Justin Len Miller v Elwood's Eatery atf the Allcock Family Trust

[2024] NSWDC 570

District Court

New South Wales

Medium Neutral Citation:

Justin Len Miller v Elwood’s Eatery atf the Allcock Family Trust [2024] NSWDC 570

Hearing dates:

20-21 November 2024

Date of orders:

29 November 2024

Decision date:

29 November 2024

Jurisdiction:

Civil

Before:

Newlinds SC DCJ

Decision:

Direct the parties to seek to agree as to the amount of a final judgment to be entered, consistent with these reasons.

Catchwords:

BAILMENT — Conversion – Detinue

CONTRACTS — Terms – Oral contract – Proof – Interpretation

EVIDENCE — Affidavit evidence – Proof of words spoken as evidence of terms of contract

DAMAGES – Purpose of damages is to put successful party in position they would have been but for the other party’s wrongful conduct

CONTRACTS — Unjust contracts — Contracts Review Act 1980 (NSW)

Legislation Cited:

Contracts Review Act 1980 (NSW) s 7; s 9

Cases Cited:

Gan v Xie [2023] NSWCA 163

Kanes Hire Pty Ltd v Anderson Aviation Australia Pty Ltd [2023] FCA 381

Watson v Foxman (1995) 49 NSWLR 315

Wild v Meduri [2024] NSWCA 230

Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; 219 CLR 165

Category:

Principal judgment

Parties:

Justin Len Miller (Plaintiff/Cross-Defendant)
Elwood’s Eatery Pty Ltd as Trustee for the Allcock Family Trust (Defendant/Cross-Claimant)

Representation:

Counsel:
A J Munro (Plaintiff/Cross-Defendant)
M Short (Defendant/Cross-Claimant)

Solicitors:
Toby Tancred Solicitors (Plaintiff/Cross-Defendant)
Blackwell Short (Defendant/Cross-Claimant)

File Number(s):

2023/339591

Publication restriction:

Nil

JUDGMENT

Overview

1. It is common ground that the parties entered into an agreement sometime in late 2022/early 2023. They agree it was oral, and that it came into existence in a series of conversations between the Plaintiff and Mr Ben Allcock of the Defendant, to the effect that the Plaintiff would be allowed to install approximately 25 arcade gaming machines in premises under the control of the Defendant.

2. There is no dispute that the Plaintiff agreed to pay the Defendant an amount of money for that right and that, in return, the Plaintiff could keep all of the takings from those machines. It is also accepted that the arrangement could be terminated by either party at will.

3. By sometime around August 2023, the parties were in dispute as to the precise terms of the deal. The Defendant terminated the arrangement and effectively locked out the Plaintiff and wrongfully has refused to allow the Plaintiff to retake possession of the machines, notwithstanding requests to do so.

4. The fundamental dispute between the parties was then and remains what were the terms of the agreement as to how much the Plaintiff was required to pay to the Defendant for the right to install and operate the machines in the Defendant’s premises.

The Plaintiff’s claim

5. The Plaintiff sought orders for the delivery up of the machines. In the alternative, he sought damages for the value of the machines. During the course of the hearing the Plaintiff abandoned his claim for return of the machines and elected to claim only damages, being the sum of $37,500, said to be the value of the machines at the time the Defendant declined to return them.

6. Over and above that amount, the Plaintiff seeks damages calculated at $92,455, representing what he claims are lost profits from the machines from the time he was refused access to them.

The cross-claim

7. By the cross-claim, the Defendant seeks damages for breach of contract. It is based upon the Defendant's version of the terms of the contract.

The issues

8. The central issue for determination arises on the cross-claim, viz what are the terms of the contract.

9. In particular:

1. Was the amount to be payable weekly or monthly? The Plaintiff’s case is that it was $1,100 (inclusive of GST) per month. The Defendant’s case is that it was $1,100 (inclusive of GST) per week.

2. Did the obligation to pay the regular amount commence on the date the Plaintiff moved the machines in (the Defendant’s case) or the date the business commenced operation (the Plaintiff’s case)?

3. What, if anything, was the Plaintiff’s obligation to contribute to the cost of signage?

4. What, if anything, was the Plaintiff’s obligation to contribute to the cost of a roller door(s)?

5. What, if anything, was the Plaintiff's obligation to pay for electrical works?

6. What, if anything, was the Plaintiff's obligation to pay for power points?

7. What, if anything, was the Plaintiff’s obligation to contribute to ongoing electricity costs?

8. What, if anything, was the Plaintiff’s obligation to contribute to plumbing costs?

9. The Plaintiff's claim for lost profits.

10. The Plaintiff, on the premise that the contract is on the terms as contended for by the Defendant, says a contract on those terms is unfair within the meaning of s 7 of the Contracts Review Act 1980 (NSW) (“Contracts Review Act”). The Plaintiff seeks relief under s 9 of that Act to the effect that in substance the contract would be rewritten so as to accord with his subjective understanding of the bargain.

11. As to the issues on the claim, there is no dispute that the Plaintiff has been, at all times, entitled to retake possession of the machines and that the Defendant's refusal to allow him to do so was wrongful. Nor is there any issue but that the value of those machines at the time the Plaintiff made demand for their return was $37,500 and that the Plaintiff is entitled to an award of damages in that amount. There is, however, a significant issue around the Plaintiff’s claimed loss of profit.

The basic facts

12. From about July 2021, the Plaintiff frequented a southern American-styled BBQ restaurant in Orange, named ‘Smoking Brothers’. During this time, he met Mr Allcock, director of the Defendant, and struck up a friendship. The Plaintiff was very impressed with Mr Allcock and later had tattooed on his thigh, the ‘Smoking Brothers’ logo.

13. In May 2022, the Plaintiff purchased 60 arcade gaming machines for $120,000. He stored 50 of the machines at a storage unit, incurring weekly storage fees. The other 10 were stored in his mother’s garage at no cost.

14. In October 2022, Mr Allcock told the Plaintiff that he intended to move his restaurant to a bigger venue and raised the prospect of the Plaintiff operating some of his arcade machines from the new venue. On 25 November, and again on 8 December, the Plaintiff inspected the proposed new premises with Mr Allcock.

15. During the 8 December meeting, the first phase of an oral agreement between the parties was made. Mr Allcock told the Plaintiff he would be charged an occupation fee of $1,000 plus GST to place and operate his machines in the new premises. It was agreed that the Plaintiff could keep whatever income he earned from the arcade machines. Mr Allcock stated that the Plaintiff might have to pay some outgoings, however that would be discussed later. The parties are at odds as to whether the agreed occupation fee was to be paid weekly or monthly. They also do not agree as to the starting date of the arrangement.

16. In about March 2023, Mr Allcock alleges that he advised the Plaintiff that he would be required to pay one third of the costs of installing power points to run the machines. Further, Mr Allcock stated they would discuss costs associated with actual power usage, at a later time. There were other discussions during this period as to the costs of roller shutters.

17. In late April 2023, the Plaintiff installed the machines.

18. In April 2023, Mr Allcock informed the Plaintiff that he intended to install vinyl wrapping (wall art) in the venue. There is an issue between the parties as to whether the Plaintiff agreed to pay one third of the cost.

19. The Smoking Brothers restaurant commenced trading on 9 June 2023 and customers commenced using the Plaintiff’s machines from that date.

20. In July, Mr Allcock and his wife Elouise went on holiday. On 29 July 2023, the Plaintiff received an invoice from the Defendant. It was calculated on the basis of $1,100 (inclusive of GST) per week.

21. The Plaintiff gave evidence that he observed the amount charged for rent was not as he considered had been agreed. As Mr Allcock was on holiday, the Plaintiff said he chose to wait for his return to discuss that with him.

22. On 18 August, the Plaintiff received two further invoices, again calculated on a weekly basis.

23. Upon Mr Allcock’s return from holiday, the Plaintiff says he spoke with Mr Allcock about the amounts charged, disputing the amounts. Mr Allcock denies this conversation, but it is accepted there came a point in time where the parties were in furious disagreement. Both the Plaintiff and Mr Allcock were steadfast in asserting their version of the deal.

24. At some point, Mr Allcock and the Plaintiff fell out as a result of this disagreement. The Plaintiff informed Mr Allcock of his intention to list the machines for sale on Facebook, although he first offered them to Mr Allcock for $50,000.

25. The Plaintiff then listed the arcade machines on Facebook. He was contacted by Mr Nigel Baldwin on 26 August, and ultimately agreed to sell him the machines for $37,500. The Plaintiff’s case is this amount reflects the true market value of the machines, that is what an arm’s length willing buyer was prepared to pay. So much is accepted by the Defendant.

26. 26 August 2023 was the last date the Plaintiff took any money from the machines.

27. On 15 September 2023, Mr Baldwin attended the premises. He inspected the machines and deposited $37,500 into the Plaintiff’s account. Upon returning to the premises to collect the machines, the Plaintiff spoke with Mr Allcock, who refused to allow Mr Baldwin to remove the machines until he was paid the full amount claimed from the Plaintiff. On 15 September 2023, the Defendant issued the Plaintiff with a ‘Trespasser’s Notice’, denying the Plaintiff access to the premises.

28. Since 15 September 2023, the Defendant has had possession of the machines and has refused to return them.

29. On 18 September 2023, the Plaintiff refunded $37,500 to Mr Baldwin.

30. On 12 October 2023, the Plaintiff’s solicitors wrote to Mr Allcock asserting the Plaintiff’s version of the agreement and again demanded return of the machines.

What were the terms of the arrangement?

31. As I have said, it is common ground that there was an enforceable contractual agreement struck between the parties.

32. That contract came into existence and developed over the course of a number of conversations between the Plaintiff and Mr Allcock between December and March 2023.

33. There is no doubt on the evidence of both the Plaintiff and Mr Allcock, and also by reference to how they conducted themselves thereafter, that there was an agreement struck at some point during the course of the conversations. What I consider probably occurred is that there was an agreement made on 8 December 2022 as to the regular amount payable and thereafter there were a series of discussions where that agreement was added to, varied, or perhaps reconstituted to provide for further payments and arrangements dealing with costs associated with the fit out of the premises.

34. By the time the Plaintiff installed his machines into the Defendant's premises in April 2023, there was an agreement that from a point in time the Plaintiff would pay the Defendant an amount, being $1100 inclusive of GST. The two issues between the parties on this aspect of the case is whether that amount was payable weekly (the Defendant's case) or monthly (the Plaintiff's case) and whether the payments would commence from the time the machines were moved into the premises (the Defendant's case) or from the time when the Defendant's restaurant business commenced trading from the premises (the Plaintiff's case).

35. Thereafter, the issues are whether the Plaintiff agreed to pay a proportion of the costs involved with particular signage, a roller door, some plumbing work, power points, and other electrical work as part of the Defendant’s fit out and whether the Plaintiff agreed to contribute an amount for electrical works, again as part of the fit out.

The evidence

36. Both the Plaintiff and Mr Allcock gave evidence as to their recollection of the various conversations. I formed the impression that they were both honest and doing the best they could to remember. That being said, the topics being discussed were complicated and liable to ambiguity. I formed a strong impression that both were confused from time to time and there was miscommunication and misunderstanding involved, going in both directions.

37. Neither of them profess to have a clear recollection of precisely what words were said by each in the various conversations. Nonetheless, they both gave confident and emphatic evidence as to their subjective understanding of the “gist" of what was said. On the question of whether the amount payable was monthly or weekly, they both gave convincing evidence and were steadfast under cross-examination.

38. There is very little, if any, objective evidence other than the invoices which were issued by the Defendant to the Plaintiff. The Plaintiff did not take issue with those invoices in writing, however the Plaintiff gave evidence that, whilst he did not complain immediately because he understood Mr Allcock and his wife were on holidays, upon their return he did complain and took the position, which has remained his position, that the amount payable was monthly not weekly – I accept his evidence in that regard because I consider it probable for him to have waited and it is clear to me that, at all times, the Plaintiff has believed the arrangement was for monthly payments and see no reason why he would not have raised this with Mr Allcock, whom at the time he regarded as his friend and mentor.

39. Other than that, both parties sought to make submissions demonstrating that the alternative version of the contract did not make commercial sense. I was not impressed with either party’s submissions in that regard. The unstated premise in each party's position was an understanding of how much money could be expected to be received by way of takings by the Plaintiff from the machines once they were up and operating. However, it is clear to me that no one at the time had any idea as to how much those takings might be and so I do not think an analysis of the probabilities based on commercial likelihood is of much assistance.

40. The Plaintiff's mother also gave evidence which was consistent with the Plaintiff at all times having a subjective understanding that the amount payable was to be calculated on a monthly basis and not a weekly basis, and that he was upset and frustrated when he found out that Mr Allcock did not agree. Other than that, the Plaintiff's mother gave no direct evidence as to what was actually said between the Plaintiff and Mr Allcock. I accept the Plaintiff’s mother’s evidence.

41. Mrs Elouise Allcock also gave evidence to similar effect in regard to her husband, Mr Allcock, namely that his subjective understanding of the deal has remained consistent, although it is clear there was some confusion in his mind as to some of the fit out costs. Like the Plaintiff’s mother, Mrs Allcock gave no direct evidence of the arrangement, but her evidence, which I accept, does confirm that Mr Allcock has always believed the payments were to be weekly.

42. Of significance is the evidence of Mr Bloomfield, who was an employee of the Defendant at the time, working behind the bar. He assisted the Plaintiff in April 2023 in moving the machines into the premises. Mr Bloomfield gave evidence to the effect that, after the business was operating, the Plaintiff said to him on an occasion “my rent is $1,000 a week”. Mr Bloomfield also said that there was a number of conversations wherein the Plaintiff would tell him, by reference to the quantum of takings received in any particular week, whether or not that amount was more or less than the rent he had to pay.

43. Mr Bloomfield also said that to the effect that on one occasion the Plaintiff said to him:

“I still owe Ben for some of the costs of the wall art and some other things he paid for.”

44. Mr Bloomfield also gave evidence that, after the Plaintiff received invoices from the Defendant, he showed frustration and anger about the total amount. Such a response is consistent with the Plaintiff being surprised by and not agreeing with the amount claimed in the invoices.

45. I accept Mr Bloomfield’s evidence was honestly given, but for reasons I will explain, I do not consider it reliable.

46. Before returning to the resolution of the monthly/weekly aspect of the case, I will consider the other aspects of the Defendant’s claim, there are a number. Each of which, unfortunately, is worth a very small amount of money.

Vinyl wrapping costs

47. The Defendant contends that the Plaintiff agreed to pay one third of the cost of installing vinyl wrapping (wall art) in a conversation April 2023.

48. The amount in issue here is around $1,000. The Plaintiff's position is that he accepts that he agreed to pay one third of these costs.

49. Mr Bloomfield also gave some evidence consistent with the Defendant’s position on this issue, involving the Plaintiff effectively making an admission to that effect to him.

50. Objectively it seems to me, that the art, the subject of these costs, was very much specific to the Plaintiff's business and therefore it is more probable than not that the Plaintiff did agree to contribute an amount.

51. However, that does not assist in resolving the issue because it is common ground between the parties that he did agree to make a contribution. The question is whether the contribution was agreed to be one third or one half.

52. Mr Allcock's evidence was that the discussion took place in the context of him explaining to the Plaintiff that the landlord had agreed to pay one third of the costs. He says that there was then an agreement as between him and the Plaintiff that they each pay one half of the amount of the costs.

53. On the other hand, the Plaintiff says, in the same context, that his understanding was that the agreement was that each of him and Mr Allcock would pay 50% each of the amount left, after payment of one third by the landlord.

54. Having considered the evidence of all the witnesses, I am not prepared to decide this issue, or for that matter any question in the case, based on some assessment of their respective credibility or reliability. I find on balance it is more probable than not that the Plaintiff did agree to contribute one half of the costs of the vinyl wrapping work. This is because it seems to me to be more probable because the artwork is so specific to the Plaintiff’s business.

Roller shutters

55. The issue is that the Defendant contends the Plaintiff agreed to pay one third of the costs, and the Plaintiff denies any obligation.

56. The invoicing for this aspect of the matter is problematic from the Defendant’s point of view.

57. On Mr Allcock's version of the agreement, the Plaintiff had an obligation to contribute one third of the cost incurred in paying for the roller shutter to be installed. However, the amount that was actually invoiced was not that cost. The installer of the roller shutters had provided a significant discount to the Defendant, which Mr Allcock thought appropriate not to pass on to the Plaintiff.

58. I think there might have been a lot of confusion around whatever conversations there were concerning the roller shutter and I am not satisfied that the Plaintiff agreed to contribute any amount for the roller shutters and will not allow the Defendant that aspect of the cross-claim.

Ongoing electrical works

59. There is a paucity of evidence in support of this aspect of the Defendant’s claim. As far as I can tell from Mr Allcock’s own evidence, discussions concerning potential sharing of electricity bills occurred but never beyond the stage of the parties agreeing that they would talk about it further and come to an agreement, which never occurred.

60. Moreover, the invoicing for this aspect of the claim by the Defendant again raises issues. A flat rate of $650 per week was invoiced, however, the Defendant's case is that there was an agreement made for 15% of the actual electricity costs to be paid by the Plaintiff and yet this does not accord with the invoicing. Again, I think this indicates confusion on the part of Mr Allcock, who had to communicate the basis of the claim to his wife when she was preparing the invoices.

59. Whilst I think the parties agreed to subsequently agree on this topic, I am not satisfied that there was ever any agreement for the Plaintiff to pay any ongoing electrical costs, nor do I think, even if there was, that any amount has been proved. I will not allow the Defendant this aspect of its cross-claim.

Electrical costs/power points

62. This aspect of the Defendant’s claim falls into two categories. The first concerns power points installed specifically for the purpose of the Plaintiff's machines.

63. In cross-examination, the Plaintiff conceded that he agreed to pay all costs of the power points but nothing else for electrical work. On the other hand, the Plaintiff in his original affidavit evidence conceded one third of all electrical-related work. This represented a significant change in position by him.

64. Again, the invoicing is extremely problematic for the Defendant. The invoice sent by the Defendant to the Plaintiff upon which the Defendant relied, until the last minute in the case, was clearly not referable in large part to work done for the benefit of the Plaintiff. That evidence as amended by an email from the electrician still did not itemise a specific amount for power points.

65. I think it is more probable than not that the Plaintiff agreed to pay all of the costs of the power points because they were only being installed for his immediate benefit. I am not satisfied that there was any agreement that he pay for any other electrical work.

66. I will allow the cost of the actual power points, but nothing further in relation to this aspect of the Defendant’s cross-claim.

Plumbing work

67. It is unclear to me how this claim is propounded. There does not seem to be any relevant evidence to justify any amount being paid by the Plaintiff for any plumbing work, whether it be by proof of an agreement to do so or proof of any such work being done.

68. I will not allow this aspect of the Defendant’s cross-claim.

Commencement date of payments

69. The parties are at issue as to the starting date for the payments. The Plaintiff says that his obligation to pay was agreed to start from the time the business of the Defendant and the Plaintiff actually commenced, whereas the Defendant's case is that the agreement was the payment would run from the time the machines are installed.

70. In a rather bizarre twist, each of Mr Allcock and the Plaintiff in cross-examination effectively conceded the other sides position. Mr Allcock appeared to clearly concede that his understanding was that the start date would be the date the businesses commenced, whereas the Plaintiff conceded equally clearly that his understanding was that the payments would commence from the time the machines were installed. Perhaps they were both confused when under cross-examination. However, it does emphasise, what to my mind seems clear from all of the evidence, that there was a large degree of miscommunication and misunderstanding as between them during all of these conversations.

71. On balance, I think it is more likely than not that the agreement provided for commencement as at the time of the commencement of the businesses, that is 9 June 2023. This is because I consider that is more commercially likely. I will allow the Defendant’s cross-claim to the extent that the payments commenced on 9 June 2023.

Weekly/monthly

72. The significant battleground is the issue as to whether the $1,100 (inclusive of GST) payment was to be paid weekly or monthly.

73. As to whether the amount was payable weekly or monthly and having heard both of the principal witnesses and in light of my finding on the other issues, I think there is real scope for their having been a misunderstanding between the parties at the time, with one assuming that their discussions concerned weekly payments and the other assuming monthly. I consider it likely that there was never a true “meeting of the minds”.

74. Because neither party has a real memory of the actual words spoken and because there is no unequivocal, objective support for either party’s understanding, it is necessary for me to seek to glean from each party’s subjective understanding or opinion, as to the meaning conveyed by the words used at the time, what their mutual intention was. Of course, each party’s subjective understanding of the meaning of the contract is not itself directly admissible to prove the terms of a contract: see for example Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; 219 CLR 165 at [40]. As is explained in the recent spate of cases concerning the quality of evidence to be given concerning oral conversations (see for example: Kanes Hire Pty Ltd v Anderson Aviation Australia Pty Ltd [2023] FCA 381; Gan v Xie [2023] NSWCA 163; Wild v Meduri [2024] NSWCA 230), that evidence is admissible as “lay opinion" evidence as to the meaning conveyed by the actual words spoken. As ‘lay opinion’, it represents parties’ subjective understanding of what was said. So it can be seen to be extremely problematic as evidence of what was actually said, which ultimately must be the basis of the Court’s objective determination of the contractual terms.

75. As was so clearly explained by McClellan CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 318 where, as here, the matter has to be judged by reference to the objective theory of contract, with the Court seeking to determine what a reasonable businessperson listening to the actual words and observing the conduct of the parties at the time would have considered to be the terms of the arrangement, such a process is fraught with difficulties in the absence of precise findings as to those actual words.

76. As far as the demeanour of each of Mr Allcock and the Plaintiff was concerned, they both presented as impressive witnesses and I would not be prepared to judge either by their performance in the witness box.

77. I was a little unimpressed with Mr Allcock’s approach to invoicing for the cost of the power points, wherein he put forward and maintained a position that the agreement by the Plaintiff to pay one third of the power point costs, meant that the Plaintiff was obliged to pay the cost of the electrician before the electrician granted to the Defendant a discount from that initial starting point. I did not consider that made any sense at all, nor could it be justified by the Defendant's own explanation of his understanding of the contract, and I do think reflected poorly on his credit. Nonetheless, I consider he was being honest as to the central issue of whether the payments were weekly or monthly.

78. There is then the objective fact of the invoices, although, as I have said, I think they do no more than reflect the competing versions of the arrangement put forward by the parties, as I accept the Plaintiff's evidence that he waited until Mr Allcock returned from holidays before raising the issue.

79. The Plaintiff's mother does no more than confirm the Plaintiff’s subjective understanding of the arrangement and that he has held that understanding at all relevant times. The same can be said of the evidence of Mrs Allcock.

80. That then leaves the evidence of Mr Bloomfield.

81. Mr Bloomfield’s evidence is couched and was presented in a rather unusual way. The conversation whereby he says the Plaintiff accepted that the amount payable was weekly, as far as his affidavit evidence is concerned, comes completely “out of the blue", in that it was presented without any surrounding context and, in those circumstances, seems implausible.

82. The same can be said for the alleged conversations to the effect that monies were owed for the wall art and other matters.

83. Moreover, I consider the topic was something that Mr Bloomfield would have had no interest in at the time and I find it difficult to accept he has an actual memory of their conversation. On the other hand, he accepts that Mr Allcock had told him, after the matter had turned into a dispute, that Mr Allcock believed it was $1,100 (inclusive of GST) per week. This information may have unconsciously influenced him to believe he has a memory of the conversation.

84. On balance, I do not place any weight on the evidence of Mr Bloomfield. I consider it honest, but unreliable.

85. As to whether the payments were to be weekly or monthly, the onus is on the Cross-claimant to present evidence which satisfies me to the requisite standard that particular words were said that would support a finding of a term to that effect.

86. I am not so satisfied. Having considered all of the evidence, I find myself unsure as to what was said between the Plaintiff and Mr Allcock. It must follow that the party with the onus of proof, viz the Cross-claimant, has failed to prove its case.

87. The only thing I am satisfied of is that there probably was no meeting of the minds between the parties as to this important term of the contract, albeit they both believed that there had been.

88. For those reasons, the Cross-claimant's case in relation to the $1100 payment fails, other than it succeeds to the amount admitted by the Plaintiff/Cross-defendant, being $1100 per month.

Summary of findings as to the cross-claim

89. The arithmetic is difficult and will require checking.

90. For present purposes, I propose to publish these reasons and direct the parties to agree as to how much is owing one way or the other as between the claim and the cross-claim, as a matter of arithmetic, based on my findings.

91. In summary, my findings in relation to the amount claimed in the cross-claim are as follows:

1. The obligation for regular payments was to be calculated on a monthly, as opposed to weekly, basis. Accordingly, the Defendant was entitled to be paid $1,100 (inclusive of GST) per month.

2. The commencement date for such payments is 9 June 2023.

3. The Plaintiff is obliged to contribute one half of the vinyl wrapping (wall art) costs.

4. The Plaintiff is obliged to contribute the full costs of any power points installed for the purpose of the operation of his machines, but no other electrical installation costs.

5. The Plaintiff is not obliged to pay any amount for ongoing power bills.

6. The Plaintiff is not obliged to pay any amount for plumbing work.

7. The Plaintiff is not obliged to pay any amount for the costs of the roller shutters being installed.

The Plaintiff’s claim

92. As I have said, there is no issue but that the Defendant wrongfully refused to deliver up the Plaintiff's machines upon termination of the contract between them and upon demand by the Plaintiff.

93. There is also no issue that the market value of the machines at the time of that refusal was $37,500.

94. The Plaintiff's claim can be characterised legally as either bailment, detinue, conversion, and/or breach of an implied term of the contract to the effect that, upon termination of the arrangement, the parties would cooperate so as to allow the Plaintiff to retake possession of his machines.

95. On any view of it, in the circumstances, the Plaintiff is entitled to damages calculated to put him in the position he would have been in if not for the wrongful conduct of the Defendant.

96. The starting point is that the Plaintiff is entitled to the market value of the goods as at the time he was refused possession, being $37,500.

The Plaintiff’s claim for lost profits

97. This aspect of the claim falls into two categories. The first is a closed period, 6 August 2023 to 15 September 2023, being 20 days.

Lost profits for the closed period

98. The Plaintiff’s recordkeeping was, to say the least, basic and obviously not exact. It is a series of notes on his mobile phone. Moreover, his recollection as to the periods under which he assessed his takings was extremely vague.

99. In relation to the period up to and including the day that the proposed sale to Mr Baldwin fell over, it is clear that the machines continued to operate and the Defendant took the takings, to which it had no entitlement.

100. The Defendant has chosen not to give any evidence as to what those takings were. I consider that I am entitled in those circumstances to rely on what is very sketchy evidence by the Plaintiff as to actual takings prior to the termination of the arrangement and extrapolate those takings for the closed period of 20 days. On my calculation, and this is set out in some supplementary written submissions provided by counsel for the Plaintiff, I am satisfied that the appropriate loss is $229.25 per day for 20 days, being $4,585.

101. I accept that amount is based only on gross takings. However, I think for such a short period such other costs as the Plaintiff had, which of course primarily involves monies he was obliged to pay to the Defendant, which sum I am going to order he pays, and will be set off against any amount he is entitled to, can be ignored.

102. For those reasons, I have decided to allow the Plaintiff lost profits for the closed period calculated at $4,585.

Ongoing lost profits

103. The Plaintiff has a much larger claim for lost profits. That claim commences from 15 September 2023, and continues to the date of this judgment, a period of approximately 61 or 62 weeks. It raises significant and complex legal and factual questions.

104. I have decided this aspect of the Plaintiff's claim fails at the level of basic principle. Ultimately, the claim was not pressed by counsel for the Plaintiff. I consider that decision to have been appropriate.

105. The reason this aspect of the claim had to fail was because, however the cause of action is characterised as a matter of law, the ultimate purpose of an award for damages is to put the injured party back into the position it would have been in if not for the wrongful act.

106. The wrongful act here was the failure of the Defendant to return the machines. I have already determined, on orthodox principles, to compensate the Plaintiff for that failure by awarding him damages, being the market value of those goods from the date of refusal. On top of that amount, the Plaintiff will be entitled to interest at the Court rates from that time forward.

107. It seems to me axiomatic that, having done so, to allow lost profits from those same machines, for the same period, must be inconsistent and involve double counting.

108. Perhaps even more fundamentally, as a matter of evidence, it is clear beyond almost any doubt that the Plaintiff had no other opportunity himself to make profits from the machines. He had already explored all opportunities in Orange and there were none available, and his intention was, the project having failed, to sell the machines as he was prevented to do by the Defendant.

109. In those circumstances, I just do not think that the Plaintiff suffered any further lost profits as a result of the Defendant's conduct. The Defendant was entitled to terminate the arrangement at will. If it had done so and the machines returned, the Plaintiff would not have made any money, indeed, he probably would have been worse off because he would have to pay storage costs. Because of this, he would have sold them at the earliest opportunity, which is in fact what he attempted to do.

110. No doubt this is why counsel for the Plaintiff was ultimately driven to characterise the claim as an account of profits.

111. Without getting into difficult areas as to whether an account of profits would be available in the circumstances, I think that, as the claim primarily is at common law, the damages that I have awarded for the loss of the machines themselves is adequate compensation for the fact that the Defendants effectively took the machines. Again, to require the Defendant to pay the market value of the machines as well as account for profits made on the machines seems to me to be not consistent with the overarching principle of an award of damages, at least at Common Law.

Conclusion as to the Plaintiff’s claim

112. For those reasons, I will award the Plaintiff damages assessed at $37,500 with interest to run on that amount at the Court rates from 15 September 2023, and an amount of $4,585 for lost profits with interest to run on that amount at the Court rates from 15 September 2023.

113. I will not allow the Plaintiff any other aspect of its economic loss claim.

The Plaintiff’s alternative claim

114. The Plaintiff has an alternative claim under the Contracts Review Act which had, as its starting point, an assumption that its case as to the meaning of the contract would be unsuccessful.

115. As the Plaintiff has been largely, albeit not entirely, successful, this aspect of the claim falls away.

116. However, in the event that I am wrong in my determination as to the terms of the contract and if the contract had the meaning contended for by the Defendant, I would not have found in the Plaintiff's favour in relation to the Contracts Review Act claim. This is because, notwithstanding the Plaintiff's slight cognitive disabilities as identified in the medical evidence and the fact that obviously Mr Allcock was a much more experienced businessman at the time and the Plaintiff did look up to him in a way that could be described as close to “hero worship”, I am not satisfied that there was anything unfair in their dealings so as to render the contract susceptible to a finding pursuant to s 7 of the Contracts Review Act.

117. I think in truth, the parties, who were friends, were each seeking in a way to do each other a favour. This is probably why the arrangement was never reduced to writing. Neither really had any proper idea as to whether the Plaintiff's business would be a success or not, but there was built into the contract an escape hatch for either party. That is, if the commercial arrangements did not work out, the contract was terminable by either party at will.

118. I do not think it can fairly be said that Mr Allcock took advantage of the situation, even if it be said that it was not knowingly, so as to produce an unfair outcome. The terms of the contract itself, even if it has the meaning contended for by the Defendant, have not themselves been demonstrated to be unfair.

119. If it was necessary to decide, I would have dismissed the claim under the Contracts Review Act.

Conclusion

120. I have found in favour of the Plaintiff's claim, in the amounts I have identified at paragraph [112] of this judgment.

121. I have found in favour of the Defendant on the cross-claim in the amounts identified at paragraph [91] of this judgment.

122. Those amounts ought be set off.

123. What I propose to do is to direct the parties to agree arithmetically as to the amount of a single judgment (after set off) in favour of one or the other parties (at this point of time I am not sure who that will be).

124. That agreement should include, if possible, interest on the various claims.

Costs

125. Unfortunately, the ultimate outcome of this litigation is going to be a modest judgment one way or the other, which will be wholly disproportional to the legal costs spent in fighting the matter. I anticipate that the parties may wish to be heard on the question of costs and will make no observations on that topic until that happens.

Orders

126. My orders are as follows:

1. Direct the parties to seek to agree as to the amount of a final judgment to be entered, consistent with these reasons.

2. Stand the matter over to [Date] to deal with any outstanding issues if the parties cannot agree and also to hear submissions as to the question of costs.

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Decision last updated: 29 November 2024