Khabiya t/as Samso Wall Printing v Sachdeva

[2019] NSWDC 431

District Court

New South Wales

Medium Neutral Citation:

Khabiya t/as Samso Wall Printing v Sachdeva & Ors [2019] NSWDC 431

Hearing dates:

31 July 2019, 1 – 2 & 16 August 2019

Date of orders:

22 August 2019

Decision date:

22 August 2019

Jurisdiction:

Civil

Before:

Abadee DCJ

Decision:

See paragraph 282.

Catchwords:

CONTRACT – supply of wall printing machinery – breach of contract – existence of oral contract –whether damage was caused.

 

DAMAGES – breach of warranty – loss of profits – cost of rectification – reliance damages.

 

TRADE PRACTICES – misleading or deceptive conduct – whether pre-contractual representations were made – whether the misrepresentations were false, misleading or deceptive – whether statement about “quality” of product actionable representation or ‘puffery’ – ancillary liability – whether agent directly liable for any misrepresentation – whether agent can only be liable as accessory for misleading or deceptive conduct – reliance.

  ESTOPPEL– whether estoppel lies in respect to verbal guarantee that is unenforceable for non-compliance with requirement of writing.

Legislation Cited:

Civil Liability Act 2002 (NSW).
Competition and Consumer Act 2010 (Cth)
Evidence Act 1995(NSW)
Fair Trading Act 1999 (Vic)
Sale of Goods Act 1895 (WA)
Statute of Frauds 1677 (Imp)

Cases Cited:

ACCC v TPG Internet Pty Ltd (2013) 250 CLR 640
ACCC v Valve Corporation (No.3) [2016] FCA 196
ACCC v Valve Corporation [2017] FCAFC 224
Ankar Pty Ltd v National Westminster Finance (Aust) Pty Ltd (1987) 162 CLR 549
Beaton v Moore Acceptance Corp Pty Ltd (1959) 104 CLR 107
Bellgrove v Eldridge (1954) 90 CLR 613
BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266
Briginshaw v Briginshaw (1938) 60 CLR 336
Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592
Byrne v Australian Airlines Ltd (1995) 185 CLR 410
Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304
Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45
Coal Cliff Collieries Ltd v Sijehama Pty Ltd (1991) 24 NSWLR 1
Commonwealth of Australia v Amann Aviation Ltd (1991) 174 CLR 64
Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226
Foran v Wight (1989) 168 CLR 385
Forrest v ASIC [2012] HCA 39
General Newspapers Pty Ltd v Telstra Corp (1993) 45 FCR 164
Gould v Vaggelas (1985) 157 CLR 215
Hadley v Baxendale (1854) 156 ER 145
Heimann v The Commonwealth (1938) SR (NSW) 691
Henville v Walker (2001) 206 CLR 459
Heydon v NRMA Ltd (2000) 51 NSWLR 1
Houghton v Arms (2006) 225 CLR 553
Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413
Magennis v Fallon (1828) LR 2 Ir 167
Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494
Mondel v Steel (1881) 151 ER 1288
Petty v Penfold Wines Pty Ltd (1994) 49 FCR 282
Qantas Airways Ltd v Gama (2008) 167 FCR 537
Rosenberg v Percival (2001) 205 CLR 434
Smith v Land and House Property Corp (1884) 28 Ch D 7
Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272
TC Industrial Plant Pty Ltd v Robert’s Queensland Pty Ltd (1963) 37 ALJR 289
Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387
Wardley Australia Ltd v Western Australia (1992) 175 CLR 514
Watson v Foxman (2000) 49 NSWLR 315

Texts Cited:

Australian Consumer Law
K.R Handley, ‘Exploring New and Old Ideas about Estoppel and Election’ (2019) 93 ALJ 594 at 596
Meagher Gummow & Lehane’s Equity: Doctrines and Remedies, (5th ed)
Ritchie’s Uniform Civil Procedure (NSW)
Sutton, Sales and Consumer Law (4th ed), LBC 1995)

Category:

Principal judgment

Parties:

Mr Khabiya (Plaintiff)
Mr Sachdeva (First Defendant)

Representation:

Counsel:
Mr C Carter (Plaintiff)
Mr J Mack (First and Third Defendant)

  Solicitors:
Vaikom Rajeev (Plaintiff)
MST Lawyers (First and Third Defendants)

File Number(s):

2016/257216

Publication restriction:

Nil

Judgment

INTRODUCTION

The parties

1. The plaintiff carries on the business of distributing wall printing machines under the trading name “Samso Wall Printing”. In 2015, the plaintiff entered into business dealings with the defendants, Mr Tarun Sachdeva (the First Defendant), Seema Sachdeva trading as Opticure (the Second Defendant), who traded (in India) under the name “Opticure Solutions TIN 06111340871”. Seema Sachdeva is Tarun Sachdeva’s sister-in-law. The Second Defendant manufactures and sells wall printing machines in India and they are exported to other countries.

2. With no disrespect, it will be convenient hereafter to refer to the Plaintiff as Jeeth, the First Defendant as Tarun and the Second Defendant as Opticure.

3. Jeeth also brought a claim against a Third Defendant, a registered entity with the title “Opticure”, but whose formal corporate name was Iscon (Vic) Pty Ltd. It was solely owned and managed by the First Defendant, Tarun Sachdeva. It was the trustee of the Sachdeva Family Trust trading as ‘Opticure’. During the hearing, it emerged for the first time that Iscon had become deregistered in August 2018 (the proceeding having commenced in 2016). Deregistration has the effect that the company no longer exists: s 601AD(1) Corporations Act 2001 (Cth). After hearing from Counsel for Jeeth and for Tarun (the sole director and shareholder of Iscon), I ordered that the Third Defendant’s name be struck out from the statement of claim (as finally amended).

4. Counsel for Tarun characterised the legal relationship between Tarun and Opticure as being one whereby Opticure appointed Tarun as its Australian agent, or, put in more grandiose terms, its ‘Official Global Representative’. The scope of that agency was that Tarun would enter into contracts in relation to the sale of wall printing machines on Opticure’s behalf.

5. By this proceeding, Jeeth seeks orders for damages for breaches of what were identified as two contracts with Opticure, and a contract of guarantee with Tarun and for contraventions of the prohibition against misleading or deceptive conduct (in the form of pre-contractual representations inducing entry into the First Contract said to be made by Opticure, Tarun and/or Iscon) in trade or commerce under sections 18 and 29 of the Australian Consumer Law. An additional claim of accessorial liability is made against Tarun in respect to the alleged contraventions of Opticure of s 18.

6. The pleadings were drafted in a complicated fashion: featuring multiple parties, with multiple permutations or versions of alleged contracts between Jeeth and Opticure; alleged representations by multiple parties and an allegation of accessorial liability. It assists therefore to set out, in outline, Jeeth’s cases against Tarun and Opticure.

Jeeth’s contractual claim(s) against Opticure

The ‘First Contract’

7. On 26 May 2015, Jeeth and Opticure entered into a non-exclusive contract (the ‘First Contract’) whereby Jeeth would distribute Opticure’s wall printing machines and related products within certain territories of Australia (Western Australia, Northern Territory and South Australia). This contract featured a number of alleged terms, some of which are disputed, but its essence involved Jeeth purchasing six sets of products from the Opticure for what Jeeth contends was the sum of approximately AU$46,500 (incl GST).

8. Jeeth signed the contract. Tarun (not Opticure) signed the contract. Counsel for Tarun accepted that Tarun signed the contract as agent for Opticure.

9. Jeeth says that Opticure breached the First Contract by failing to deliver two of the sets of products prior to 25 June 2015 and thereafter not refunding Jeeth's payment. Opticure contends that in relation to its obligation for delivery, the term of the contract was that it was only required to do its best to deliver the first two sets of machines before 25 June 2015. It disputed that the obligation for delivery by this date was an essential term. To the contrary, Opticure says that it was Jeeth who was in breach of the contract after defaulting on his obligation for payment.

10. In their separate defence, Tarun admits that Opticure did not deliver the products ordered before 25 June 2015, or refund the payment made by Jeeth, but said that the two machines were not delivered, due to Jeeth’s failure to pay the outstanding balance of the purchase price, as required under the Distributorship Agreement.

11. Jeeth asserts, and Opticure disputes, that on 18 August 2015 Jeeth accepted Opticure’s repudiation of the First Contract. Tarun denies any repudiation of the First Contract and says that Opticure understood that the Distributorship Agreement was still on foot, due to on-going communications received from, or on behalf of Jeeth.

12. On 23 August 2015, Mr Tony Tiernan, acting as (another) agent for Opticure, rang Jeeth to tell him that the goods (which had been ordered under the First Contract) were, in fact, ready to collect and that Jeeth would need to sign an authority. There is a question as to whether Mr Tiernan acted for anybody else. That question arises because Jeeth claims that the products were imported into Australia by Iscon.

The ‘Second Contract’

13. Jeeth alleges that on or about 23 August 2015 he entered into an agreement with Opticure (and Iscon) for Jeeth to receive the goods that had been shipped to Australia (the ‘Second Contract’). Both Opticure (and Iscon) dispute entering into such an agreement.

14. Jeeth alleges (and each of Opticure and Tarun deny) that the Second Contract contained the following terms:

1. Jeeth would not enforce his rights against Opticure for a refund of the money he had paid pursuant to the First Contract;

2. Iscon assumed the obligations that Opticure had under the First Contract in the Second Contract’;

3. the products sold to Jeeth would be of merchantable quality (this being an implied condition under the Sale of Goods Act 1895 (WA);

4. with the sale of the wall printers, there was also the supply of 8 Litres of ink and 2 Litres of flushing liquid;

5. Jeeth would pay transportation costs of Opticure and Iscon.

15. Jeeth contends that this Second Contract was breached in that:

1. the products that were received were not new, but were old machines that had been previously used for product development testing and demonstration purposes;

2. the products were not of merchantable quality, but rather caused damage to the ceilings and floors upon use;

3. accessory equipment (such as instruction manuals and licence fees for software) was not supplied; with the result that the products stopped pumping black ink due to faulty connections with the motherboard.

4. The products were not supplied with ink, thereby requiring Jeeth to separately purchase the ink; and

5. Opticure and/or Iscon did not provide promotional or marketing material and the necessary specifications for use of the products.

16. Jeeth complains that Opticure and/or Iscon refused to repair or replace the defective products.

Opticure’s Defence to the Contract claims

17. The Second Defendant, whose (personal) name was Seema Sachdeva, did not appear at the hearing. She is an Indian resident and domicile. Although there may have been issues as to form, Ms Sachdeva not only effectively traversed the allegations raised against her; she also supplied what might best be called a counter-narrative in her Defence. She admitted that a non-exclusive distributorship agreement had been entered into on 26 May 2015. She said that two machines had been supplied to Jeeth on 17 August 2015. She said that it was a term of the contract that any defect in the machine would be reported to her within 21 days of receipt and that if any dispute arose, it would be subject to a jurisdiction outside of Australia. She says, further, that after his receipt of the two machines, Jeeth had not only used them, but had profited from their use without reporting (at least to her) any problem.

18. She says that since the agreement was executed at the principal place of business in Faridabad, Haryana, in India, substantive rights were governed by ‘Indian law’. In particular, she relied upon a 3 year time-limitation (from the date of the invoice) under Indian law as to the right of recovery of damages; as well as a contractual warranty said to have subsisted for 15 months. She reiterated that a jurisdiction clause barred Jeeth’s claim from being heard in this Court.

19. She added that Jeeth had obtained a remedy by filing a lawsuit against her brother-in-law (Tarun) and accordingly, this proceeding was no longer maintainable.

20. She also adds that Jeeth was himself in breach by failing to purchase the remaining four machines. She also contends that in breach of the agreement, Jeeth used his own ‘Samso’ branding rather than the ‘Opticure’.

21. Tarun and Iscon say that the First Contract had been varied, in that two Samso branded machines had been shipped from India to Perth, notwithstanding Jeeth’s non-compliance with the terms of the Distributorship Agreement.

Tarun’s position in relation to the alleged versions of the contract

22. Tarun says he is not a party to the ‘First Contract’ or ‘Second Contract’.

23. Tarun admits that under the terms of the Distributorship Agreement, the machines were to be new. It denies that the machines that were supplied to Jeeth were ‘old’, or had previously been used for product development, testing and demo purposes. He said in his Defence that they were new.

24. Tarun denies that the machines that were supplied were not merchantable or safe to use. He said that they had been safely operated under supervision in India and, moreover, the plaintiff (or his representative) had seen the results of testing and inspection in fulfilment of his order. He also said that Opticure had not been informed, prior to the filing of an amended pleading, of any damage caused to the ceiling or floors by the machine. He accepted that an issue arose on 10 September 2015, due to what he said was Jeeth’s incorrect product connections but that this had been rectified. Otherwise, he says, Jeeth had been provided with a hard copy instruction manual and software and on-going support.

25. Tarun denied that there was a term in the agreement that the machines were to be supplied with ink, although he accepted that Jeeth placed an order in 20 August 2015 to purchase ink from Opticure.

26. In the light of his denial that the products delivered were defective, it stood to reason that Tarun denied refusing to repair or replace them. To the contrary, he alleged that Jeeth had never requested that they be repaired or replaced until the commencement of this proceeding.

27. Finally, Tarun denied not providing promotional or marketing materials or all specifications.

The claim of misleading or deceptive conduct for pre-contractual representations against Opticure and Tarun

28. Jeeth contends that he was induced to enter into the First Contract by the following verbal representations made, on 22 May 2015, by or on behalf of all, or at least some of, the defendants, being that:

1. the machines manufactured by the Opticure were of the “highest quality”;

2. Opticure Solutions would provide “all after sales service”.

29. The former representation was said to be misleading or deceptive in that the products that were delivered were not of the highest quality. In this regard Jeeth relies upon the same breaches of the Second Contract identified above.

30. In relation to the latter representation, Jeeth says that an after sales service was not provided and that the defendants did not intend to provide it.

31. Jeeth says that the second representation was in the nature of a representation as to a future matter and thereby relies upon section 4 of the Australian Consumer Law.

32. I have noted that Tarun accepts that he was the appointed agent for Opticure.

33. Further, in relation to the misleading or deceptive conduct claim, Jeeth contends that Tarun was ‘involved’ in (in the sense of knowingly concerned in or party to) the contraventions, by Opticure of the statutory prohibition.

The guarantee claim (and its derivatives) against Tarun

34. Jeeth also brings a claim on an (oral) guarantee and indemnity purportedly granted by Tarun on or about 22 May 2015 in respect to any losses sustained by Jeeth as a result of the First Contract.

35. Alternatively, if there was no enforceable guarantee, Jeeth contends that a (conventional) estoppel arises to prevent the first defendant denying that it is personally liable under a contract of guarantee.

36. Further in the alternative, Jeeth says that Tarun engaged in misleading or deceptive conduct in contravention of the prohibition against misleading or deceptive conduct, by making a representation (in substance a guarantee) on 22 May 2015, in trade or commerce, that he would be liable for any losses sustained by Jeeth in entering into the First Contract. This representation, Jeeth says, was restated on 3 June 2015.

Damages

37. Jeeth contends that the same damages are recoverable, whether under contract or pursuant to section 236 of the Australian Consumer Law. Jeeth says that his loss and damage is represented by: (a) the sum of $93,035.22, which was initially paid under the contract for the first two products; (b) $126,000 representing a loss of profit, (c) $21,160 paid in the form of transport costs (incl of GST) and (d) $9,770 in additional costs (incl GST).

Appearances

38. When this matter was called on, appearances were announced for the plaintiff and the first (and formerly third) defendant. No appearance was announced for the second defendant. That position was maintained after I asked the court officer to call the matter outside the courtroom.

39. The second defendant’s absence was no surprise. As I indicated at the outset of the trial, the Registry of the Court had received, in advance, a written letter from the then former solicitors for the Second Defendant, which attached a Notice for its Removal as a solicitor for the Second Defendant [1] . The covering letter indicated that on or about 24 July 2019, the solicitors’ authority had been terminated by the second defendant and that the second defendant (an Indian national and resident) did not seek to appear at the trial.

    1. The solicitors were from a Victorian firm and they were unable or unwilling to arrange to file this document themselves. The Court granted leave to file it in Court.

40. When apprised of these circumstances concerning the Second Defendant, Counsel for the Plaintiff indicated his wish to proceed against the Second Defendant (and the other defendants who had appeared) and the Court sanctioned this proposal (see r 29.7 of the Uniform Civil Procedure Rules). The effect of this, as indicated at [29.7.5] in Ritchie’s Uniform Civil Procedure (NSW), was that Jeeth needed only to prove his claim against Opticure so far as the burden of proof (relating to the pleaded matters against the second defendant) rested upon him; but once that was done, he was entitled to the relief claimed and such other relief as was consistent therewith.

The issues

41. These were ultimately:

1. Whether there was one or two contracts between Mr Khabiya and Opticure;

2. the terms of the contract;

3. whether there was breach of the contract(s);

4. damages

5. what material pre-contractual representations were made and by whom;

6. whether the representations were false or misleading or deceptive; and

7. whether any damage was caused by the misrepresentations.

FACTUAL BACKGROUND

42. On 1 March 2015, Tarun was appointed as the ‘Official Global Representative’ for Opticure. When he was cross-examined, Tarun said he had not been a director of Opticure. Nor was he an employee. He identified himself as Opticure’s ‘representative’. He had come to be associated with Opticure because it was his brother, Sajiv Sachdeva, who had first made the product. He was married to Seema Sachdeva, the Second Defendant. He said he played no role in Opticure’s management; nor was he in any position of control. He had no power of attorney conferred on him. He said he was responsible for sales of the product in India and most of the sales outside of that country, including Australia.

42. In early 2015, Jeeth was looking for a business opportunity to pursue. In his affidavit, Jeeth said that his interest was drawn to what appears to be a revolutionary product that could print on walls in situ. He watched an episode of the popular television show “The Block” and saw the results of a wall printer manufactured by the Australian company Zeescape. Thereafter, he conducted some research over the Internet and discovered that a wall printing machine similar to that which he had seen manufactured by Zeescape was manufactured in India by a company called Opticure. The advertisement on that company’s Internet page identified Mr Sanjeev Sachdeva as a point of contact at Opticure.

43. Between April and May 2015 Jeeth rang the mobile number and spoke to a person who he later identified as Tarun, whilst the latter was in India. Jeeth had seen video clips over the Internet about printing machines and was interested to learn about Opticure and its printing machines. In this period there was an agreement between Jeeth to meet with Tarun in Melbourne. Tarun requested that Jeeth produce some financial documents so as to establish his financial capacity to act as a potential distributor of printing machines in Australia. Some financial documents were emailed to Tarun for this purpose.

44. Around this time, Tarun says he told Jeeth that he was a representative for Opticure.

45. In his affidavit, Jeeth says that, amongst other things, that Tarun had told him (whilst he was in India) over the telephone in April or May 2015 that “our” (Opticure’s) machines were “world class”, and “revolutionary”, and that “we could provide “superior after sales support”.

46. In his affidavit, Tarun denied saying that Opticure’s machines were ‘revolutionary’. Under cross-examination, he denied statements attributed to him by Jeeth (and/or Ms Khabiya), among them, that Opticure’s machines were ‘world class’ and, unlike Zeescape, it could provide superior after sales support. He also denied saying that upon payment, Opticure’s printing machines were ready for distribution. He denied using the words ‘highest quality’ when ‘ranking’ Opticure’s products; but, instead, said that he told Jeeth that they were of good quality, and even superior, in comparison with Zeescape’s product, which had been manufactured in China.

Meeting on 22 May 2015

48. On 20 May 2015, Jeeth and his wife left Perth to go to Melbourne to stay at the Citadines Hotel. They stayed there for two nights before returning to Perth late on 22 May.

49. On 22 May 2015, Jeeth, and his wife (Ms Sonal Khabiya) met Tarun at the Citadines Hotel. They discussed a potential appointment of Jeeth as a distributor. Jeeth’s recollections about how many times he saw Tarun on 21 and 22 May were not strong. However he thought he had meetings with him over both days. Ms Khabiya also thought meetings had occurred over both days.

50. It became apparent during the course of his cross-examination that there was a lack of certainty or recollection as to what extent Jeeth had kept a contemporaneous record of what was discussed during these meetings. He accepted that it was not his normal practice to take handwritten notes. However he did so on this occasion. Those handwritten notes were subsequently discarded. Nevertheless, Jeeth’s evidence was that the handwritten notes formed the basis for his formulation of a ‘Memorandum of Understanding’ [2] . Later, he said there was another note of the meeting generated electronically.

    2. Ex 1 (Vol 2, p 303).

51. In his first affidavit, Jeeth deposed to Tarun saying, at this meeting, amongst other things, that “our machines are of the highest quality. They are revolutionary and they will set the standard around the world”. It was put to Jeeth in cross-examination that Tarun had never said that the machines were of the “highest quality”, but Jeeth maintained that he had.

52. Jeeth also deposed in his affidavit to his recollection that Tarun had said, during the same meeting “we will assist you with after sales service. If you are a customer who needs a part - you will receive what is needed right away. There will be no delay.” It was put to Jeeth in cross-examination that his subsequent complaint was not that no assistance had been provided by Tarun; merely the adequacy of such assistance. I understood Jeeth to accept that this was so. Nevertheless, he accepted that Tarun had sent him a range of emails responding to concerns that Jeeth had raised. The machines were still in his possession.

53. Further, Jeeth deposed in his affidavit to Tarun to parts of conversations during this day in which the exchange went as follows:

“I said:   I would have the arrangements in place and machines here in Australia before 30 June. I want the distribution agreement to start this financial year. There are tax advantages for me in doing so and June is a good month to get lots of sales and I would like to advertise the end of financial year sales.

Tarun replied:    yes that will be possible. If anything goes wrong I will refund your money.”

and later

“Tarun said: Jeeth, please see my property mortgage document with ANZ for Parkmead Way under my name, and for my other property, please see this real estate agent contract that is currently under rental and my name is on the lease document which has the address of the property

I said:   that looks good.

Tarun:   Jeeth, you have seen all my financial details, and if anything goes wrong, I give you my personal assurance, and I will be personally liable, and you can also mention this in the MOU and agreement, and you have my word on it. I have run businesses myself and I understand you’re starting a new business and I will be there to take you through, this journey, as we have helped many small businesses in the past and (sic) not new to such things.”

54. In is affidavit, Jeeth continued deposing to his conversations with Tarun. He deposed that after drafting a Memorandum of Understanding in Tarun’s presence, he and his wife left the hotel to talk and to find a bank. He recalled that at this point, Tarun called him and said:

“I will personally liable and please include that in the MOU”.

55. Thereafter, he deposed in his affidavit, he specifically included reference in the MOU to Tarun being personally liable in respect to the machine payments. He says he later watched Tarun sign the MOU; after handing over his cheque for AU$22,500. Jeeth deposed in his affidavit that in signing the MOU that he relied upon Tarun informing him that he would be personally liable if Jeeth made the payments as the basis of deciding to proceed with the deal. He specifically says that he would not have proceeded with the business deal if Tarun had not told him that he would be personally liable for the payments. He also says that he relied upon both of the representations as to the quality of the manufacture and after sales support. He said that these matters were important to him: he wanted to be part of a business that offered leading quality products and high standards of customer service.

56. Under cross-examination, Jeeth’s evidence of these statements about personal liability was closely scrutinised. He could not remember how many times Tarun said the statements (although recalled that there were multiple times). He could not remember whether it was the morning of 22 May or at lunch. Such handwritten file notes as he says he took of the meeting had been discarded. It was put to him that Tarun had never signed any personal undertaking. To this, Jeeth responded that his version of the memorandum of understanding was signed by Tarun at the Citadines hotel on 22 May and he thought that Tarun had retained such (signed) version even though he, himself had not retained a signed version. It did not occur to him to ask for a photocopy, or even take a photograph, of this signed version.

57. Jeeth was also referred, when under cross-examination, to an undated typed document [3] . It appears to be a transcription of conversation Jeeth had with Tarun of what was said on 21 or 22 May; however, Jeeth could not remember whether he had typed it on those days. He thought it was possible that the document had been created by him using a “OneNote” facility on his mobile phone. Later, in re-examination, it emerged that a document similar in content to this did appear on his mobile phone in the “OneNote” file and that it had been modified more than two years ago. As to the content of this undated typed note, it did, relevantly, contain the following statement:

“Tarun to Jeeth:

Jeeth you have also seen all my financial details, and if anything goes wrong I give your personal assurance, and I will be personally liable, and you can also mention this in the MOU and agreement, and you got my words. I have run the businesses myself, and I understand you’re starting a new business, and I will be there to take you through this journey as we have helped many small businesses in the past and not new to such things”.

3. Ex 1, Vol 2, p 299

58. In her affidavit, Ms Khabiya deposed to her recollections what was said in the meeting in Melbourne on 22 May. She recalled Tarun saying to her:

“I have been travelling all over the world. What I have discovered is this type of quality you will not find in other like machines made by Zeescape. I have bought the same machine that Zeescape uses. It is from China. It has a lot of problems.

…

If you buy from us you will not have any problems. You will get the best quality and service from us. We are different from Zeescape. Our printing is revolutionary. You will start earning from day one. It only takes one person to use a machine. You will get our support if there are any problems. If you go with us we will send you marketing video you can use to show customers.”

59. Ms Khabiya also deposed, during the same meeting in Melbourne on 22 May, to Tarun saying the following on the subject of security:

“I will be personally liable if anything goes wrong with you guys. This is my business and after all the work I have done I know you will not get a better product in the marketplace. If you need support or any service I will make sure that it happens. You can trust me.”

60. She then deposed that Karen had showed her a copy of a lease document. She also recalled that after Tarun had made the above statement, Jeeth had asked him to confirm that in writing; to which Tarun responded “yes, we can put that in any agreement we reach. I will be personally liable.”

61. Under cross-examination, Ms Khabiya confirmed that Jeeth had taken handwritten notes and, further, that these had been used by him to create his version of the Memorandum of Understanding on 22 May. She could not identify any other, additional document that he had typed. She was shown the undated typed document said to have been created by Jeeth on ‘OneNote’ on his mobile phone. After some ambivalence, she confirmed that she had not created it; and neither had Tarun. She did not see Jeeth type on his computer and she could not confirm that this additional document had been created in the hotel room.

62. She also purported to corroborate Jeeth’s evidence that Tarun and Jeeth had signed the latter’s version of the Memorandum of Understanding. She had seen this document in Jeeth's hands near the lobby. She recalled it being printed out at reception. She could not recall where, within the document, it had been signed. Curiously, she said she had suggested to Jeeth that some proof should be taken of the signed copy, but she added that Tarun had rejected the idea of a photo being taken of it. She could not identify any request for a signed copy being made in writing.

63. She was challenged on her evidence that Tarun had given an undertaking as to his personal liability. She maintained that he had said he would be personally liable on both days of the meeting. She accepted that it was important to have such undertaking recorded in writing. She regarded the (missing) signed version of the Memorandum of Understanding as satisfying that particular requirement.

64. In his affidavit, and again under cross-examination, Tarun denied representing that he would be personally liable if something went wrong with the distributorship agreement. He also generally denied Jeeth’s account of what was said during the meeting. He accepted, on the other hand, that he would be personally liable for the return of the cheque for $22,500 which Mr Khabiya had given him if the agreement did not proceed. Tarun explained the circumstances in which this promise about the cheque arose. He said that at the meeting on 22 May, Jeeth had wanted to secure distribution rights and had asked Tarun about the bank details for Opticure. Tarun explained that because he did not have the bank details for Opticure, on hand, at the time and due to the time difference between Australia and India (which meant he could not ascertain the bank details), Jeeth wrote a cheque for him personally for the sum of $22,500 to indicate the seriousness of his intent about entering into the distributorship agreement.

65. It was put to Tarun in cross-examination that he had a personal or financial interest in vigorously ‘promoting’ these machines to Jeeth (and Ms Khabiya). It was put, and Tarun accepted, that no distributor had been appointed (anywhere else in the world) and that he stood to gain from Jeeth’s appointment. Tarun disputed this. He said he did not get paid anything, per se, from the appointment of a distributor; but would receive 5% of commission on sales. He had other sources of income at that point. It was put that he was “keen” about the prospect of Jeeth being appointed as a distributor. Tarun disputed this. It was also suggested that he was motivated to ‘promote’ the machines in the best possible light. To this, Tarun said that he was not responsible for promotion of the product – if someone made an inquiry of it, he would field the inquiry.

66. More directly, it was put to Tarun that he had represented to Jeeth (on either or both 21 or 22 May) that the machines were of “high quality”. Tarun said he only thought he had represented that they were of good quality; meaning that they were fit for purpose and had, or perhaps were capable, of performing well.

67. It is at least clear that on this date, the plaintiff made out a cheque to Tarun for the sum of $22,500 and that Jeeth emailed to Tarun a ‘Memorandum of Understanding’.

Events leading up to entry into agreement

Different versions of the ‘Memorandum of Understanding’

68. After the meeting, on 22 May 2015, Jeeth sent (by email) to Tarun what he described as his version of a memorandum of the understanding that had been reached at the meeting. The document contained 14 points. Tarun’s evidence was that he did not assist Jeeth to prepare this document. Tarun said he only saw it for the first time when he had received it by email (and responded to it by email on 23 May).

69. In the view of the issues in this proceeding, it is not necessary to identify each point. It suffices, initially, to note that point 1 was expressed in the language of Jeeth’s “offer” to “represent” Opticure as its Australia-wide sole representative, and sole distributor of all of their products in Western Australia, Northern Territory and Adelaide, with other rights to distribute in other parts of Australia. Further:

• Point 8 indicated that on 22 June 2015 (which Jeeth subsequently corrected to 22 May 2015) SAMSO Wall Painting would make a 50% advance payment for 1 off items 3.1, 3.2 and 3.3 (sic) In the name of Tarun Kumar Sachdeva”.

• Point 10 stated that a final legal agreement between Opticure and Samso would be finalised between 25 and 26 May 2015 at Perth and additional of that payment will be made.

• Point 13 provided that in case both the part(ies) were unable to come to an agreement on the entire agreement by 22 May 2015 (‘Stage 1’) and execute the specific items of 5 and item 6 by 25 June 2015 (‘Stage 2’) then all the advance payment made including cheques/online transaction etc .. Will be refunded to SAMSO Wall Printing and the whole agreements need to be re-negotiated between 10 June – 25 June 15 (sic).

• Point 14 was expressed as “Mr Tarun Sachdeva will be personally liable for this payments.”

70. In cross-examination, it was put to Jeeth that he understood that Tarun’s personal undertaking was a reference only to the $22,500. Jeeth maintained that it was personal liability in relation to all dealings.

71. It was put to Tarun, when he was cross-examined, that he had not positively disclaimed the correctness of what was said in point 14. He also said that, on behalf of Opticure, he made no promise that machines could be provided by June; but rather, it would try its best to achieve that outcome.

72. Jeeth indicated in cross-examination that after the meeting on 22 May, he had engaged his accountant, Mr Garg, to assist him to facilitate the entry into an arrangement with Opticure. This mainly consisted of him adopting a template-form for a contract. By then he had mentioned to Mr Garg that he was exploring business opportunities with Opticure. Jeeth accepted (and an email indicates) that on 23 May 2015, he had on-sent, by email, the memorandum of understanding referred to in the last paragraph. This was to keep Mr Garg “in the loop”.

73. On 23 May 2015, Tarun sent an email to Jeeth, saying it was a pleasure to meet him and his wife and acknowledging receipt of the cheque for $22,500 and stating that it would be fully refundable if the agreement did not go through. In his affidavit, Tarun denied making any personal guarantees, other than undertaking to be personally liable for the cheque if the agreement did not eventuate. It was put to Jeeth in cross-examination that there was no reference here, by Tarun, to signing Jeeth’s version of a Memorandum of Understanding. Nevertheless, Jeeth interpreted the message as his acknowledgement of Jeeth’s earlier version of the MOU.

74. On 25 May 2015, Tarun sent an email to Jeeth (apparently copied to Sanjiv Sachdeva) attaching a memorandum of understanding (dated 24 May), which set out the proposal terms which Tarun says had been prepared after discussions with Sanjiv Sachdeva (Manager of Operations at Opticure). This was a very different version to the version of a memorandum of understanding which Jeeth had sent to him only days before. Most relevantly, in the present context, it said nothing about his assuming or undertaking any personal liability of any kind. Indeed, it contained no description of any personal obligations on Tarun’s part of any kind.

75. Under cross-examination, Jeeth said he was ‘confused as to why he received this document’. Nevertheless, he on-sent it to Mr Garg the same day.

76. Tarun emphasises that this document does not refer to his guaranteeing the obligations of any parties to that document (or any potential contract).

Meeting on 26 May 2015 – entry into the Distributorship agreement

77. On this day, Jeeth met Tarun again, this time in Perth (in the East Cannington Library). Also present was Mr Garg, Jeeth’s accountant. Jeeth had met and spoken with Mr Garg earlier that day but could not recall what was discussed. He could not recall discussion with Mr Garg about the two versions of the memoranda of understanding exchanged with Tarun. The day before he had asked Mr Garg to obtain or prepare a template for a prospective agreement. The template version which he saw, prior to the meeting, did not provide content for schedules A, B, C or D.

78. The meetings with Tarun that occurred on 26 May were broken up. There were initial meeting(s) at the library. Thereafter, there was a meeting at Mr Garg’s residence that was nearby. At the former meeting Mr Garg had arrived with multiple copies of a prospective distributorship agreement. Thereafter and throughout the day, Mr Jeeth (with his wife) and Tarun worked through the body of the agreement.

79. Jeeth put a proposal for being the exclusive distributor for the territories of South Australia, Western Australia and the Northern Territory. Tarun proposed that 10 machines would be purchased over the course of one year, or buying the machines instead and operating a wall printing business if he did not want to be a distributor. Tarun returned the cheque provided to him on 22 May.

77. After a 3 hour interval, during which Jeeth consulted Mr Garg, the meeting reconvened at Mr Garg’s residence, where a pre-drafted non-exclusive distributorship agreement was provided to him for his review. Both of them signed a Distributorship Agreement. The parties to the agreement were Jeeth (or at least his trading name) and the business name given to Opticure. Tarun, as indicated, signed on behalf of Opticure. This document attached a Memorandum of Understanding. Opticure’s banking details were also provided to Jeeth. It was during this meeting, Tarun says, that he returned the cheque that had been given to him on 22 May. In receiving it, he deposed in his affidavit, he recalled telling Jeeth that it had been addressed to the wrong party, and should have been addressed to the contracting party – Opticure.

78. Under cross-examination, Jeeth said that he had excised a provision within the Distributor agreement relating to Tarun’s personal liability. He had said that it was his version of the memorandum of understanding which was the antecedent version for what eventually became Schedule D. It was suggested to Jeeth that he had copied and pasted Tarun’s version of the MOU in Schedule D, but Jeeth disputed this. That evidence, however, does not appear to be right. A cursory comparison between Schedule D and the two earlier versions of the Memoranda of Understanding indicates a greater similarity with Tarun’s version than Jeeth’s version; even if schedule D contained fewer clauses. At any rate, when asked why he would excise such provision, Jeeth explained that in view of his understanding as to Tarun’s position (as a director of Opticure Solution), which was comparable with his own position as a director of a business, he similarly assumed that if things went awry, Tarun would be personally liable.

79. When she was cross-examined, Ms Khabiya said that Jeeth was responsible for inserting everything into the template that Mr Garg had provided.

80. In his cross-examination, Tarun was challenged on why he executed the Distributorship Agreement on Opticure’s behalf and, in particular, why he affixed his name under the word ‘director’ when he was not a director of Opticure. Tarun said that he had explained this circumstance but was assured that it would not matter – Jeeth’s accountant would ‘change that matter over’.

81. Material terms of the Distributor Agreement were ultimately as follows:

1. Opticure was to deliver to Jeeth, and Jeeth was to pay Opticure R$13,500,000 for the “Products”, being six printer heads, six railing and stands, cartridge and cleaning chemicals; and six customised laptops, ink supply system sundry items dampers extra tubing, cable connectors and moving belts (cll 10.4, 11. & Sch B & C);

2. the current prices for the products (in Indian Rupees) were set out in schedule B (cll 10.1) and those prices were not to be increased for any of the products until the expiry of the first year and three months of the agreement (cl 10.2)

3. the products would be ‘fit and merchantable’, and would meet and be in accordance with the law of the “Territory”, being the law of Western Australia, Northern Territory and South Australia (cl 7.1(a), Sch A). ‘Merchantable’ meant saleable in the ‘Territory’ under its product description at its market price or, if applicable, fit for its ordinary purpose (cl 1.1).

4. where a product was defective and/or not merchantable, then so long as (i) Jeeth had properly stored the products; (ii) no ‘use by date’ had expired; and (iii) Jeeth had not altered, tampered with or adulterated the products and/or their packaging, Opticure must either replace or repair or pay the cost of replacing the defective products at her own cost (cl 7.1(b)(i));

5. Opticure would provide Jeeth with suitable promotional and marketing materials in relation to the products throughout the term of the agreement (cl 6.1);

6. Opticure would provide Jeeth with all specifications (if any) required for use of the products by consumers (cl 6.3).

7. Either party had a right to terminate if the other committed a ‘Material Breach’ (cl 12.1). ‘Material breach’ included, relevantly, any breach of an “essential term”.

8. Upon termination, Opticure was obliged to deliver sufficient quantities of the products ordered by Jeeth so as to allow it to satisfy all of its outstanding contractual obligations to its consumers or assume such responsibility directly herself (cl 12.2);

9. the parties chose the ‘Law of Australia’ as the system of law to govern their rights and obligations and the parties agreed to submit to the jurisdiction of the courts of the State or Territory in which the ‘Territory’ was located (cl 14.1). A dispute resolution mechanism was also included (cl 14.2).

10. An ‘entire agreement’ clause was included (cl 17).

11. The parties acknowledged and represented to each other that they had had the opportunity to seek and obtain separate and independent legal advice prior to entering into the agreement (cl 22.1).

85. Jeeth accepted that he read the ‘entire agreement’ clause in clause 17 prior to signing the agreement.

86. Further, incorporated within the distributorship agreement was a ‘Memorandum of Understanding’. Tarun also signed this document on Opticure’s behalf as its agent. Three of the material terms of that document relied upon by Mr Khabiya were that:

1. Opticure would “do its best” to deliver the first two sets of items (priced under 3.1, 3.2 and 3.3 to Schedule B) before 25 June 2015. If this did not happen, then Opticure would refund all the payments made by Mr Khabiya and re-negotiate the entire terms of the signed agreement. This term was described as “essential” (par 13)

2. Opticure “will (sic) be initial first payment on 26 May in this payment transaction is expect (sic) to complete within five business days” (par 11)

3. warranty and technical support of the supplied product lies with Optciure Solutions (par 14).

87. On 28 May 2015, Jeeth sent emails to Tarun, placing orders for printing machine parts, being a printing head, and another for printing machine parts for customised accessories; and asking for an invoice. Later that day, Tarun sent an email to Mr Garg enclosing invoices for these orders.

88. On 29 May 2015 Jeeth transferred the sum of $93,035.22 to Opticure. He did not receive confirmation the payment had been received until 4 or 7 June. Jeeth explained that this was in large part due to a halt which he had placed upon the processing, for the purposes of ‘verification’. This was notwithstanding the circumstances that, in a context where the date for delivery is 26 June, he was aware that Opticure would not start the manufacturing process until it had received payment.

89. On 1 June 2015, Jeeth sent an email to Tarun, requesting a factory visit in India to facilitate his ‘due diligence’ exercises and outlined a timeframe for the agreement, moving forward.

90. On 2 June 2015, Tarun sent an email to Jeeth. The email reminded Jeeth that the product was still in the ‘testing’ stage and would soon be launched properly on Opticure’ website. Training would take place at Opticure’s studio; not at the factory. At this point, no receipt of payment transfer had been received by Opticure since the distributorship agreement had been signed. But receipt of the payment was acknowledged the next day.

91. By early June 2015, Jeeth was starting to become uneasy about the prospect of whether the machines which he had ordered would be delivered later that month. He said in his affidavit that he understood that Tarun was asserting, for the first time, that the product was only in testing stage and would be launched soon. In response to this part of his affidavit, however, under cross-examination, Jeeth was referred to his own earlier version of the memorandum of understanding, in which (at point 2) SAMSO Wall Printing had requested a (preliminary) order for the newer model of the printing machine to be tested and launched in June. Jeeth said he only learnt about this during his verification, but he eventually accepted that the product that he was wanting to buy was in the process of being tested.

92. Jeeth deposed in his affidavit to a telephone conversation with Tarun on 3 June 2015. In that affidavit, his account of the conversation was as follows:

“I said:   I am concerned with the lack of transparency so far you have not even given me any real pictures of the machine from your production and any detailed technical specification?

Tarun:   I will email you quality pictures.

I said:   OK. As part of your personal assurances that you will be personally liable, you had earlier show me your property details and ID on the phone. However I do need a formal communication of both of your property details by email for my record. Please send me both property details, passport ID, overseas citizenship etc by email. These are the same documents that you showed me on the phone during our Melbourne meeting. And I also need a security check urgently.

Tarun: you will have the machines with the highest quality - there is no need to worry. It’s a very busy time for us let me focus on production and testing please and also provide the details of the person who like to do verification etc and collect the security check and then become back to you.

Tarun: Jeeth, I have given you my words earlier and I think also send you those documents by ‘What’s App’ earlier. For your peace of mind let me forward those documents by email and please feel free to contact my real estate agent if you need any reference check done on my property etc and I will clearly mention their contact details in the email authorising to do so.”

93. Jeeth was questioned, in cross-examination, as to why, at this point, he had not reminded Tarun about his personal liability undertaking. Jeeth said he did this when Tarun had provided his property details, before Jeeth had released the payment. It was also put that to the extent that Tarun had said anything about being personally liable, it was merely a reference to the past statement that he had made on 22 May. Jeeth’s response was that this representation was ongoing. He denied that he taken no note of this particular conversation; though he accepted that he had not produced it during the course of the proceeding. It was put to him that he was making up this conversation but Jeeth denied doing so.

94. In his affidavit (of 10 May 2019), Tarun denied this account of the conversation. Instead, Tarun deposed to informing Jeeth that his business adviser had suggested he conduct some due diligence on Opticure. To that end, Jeeth was asking for details about his personal property, and a copy of his passport or overseas citizenship. Though he thought that the requests were odd, he supplied information by email that day. There is nothing in this account to support the notion of any reassurance by him to Mr Khabiya that he would be liable for any losses suffered under the distributorship agreement.

95. On 4 June 2015, Jeeth sent an email to Tarun outlining a proposal to move forward. It set out five points for discussion, including a new model of the machine and attached photographs.

96. On 4 June 2015, Jeeth placed an order with Zeescape for an alternative machine. In cross-examination, Jeeth said that he had placed the order with an Australian resident but later cancelled the order. He had not sought Mr Garg’s advice to enter such transaction.

97. On 6 June 2015, Jeeth sought additional information from Tarun. His representative attended the factory in India.

98. On 7 June 2015, Tarun sent an email to Jeeth. The email confirms the issue of a post - dated cheque to Jeeth’s representative, Surrender Gupta, on Jeeth’s behalf, totalling R$45,000,000. As security to Jeeth ahead of the dispatch of the wall printing machines as requested. On the same day, Tarun notified Jeeth of new email addresses, including an Australian email address for Iscon.

99. On 13 June 2015 Tarun sent an email to Jeeth. His message confirmed that Opticure would be doing the trials of the printing machine by 21 June 2015 and that that would include an ink trial. The ink and chemicals were classified as ‘dangerous goods’, but had previously been successfully shipped in the past.

100. On 16 June 2015, Jeeth sent emails to Tarun attaching photographs of new and old machines.

101. On 17 June 2015, Jeeth sent an email to Tarun complaining that the delay in providing him with training, 10 videos and other marketing support was causing him grief and affecting his marketing and the operational side of his business.

102. On 19 June 2015, Tarun sent an email to Jeeth advising the testing of the new machines had given positive results and reminding Jeeth what it had done for him: pointing out that Jeeth’s request for verification had delayed production; that he had rescheduled other production and marketing trips in order to meet Jeeth’s order and had issued post-dated cheques at Jeeth’s request (contrary to usual company policy); and had issued photographs and videos of the new machines after Jeeth’s continuing requests.

103. On 19 June 2015, Jeeth placed an advertisement on ‘Gumtree’ for a business investor.

104. On 20 June 2015, Tarun sent an email to Jeeth advising Opticure was ‘ready to dispatch’ the first lot of machines and demanding further payments before dispatch. The same day, Jeeth sent an email to Tarun responding to his demands for further payment. In it he asserted that full payment of the printing machines had already been made.

105. On 21 June 2015, Tarun sent an email to Jeeth. The message relevantly noted:

1. the distribution agreement had referred to 6 machines, and now Jeeth was attempting to say that there were only two machines;

2. the payment needed to be made for a deal not for two machines but the six machines (with reference to clause 10.5 of the Distributorship Agreement); and

3. Jeeth’s attempts to alter the terms of the agreement.

106. Later that day, Jeeth sent an email to Tarun suggesting that they not waste time or involve lawyers. Complaints were made about a lack of trust and Opticure’s failure to provide videos and pictures for marketing purposes at a forthcoming expo.

107. On 21 June 2015, Tarun sent a further message to Jeeth, in which he conveyed his belief that Jeeth’s expectations were too high. He provided an alternative suggestion that all the machines be bought in one go. If that was acceptable, money could be transferred into his lawyers trust account and then, after delivery of the six machines, the lawyers could release payment to Opticure. Any deposits into the trust account needed to be paid 50% in advance and 50% on delivery. Dispatch could occur when 50% was received for the machine. Tarun sought a decision from Jeeth the next day.

108. On 22 June 2015, Jeeth sent an email to Tarun repeating that their impasse about the payment was not because of any inability (on his part) to pay, but because of a lack of trust. The email was expressed in somewhat emotive terms. It was put to Jeeth in cross-examination, and Jeeth did not dispute, that at this point he had not referred Tarun to his undertaking to be personally liable.

109. At about this point, Jeeth engaged lawyers, Messrs Culshaw Miller. A letter was from that firm was sent to Tarun on 23 June 2015. The letter asserted, amongst other things, that payment had been made to machines, but no receipt of those machines had been made and that Opticure had demanded the final payment be made prior to delivery. This insistence upon final payment was said to be in breach of the distributorship agreement. The letter also complained about an absence of training and a failure to deliver videos; being matters which were also in breach of the agreement. The letter culminated by demanding delivery to the warehouse in Western Australia that had been nominated by Jeeth, all the return of his deposit. It also sought confirmation that the defendants could perform the agreement.

110. It was also pointed out to Jeeth, in cross-examination, and not disputed by Jeeth, that there was no reference within this letter of demand to any personal undertaking provided by Tarun.

111. Not long after this letter of demand, on the same day, Tarun and Jeeth commenced to have some more positive telephone conversations, on a daily basis.

112. On 24 June 2015, Jeeth told Tarun, during a telephone call, that he was still interested in purchasing six machines, as per the initial commitment in the distributorship agreement. He said he was happy for ‘Opticure India’ to send the printing machines to ‘Opticure Australia’ (Victoria) and then to him in Perth; rather than directly from; from India to Perth. Jeeth said that he was happy to pay the additional shipping charges as he would be saving money by not having to convert rupees into Australian currency.

113. On 26 June 2015, there were several pieces of correspondence from Mr Garg, being Jeeth’s accountants and business adviser; including a request by Mr Garg for the Opticure logo and official contact details to be added to the updated invoices.

114. The same day, Tarun received an email from the Commonwealth Bank of Australia, stating that $1,200 have been transferred from Jeeth for a delivery fee. On 29 June, another transfer was made to Tarun on behalf of Jeeth, for the sum of $9,273.78.

115. Between 18 July and 20 July 2015, the plaintiff’s wife, Ms Khabiya, visited the Opticure Indian studios. This visit was for 2 days. She made a second visit between 4 and 7 August 2015. That visit was for 3 days. These trips were utilised to train her in the use of the machine. Film clips were shown during her cross-examination which showed, firstly, that Tarun was giving her lessons on the software; and, secondly, demonstrating the wiring and other use of what might be called the ‘hardware’ part of the machinery. Ms Khabiya accepted under cross-examination that for sophisticated equipment like this, she needed weeks of training.

116. On 7 August 2015, Mr Khabiya signed a tax invoice (dated 6 August 2015) acknowledging receipt of the items.

117. On 18 August 2015, Jeeth's lawyers, Culshaw Miller, wrote to Opticure. It referred to the circumstances that no response had been received to its early communication of 24 June 2015. It alleged non-performance, which constituted a repudiation of the distributorship agreement. It gave notice of Jeeth’s acceptance of that repudiation and it demanded repayment of all payments made by Jeeth.

118. On 23 August 2015, Tarun sent emails to Jeeth demanding further payment. Later that day, Jeeth confirmed payment had been made. At this point, Tarun says that there was nothing in these documents to support the notion that guaranteed obligations in relation to the reception of goods that had already been shipped to Australia. Jeeth did not depose to any conversation with Tarun on this day.

119. On 25 August 2015 two machines were dispatched and received on Jeeth's behalf, in Perth. Ms Khabiya gave evidence that her role, in the business, was to look after the sales and the printing part of it. This required her to operate the machine.

120. Under cross-examination, Tarun said that the machines that were packaged and sent were the ones that were the subject of demonstration (to Ms Khabiya or Jeeth).

121. On 29 September 2015, Opticure sent emails Jeeth foreshadowing that the second lot of machines were due for dispatch.

122. On 28 October 2015, Jeeth sent an email to Tarun saying that there was a need to discuss issues over the telephone. If they could get simple solutions directly, they would have to go and look for technical support in the market with a third party. He complained that his call had not been returned within 24 hours and that this created mistrust. He asked Tarun to call them with a view to resolving the ‘simple stuff’ first and then the more controversial items.

123. On 29 October 2015, Mr Tarun sent an email to Tarun relating to a courier company.

Complaints about the machines

Jeeth’s affidavit evidence

124. Jeeth deposed in his affidavit that the machines delivered were not of the same standard as the ones in the videos shown to him by Tarun, back in May 2015, or that he saw in Delhi. He said that they appeared to be old or used. He saw rust marks on them and screws and other fittings were missing.

124. Jeeth said that the trolley sent by Tarun did not work properly: two people were needed to move the machine and said only one person at been promised. He said that the design of the machine did not allow for manual handling. He needed to obtain assistance from others to move it.

125. He said that the machine constantly linked ink. He said that the machines often spat ink in the start-up process. The ink printhead would dry out and require regular purging.

126. He complained that he did not receive the promised technical support which Tarun had represented to him back in Melbourne and in Perth, prior to his paying purchase monies. Owing to time differences, when he did speak with technical people, issues are sometimes resolved over more than one day and on a number of occasions he had to wait weeks to get technical support.

127. He says that he had not been able to replicate the printing quality from the machines, as depicted in the videos shown to him.

128. When he gave evidence in chief, Jeeth was taken through some video clips which he had made a recording of. The video clips fell into two categories: first, they demonstrated the way in which the machines operated. Secondly, there are number of clips taken of a machine on 10 July 2015 which showed lines appearing on the wall after the application of machine. There were also video clips taken on 14 September 2015 tending to show the leaking of ink, some rust and a need to clean the printing head. A further clip apparently taken on 14 September showed that the software was not performing properly. He was not cross-examined upon his explanations for what appeared in these video clips.

Ms Khabiya’s affidavit evidence

130. In her affidavit, Ms Khabiya deposed to observations when the two machines arrived at her home in September 2015. She said that the machines did not resemble the machine that had been shown in Tarun’s studio. On one of them she saw visible rust marks on part of machine, screws missing and breakages in the metal. Her opinion was that the machines were not new. She was disappointed also not to receive any instruction manual.

131. She said that on or about 12 September 2015, Jeeth and her had tested one of the machines. After having done so she observed the following problems: (a) the machine would was not calibrated properly so it would not print correctly; (b) Ink continually spilled from the print head; (c) the print head kept on drying out if the machine was used non-stop: a short break in printing would result in the print head drying out and then requiring purging with the solvent; (d) purging took approximately one hour, on each occasion, due to air bubbles formed in the ink print head; (e) the print was bad quality; (f) the printer was not printing in the way demonstrated in the two videos that she had seen in Melbourne back in May; or on her visit to India; (g) ink started to leak onto the floor and over the machine; (h) the software on the laptop was playing up and started to crash, on average, of every third file; (i) the software on the laptop did not appear to be licensed; (j) the machine was not operating in an uninterrupted fashion - there was much more time spent purging the machine rather than actually printing; (k) significant numbers of bottles of ink were wasted; (l) as the print head kept drying out it was impossible to start and complete a printing job in one go.

132. She said that as a result of these problems she sent a message, via ‘Whats App’ to email to Tarun, seeking technical support.

133. She says that on 14 September, Jeeth and her attempted to undertake further printing. By this stage, they had not heard back from Taryn and had not received the technical support that they had sort. The outcome of the attempt was that the quality of the picture was blurred. Indeed after 14 September, she said that she could not get the machine to print any pictures.

134. She recalled trying to contact Tarun on several occasions in the period 14 September to 26 October 2015. In this period she could not get the machines to print. She also complained that the trolleys that had been supplied were not able to adequately move the machine.

DAMAGES CLAIM

Jeeth’s evidence

Payments made

135. Jeeth exhibited to his affidavit an Excel spreadsheet of damages that he claimed [4] .

     4. The spreadsheet appeared at Ex 1, Vol 2, p 545

136. Shorn of the explanatory ‘remarks’ in one of the columns, the spreadsheet is reproduced below.

Date	Description	Amt (Inv)	To A/c	GST
28 May -15	Opticure Machine	93,035.22	Opticure India A/c	-
23 Aug-15	Third Party Transport Charges with GST, Customs ect. For 2xMachine	18,499.91	Opticure Australian ANZ A/c 013-912 4841 68845	10,392.18
10 Sept-15	2 Machines Wooden Box for Transport with Packaging ect. + Trolley	1,726.16	Opticure Australian ANZ A/c 013-912 4841 68845	-
10 Sept-15	Stainless Steel Cleaning Box, Agent Lessoning and Commission for transport + Batch Name Plates	933.76	Opticure Australian ANZ A/c 013-912 4841 68845	-
21 Aug-15	First Delivery of INK	7,975.00	Opticure Australian ANZ A/c 013-912 4841 68845	725.00
05-Oct-15	Second Delivery of INK/MAGENTA	1,742.00	Opticure Australian ANZ A/c 013-912 4841 68845	125.09
123,912.05	11,242,27

137. Jeeth says that, with the exception of the first payment to Opticure’ Indian bank account, all subsequent payments were made to Iscon’s ANZ bank account. No point was taken by Counsel for Mr Tarun that such receipts were not held on trust for, or on behalf of Opticure.

Jeeth’s expectations

138. In his affidavit, Jeeth said that his business plan was to purchase each machine from Opticure for AU$46,500 and sell it in Australia for AU$67,500. His intentions, in this regard, were shaped from what he asserts Tarun had represented to him in terms of its superiority over the Zeescape (competitor) products. Jeeth says that he was aware that the Zeescape machine sold for AU$63,000. Accordingly he anticipated making a profit of AU$21,000 (plus GST) on each machine.

139. Jeeth deposed that he currently holds and stores two Opticure machines that he had paid for from Opticure. He had been unable however to sell them. He says, therefore, that he’s been deprived of AU$42,000 worth of profit.

140. Jeeth asserts that if he had been delivered the six machines, as promised, pursuant to the distributorship agreement, and on the assumption that he could sell them at AU$66,000 each, his profit would have been AU$126,000 (6 x AU$21,000). This represents his claim for loss of profits flowing from Opticure’ (and/or Tarun’s) breach of the First or Second Contracts.

141. Under cross-examination, Jeeth accepted that as at the date of his entry into any distributor ship agreement on 26 May, he had no customers. He said he had received expressions of interest but that was only after his entry into the contract. He accepted that in his calculations of lost profits in his affidavit he took no account of any overheads of the business.

142. Mrs Khabiya deposed in her affidavit that because of what she regarded as a lack of technical support in the spring of 2015, it was not possible to offer the machines, and the respective laptops for sale, in the Australian market. She opined that, in practical terms it was not possible to run a distribution business in respect to the wall printing machines manufactured by Optical Solutions. No sales have been made and no profit made. She says that Jeeth and she have not been able to sell either of the machines.

CONSIDERATION

Submissions

Plaintiff’s submissions

143. In his written submissions, Counsel for the plaintiff submitted that Jeeth and Ms Khabiya had strong recollections as to the events that have occurred; particularly at the Citadine Hotel meeting in Melbourne and the meeting in Perth. He submitted that they were both witnesses of credit. In the case of Jeeth, counsel submitted that he was a novice in the business world of printing and was anxious to enter into a commercial arrangement with the First Defendant. To that end he heavily relied upon representations made by the First Defendant; and in particular, the guarantee representation.

144. The first defendant, on the other hand, was careful to distance himself from the second defendant’s operations and management. Counsel submitted that I should reject the first defendant’s evidence as to his true role in the operations of the second defendant. Counsel submitted that the first defendant was involved in an agreement to indemnify the Plaintiff for losses, the supply of two defective machines and the failure to provide adequate technical support to the plaintiff. Counsel submitted that I should also find that the first defendant was knowingly involved in a contravention of the provisions of the Australian Consumer Law.

145. Counsel submitted that the plaintiff had made out its case against the second defendant in all of the alleged cause of action.

Submissions on behalf of the first defendant

146. Counsel for the first defendant submitted that there were only four material events relevant to the claims against his client: 22 May 2015, 26 May 2015, 3 June 2015 and 23 August 2015.

147. As to 22 May 2015, no guarantee agreement, or (alternatively) guarantee representation was entered into or made (respectively) by the first defendant on this day. As a matter of law, a guarantee had to be evidenced in writing. The plaintiff (and Ms Khabiya) should not be believed in what they said in their evidence about this. Further, if a guarantee representation was made, it could not be said to have been relied upon because of the existence of an entire agreement clause in the distributorship agreement.

148. As to 26 May 2015, although the distributorship agreement was entered into between the plaintiff and second defendant that day (signed by the first defendant on the second defendant’s behalf), no rights arose against the first defendant by reason of that contract. In particular, although the plaintiff intimated in his submissions that the first defendant had engaged in misleading or deceptive conduct as to the capacity in which he applied his signature, in execution of the written agreement, there was no pleading to this effect.

149. As to 3 June 2015, there was no note, or any other written corroboration for a guarantee representation being made on this day; but even if there was it had no causal consequence – by then the plaintiff had already become bound to the distributorship agreement through which he allegedly suffered losses.

150. As to 23 August 2015, there was no evidence of any oral contract or any written contract involving either the first and/or second defendants. Accordingly there was no pleaded ‘Second Contract’.

Credit

Jeethender Khabiya

151. I did not regard Jeeth as a reliable witness. Making allowance for the circumstance that he was giving evidence about events over 4 years before, at its best, his evidence was peppered with answers that he could “not remember” matters. Some of these things which he could not recall were more material than others. The more material events concerned his recollections of what contemporaneous records he took of important meetings, such as those which occurred on 21 and 22 May. But although some of his answers were that he did not remember whether a typed note which appeared in an exhibit was generated on Microsoft ‘Word’, or Microsoft ‘One Note’ might partly be explicable by the subsequent passage of time, too often his evidence veered from a position of an absence of recollection, towards stating a position, then only to shift from that position that he had advanced during questioning of him. He shifted for example, when asked about his practices of taking handwritten notes of conversations: from one of general denial; and then to the use of them in only exceptional circumstances once confronted with evidence that was inconsistent with his testimony. He shifted his evidence when asked about when he started receiving expressions of interest from prospective customers: at first, he said that there was no expression of interest for the purchase from him of such machines forthcoming prior to the date the distributorship agreement was entered (26 May); but later, he said he had received ‘representations’.

152. I formed the strong impression that not only did he guess, but also that he guessed in a fashion which he thought might advance his case. He was guarded in certain instances: when he was cross-examined as to how the amount for the cheque he provided to Tarun (AUD$22,500), he struck me as unnecessarily clutching for some other explanation other than the obvious explanation that this was 50% of the purchase price for one of the machines he was proposing to purchase. I also thought he was too readily disposed to shift responsibility for the content of the distributorship agreement to his accountant, Mr Garg (who he did not call as a witness on his behalf).

153. I am not prepared to accept his evidence uncorroborated by other reliable evidence or unless it is consistent with the objective probabilities.

Ms Khabiya

154. Mrs Khabiya presented in a very forceful fashion. She gave very adamant evidence not admitting of any trace of self-doubt. Sometimes she gave non-responsive evidence, but I perceived that this was more the product of a lack of understanding of the question. I formed the impression that, although she sincerely believed in the correctness of her evidence, sometimes she did so in a way that, by intention or design, advanced the case of her husband: some of her answers, as I have said, were not responsive to questioning but were designed to put forward her a point of view. I accordingly treat her evidence with some caution.

Tarun Sachdeva

155. I felt that, on occasions throughout his evidence in cross-examination, Tarun was sparring with Counsel in a way which had the intention or effect of advancing his interests. Sometimes, he even raised questions of Counsel himself. It appeared, at times, that he was resentful of having to answer questions. His evidence that he did not remark upon the high quality of the printing machines whilst acting as a sales representative was, I thought, implausible; and this suggested to me that he was conscious of the effect of his answers upon his case. He was referred to the circumstance that he had executed the distributorship agreement, purporting to be director of Opticure; in a context where most other communications he had had with Jeeth tended to identify him as the person behind Opticure, rather than his sister. His answer as to why he represented himself as a director of Opticure - that it was because he was asked to do so by Jeeth, or Jeeth’s accountant – was not convincing. I did not consider him to be a very reliable witness. I also treat his evidence cautiously.

The contract case against Opticure

Was the First Contract terminated?

156. An initial question must be what contract with Opticure does Jeeth sue upon? For reasons that follow, I do not accept that there were two contracts, as Jeeth says occurred. The better view is that he sued upon the distributorship agreement entered into on 26 May 2015 and that despite what occurred in August 2015, that contract endured, at least until September or October. What happened after that was not clear; but precisely how it ended after that does not need to be determined.

157. In my view, clause 13 of the memorandum of understanding, embodied in the distributorship agreement, meant that if the two sets of items had not been delivered before 25 June 2015, then Jeeth was entitled to a refund of his payment made pursuant to the distributorship agreement, and if that (the provision of a refund) did not occur, then Jeeth was entitled to have the distributorship agreement re-negotiated. It did not say ‘terminated’. That appears from an ordinary reading of the express words of that clause.

158. Clause 13 has to be construed alongside clause 11 of Schedule D. Although the language appears awry, the intention seems to be that within 5 days of its receipt of the 50% initial advance payment by Jeeth, the balance had to be paid within 5 business days. That does not appear to have occurred in this case.

159. Clauses 11 and 13 broadly resemble, in their combined operation, s 28 of the Sale of Goods Act 1895 (WA), whereby the seller’s obligation to deliver is contingent upon the buyer’s readiness and willingness to pay the price.

160. The circumstance that Opticure did not deliver the goods by 25 June 2015, nor refunded the money, at that point, did not itself confer a right to terminate upon Jeeth under the contract, in circumstances where it appears that Jeeth was unwilling or unable to pay the balance of the purchase price for the first set of machines within 5 days of 26 May 2015. Moreover, Jeeth did not attempt to prove that Opticure had not exercised its best endeavours to deliver the goods by that date.

161. The issues arise from the next part of the clause. This was an obligation, even after Opticure was required to refund the payments made to that point, to re-negotiate the entire terms of this signed agreement. There is, firstly, an ambiguity as to which signed agreement the reference is made to. It seems to me that the reference is made to the distributorship agreement as a whole, rather than simply the memorandum of understanding. Secondly, although there may be some doubt in the matter, it appears that the authorities countenance the enforceability of a promise to negotiate, and, logically, re-negotiate, existing arrangements [5] .

     5. Coal Cliff Collieries Ltd v Sijehama Pty Ltd (1991) 24 NSWLR 1; also United Group Rail Services Ltd v Rail Corporation New South Wales (2009) 74 NSWLR 618

162. In this case, in breach of the distributorship agreement, Opticure did not refund any payment(s) arising from its failure to deliver the goods by 25 June 2015. However, although Jeeth was entitled to receive his refund for payments he had made, properly construed, the failure to make refund for non-delivery by that date did not trigger an express entitlement to terminate. Clause 13 of the memorandum of understanding in schedule D only triggered the mechanism whereby the parties were required to re-negotiate the existing terms.

163. But on 18 August 2015, it is clear that by solicitor’s email to Tarun, Jeeth purported to accept an alleged repudiation by Opticure of the distributorship agreement. The email referred to, in this respect, specifically to the non-delivery of the product (two months’ before) and generally asserted Opticure’s unwillingness or inability to perform its obligations under the agreement. But the remedy conferred in clause 13 of the memorandum of understanding was a right to re-negotiate the entirety of the distributorship agreement. There is no specific complaint that Opticure did engage with Jeeth in a way that breached that requirement. The evidence indicates that it did engage, and that was in furtherance, of the performance of the agreement entered into in May 2015.

164. Alternatively, even if, contrary to my finding, there was a repudiation by Opticure, in my view, from 25 June, Jeeth’s conduct amounted to an election to continue with furtherance of the distributorship agreement. In this way, for example, Ms Khabiya (as Jeeth’s representative) visited India twice, in July and early August 2015, for the purposes of receiving the necessary training to operate the printing machines once they had been delivered. Jeeth himself attended, for training, in early August 2015. Further, Jeeth did not insist upon any renegotiation of any of the terms of the distributorship agreement. In this way, the contract remained on foot. Broadly speaking, what followed thereafter from June to August 2015 was conduct by the parties consistent with a common understanding that the First Contract remained on foot.

165. Further, I accept the submission of Counsel for the first defendant that there was no written or verbal evidence of a contract entered into in August 2015.

242. Alternatively, what Tarun said about the highest quality of the machine could be taken to constitute his ‘opinion’. I would also be prepared to infer that there was an implied representation that he genuinely held this opinion. It was not seriously suggested that he did not. I am not persuaded that the circumstances were such that there was an implied representation that he had reasonable grounds for such opinion. Tarun was a sales representative. The context in which he made the statement, particularly the other (general) things which Jeeth and Ms Khabiya attributed to him at the time that this particular statement was made, plainly did not indicate that he was a technical expert. He appeared, to all intents and purposes, to be a salesperson and what he said, to a person (Jeeth) who appeared to want to enter into a commercial relationship, was ‘sales talk’.

243. Counsel for the plaintiff submitted that the likelihood that this verbal representation was made was reinforced by the alleged circumstance that on 26 May 2015 – the date the distributorship agreement was entered into - the pleading received a colour brochure of the second defendant which, described its products as amounting to “unique and revolutionary technology”. But in my opinion, this is quite a different (and unpleaded) representation, in substance to the representation that was pleaded. It suggests that there is a new product in the market; rather than an improvement on an existing product where there were products in a competitive market.

244. A further problem, as noted by Counsel for the first defendant, was the plaintiff’s failure to establish that there was some printing machine of superior quality to that that was manufactured by the second defendant.

245. If I am wrong, however, I am not satisfied that the element of causation is made out. Prior to the time when he placed his order, in June 2015, Tarun had shown Jeeth, by way of demonstration, video clips of the operation of the machines. At this point, Jeeth deposed in his affidavit, he ‘liked what (he) saw’. Leaving aside the impressions generated by what he saw, other matters were weighing upon Jeeth’s deliberations as to whether to proceed with the purchase. This included the issue about whether a guarantee was provided (see below), whether Opticure was a reputable company (and whether Tarun himself was a person of some financial substance) and whether other security might be provided. At this stage, I consider that any real influence of as an original inducement – that the product was of the highest quality - had been spent.

Extra-territorial dimension?

250. In so far as the attempt is made to sheet home liability to Opticure for the first verbal representation made by Tarun, a question arises as to where the representation were made. To the extent that this representation can be imputed to her, a consequential issue may be whether “Opticure,” a foreign national, can be liable under the Australian Consumer Law.

251. I have indicated that if, contrary to what I have found, the ‘highest quality’ representation was made and caused loss, Opticure (the trading name of a foreign national) is, along with Tarun, also prima facie liable to Jeeth under s 139C Competition and Consumer Act).

252. The particulars of the representation show, however, that the conduct of Tarun was partly engaged in whilst he was in India (the April – May 2015 telephone conversations to Jeeth, then in Western Australia) and partly engaged in by him in Melbourne on 21-22 May. However, nothing turns upon the distinction between the places that these alternatives, since any representations by Tarun during a telephone conversation with Jeeth in Australia, whilst the former, was in India, were directed to a person in Australia in the course of a prospective transaction for the sale of goods in Australia. In my view, that establishes that Tarun was engaging in conduct in Australia for the purposes of the Competition and Consumer Act 2010 (Cth) [27] .

     27. Similar circumstances sufficed to establish the connection with Australia in ACCC v Valve Corporation (No.3) [2016] FCA 196 at [170]-[188] (not disturbed on appeal: ACCC v Valve Corporation [2017] FCAFC 224)

253. Although ‘Opticure’ is, in fact, a foreign national, given that her liability is derivative, in the sense that it is the liability of a principal for the conduct of an agent, to the extent that Tarun’s conduct occurred inside Australia, there is no question about the extra-territorial operation of the Australian Consumer Law.

254. Further, in my opinion, and if it was necessary to so find, s 6 of the Competition and Consumer Act 2010 (Cth) is of sufficient breadth as to permit a finding that each of Tarun, and Opticure, could have been liable for damages for any misleading conduct as a result of the making of this first verbal representation.

The guarantee representation

255. Jeeth’s case is that the guarantee representation was made on 22 May 2015 and also on 3 June 2015. In substance, the oral representation was in the same terms in each case.

256. I am not satisfied that Jeeth has made out his case against Tarun in relation to this representation on the balance of probabilities.

257. In this, contrary to the submissions for the plaintiff, I am not persuaded that the decisive question is whether Mr Tarun was more credible as a witness than Jeeth and Ms Khabiya (or vice versa). The alleged representation was made many years ago, was the subject of evidence from self-interested litigants. The safest recourse is to consider the matter from the point of view of the objective circumstances arising at the time [28] .

     28. Fox v Percy (2003) 214 CLR 118 at 129

258. First, and to begin with, I regard it as inherently unlikely that Tarun would make a personal guarantee about matters of which he had no effective control should Jeeth decide to acquire the printing machines. Those machines may have been defective for multiple causes, including technical ones; many of which would appear to be beyond Tarun’s technical expertise.

259. I do not accept the case theory advanced on behalf of Jeeth, that Tarun was so desperate to obtain some personal financial benefit, by way of commission or otherwise, arising from the sale of the printing machines as to motivate him to give an undertaking of this magnitude. Indeed, in this regard, no real attempt was made to falsify, by means of documentation or other evidence, Tarun’s evidence that he did not, in fact, stand to obtain any special financial benefit. Nor does it strike me as plausible: a rationally-minded person in Tarun’s position would likely have reasoned that if he attempted to ‘dud’ an Australian purchaser with inducements of this kind, it could seriously damage Opticure’s reputation within the Australian market, which Opticure was trying to build, if it came to light.

260. Secondly, I would have expected an undertaking of this kind to have been documented in an agreement. It is true that, at one point, there was a reference to a personal undertaking expressed by Tarun in Jeeth’s initial draft of a Memorandum of Understanding. But that version was not the version which appeared as Schedule D to the Distributorship Agreement; which made no reference to any personal undertaking by Tarun at all. The ‘entire agreement’ clause in the distributorship agreement is a powerful indicative factor suggesting that it was not the intention of the parties relying upon an earlier iteration of a memorandum of understanding not incorporated in the agreement.

261. At any rate, and contrary to Jeeth’s evidence, I find that Tarun’s email of 23 May 2015, by which he acknowledged receipt of a cheque, did not amount to Tarun’s acceptance of Jeeth’s version of a Memorandum of Understanding; irrespective of how Jeeth may have interpreted the message within it. Tarun’s email. At its highest, his message was that he would be liable to refund the cheque for $22,500 “if the deal doesn’t go through”. The message said nothing about the consequences if the deal did go through, but Jeeth was dissatisfied with the products.

262. Thirdly, on its face, even Jeeth’s version of the ‘memorandum of understanding’ did not clearly evince any undertaking by Tarun to be personally responsible for all of Jeeth’s losses should he enter into an agreement with Opticure. In this regard, the context, here, is a document prepared at a meeting in Melbourne on 21-22 May. The document itself was expressed, on its face, to be Jeeth’s “preliminary” offer to Opticure (point 1), with a ‘preliminary’ order to be placed (point 2). The document not only contemplated that a ‘final legal agreement’ (assuming this ‘offer’ was accepted) was to be entered (point 10), but the agreed term for the distributorship agreement (point 11) had not been fixed. If there was to be any disagreement about the operation of the ‘agreement’, the whole agreement would need to be negotiated (point 12).

263. On the matter of payments, this memorandum of understanding referred to a ‘50% Advance payment’ (point 3) for ’22 June 2015’ (which, the evidence revealed, was an erroneous reference to 22 May 2015 (point 8). When considered with points 3 & 8, in my view, the reference in point 14 to Tarun being “personally liable for this payments” is a reference to his being only personal liable for the 50% Advance Payment, ie $22,500, if this version of the Memorandum of Understanding was accepted.

264. As a further matter, and if it was necessary, I would not have construed point 14 as giving rise to a prospective liability of the kind contended for by Jeeth. Grammatically, the clause is inapt. As a final recourse, I would have found that any prospective obligation in cl 14 would operate ‘strictly’ against Jeeth [29] , so as to be limited to a guarantee only to return the cheque of $22,500 if no distributorship agreement had been entered into.

     29. Ankar Pty Ltd v National Westminster Finance (Aust) Pty Ltd (1987) 162 CLR 549 at 561-2

265. At any rate, I have already found that Jeeth’s version of the memorandum of understanding was not accepted by Tarun.

266. Further, also, I am not persuaded as to the contemporaneity, or general reliability, of the undated typed note which appeared to have been created on Jeeth’s mobile telephone, and which Jeeth relied upon at trial [30] . The only evidence for when the document was generated was that it had been generated, or modified, more than two years before Jeeth gave testimonial evidence. When Jeeth was giving evidence, the relevant event had occurred more than four years before. The content of the note was not reproduced in an email, or other correspondence which could have been put to Tarun. It could have been generated at any time, including at about the time in November 2018 when Jeeth was preparing his affidavit.

     30. Ex 1, Vol 2, p 299

267. It is common ground that, leaving aside the matter of Jeeth’s version of the memorandum of understanding, and the undated typed note, there is no documentary evidence of any guarantee representation.

268. As a final observation on this point, Counsel for the first defendant said that in the absence of a guarantee in writing, there may be constitutional questions as to whether the Fair Trading Act (Vic), by its incorporation of the provisions of the Australian Consumer Law, might supersede, if not impliedly repeal the Victorian legislative requirement for guarantees in writing. This point was only raised in a response to a question by me during Counsel’s closing address; had not been preceded by any Judiciary Act notice and for the reasons I have already articulated, this point need not be considered any further.

269. Fourthly, the conclusion at paragraph [267] is important in a context where I have already expressed my doubts upon Jeeth’s credibility. Incorporated within this was a view that Jeeth did not have a strong memory – I reiterate that his evidence featured answers that he “did not remember” many matters. To this, I add that when he did give testimonial evidence, he was describing events that had occurred well over four years before. For that matter, the affidavit upon which he was cross-examined had been prepared well over three years after the events that he had deposed to had occurred; when it could hardly be said that the events were fresh in his mind. It may fairly be said that the same points concerning the lapse of time might be made against Tarun, but it is Jeeth’s case to prove that this verbal guarantee representation was made.

270. I also recognise that Ms Khabiya purported to give corroborative evidence of Jeeth’s account of what Tarun said and, as I have noted, she gave her evidence sincerely. Nevertheless, I am particularly mindful of the observations of McClelland CJ (in Eq) in Watson v Foxman, and find that although she was sincerely convinced in her recollection that Tarun had personally undertaken to be liable for all losses generated by the purchase of products that later turned out to be defective, she is mistaken in her recollection. There was too much ambiguity in what Tarun had said on that subject matter, all those years ago, for her to have formed an accurate and reliable recollection of such a sufficiently clear statement by Tarun so as to amount to a representation.

271. Fifthly, I am mindful that there was no contemporaneous complaint to Tarun about his having made a guarantee representation. It was not referred to on 23 June 2015 and 18 August 2015, prior to receipt of the defective products, when Jeeth’s lawyers separately wrote to Tarun. I infer that those lawyers would have been instructed by Jeeth about the existence of any personal guarantee representation by Tarun had that occurred, since this would have facilitated a potentially easier path to recovery for Jeeth to recover compensation (and, more especially, the more effective enforcement of any order for compensation) then making a claim against a foreign national. I also infer that if such information was not volunteered by Jeeth, a reasonably competent legal practitioner in the position of this firm would have sought instructions of all agreements or representations made by Tarun.

272. What was curious was that, leaving aside the involvement of lawyers, notwithstanding the accounts given by Jeeth (and Ms Khabiya), in their respective affidavits, about the difficulties they experience with operating the two machines after they had received them, Jeeth never appeared himself to directly remind Tarun of his undertaking in writing; nor instructed Jeeth’s lawyers to demand payment for the losses arising from the operation of the machines. It appears that his complaint was made, for the first time, in the pleading, when he commenced this proceeding. In my view, that is not conduct consistent with a firm belief or conviction in this particular claim.

273. For these reasons, I find that the guarantee representation case is not made out.

274. The claims for misleading and deceptive conduct (s 18), and false or misleading statements (s 29) fail.

Estoppel claim against Tarun

275. The doctrine of estoppel may, in certain circumstances, ‘outflank’ a defence that a claim in contract fails because of non-compliance with a statutory requirement that a contract be in writing [31] . Tarun submits that an estoppel may relieve the plaintiff against the requirements imposed by s 126 of the Instruments Act 1958 (Vic) only if the plaintiff may allege and prove that the first defendant engaged in unconscionable conduct and, specifically, conduct inducing an assumption or belief in the plaintiff that an agreement would be reduced to writing.

     31. Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 per Deane J at 446

276. The plaintiff does not substantially dispute this. His response was that there was a promise made on 23 May, and that promise was in writing (an email that day sent to Jeeth at 10:09pm).

277. It is unnecessary to consider Tarun’s submission as to the ambit of the doctrine of estoppel and how it may apply to a statutory requirement that an agreement be reduced to writing, or whether it can extend to a promise, as distinct from a representation, [32] as Jeeth’s argument fails on the facts. As I noted in paragraph [261] above, Tarun’s email could in no way be viewed as a written promise to accept or fulfil all the points (including point 14) in Jeeth’s Memorandum of Understanding contained within Jeeth’s email, to which Tarun was responding. Apart from anything else, in Tarun’s email, it was plain that Tarun was only promising to refund the $22,500 cheque if the ‘deal’ did not go through.

     32. K.R Handley, ‘Exploring New and Old Ideas about Estoppel and Election’ (2019) 93 ALJ 594 at 596.

Damages for any statutory action

278. Because of my findings on liability, I will only briefly consider this subject, lest I am wrong about those findings.

279. Jeeth’s pleading does not distinguish, in terms of quantum, any liability that Opticure, and/or Tarun, had under s 236 of the ACL, and that which Opticure had for breach of contract.

280. I would have not have been disposed to award damages for loss of expectation under s 236, in any event. A person does not suffer loss, for the purposes of the statutory precursor to the current s 236, so the plurality held in Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494, simply because a hoped for advantage, or expectation, does not materialise. The conventional principle is that, for the purpose of 236, the award is not intended as damages for loss of an expected performance.

281. I accept the correctness of the implied assertion in Jeeth’s pleading and find that any damages recoverable under s 236 would have been no different to what they are under the contract claim.

SUMMARY & ORDERS

282. For the foregoing reasons I find that:

1. The Plaintiff has made out its case that the Second Defendant is in breach of contract, specifically, for breach of its warranty of merchantable quality.

2. The plaintiff is entitled to recover damages for breach of contract in the sum of $92,000, together with pre-judgment interest.

3. The plaintiff has failed in his claims of statutory misleading or deceptive conduct, or false or misleading statements, against the First and/or Second Defendants, under ss 18 and 29 of the Australian Consumer Law, respectively.

4. The plaintiff has also failed in his of claims of a breach of a contract of guarantee and (in the alternative) conventional estoppel against the First Defendant.

283. Within 15 days of these reasons, the Plaintiff is to supply short minutes of order to reflect these reasons for judgment, in accordance with a timetable whereby:

1. The plaintiff is to serve proposed short minutes upon the first defendant within 5 days of these reasons;

2. Within a further 5 days (after (i)), the first defendant is to:

1. notify the second defendant of these reasons (by reference to the internet link or alternatively, by supplying her with a hard copy of these reasons, or some such other means as the first defendant regards as expedient for the said notice.

2. prepare and serve an affidavit deposing to his attempts to notify the second defendant of these reasons; as well as any acknowledgment of receipt from the second defendant and (where appropriate) the means by which the second defendant received such notice;

3. notify the plaintiff’s solicitor (by written correspondence) of any points of disagreement with the plaintiff’s proposed short minutes and reasons for such disagreement;

3. Within a further 2 days (after (ii)), the second defendant is to serve upon the plaintiff’s solicitor a version of short minutes that she contends should be made and state reasons for disagreement with the plaintiff’s version.

4. Within a further 3 days (after (iii)), the plaintiff is to send to my Associate all documents referred to in steps (i)-(iii) inclusive.

284. The short minutes should make provision for pre-judgment interest and costs; as well as liberty to apply on 2 days’ notice.

285. Absent any indication to the contrary, final orders will be made on the papers.

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Endnotes

Decision last updated: 22 August 2019