question. The correct question in my opinion, is what did the contract require? Or to put another way, what were the parties' obligations under the contract?

46. The suggested requirement that a proof of delivery be provided within 60 days to allow the defendant to invoice Save Logistics is not a requirement found in the Transport Rate Schedule. Nor has the defendant pleaded that there was such term in the contract.

47. The express written term set out in the Transport Rate Schedule is 'trading terms are strictly 40 days from invoice date'. There is no qualification in the Transport Rate Schedule to say that such an invoice must be valid. Suggesting that an invoice must be 'valid' simply begs the question: valid by reference to what? In a contractual setting, surely any question of validity must be tested against the requirements of the contract.

48. Because the defendant also raises further questions about the 'validity' of the third invoice, I will move on to that invoice before returning to the question of whether or not the defendant is obliged to pay Invoice 167.

Invoice 176

49. Invoice 176 is dated 2 April 2021. It is the last invoice the plaintiff rendered to the defendant. It is for the sum of $1,320 inclusive of GST. The whole amount is in dispute.

50. It is not clear to me that the defendant accepts that the plaintiff actually delivered the goods at the request of the defendant.

51. The following objective contemporaneous evidence establishes that it did:

1. An email sent on 23 March 2021 at 3:38pm (Exhibit H) shows that Linfox made a booking for a job with the defendant to pick up goods from Smiths Regency Park in South Australia on 24 March 2021 and deliver them to Coles Truganina in Victoria on 25 March 2021 using a B-Double Tautliner type of truck. The booking included a "shipment" number 1424182.

2. An email sent on 23 March 2021 at 3:45pm (Exhibit H) shows that Mr Folty (of the defendant) forwarded the booking to Callum Moher (of the defendant). Callum Moher was the operations coordinator of the defendant (T155:50).

3. Text messages between Mr Moher and Mr Spyrou on 24 March 2021 show that Mr Moher made arrangements with Mr Spyrou for the plaintiff to make the delivery (Exhibit J).

4. The plaintiff issued tax invoice number 176 to the defendant on 2 April 2021, in which the work done was described in a similar way to the email from Linfox placing the order (Exhibit H) and conveyed to Mr Spyrou by Mr Moher (Exhibit J). The invoice included reference to the same load number 1424182, being the same shipment number provided by Linfox when making the booking (Exhibit H).

5. On 21 April 2021, Linfox issued a "Recipient Created Tax Invoice" (Exhibit I). Although created by Linfox, this was an invoice from the defendant to Linfox for services provided by the defendant to Linfox. The services listed on the invoice included a charge for a Manifest dated 24 March 2021 with "Cust PO" numbered 1424182, being the shipment number I have already referred to a number of times.

52. Having regard to these contemporaneous emails, text messages and tax invoices, there can be little doubt that the plaintiff did the work the subject of Invoice 176 at the request of the defendant. Further, when rendering its invoice, the plaintiff described the job by reference to the very same load number that Linfox had given the defendant and the defendant had passed on to the plaintiff.

53. Subsequently, on 31 March 2022 at 11:14am Mr Spyrou sent Mr Heath (of the defendant) an email referring to invoice 176 with "attached POD for all charges on this invoice". As I have mentioned, "POD" is a shorthand reference to proof of delivery.

54. On 20 December 2022, the same proof of delivery was provided to the defendant again by the plaintiff's solicitors, Roser Lawyers (CB263 at paragraph 12[o]) in response to the comments in the defendant's spreadsheet of 13 December 2022.

55. The defendant submitted that the plaintiff is not entitled to be paid because the proof of delivery provided by the plaintiff for this delivery has no signature and is thus 'invalid'. It further submitted that it is the policy of Linfox that a proof of delivery would only be 'Fit to Pay' where a driver has signed the relevant proof of delivery. It goes on to submit that it was the practice of the defendant to only pay for trips that were verified with a valid proof of delivery. It submitted that the plaintiff was required to establish that it had made the delivery for which it sought payment. It pointed to the evidence of Mr Heath (a director of the defendant) who said that as at the date of his affidavit (17 February 2023), its customer Linfox 'refuses to pay claiming no signature on the POD does not form a valid POD to verify the load'.

52. In my opinion, one must again start by looking to the terms of the contract.

53. The suggested requirement that the plaintiff provide the defendant with proof of delivery, let alone signed proof of delivery, or proof of delivery in any particular form, is not a requirement found in the Transport Rate Schedule. Nor has the defendant pleaded that there was such a term in the contract.

54. Satisfaction by the plaintiff of Linfox's requirements is not a requirement found in the Transport Rate Schedule. Nor is such a term pleaded.

55. The refusal or failure of the defendant's customer (Linfox) to pay the defendant is not stipulated in the Transport Rate Schedule as a basis for the defendant not to pay the plaintiff. Again, no such term of the contract has been pleaded.

56. Returning to the "validity" submissions made by the defendant about Invoice 167, the defendant submits in relation to Invoice 167 that an invoice is only valid and payable when the proof of delivery has been provided, with correct information and signed accordingly. The submission is repeated in similar terms in respect of Invoice 176 where it is submitted that the proof of delivery provided has no signature and is thus invalid.

57. As I understand the submission, the defendant says that the relevant signature had to be provided by the ultimate recipient of the goods being delivered by the plaintiff. Further, as the submission was put and developed orally, it is part of a wider submission that in order for an invoice to be valid the invoice had to be accompanied by, or at least be referrable to, documents which proved delivery in a particular way, namely by having been signed in the manner I have just mentioned.

58. The issue of whether or not a proof of delivery document signed by the ultimate recipient of the goods is also said to be relevant to the question of the payment of interest on the admitted debt ($93,823.0) and any further invoice of the three in dispute which I might find owing. The defendant submits that the invoiced amounts only became payable once the obligations on the plaintiff to provide 'valid invoices' were completed.

59. At the risk of repetition, in my opinion one starts with the written terms of the contract. As I have mentioned already, the Transport Rate Schedule provides that 'Trading terms are strictly 40 days from invoice date'. The written terms do not stipulate that proof of delivery in any form, that is to say whether signed by the ultimate recipient of the goods or not, is required to accompany the invoice. The written terms of the agreement do not state that the trading terms are 40 days from valid invoice date.

60. The defendant has not pleaded any additional terms of the agreement outside the written terms set out in the Transport Rate Schedule that might relate to this question.

61. In support of its submissions, the defendant refers to the oral evidence of Mr Spyrou in cross-examination. The relevant evidence is at T64:3-65:36. I set it out in full:

ELIZABETH

Q. It was a requirement of each delivery that you obtain a proof of delivery. Correct?

A. Correct.

Q. A proof of delivery is a docket which shows a number of things?

A. Yes.

Q. That included a trip number?

A. Correct.

Q. Date?

A. Correct.

Q. Driver?

A. Correct.

Q. Customer?

A. Correct.

Q. Description of items?

A. Yes, correct.

Q. It also had an area for signatures?

A. Correct.

Q. One of those signatures was for the recipient?

A. Correct.

Q. And it was a requirement of each load that you get the signature of the recipient. Correct?

A. On some occasions, yes, not always. When freight's cross docked, as it was in this instance, there's no signature, because it's not the end delivery.

Q. The proof of delivery provided for a signature for each proof of delivery. Correct?

A. Correct.

Q. It was Deliver's(?) practice that it was required that a signed proof of delivery would be required for an invoice to be paid. Correct?

A. A POD was required, yes, correct.

Q. That's how Deliver verified each trip had been made. Correct?

A. Correct.

Q. Because you accept, don't you, that an invoice doesn't prove that delivery was made?

A. No, it doesn't.

Q. You knew, because Deliver had told you that Save Logistics wouldn't pay them unless they provided proof of delivery. Correct?

A. Yeah, correct.

Q. Because sometimes trips could be cancelled, or changes could occur, and so it was important to be able to validate trips. Correct?

A. Yep.

Q. There were some issues getting paid by Deliver, because of issues with the proofs of delivery. Correct?

A. On some.

Q. One of those issues was, for example, that an incorrect load, or trip, number had been provided. Correct?

A. Correct.

Q. You know that if you put an incorrect trip number into the system, it won't validate within the system?

A. What system?

Q. Entry of the trip number into the payment system was an important step for Visy?

A. Correct, yeah.

Q. You accept, don't you, that payment terms for the invoices, once proof of delivery had been provided, was 40 days. Correct?

A. It was supposed to be. Yes.

Q. Supposed to be? That was in the transport schedule, wasn't it?

A. Correct.

Q. There were delays in payment because IAZ hadn't provided all the correct proof of delivery. Correct?

A. Correct.

66. A number of things may be said about this evidence:

1. Whilst Mr Spryou agreed with the proposition that 'It was a requirement of each delivery that you obtain a proof of delivery', this is not a requirement stated in the Transport Rate Schedule and it is not pleaded as a term of the contract. One might infer that it was a 'requirement' of the defendant, but that does not elevate it to the status of a term of the contract, particularly when it has not been pleaded as one.

2. Mr Spryou did not agree with the proposition that 'it was a requirement of each load that you get the signature of the recipient'. He said: "On some occasions, yes, but not always." To the extent that he may have accepted that it was a requirement to get a signature of the recipient on some occasions, that is not a requirement stated in the Transport Rate Schedule and it is not pleaded as a term of the contract.

3. Mr Spryou agreed with the proposition that it was the defendant's practice that it required proof of delivery for an invoice to be paid, but he did not agree that the proof of delivery had to be signed. To the extent that this was evidence of the defendant's 'practice' that it required proof of delivery for an invoice to be paid, that is not a requirement stated in the Transport Rate Schedule and it is not pleaded as a term of the contract.

4. In my opinion, when read together, the last 3 questions and answers should not be taken as an admission by Mr Spryou that the time for payment ran "once proof of delivery had been provided" because that is not 'in' the Transport Rate Schedule, as the next question appears to suggest. What is in the Transport Rate Schedule is that 'Trading terms are strictly 40 days from invoice date'.

67. Having regard to those matters, I find that the 17 February 2021 Agreement did not require the plaintiff to provide proof of delivery signed by the ultimate recipient of the goods; nor did it provide that time for payment of the plaintiff's invoices ran only once proof of delivery had been provided; nor did it provide only for payment on the receipt of a 'valid' invoice. The written term of the contract was unqualified. The contractual obligation of the defendant was to pay strictly 40 days from invoice date.

68. It follows that I find the plaintiff is entitled to be paid for Invoice 176.

Returning to Invoice 167

69. Returning to invoice 167, as I understand it there is no issue about the fact that the plaintiff had actually delivered the goods. As I mentioned earlier the complaint is that proof of delivery was provided too late, such that there was no longer a requirement for the defendant to pay the plaintiff for the service.

70. In the absence of proof of a contractual agreement to that effect, in my opinion, it is not too late, and the defendant is obliged to pay Invoice 167.

71. For that reason, together with the reasons I gave earlier in relation to Invoice 167 and the further reasons I have given in relation to Invoice 176, I find that the plaintiff is entitled to be paid for Invoice 167.

72. Further, as with the other invoices, the contractual obligation of the defendant was to pay strictly 40 days from invoice date.

73. I will now move to the defendant's Cross-Claim.

The Defendant's Cross-Claim

74. As I have mentioned, the Cross-Claim is put on 3 different, alternative, bases. I will start with the Alleged Non-Disclosure Agreement of 2 March 2021, then go to the alleged oral express or implied term in the 17 February 2021 Agreement, then finally the alleged misleading or deceptive conduct.

First alternative: the Alleged Non-Disclosure Agreement of 2 March 2021

75. The defendant pleads (Cross-Claim par 14) that the alleged agreement was in writing between the defendant and the plaintiff, entered into on 2 March 2021. It is stated in particulars that the agreement was in writing and a copy of it was provided in person to the plaintiff by the defendant on or about 4 March 2021 in Sydney, NSW.

76. The plaintiff denies that the alleged agreement was entered into and denies that a copy of it was provided to it by the defendant in March 2021 in Sydney.

77. Notwithstanding that the defendant pleaded that the Alleged Non-Disclosure Agreement of 2 March 2021 was entered into on that date, it was submitted (written submissions par 39[d]) that I should find there was an offer and acceptance on 4 March 2021 on the basis that on that day, at a meeting in Sydney, Mr Holmes (of the defendant) handed a copy of a version of the document to Mr Spyrou (of the plaintiff) which had been signed by both Mr Spyrou and Mr Blizzard (of the defendant) and Mr Spyrou indicated that he agreed to be bound by it. The document in this form, minus the signature of Mr Blizzard, had been emailed to the defendant by Mr Spyrou on 10 February 2021.

78. Before addressing the facts in more detail, I will identify the relevant legal principles about offer and acceptance.

Relevant legal principles

79. The relevant legal principles are long standing and are explained in Seddon and Bigwood, Cheshire and Fifoot Law of Contract (12th Australian edition, 2023) at par 3.2 and par 3.3 at 99 and par 3.26 at 123. In discussing the essentials of a binding contract at paragraph 3.2, the learned authors say that:

‘Whether or not there is agreement - that is, whether negotiations have crystallised into an accord - has traditionally been determined by the rules of offer and acceptance.'. At paragraph 3.3, 'As a general rule, a contract comes into existence when and where an offer of acceptance is communicated to the offeror.'.

80. In discussing what an acceptance is at par 3.26 they say:

'Acceptance of an offer creates contractual relations. An acceptance is a communication to the offeror of an unqualified assent to both the terms of the offer and to the implied invitation in every offer that the offeree commit himself or herself to a contract. Communication of acceptance, as a general rule, fixes the moment when the contract begins …'. And further, in the same paragraph, 'Whether or not there is acceptance is determined objectively by reference to the words or actions of the offeree as reasonably perceived by the offeror.'.

81. The relevant legal principles are also explained in Dyson Heydon, Heydon on Contract (2019) in c 2. In par [2.10] at 27 the learned author sets out the general rule:

'An offer (or counter-offer) is conduct which a reasonable person in the position of the offeree would understand to be an expression of willingness to contract on specified terms with the intention that those terms are to become binding as soon as the offer (or counter-offer) is accepted by the offeree, or at some other stipulated time. An acceptance is conduct which, to a reasonable person in the position of the offeror, is a final and unqualified assent to the terms of the offer (or counter-offer).

In general it is a necessary condition of a valid contract that an offer (or counter-offer) made by one of the parties be accepted by the other. The making of a counter-offer usually entails the rejection of any preceding offer or counter-offer.’

82. Two other passages from Heydon on Contract seem to me to be particularly relevant to the present case. First, at par [2.440] at 60 in discussing the need for communication of acceptance of an offer, the learned author says, after identifying some limited exceptions that have no application to the present case:

'… an acceptance does not have the effect of creating a contract until it is communicated to the offeror. There are numerous examples of this. There is no contract when the "acceptance" is written on a document kept by the "acceptor". There is no contract when a company resolves to accept an offer to buy shares but does not tell the offeror. …'.

83. Then at par [2.840] at 81, in discussing the effect of a rejection of an offer:

'An offer can be terminated by rejection. Once rejected, it cannot be accepted, unless the offeror at a later stage in negotiations revives it (that is, makes a new offer to identical effect). But, particularly where complicated negotiations are involved, there may be circumstances in which an offer may be treated, despite its rejection, as remaining on foot, available for acceptance, or for adoption as the basis of mutual assent manifested by conduct. A counter-offer strictly so-called operates as a rejection of the offer. But a counter-offer is capable of acceptance by the original offeror.'

The facts

84. The defendant has identified the written document as the document at pages 1 to 5 of Exhibit MB-1 to the affidavit of Mr Matthew Blizzard, a director of the defendant, affirmed on 2 June 2023 (CB426-430). The document is headed 'Mutual Non-Disclosure Agreement'. Immediately below the heading it states that the agreement 'is entered into this 10th February 2021'. Parts of the document have been crossed out against the electronic signature of Mr Spyrou, at clauses 5 and 8.4. Mr Blizzard's signature appears above his typed name on the execution page, with the date handwritten below as 2/3/21. Mr Spyrou's signature appears on the same page, above his handwritten name, with the date handwritten below as 10/2/21.

85. How this particular document came into existence in the form it is (signed by Mr Spyrou and Mr Blizzard) is a matter of controversy. Whether a copy of it was handed to Mr Spyrou by Mr Holmes on 4 March 2021 is disputed. As is whether Mr Spyrou indicated on 4 March 2021 that he agreed to be bound by it.

86. It is therefore necessary for me to recount the events leading up to that day. They start with an exchange of emails.

87. On 10 and 11 February 2021, the parties exchanged 3 emails:

1. On Wednesday, 10 February 2021 at 5.25 p.m. Mr Heath (a director of the defendant) sent an email to Mr Spyrou and to the plaintiff's accountant, copied to Mr Folty (of the defendant) in the following terms (CB216):

Hi Dan,

Attached as discussed with Jakub is our standard NDA. Do we need to add "trading as AST services" to your business name?

Please review and if all ok please sign and return by scan is fine. Otherwise let me know.

Kind regards,

The document attached is at CB217-221 and is entitled "Mutual Non-Disclosure Agreement". There are no signatures on the execution page, although Mr Blizzard's name and details have been typed onto it under the defendant's name.

2. (2) On the same day at 9.13 p.m., Mr Spyrou sent an email to Mr Folty and Mr Heath saying:

Hi guys,

Please see attached.

Please confirm you are happy with the attached?

Kind regards,

There were 2 documents attached to the email. One was the defendant's "Credit Application for a Commercial Account" which Mr Spyrou had completed by hand, signed and dated 10 February 2021 (CB228-230). The other was the "Mutual Non-Disclosure Agreement" sent to him by Mr Heath earlier that day, but which Mr Spyrou had altered and signed in the way I have referred to already (by striking through parts of clause 5 and clause 8.4) (CB223-227).

I will refer to this document as the Amended NDA. In its written submissions, the defendant has referred to it as 'the Modified NDA'. This Amended NDA signed by Mr Spyrou is the version of the document that Mr Blizzard says he signed on 2 March 2021 and the defendant alleges was presented to Mr Spyrou in Sydney on 4 March 2021.

(3) The next day, on Thursday 11 February 2021 at 12.23 p.m. Mr Heath again sent an email to Mr Spyrou and to the plaintiff's accountant, copied to Mr Folty saying:

Hi Daniel,

For completeness I have added your full entity name in the entity name box of the attached Credit app. If you are ok with this then no further changes are needed to this document attached. Please just keep on file.

Regarding the NDA I have also amended it attached to include your full company name. Please sign off this version instead. I notice on the version you signed and scanned back last night you crossed out the survival clause 8.4 which renders the document useless (emphasis added). Please don't cross 8.4 out. You also crossed out the Term clause. If you are uncomfortable with 5 years then make it 1 year (emphasis added) to align with the time period in clause 8. We need these clauses to protect the risk of going direct to our customers.(emphasis added)

Any questions let me know.

88. The documents attached to this email were not reproduced in the Court Book. However, it is common ground that the NDA attached was in the same form as the document Mr Heath had sent the day before with only the change mentioned in the body of the email (i.e. including the plaintiff's full company name). Mr Heath also conceded in cross-examination that Mr Spyrou did not sign this version of the NDA and send it back.

89. Mr Blizzard gave evidence by affidavit (CB434) that he spoke to Mr Heath on 11 February 2021 and Mr Heath said to him that:

'he felt the NDA as it was (sic) fine as signed by Mr Spyrou' and 'should things progress with IAZ we could look to have Mr Spyrou sign the unedited version ideally, but if not provide him the signed by me version which was the signed by Mr Spyrou version.'.

90. It is curious that Mr Blizzard said this conversation took place on 11 February 2021 and at this time there was a 'signed by me version', i.e. a signed by Mr Blizzard version, of the Amended NDA when Mr Blizzard's other evidence is that he signed the Amended NDA on 2 March 2021.

91. On 17 February 2021, the plaintiff and defendant entered into the 17 February 2021 Agreement. On the same day the plaintiff commenced to make deliveries under that agreement and issue invoices to the defendant. The plaintiff issued further invoices on 18 and 19 February.

92. Mr Blizzard gave evidence by affidavit (CB434) that he spoke to Mr Holmes the then General Manager of the defendant on or about 24 February 2021, at which time Mr Holmes said to him 'It would be best for me and Jakub [Foltynewicz] to visit Daniel Spyrou in Sydney to finalise aspects of the trading relationship with Deliver.', and Mr Blizzard said to Mr Holmes 'There are only a few issues to finalise which will be best negotiated face to face whilst you build the relationship as Spyrou is not good with emails and grasping written content. I am concerned about the NDA and that Spyrou has crossed parts of it out when signing it. We should try to get him to sign it without crossing anything out. If this doesn't transpire, just give him a copy signed by me as this NDA will otherwise do.'.

93. This paragraph of Mr Blizzard's evidence was admitted over objection as an exception to the hearsay rule under s.64(3) of the Evidence Act 1995 on the basis that Mr Holmes was to be called to give evidence by the defendant (T33-34). As events at the hearing transpired, Mr Holmes was not called and I made a subsequent ruling that he was 'not available' for the purposes of s.63 (T259:35). I have referred to this above [par 26].

90. Having regard to the basis on which the evidence was admitted and that Mr Holmes has not been cross-examined, taking this evidence at its highest, I would not regard it as evidence of the truth of what was said by either Mr Holmes or Mr Blizzard.

91. Further deliveries were made and invoices rendered on 25 February and 2 March 2021.

92. Mr Blizzard gave evidence by affidavit (CB435) that on 2 March 2021 he signed the standard NDA, without any sections crossed out, and gave it to Mr Holmes. He says that on or about the same date, he had a further conversation with Mr Holmes, in which he gave him a copy of the "fully signed NDA" and said words to the effect:

"Here is the signed NDA. You should try to get him to agree to sign the original version. If he will not, you can give him the signed version with the parts crossed out.". He says that Mr Holmes replied "OK - I will see how we go.".

97. Mr Blizzard says that on or about the same date he signed the NDA, being the version with some clauses crossed out by Mr Spryou (i.e. the Amended NDA). Mr Blizzard says he also gave a copy of this document to Mr Holmes in line with their conversation on or around 24 February and 2 March 2021.

The events of 4 March 2021 in Sydney

98. This brings me to the events that are said to have taken place in Sydney on 4 March 2021. It is common ground that Mr Holmes and Mr Folty met Mr Spyrou in Sydney on 4 March and that they had drinks before going to a Chinese restaurant for dinner and then spending the night at the casino into the wee small hours.

99. There is no direct evidence from Mr Holmes about what happened on that occasion. As I have mentioned, he did not give evidence in the proceedings.

100. Mr Folty affirmed 3 affidavits and was cross-examined. He was not really shaken in cross-examination and gave his evidence in an extremely careful manner. I have no hesitation in accepting him as a credible witness.

101. In his affidavit of 5 May 2023 he recounted the events of 4 March 2021 as follows. He flew up to Sydney for a meeting with Optifarm and Mr Spyrou - Optifarm was a client of the defendant. He recalls having dinner at a Chinese restaurant at the Star casino with Mr Spyrou, Mr Holmes and two others who worked for Optifarm. After dinner, they all went and gambled at the casino at the tables. He says that he knew of no discussions that were had between Mr Spyrou, Mr Holmes and himself about a confidentiality agreement or industry-standard agreement between the plaintiff and the defendant, as they were at dinner with Optifarm. He did not discuss any work between the plaintiff and the defendant with Mr Holmes or with Mr Spyrou because it was not appropriate in the circumstances.

102. In his affidavit of 22 August 2023, he said that he did not see Mr Holmes take a copy of the NDA to Sydney, nor did he see Mr Holmes hand a copy of either a clean or marked up copy of the NDA to Mr Spyrou. From the best of his recollection he was with Mr Spyrou and Mr Holmes throughout the events he recounted in his earlier affidavit. He says that he did not hand a copy of the unexecuted NDA or a copy of the NDA executed by Mr Blizzard to Mr Spyrou on 4 March 2021, and nor did Mr Holmes from his recollection.

103. Mr Spyrou affirmed 5 affidavits in the proceedings and was cross-examined at length. He was clear, concise and forthright in his oral evidence readily making concessions when appropriate. I have no hesitation in accepting him as a credible witness.

104. In his affidavit of 5 May 2023, Mr Spyrou said that he denied that Mr Holmes, Mr Folty and he had verbal discussion in which he agreed to enter into the alleged confidentiality agreement between the plaintiff and defendant on 4 March 2021. He described what happened on 4 March 2021 as follows: He met Mr Folty and Mr Holmes at their hotel, The York by Swiss-Belhotel at

approximately 4.30 - 5.00 p.m. Upon his arrival, he had a few alcoholic drinks with Mr Folty and Mr Holmes and then they proceeded to have dinner at The Century, a Chinese seafood restaurant in the Star casino Sydney. Two other people joined them from another company which he understood was also a client of the defendant. Once they had dinner, they all went down to the casino and gambled at various tables for the evening. There were no conversations between him, Mr Folty or Mr Holmes regarding an alleged confidentiality agreement.

105. In his affidavit of 7 August 2023, Mr Spyrou said he had never seen a copy of the NDA in the form annexed to the affidavit of Matthew Blizzard affirmed 2 June 2023 until he was provided with an unsealed copy of Mr Blizzard's affidavit.

Events after 4 March 2021

106. Mr Blizzard and Mr Heath both gave affidavit evidence that they spoke to Mr Holmes and Mr Folty on their return to Melbourne on 5 March 2021.

107. Mr Blizzard gave evidence by affidavit (CB436) that upon their return to Melbourne he spoke to them in the defendant's offices at which time Mr Holmes said:

'Spyrou would not agree to any change to the NDA he had already signed and wished to stand by the version he had signed. So, I told him his version was okay and gave him the copy signed by Deliver with the parts crossed out. Spyrou told me the copy signed by him with the parts he crossed out was the copy of the NDA he agreed to be bound by.'

and Mr Blizzard says he said 'OK'. This evidence was admitted to prove that it was said, but not as to the truth.

108. In his affidavit (CB401), Mr Folty denies that he had such a conversation with Mr Blizzard.

109. Mr Heath gave evidence by affidavit (CB558) that upon their return from Sydney, Mr Holmes and Mr Folty advised Mr Blizzard and Mr Heath that

Mr Spyrou had declined to revise the amendments to the NDA, and that accordingly they had provided him with a copy signed by Matthew Blizzard to record the agreed terms. This evidence was admitted to prove that it was said, but not as to the truth.

110. In his affidavit (CB401), Mr Folty said that he did not recall having a debrief with Mr Heath or Mr Blizzard regarding the NDA.

111. Further deliveries were made and invoices rendered on 5 March, 16 March, 19 March, 26 March, 27 March, 31 March and, as I have already mentioned, a final invoice on 2 April 2021.

112. Between April 2021 and August 2021 the plaintiff and the defendant exchanged various emails about the payment of invoices.

113. According to Mr Spyrou, in late July 2021 he instructed his former solicitors to write a letter of demand to the defendant, which he understands was sent to the defendant in early August 2021, and to which Mr Heath replied.

114. On 21 and 22 August 2021 Mr Heath and Mr Spyrou exchanged emails about the outstanding invoices.

115. On 13 October 2021, Save Logistics was placed into liquidation, as I have mentioned. Mr Heath said that he received and read a report to creditors from the liquidator in late October 2021 (T94 - 95). In his affidavit (CB565), Mr Heath said that upon receiving the liquidator's report, he noted with surprise that the plaintiff was recorded as a creditor of Save Logistics in the sum of $36,224. He says he then realised that the Visy work had not been lost, and that the plaintiff had engaged directly with Save Logistics. Mr Heath said that as soon as he had received the report he showed it to Mr Blizzard and had a conversation with him about it (T95).

116. On 17 January 2022, Mr Heath says that he received a further report from the liquidator showing the amount owed to the plaintiff by Save Logistics as being $220,329.

117. During March and April 2022 Mr Heath and Mr Spyrou exchanged further emails about the outstanding invoices.

118. On 1 July 2022, the plaintiff commenced these proceedings by statement of claim.

119. On 29 July 2022, the plaintiff filed an amended statement of claim.

120. On 31 July 2022, Mr Heath sent an email to Ms Kerissa Naicker and Mr Raymond Roser of the plaintiff's solicitors, the subject of which was stated to be the present proceedings. Attached to the email was a PDF document entitled "211021 initial information for creditors" and another PDF document "Confidentiality Mutual NDA Deliver Group_IAZ Logistics 10 Feb 2021". A copy of the email and the second attachment was Exhibit K. In the body of the email, Mr Heath said:

Hi Kerissa

As you know Save Logistics and Linfox were direct customers of Deliver whom Deliver engaged IAZ Logistics as a carrier. Save Logistics customer was Visy who effectively was an indirect customer of Deliver ("Deliver customers"). To protect Delivers relationship with its customers Deliver asked IAZ Logistics to sign the attached Confidentiality / Restraint Agreement (emphasis added).

On the attached liquidators report of Save Logistics dated 12 October 2021, $36,224.50 is listed at Annexure D as owing to IAZ Logistics.

On the attached Confidentiality Report dated 10th February 2021 IAZ Logistics Pty Ltd as trustee for IAZ Logistics Trust trading as IAZ Logistics Pty Limited (IAZ Logistics) agreed inter alia to:

1. the treatment of confidential information (clause 2)

2. a restraint (clause 8) (emphasis added)

3 .remedies (clause 7.1)

4. term (5 years) (emphasis added)

Can you please confirm:

1. if the transactions $36,224.50 making up the total at Annexure D as owing to IAZ Logistics were dated pre or post 10th February 2021?

2. Please provide a copy of IAZ Logistics contract with Save Logistics?

3. if IAZ Logistics ever had dealings directly with the Deliver customers list above pre 10th February 2021? If none, please provide a list of all IAZ transactions with all Deliver customers post 10th February 2021.

Kind Regards,

Nick Heath

Director

121. The confidentiality agreement attached to this email and referred to in the body of the email by Mr Heath is unsigned by anyone, and is the same version of the 'Mutual Non-Disclosure Agreement' that Mr Heath had emailed to Mr Spyrou on Wednesday, 10 February 2021 at 5.25 p.m. It is not the version of the document the defendant sues on.

122. On 22 August 2022, the defendant filed its defence to the amended statement of claim.

123. On 24 November 2022, Mr Heath sent the plaintiff's solicitor the spreadsheet which outlined a number of 'disputed charges'.

124. On 13 December 2022, Mr Heath sent an email to Mr Roser, the plaintiff's solicitor, the subject of which was stated to be the present proceedings. Attached to the email was an Excel spreadsheet entitled "Deliver IAZ reconciliation disputed' and a PDF document entitled "211021 initial information for creditors". The email made reference to 'tomorrow's meeting'. In the body of the email, Mr Heath said:

Hi Raymond

By way of background, as you know per the attached Save Logistics liquidators report page 13, Save Logistics went into liquidation owing Deliver $120,732.68 and oddly owing IAZ $36,224.50. The Save Logistics jobs recognised in the $120,732.68 have been included in Delivers amount owed to IAZ.

So net owing by Deliver to IAZ is $53,838.03.

By the way, I understand the amount owing from Save Logistics to IAZ and $36,224.50 is due to IAZ unethically going direct to Save Logistics (emphasis added), who were Deliver's customers as (sic) the time that IAZ were engaged as Delivers subcontractor. Whilst this is not a binding legal issue - it goes to showing IAZ's ethical credibility (emphasis added) in its business dealings as the logistics industry standard practice is subby's don't go direct to customers.

Hope this all gives you perspective on the complexity of this business relationship having to resolve disputed invoices / unethical dealings (emphasis added) / a major customer liquidated where Deliver will not be paid yet IAZ will.

I look forward to resolving this all tomorrow.

Kind Regards,

Nick Heath

Director

125. On 20 December 2022, the plaintiff's solicitors sent a detailed letter to Mr Heath responding to the spreadsheets Mr Heath had provided on 24 November 2022 and 13 December 2022. The letter was signed by Mr Roser and emailed by Ms Naicker.

126. On 22 December 2022 at 11.18 am Mr Heath sent an email to Ms Naicker, with a copy to Mr Roser, thanking Ms Naicker for the letter, and asking for a response to his 'earlier query below', adding a copy of his email of 31 July 2022 (which I have referred to and quoted in par 120 above). In the body of his 22 December email, Mr Heath asserted for the first time that

' …. on or about Feb 2021 IAZ (and personally guaranteed by Dan as attached) represented IAZ would act as a subcontractor to Deliver for transport work in relation to Deliver customers Save Logistics and VISY and would not seek to be engaged directly by Save Logistics or VISY for transport work (the Representation).’

127. I note in passing that the date of the alleged representation is significant. The representation the defendant now relies upon is said to have been made in December 2020 and reconfirmed in or about March 2021 (see par 13 and 14 above), not February 2021.

128. Ms Naicker responded to this email on the same day at 4.11 p.m., telling Mr Heath

'In respect of your "false and misleading" allegation against our client and Save Logistics, we are instructed that our client did not execute a restraint or exclusivity agreement with Deliver. If you are of the view our client did in fact execute such an agreement, we would be obliged if you would provide same.'.

129. Mr Heath responded to Ms Naicker's email almost immediately, at 4.23 p.m., saying:

‘In respect of our "false and misleading" allegation against your client and Save Logistics, whilst your client did not execute a written restraint or exclusivity agreement with Deliver (emphasis added), there was a verbal commitment from Dan IAZ would be Delivers subcontractor and IAZ would not poach Delivers customers we subcontracted IAZ to serve on our behalf. …’

My conclusions about the Alleged Non-Disclosure Agreement of 2 March 2021

130. Although the defendant asserts that the agreement was entered into on either 2 March 2021 (‘the pleading’) or 4 March 2021, one must start with the exchange of emails on 10 and 11 February 2021.

131. Looking at this exchange of emails and documents objectively, and analysing them in terms of offer and acceptance as the defendant suggests I should, it is tolerably clear, and to my mind inescapable, to conclude that the first email was an offer by the defendant to enter into an agreement on the terms it proposed, which was rejected by the plaintiff in the second email who then made a counter-offer to enter into an agreement on different terms, which was then rejected by the defendant in the third email who then renewed its earlier offer which was not accepted by the plaintiff.

132. In my opinion, one could hardly have a more strident and unequivocal rejection of an offer than the defendant's statement in Mr Heath's second email that the change made by Mr Spyrou to clause 8.4 'renders the document useless'. That is before one considers the balance of the email, which reinforces the message.

133. After this exchange of emails the parties were left in the position described in Heydon on Contract. Once the defendant had rejected Mr Spyrou's offer it could not be accepted unless Mr Spyrou revived it by making a new offer to identical effect.

134. There is no suggestion that Mr Spyrou ever did that in writing. Effectively the defendant's submission is that Mr Spyrou did that in Sydney on 4 March 2021.

135. I am not satisfied on the evidence that on 4 March 2021 Mr Holmes handed a copy of the Modified NDA to Mr Spyrou which had been signed by both him and Mr Blizzard, or that Mr Spyrou indicated that he agreed to be bound by that version of the NDA, or that the plaintiff accepted the terms of the Modified NDA by it's conduct. I am not satisfied on the evidence that there was an offer and acceptance of the Modified NDA on 4 March 2021.

136. I accept the evidence given by Mr Spyrou and Mr Folty about what happened on 4 March 2021.

137. I am fortified in reaching these conclusions by events that took place after 4 March 2021, particularly the admissions made in Mr Heath's emails of 31 July 2022, 13 December 2022 and 22 December 2022 in the chronological context I have set out. Each of those emails was written by Mr Heath to the plaintiff's solicitor after these proceedings had been commenced. One would expect that someone writing to their opponent's solicitor would take care in what they were saying lest it be misunderstood or used against them in the litigation.

138. In the first email (31 July 2022), it is significant in my opinion that Mr Heath asserted that the plaintiff had agreed to the terms set out in the document he had sent to Mr Heath on 10 February 2021, emphasising that a restraint for a term of 5 years had been agreed. He did not assert that the plaintiff and the defendant had agreed to the terms set out in the Amended NDA, which is the version the defendant now says was agreed. And the differences are material: the term of 5 years asserted by Mr Heath in the email is crossed out in the Amended NDA, as is clause 8.4. In February 2021 he had stated forcefully that crossing out clause 8.4 rendered the document useless.

139. The second email (13 December 2022) is even more damning in my opinion. Mr Heath's reference to:

'IAZ … going direct to Save Logistics, who were Deliver's customers (at) the time that IAZ were engaged as Delivers subcontractor'

is undoubtedly a reference to the subject matter of the defendant's complaint in these proceedings. In my opinion, his statement about it not being "a binding legal issue" and appeal to ethical considerations, as opposed to legal ones, can only sensibly be read as an admission that as a matter of fact the defendant did not have a binding legal agreement with the defendant about it. Mr Heath's attempts to put a different complexion on the purport of the statements made in the email in cross-examination were unconvincing.

140. The third email (22 December 2022, at 4.23 p.m.) is possibly even more critical to the way in which the defendant has presented its case in relation to the Alleged Non-Disclosure Agreement of 2 March 2021. The admission in the email is unequivocal - the plaintiff “did not execute a written restraint or exclusivity agreement with Deliver".

141. It was faintly submitted (defendant's written submissions par 43 and 47) that I should find that the conduct of the plaintiff indicated acceptance of the Amended NDA or that I should infer from the parties conduct that they agreed to 'some form of NDA Agreement'. I do not accept those submissions based on the evidence I have sought to summarise above and the conclusions I have reached about an alleged offer and acceptance on 4 March 2021.

142. For those reasons, I find that the parties did not enter into the Alleged Non-Disclosure Agreement of 2 March 2021.

Second alternative: alleged express oral or implied term of the 17 February 2021 Agreement

The pleading

143. The defendant pleads (Cross-Claim par 5) that it was an express, or alternatively an implied term of the 17 February 2021 Agreement that the plaintiff would provide the services only as a sub-contractor and not directly to Save Logistics for a period of 6 months.

144. In its particulars it stated that the term was express and constituted by conversations in December 2020 between Mr Spyrou, Mr Holmes and Mr Folty. Alternatively, it stated that the term was to be implied from all the relevant circumstances in order to give business efficacy to the 17 February 2021 Agreement. The period of 6 months was said to have commenced on the day the agreement was entered into.

145. The plaintiff denies that any such term was agreed in conversations between Mr Spyrou, Mr Holmes and Mr Folty in December 2020, and denies that any such term was implied.

146. I will address the question of whether there was an express oral term first.

The facts

147. It is common ground that on 16 December 2020 Mr Holmes and Mr Folty met with Mr Spyrou in Sydney at the plaintiff's office. There were no other meetings between Mr Spyrou, Mr Holmes and Mr Folty in December 2020.

148. Mr Folty's affidavit evidence was that he flew to Sydney with Mr Holmes on 16 December 2020 to have a meeting with a number of new leads. In addition, he and Mr Holmes visited some sites and warehouses. He said that he met with Mr Spyrou briefly. This was the first time he had met Mr Spyrou in person. Mr Folty said that he did not recall discussing any confidentiality agreement or "transport industry standard agreement". He denied that he received any verbal confirmation from Mr Spyrou agreeing to either such agreement on that day. In cross-examination he said that he had a good memory of what happened in the meeting on 16 December 2020 and he did not believe he spoke with Mr Spyrou at all about Save Logistics.

147. Mr Spyrou's affidavit evidence was that he did not have any conversation with Mr Folty or Mr Holmes on 16 December 2020 regarding the alleged confidentiality agreement between the plaintiff and the defendant. In cross-examination he denied being told that the plaintiff was required to enter into a confidentiality agreement.

148. There is no direct evidence from Mr Holmes about what happened on 16 December 2020. As I have mentioned, he did not give evidence in the proceedings.

149. With leave, Mr Heath gave some oral evidence in chief about what he said Mr Holmes has told him when he came back to Melbourne after the 16 December 2020 trip to Sydney. Mr Heath said that Mr Holmes told him "it was a good trip", they had a good discussion about ongoing relationships. Mr Heath said that Mr Holmes had satisfied himself to Mr Heath that he had obtained a verbal confidentiality understanding from Mr Spyrou. This evidence was admitted provisionally unless and until Mr Holmes was called as a witness, and not as to the truth of what was said. As events transpired, as I have mentioned, Mr Holmes was not called as a witness. In my opinion, in the circumstances this evidence carries very little weight.

150. Mr Heath also gave oral evidence that Mr Folty told him at the same time

"It was a very successful trip. We've struck a good relationship. I think I can trust these guys. They gave me and Ben a verbal understanding, we were both there in the room, to have two people from the company to witness.".

In his affidavit, Mr Folty had denied having a conversation along these lines with Mr Heath on his return to Melbourne. It is also contradicted by Mr Folty's evidence, which I accept, that the matter was not discussed in Sydney.

My conclusions about whether there was an express oral term of the 17 February 2021 Agreement as alleged

153. I accept Mr Folty's and Mr Spyrou's evidence about what was discussed, or more precisely what was not discussed, in Sydney on 16 December 2020.

154. The defendant has not satisfied me on the evidence that it was an express term of the 17 February 2021 Agreement that the plaintiff would provide the services only as a sub-contractor and not directly to Save Logistics for a period of 6 months.

Alleged implied term to the same effect

155. The defendant alleges that a term to the same effect is to be implied from all the relevant circumstances and in order to give business efficacy to the agreement.

156. It is said to be implied according to the principles stated in B.P. Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283. Although so much was clear from the pleadings, the defendant expressly disavowed that term was implied from custom or usage (T39-40).

Legal principles

157. The relevant principles were stated by Gaudron, McHugh, Gummow & Hayne JJ in Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (in liq) (2000) 202 CLR 588 at 609 paragraph [44], omitting citations:

'The rules governing the implication of an implied term as a matter of fact were stated by the Privy Council in BP Refinery (Westernport) Pty Ltd v Shire of Hastings and have subsequently been approved and applied in numerous decisions of this Court. In Codelfa Construction Pty Ltd v State Rail Authority of NSW, Mason J restated the five conditions laid down by the Privy Council:

"(1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that 'it goes without saying'; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract."

158. However, one should not seek to apply the Codelfa test strictly if the contract is oral or partly oral and it is apparent that the parties never attempted to reduce their agreement to a complete written form. In Hawkins v Clayton (1988) 164 CLR 539, in a passage subsequently adopted by other members of the High Court, Deane J said at 573:

"The most that can be said consistently with the need for some degree of flexibility is that, in a case where it is apparent that the parties have not attempted to spell out the full terms of their contract, a court should imply a term by reference to the imputed intention of the parties if, but only if, it can be seen that the implication of the particular term is necessary for the reasonable or effective operation of a contract of that nature in the circumstances of the case. That general statement of principle is subject to the qualification that a term may be implied in a contract by established mercantile usage or professional practice or by a past course of dealing between the parties."

159. See Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 422 per Brennan CJ, Dawson & Toohey JJ; at 442 per McHugh & Gummow JJ; and Associated Alloys Pty Ltd v ACN 001452106 Pty Ltd (In liq) (2000) 202 CLR 588 at 610 per Gaudron, McHugh, Gummow & Hayne JJ.

The parties' submissions

160. The alleged implied term is that that the plaintiff would provide the services under the 17 February 2021 Agreement only as a sub-contractor and not directly to Save Logistics for a period of 6 months.

161. The defendant submitted that the implied term is reasonable and equitable because it is necessary to give protection to the defendant that its valuable contract with Save Logistics would not immediately be undermined by the plaintiff. It submitted that the implied term was reasonable and equitable because it was in line with industry standards. It submitted that "it goes without saying" because there was an obvious risk that without such a clause the plaintiff was likely to poach the customer. It was said to be said to be of clear expression and not to contradict any express term of the contract.

My conclusions on an implied term

162. Although both parties addressed this issue by reference to the 5 conditions stated in BP Refinery, in my opinion it is more appropriate to do so from the perspective stated by Deane J in Hawkins v Clayton. I say that because, although both parties accepted that the Transport Rate Schedule set out written terms of the 17 February 2021 Agreement it is apparent when one looks at it that the parties did not attempt to spell out the full terms of their contract in that document.

163. The contract was one for the transportation of goods in the geographical zones at the rates stated in the Transport Rate Schedule.

164. In my opinion, the particular term is not necessary for the reasonable or effective operation of a contract of that nature in the circumstances of the case.

165. To the extent that the defendant seeks to call in aid "industry standards", in my opinion such a submission would be more relevant if the term were said to be implied by custom and usage, but it is not. In any event, I am not satisfied on the evidence that there were such industry standards. The directors of the defendant gave some very general self-serving subjective evidence about what they understood was done in the industry and what their own expectations were, but no attempt was made by the defendant to prove what might be termed a generally accepted industry standard. Certainly, from the plaintiff's point of view, there was no such standard because Mr Spyrou's evidence was that in his 15 years of being in the industry he did not have one "confidentiality" arrangement, as counsel for the defendant referred to the topic in cross-examination (T71-72).

166. I find that there was no such implied term in all the circumstances of the case.

Third alternative: alleged misleading or deceptive conduct

167. In light of the findings I have already made, I can be brief in dealing with the alleged misleading or deceptive conduct.

168. As I mentioned at the outset of these reasons, the defendant also asserts that in order to induce it to enter into the 17 February 2021 Agreement, the plaintiff represented to it that the plaintiff

'would act in respect of work provided to Palmer Regional Logistics Pty Ltd trading as Save Logistics only as the Cross-claimant's sub-contractor in compliance with the Agreement and would not, once engaged as sub-contractor, seek to be engaged directly by Palmer Regional Logistics Pty Ltd trading as Save Logistics, for a period of 6 months'.

169. It can be seen that the alleged representation aligns closely with the alleged express oral term of the agreement.

170. The representation was said to have been made in December 2020 and re-confirmed and acknowledged in a subsequent meeting in or about March 2021. These are the meetings between Mr Spyrou, Mr Folty and Mr Holmes on 16 December 2020 and 4 March 2021 that I have already considered.

171. For the reasons I have already given, I accept the evidence of Mr Spyrou and Mr Folty about what took place at those meetings.

172. In those circumstances, I find that no such representation was made by the plaintiff to the defendant.

Conclusion on the Cross-Claim

173. For those reasons, in my opinion, the Cross-Claim should be dismissed.

Summary

174. To summarise, I have found that:

1. The plaintiff is entitled to be paid the undisputed sum of $98,823.03 which the defendant accepted has not been paid and is properly owing (par 18).

2. The plaintiff is not entitled to the disputed amount in respect of invoice 164 (par 38).

3. The plaintiff is entitled to be paid for Invoice 176 (par 68) - a further sum of $1,320 (par 49).

4. The plaintiff is entitled  to be paid for Invoice 167 (par 71) - a further sum of $4,675.

175. The plaintiff is therefore entitled to judgment on its claim against the defendant in the sum of $104,800.03, together with pre-judgment interest pursuant to s.100 of the Civil Procedure Act, 2005.

176. The defendant's cross-claim against the plaintiff ought to be dismissed.

177. Subject to either party seeking a special costs order, costs should follow the event, such that the defendant should pay the plaintiff's costs of the proceedings.

178. Bearing in mind that the parties wish to have the opportunity to calculate pre-judgment interest, I propose to publish these reasons and list the matter for directions and the making of final orders in 14 days time.

Orders

179. I make the following orders:

1. Direct the parties to confer and attempt to reach agreement about the calculation of pre-judgment interest and costs within 7 days.

2. Direct that in the event the parties are unable to agree as to the calculation of interest or costs, they are to provide submissions of no more than 5 pages to the Associate of Judge Waugh within 10 days.

3. Stand the proceedings over for final submissions and the making of final orders before Judge Waugh at 9.30 a.m. on 13 October 2023.

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Amendments

29 September 2023 - Name corrected at paragraph 120

03 October 2023 - Amendment made to paragraph 179

03 October 2023 - Amendment made to figure at paragraph 174 (4)

Decision last updated: 13 December 2023