Knauth v Australian Fuel Distributors P/L
[2017] QDC 163
•16 June 2017
DISTRICT COURT OF QUEENSLAND
CITATION:
Knauth v Australian Fuel Distributors P/L [2017] QDC 163
PARTIES:
Leonard Patrick Knauth
(plaintiff)
v
Australian Fuel Distributors Pty Ltd (ACN 009 644 151)
(defendant)
FILE NO/S:
BD 3257/14
DIVISION:
PROCEEDING:
Civil trial
ORIGINATING COURT:
District Court of Queensland
DELIVERED ON:
16 June 2017
DELIVERED AT:
Brisbane
HEARING DATE:
29, 30 and 31 May 2017
JUDGE:
Andrews SC DCJ
ORDER:
Judgment for the plaintiff against the defendant in the sum of $2,262.50.
The parties are at liberty to make submissions on costs in writing within seven days.
CATCHWORDS:
CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – FORMATION OF CONTRACTUAL RELATIONS – MATTERS NOT GIVING RISE TO BINDING CONTRACT – VAGUENESS AND UNCERTAINTY – UNCERTAIN PROMISES – where a request for a carrier to cart for 4,000 kilometres per week – where there was no period of carting requested – where the request was for carting to start in July or August – where the carrier offered to start at the beginning of October – where carting was usually requested on only a load by load basis – whether there was a contract for carting to commence from the beginning of October for an indefinite period.
PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – PLEADINGS – DEPARTURE – where carrier pleaded that he lost profits to be made from a carting contract – where no alternate plea that he lost a business opportunity to do carting – where no carting contract established - whether the plaintiff can depart from pleading to claim damages for lost opportunity to do carting.
DAMAGES – GENERAL PRINCIPLES – MITIGATION OF DAMAGE – PLAINTIFF’S DUTY TO MITIGATE – where the plaintiff owned 3 trucks for commercial use – where truck A was damaged by contaminated fuel and reasonably replaced by truck B – where plaintiff then used truck C for truck hire making it unavailable for more profitable carting contract – where the plaintiff failed to rent a truck to perform a profitable carting contract – whether the plaintiff failed to act reasonably to mitigate his loss.
COUNSEL:
B Hall for the plaintiff
AP Collins for the defendant
SOLICITORS:
Shine Lawyers for the plaintiff
Carter Newell Lawyers for the defendant
Background
On 19 September 2012 at about 3.30am the plaintiff drove his Western Star truck and trailer into the defendant’s fuel station at Banana in Queensland. The trailer was laden with ammonium nitrate. He filled the truck at the defendant’s diesel pump. The fuel he pumped was a shandy of diesel with petrol. The mixture soon made the truck inoperable. He arranged to have the trailer of ammonium nitrate collected and delivered at his own expense. He needed to have his truck repaired. He expected the defendant to promptly accept responsibility. That took much longer than he expected. The truck was not repaired promptly. He pleaded that the inoperable truck cost him a 2-3 year contract (the Busby Contract) to cart materials due to start on 30 September 2012.
The defendant conceded in address that plaintiff has causes of action against it for damages for breach of duty owed under:
1. Contract; and
2. The law of negligence (though the defendant submitted its liability is governed by sections 9 and 11 of the Civil Liability Act 2003 (Qld), (CLA) which seems to be correct); and
3. The Australian Consumer Law (ACL) at schedule 2 section 18.
The defendant also conceded that the plaintiff is entitled to damages under each for his cost of unloading and delivering the ammonium nitrate.
The issues are:
1. Whether the plaintiff had a contract with Busby;
2. If there was no contract with Busby, whether the plaintiff can reframe his case in a way not pleaded;
3. Whether the plaintiff failed to act reasonably to mitigate his loss;
4. Whether the loss of the contract was too remote or was not caused by the defendant’s breaches of duty;
5. Whether the damages for the loss of a contract are recoverable in contract, under the CLA and under the ACL;
6. Quantum of damages for the loss of the sub-contract;
7. Quantum of damages for the lost opportunity to work for.
My findings can be summarised as follows:
1. The plaintiff had no contract with Busby, meaning that it was not possible for him to suffer the loss that is pleaded;
2. Although there may have been scope to argue, under tort, contract and the ACL that the plaintiff lost the chance of an opportunity to work for Busby from week to week, this was not pleaded. As such, it is not open for me to find that the plaintiff lost the chance of a commercial opportunity;
3. In any event, the plaintiff failed to act reasonably to mitigate his loss;
4. It is not necessary for me to consider the remaining issues (the fourth, fifth, sixth and seventh issue).
Facts
Mr Knauth (plaintiff) carried on a business under the name “LP Knauth”.
At material dates the plaintiff owned and used in the business:
1. A 1998 model Western Star truck, registration 861KWY, purchased in 2001;
2. A Mack truck, registration 526JSL, purchased in 2006;
3. An International Eagle truck purchased in 2007;
4. Several trailers;
5. A dolly for linking one trailer to another.
The plaintiff earned his income by subcontracting to cart freight with a truck and trailer and by hiring out spare his spare trucks and trailers. He could put a road train together by attaching two trailers and a dolly to a truck or he could hitch one trailer to a truck.
The plaintiff also earned his living from truck driving, and had been carrying ammonium nitrate as pellets or as emulsion as a sub-contractor since the 1990s.
The plaintiff’s business earnings in the five financial years prior to the fuel contamination, while he owned the same equipment, had fluctuated from a loss of $500 per week to an income of $1,800 per week. His profit or (loss) had been:
1. In FYE 2008 $36,785;
2. In FYE 2009 ($11,136);
3. In FYE 2010 ($26,852);
4. In FYE 2011 $58,236;
5. In FYE 2012 $94,730.
Curiously, in the year when he lost the alleged sub-contract for which he claims losses exceeding $150,000 pa, the taxable income from his business was significantly higher than in any of the five prior financial years. In FYE 2013 it rose to $206,977. It is more curious because seven months into FYE 2013, the plaintiff lost his best and oldest customer, Toll Holdings Pty Ltd (Toll), for whom he had carted ammonium nitrate for more than 15 years.
In FYE 2012, Busby Group Holdings Pty Ltd (Busby) was the plaintiff’s other regular customer. Mr Busby (Mr Busby) owned and managed it.
Continuity and longevity of business with the plaintiff’s two primary customers was not secure. Neither Toll nor Busby had ever entered into long term contracts with him. Each would request his services or equipment as their needs arose. Toll was very regular.
Toll was in the habit of requesting his freight services each week. He had been carting for Toll for years and that work was so continuous that the plaintiff called it “full time”. For so long as the plaintiff continued to be a reliable provider of a truck, trailer and driver to Toll, he had good prospects, from week to week, of winning another week’s work from Toll, for so long as Toll was requiring freight services from private contractors at Rockhampton. In 2012 the plaintiff did the driving when he carried for Toll. He did not have a driver employed in 2012. It follows that two of his three trucks were idle in 2012.
The work that the plaintiff did for Toll is work he described as “wet hire”. With wet hire work the plaintiff would supply the truck, trailer and driver and meet all the expenses. With wet hire work the business had more expenses but the returns more than compensated. Wet hire was more profitable than “dry hire”. With dry hire, the plaintiff would supply only a trailer or a truck or a truck and trailer but he would not supply a driver. The hirer, always Busby in 2012, would supply the equipment to its own customer, charge a mark-up fee of 15% on the plaintiff’s dry hire charge and supply the equipment to its own customer which would supply fuel, a driver and pay for insurance. Busby would take the Mack or the Eagle for dry hire “on and off”. Busby started taking the Mack in August 2012. I infer the dry hire continued to be intermittent.
The Western Star and the Mack each were licensed to carry explosive goods. That licence was essential for lawfully carting ammonium nitrate for Toll. It meant that the plaintiff could readily use either the Western Star or the Mack to do work for Toll. If he had wished to use the Eagle for Toll he would have been required to obtain an explosives licence for it.
The Eagle was not just unlicensed for carrying explosives, it was unregistered in September 2012. That was an easily reversible money saving decision. If it was not being used for wet hire or dry hire the plaintiff saved on registration fees by leaving it unregistered. It could quickly be re-registered. After the Western Star became inoperable on 19 September, the plaintiff had the Eagle re-registered on 28 September 2012.
The three trucks, the trailers and dolly were all stored at the plaintiff’s yard at Gracemere, Rockhampton if they were not being used or let for dry hire.
Until July 2012 Busby’s custom was an intermittent source of dry hire income from the hire of trailers. Between July and 19 September 2012 Busby also took a truck on dry hire occasionally. The Mack was with Busby on dry hire on 19 September 2012.
Busby’s business was booming in 2012 and continued to boom until September 2014 when Mr Busby sold it. Mr Busby’s opinion is that September 2014 was the very top of the cycle for the Busby business. Mr Busby’s preferred business model in 2012 and subsequently was to use subcontractors. Mr Busby preferred local, reliable subcontractors who had trucks, drivers and trailers available, to fill Busby’s contractual obligation to supply a truck and trailer on wet hire. There was no evidence of whether he exclusively used local subcontractors. Busby would simply add a 15% mark-up. However, Busby also contracted to supply dry hire. To fill an order for dry hire, Busby would hire the necessary trailer or truck from a subcontractor and Busby would resupply the equipment on dry hire to Busby’s customer, adding a mark-up of 15%.
The plaintiff’s business was local. There were sufficient competitors capable of providing wet hire trucks and trailers and dry hire trucks and trailers that the plaintiff believed reliability was important for retaining his two customers. It was clear from the evidence of Mr Busby and his manager Mr Garth that there was ample competition from subcontractors.
For as long as the plaintiff continued to be a reliable dry hire provider to Busby of a truck or truck and trailer, Busby was likely to be a regular customer for occasional dry hire in 2012.
A new business opportunity arose from a conversation that the plaintiff had with Mr Busby in about July 2012. The conversation was to the effect that in August 2012 Busby wanted a sub-contractor to supply a truck, driver and trailer to carry construction materials to mine sites, and the work would involve 4,000 kilometres per week. The plaintiff said that he was interested but would not be able to supply that service until the first of or in early October 2012. There was no mention of how long the work would be available for. I deal with the evidence of the conversation in detail below.
Busby’s need created an opportunity to put a second of his 3 trucks into the more profitable wet hire. Busby, generally speaking, paid better rates for wet hire than Toll. If the plaintiff was to be paid 2 cents per kilometre it was a chance to earn a gross $8,000 each week amounting to about $3,000 per week after expenses. That seems objectively to have been a good opportunity if it was to last for a short time and a very good opportunity if it was to last for a long time. For reasons not satisfactorily explained, the plaintiff did not offer to supply a truck, trailer and driver to Busby in August. The plaintiff’s earnings in FYE 2013 boomed. That may be part of the plaintiff’s reason for not seizing this new opportunity as soon as it was to become available in the next month.
The first issue: Did the plaintiff enter into the Busby Contract?
Four relevant material terms pleaded of the Busby Contract, are:[1]
[1]SASOC para 11B.
1. Busby would hire a truck and driver from the plaintiff to cart pre-cast concrete products and mixed loads to various destinations as required by Busby;
2. The plaintiff would be required to provide cartage services from on or about 30 September 2012, with Busby to nominate the specific starting date closer to that time;
3. The plaintiff would be paid $2.00 per kilometre (exclusive of GST) with a guaranteed rate of at least 4,000 kilometres per week;
4. The contract was to be an on-going arrangement, terminable by either party on reasonable notice to the other party.
The two persons are alleged to have entered into an oral agreement described as the Busby Contract. They are the plaintiff and Mr Busby. No evidence of the conversation was led from Mr Busby. The plaintiff’s evidence about this key conversation, the agreement and its components was a combination of three types of evidence. They were:
1. The plaintiff’s opinions about the way the transport business was conducted;
2. The plaintiff’s beliefs about the way the arrangement with Busby would operate; and
3. The plaintiff’s recollections about what was said between Mr Busby and the plaintiff.
Of those three, only the plaintiff’s recollections of what was said is direct evidence of an oral agreement. The plaintiff’s opinions and beliefs are, at best, relevant only as circumstantial evidence of whether there was an oral agreement and circumstantial evidence of its terms. For that reason, it is useful to highlight the plaintiff’s evidence of what was allegedly said, to distinguish it from his other evidence. This emphasises how little direct evidence there is of the conversation.
The plaintiff’s evidence about the conversation and about the alleged Busby contract was:
1. The plaintiff used to go occasionally to the Busby yard because Busby had hired trailers from him. He had been talking in the Busby yard to Mr Busby. Mr Busby had asked him a couple of times to go and work full-time for them quite a few times back in history.[2]
[2]T1-15 ll 21-26.
2. To the plaintiff, to work full-time for Busby meant like the work he was doing for Toll, using his truck and trailer for transport “and just work for them – solely for them.”[3] The plaintiff was referring to a sub-contract arrangement.[4]
[3]T1-10 l5 ll 29-30.
[4]T1-15 L 32.
3. Mr Busby “asked me if I’d come and do it.”[5] “He offered 4,000ks a week.”[6] To the plaintiff, that meant 4,000kms a week travelled at $2.00 a km, inclusive of GST.[7] They did not talk about what the plaintiff would haul for Busby. The plaintiff assumed it would be concrete pipes, railway sleepers and a bit of steel but Mr Busby did not ask him to cart anything, he just said “to come and work for them.”[8] They did not talk about where the plaintiff would be going to or from.[9]
[5]T1-15 L 40.
[6]T1-15 L 44.
[7]T1-16 ll 1-4.
[8]T1-16 ll 18-19.
[9]T1-16 L 22.
4. But the plaintiff said to Mr Busby “I could start in October – early October… I just said I had to organise the drivers and – a driver and get him there.”[10]
[10]T1-16 ll 26-30.
5. They did not talk about how long the arrangement would last but, because the plaintiff had done a couple of other jobs for Busby and for those jobs he had been told it would only be for a couple of weeks, he took it from the conversation that this proposal would be ongoing just like the work he did for Toll.[11]
[11]T1-16 ll 33-39.
6. The plaintiff believed that he would pay for fuel performing work for Busby but that he would use Busby’s fuel account,[12] and I infer that he believed the cost of the fuel would be deducted from the plaintiff’s contract entitlements.
[12]T1-17.
7. The plaintiff assumed that the days when he would be providing a truck and driver for the Busby work would be mainly weekdays.[13]
[13]T1-18.
8. There had been no discussion about how many trailers the truck would be hauling, but the plaintiff assumed it would vary between one and two and that he had to supply the trailers and that if he supplied two trailers he would be paid more money.[14]
[14]T1-19.
9. If the plaintiff had provided a truck and trailer to Busby on 1 October, he assumed that the work would be continuous.[15]
[15]T1-32 L 1.
10. The plaintiff explained that the sub-contract transport business was generally done in a particular way: he would ring a transport company to ask if work was available or the transport company would contact him to say they had an upcoming contract and he would advise whether he had a truck available.[16]
[16]T1-39.
11. He had been working for Toll for many years hauling ammonium nitrate and he then regarded it as continuous long-term work. However, he agreed that for Toll the basis of his arrangement was “it’s on a load to load, same as any contract.” And he accepted that though he used the term “full-time” about his arrangement with Toll, he worked for them on a load to load basis, depending on what work they had.[17] He accepted that Toll could have said to him at any time “there’s no more work” or “there won’t be work for a month”.[18] He advised that “everything’s speculation in the transport industry.”[19]
12. He accepted that Busby could have told him they did not want to use his trucks anymore, though he doubted that Busby would have said such a thing because they needed trucks.[20]
13. The discussions with Mr Busby were in July 2012 when “he asked me if we could do it and I said I’d think about it.”[21]
[17]T1-45.
[18]T1-45 ll 13-14.
[19]T1-50 ll 17-20.
[20]T1-50.
[21]T1-58 ll31-34
This exchange also arose in the plaintiff’s evidence:[22]
Counsel for the defendant: there was never an agreement with Busby where Busby said, I will give you a contract for three years?- - - That’s right.
Counsel for the defendant: or two years, correct? - - - That’s right. Or one month.
Counsel for the defendant: or one year? - - - One month.
Counsel for the defendant: or one month? - - - He wouldn’t – he can’t say that.
[22]T1-50 ll 5-12.
The plaintiff gave this further evidence:
Mr Busby “wanted me to start ASAP… August… I said… I couldn’t start till August/September, you know I said or beginning of October.”[23]
[23]T1-51 L 46 to T1-52 L 9.
The plaintiff then corrected himself explaining “not the beginning, early October because I had to be a driver and I had to get him organised.”[24] The plaintiff again described the relevant conversation with Mr Busby:[25]
The plaintiff: he just said he had extra work and – coming in and needed an extra truck.
Counsel for the defendant: right. And was that the extent of what he said in July? - - - yeah.
Counsel for the defendant: right. And what did you say? - - - I think I said, I’d think about it.
Counsel for the defendant: had you discussed terms at that time? - - - No.
…
Counsel for the defendant: right. So what happened between then and August or did you have more discussions in July? - - - No. I just kept working for Tolls and I went and seen him, and we were talking about it, and I said I could do it… well, I said, “Give us till October”… The beginning of October, and we’ll – or early October.”
[24]T1-52.
[25]T1-59.
The last of the plaintiff’s evidence on this issue was:[26]
Counsel for the defendant: what I’m suggesting to you, Mr Knauth is that the arrangement with Busby for the wet hire - - -? - - - That’s right. That’s what we’re talking about.
Counsel for the defendant: was just - - -? - - - Lucrative.
Counsel for the defendant: just as speculative as the dry hire contract. You may have got it – you may have got it for a certain period, but you could never be certain? - - - That’s right. You can never be certain, but you do a good job and you stop there.
[26]T1-68 ll 23-30.
Mr Busby owned Busby in 2012. He gave no evidence of any conversation with the plaintiff in July 2012 or of a conversation consistent with the plaintiff’s allegations. To be clear, when Mr Busby gave evidence, he did not deny any such conversation. He did not recall one. He recalled that in about July and August 2012, of the local subcontractors, the plaintiff was the one predominantly used by Busby. The plaintiff then had a variety of useful trucks and equipment. It was then more convenient to deal with the plaintiff because of that variety. As Mr Busby described it, the plaintiff had “the licorice all sorts…I had more options”.
He regarded the availability of the plaintiff’s trucks in 2012 as an opportunity for Busby to make money. Whatever he paid a sub-contractor, he would add a 15% margin for Busby profit. If the plaintiff or his truck was unavailable at a date when Busby needed a truck to resupply on hire, he assumed he got the job done by someone else.
Mr Busby never used written contracts in the Busby business. He was not asked about his attitude in July 2012 to entering into an oral contract for more than a single load.
Busby’s operations manager Mr Garth remembers Busby had at relevant times about 4 to 6 subcontractors who each had from 1 to 4 trucks. Decisions about who to hire were made between Mr Busby and him. He said that Busby made no contracts with the subcontractors. Mr Garth did not ever discuss with the plaintiff the kilometres which Busby would have offered him for wet hire. He could not say when the wet hire work for the plaintiff would have started, if the plaintiff had been available. He thought the hypothetical wet hire would have averaged four days a week. I infer that Mr Garth meant that the wet hire would have averaged 4 days a week if Busby had used the plaintiff’s truck and driver for wet hire in October 2012 instead of another someone else’s.
The plaintiff’s general evidence about subcontract work suggests that it was unusual to expect a long term contract. At one extreme, the worst for the plaintiff, the plaintiff gave evidence that his “full time” work for Toll was only on a load by load basis. At the other extreme, the best for the plaintiff, he accepted the proposition of defence counsel that a subcontractor providing wet hire to Busby “may have got it for a certain period, but you could never be certain”.
Those expectations the plaintiff had of agreements in his industry are consistent with the work practice at Busby. I accept Mr Busby’s evidence that Busby never used written contracts and Mr Garth’s that Busby made no contracts with subcontractors. I take that to mean that Busby’s only wet hire offers were oral. There is no evidence that Busby was in the habit of offering long term oral contracts. The fact Mr Garth and Mr Busby each gave evidence of Busby tending to consistently return to the same subcontractors does not satisfy me that Busby had a practice of making long term oral contracts.
Mr Garth’s recollection of conversations with the plaintiff was:
QUESTION: So when would that work have started if it was able to start?‑‑‑It wouldn’t – yeah. I wouldn’t be able to really speculate. Like – yeah. So long ago back.
…
The last conversation we had together was that his truck was no longer available at the time, because he had engine problems. And that was basically – there was not much interaction after that… along the lines of if you got his – once he got his truck back would he have a position? And I couldn’t promise anything…
QUESTION: if that truck was available do you think he would have provided that work?‑‑‑Yes.
QUESTION: And when do you think that work would have started?‑‑‑It would have started – yeah. It would have carried on.
QUESTION: And how long from that point do you think that work would have lasted for?‑‑‑It – I’ve got some contractors that are still with me now from that time, so it’s hard to say. If he supplied a good service he could be with me till this day. But – yeah. Fees – you know, service went off the rails or had a bad driver or something like that. You never know.
Despite Mr Garth’s obviously vague description of when Busby could have used the plaintiff’s truck for wet hire, Mr Garth said the work which would have been offered to the plaintiff was done by three other subcontractors.
It is against that background that I assess the plaintiff’s scant evidence of his conversation with Mr Busby. In particular, the plaintiff gave no evidence that Mr Busby:
1. Spoke of an “on-going arrangement”;
2. Spoke of a condition that it be “terminable by either party on reasonable notice to the other”;
3. Required him to provide cartage services from on or about 30 September 2012;
4. Said that Busby would nominate the specific starting date closer to that time;
5. Said the plaintiff would be paid $2.00 per kilometre (exclusive of GST);
6. Guaranteed at least 4,000 kilometres per week;
7. Guaranteed anything.
Drawing the most favourable inferences for the plaintiff from the evidence of the plaintiff, Mr Busby and Mr Garth, the alleged request by Mr Busby to the plaintiff, was for the plaintiff to come and cart for 4,000 kilometres per week for Busby as soon as possible in July or to come in August 2012. If there had been such a request, the plaintiff gave evidence that he said he would think about it. The plaintiff’s evidence is to the effect that he rejected a request to start either as soon as possible or in August.
The plaintiff asked Mr Busby to give him until early October. It is unclear whether those words should have been interpreted in July to mean the plaintiff wanted until early October to make up his mind, or to present a truck and driver. The words are to be interpreted objectively, in the context in which they were spoken. Whichever way those words are interpreted, there is no evidence of what Mr Busby responded. If it was an offer or counter offer by the plaintiff, there is no evidence that Mr Busby accepted it so as to bind Busby to take the plaintiff’s truck and driver on wet hire.
Whatever offer was made by Mr Busby in July 2012, whether it was an invitation to treat for a week’s wet hire for 4,000 kilometres or an offer of continuous work, it seems to have been for July or August. I am not satisfied by the plaintiff’s evidence that he accepted that offer. If the plaintiff’s mention to Mr Busby of his ability to be ready by the beginning of October amounted to a counter offer by the plaintiff to Busby, there is no evidence that Mr Busby accepted it.
Against the background of an industry accustomed to load by load cartage contracts, the plaintiff has failed to satisfy his onus that in July 2012, he and Mr Busby agreed that Busby was obliged to accept the plaintiff’s truck and driver on wet hire two or three months later at the beginning of October.
I am not satisfied that Mr Busby and the plaintiff made an agreement on the terms pleaded in the second amended statement of claim. That is to say, on the terms of the alleged Busby Contract.
The plaintiff’s counsel submitted, as an alternative to the claim based upon an indefinite Busby Contract, that I should construe the evidence as amounting to an agreement for a week of wet hire at the beginning of October with a chance for continuing wet hire to follow. He submitted that I should assess damages for the loss of that contract for a week’s work and for the loss of the chance for more.
Considering the plaintiff’s onus of proof, the highest level of commitment one could find against Busby on the scant evidence of the conversation in July 2012 is an invitation by Busby to treat for the plaintiff’s subcontract wet hire if the plaintiff offered a truck and driver at the beginning of October 2012. I deal below with the separate issue of whether the plaintiff may claim for the loss of a business opportunity to obtain long term work from Busby from the beginning of October.
The first issue is determined against the plaintiff. He did not make the Busby Contract with Busby.
What were the plaintiff’s circumstances and intentions before the damage on 19 September 2012?
In 2012 the plaintiff had been using his Western Star and a trailer to cart ammonium nitrate for Toll.
In September 2012, the plaintiff owned the Western Star with no money owing on it. He had more money owing on the Eagle than on the Mack and prices for trucks were down.
On 19 September 2012, the plaintiff’s circumstances and intentions were:
1. He intended to continue to offer his Western Star and a trailer to Toll, anticipating that Toll would continue each week to enter into a carriage contract with him;
2. He was carting for Toll on 19 September 2012 when the Western Star was damaged by the contaminated fuel;
3. There was no agreement with Toll guaranteeing work for any period into the future; the plaintiff was confident the Toll work would continue;
4. He was keen to be reliable and to appear to Toll to be reliable. As it happens, Toll stopped offering work to him in January 2013, preferring to use its own trucks;
5. His Mack truck was on “dry hire” to Busby on a short term hire;
6. He was proposing to offer the Mack to Busby for the pending wet hire contract;
7. The Eagle was unregistered in the plaintiff’s yard.
The damage on 19 September 2012 and subsequent events
The defendant carried on the business of selling fuel, including diesel under the name “Choice Petroleum” from a fuel station at Bowen Street, Banana in Queensland (Station).
On 19 September 2012, there was a large sign at the Station visible to drivers on Bowen Street containing the word “Diesel” and a price. There was also a sign at or on a fuel pump at the Station containing the word “Diesel” and a price. The plaintiff pumped fuel from that fuel pump into the Truck. The defendant admits that:
1. It entered into a contract (Contract) for the sale of fuel to the plaintiff;
2. It was a condition implied in the contract that the fuel would correspond with the description “diesel fuel”;
3. The fuel it sold contained unleaded petrol mixed in with the diesel fuel;
4. The fuel it sold did not correspond with the description “diesel fuel”.
The contaminated fuel damaged the truck, rendering it inoperable from 19 September 2012. It was inoperable until 21 January 2015.[27] I do not infer that it was inoperable because the plaintiff could not afford to repair it. He preferred to negotiate with the defendant for it to be repaired. Because he had two other trucks available to put to use on the two lucrative wet hire opportunities with Toll and Busby, it was not unreasonable to have negotiated until late October 2012 to have the Western Star repaired at another’s expense. He was continuously fobbed off with excuses throughout September and October. Mr Rayner corroborated the plaintiff’s evidence.
[27]SFAD para 9(a).
Mr Rayner gave evidence that in 2012 he was an area manager for the defendant fuel company, supervising 11 fuel sites in central Queensland; one of the sites was the Choice Fuel Station at Banana. Banana is a small town 60 kilometres west of Biloela, which is 112 kilometres west of Gladstone. The population at Banana is about 100 to 150 people. The Choice site is a truck stop with a designated area for trucks and showers and meals for truck drivers. 25 to 30 per cent of the vehicles getting fuel there would be trucks. The primary customers for diesel fuel were truck drivers and most of them would be driving for commercial purposes.
The plaintiff was the first person to communicate with the defendant to raise an issue about contaminated fuel. The diesel fuel was contaminated with some petrol. Mr Rayner first learned of the plaintiff from the site manager at Banana but Mr Rayner spoke with the plaintiff on either the 19th or 20th of September 2012 when the plaintiff first asked what the defendant was going to do about the damage to his vehicle. Mr Rayner assured the plaintiff that if it was the defendant’s problem, they would fix it. The plaintiff contacted Mr Rayner on a number of occasions to find out when something was going to be done by the defendant or by Direct Haul, the carrier that had delivered the contaminated fuel to the defendant. Mr Rayner’s typical response was to assure the plaintiff that the defendant would fix the plaintiff’s problem.
The defendant arranged for repairs to a couple of other vehicles which had been damaged by the contaminated fuel, but those repairs were less expensive than the repairs would have been to the plaintiff’s vehicle. Mr Rayner left the defendant’s business at about Christmas time 2012, at which time the defendant had still not resolved to pay for repairs to the plaintiff’s vehicle. The problem was that authorisation had to be given by Mr Rayner’s manager in Brisbane, Tony Evans. While Mr Rayner would like to have authorised the repairs, he could not do so. Just before Mr Rayner’s departure from employment with the defendant, Mr Tony Evans said the defendant would have to hand the problem to its insurers.
The plaintiff needed a truck to accept more work from Toll on 20 September 2012. The Western Star was inoperable. The Mack was on dry hire that day to Busby. The Mack was registered and had an explosives licence. The plaintiff immediately withdrew the Mack from Busby. The plaintiff did not give evidence that he had entered into a contract to provide a dry hire truck to Busby after 19 September 2012. I infer that on 19 September 2012 the Mack was let on a short term dry hire ending next day or that it was a dry hire terminable on a day’s notice. I also infer that it was more lucrative to retain continuity of wet hire work with Toll than to continue to earn on the lower rates paid for dry hire to Busby, particularly as Busby’s demand for dry hire was irregular and short term.
The plaintiff used the Mack as substitute for the inoperable Western Star the next day. He returned on 20 September 2012 to carting ammonium nitrate for Toll.
It was the plaintiff’s evidence that until the Western Star was damaged on 19 September 2012 he intended that in early October, he would supply his Mack and a sub-contractor truck driver to Busby. He gave evidence that he had arranged with an experienced and employed driver, Des Evans, to accept $780 per week to drive wet hire for Busby and that he agreed to notify Mr Evans in sufficient time for Mr Evans to give two weeks’ notice to his employer that he was terminating his employment.
Curiously, the plaintiff had not notified Mr Des Evans by Wednesday 19 September that he should give notice to his employer. Two weeks from 19 September was 3 October 2012. If there had been a contract between the plaintiff and Busby, it seems from the evidence of the plaintiff of his conversations with Mr Busby, that the plaintiff would have been obliged to have a truck and driver available for wet hire to Busby, at the latest, by the beginning of October 2012. The plaintiff was at risk of failing to comply with the starting date. The plaintiff’s omission to advise Mr Des Evans is not consistent with an agreement made in July that the plaintiff would supply a driver and truck at the beginning of October.
The plaintiff’s intention on 19 September that he would supply the Mack to Busby on wet hire in October supports the inference that he had no long term arrangement for dry hire of a truck to Busby.
At the beginning of October 2012, Busby needed a truck on wet hire. There were trucks available to Busby to take on wet hire. If Busby had offered wet hire to the plaintiff in October, it would have been for carting construction materials for about 4,000 km in any week of work at 2 cents per kilometre. Busby gave such work in October 2012 to 3 subcontractors. Two of Busby’s six subcontractors received work until Mr Busby sold the Busby’s business in September 2014.
The plaintiff’s opportunity for long term wet hire from the beginning of October was conditional upon the plaintiff’s remaining a continuously reliable supplier of a reliable truck, trailer and driver and upon Mr Busby and Mr Garth continuing to prefer the plaintiff’s driver, truck and equipment to that of others in the competitive wet hire market. Once Busby found a reliable subcontractor, Mr Busby and Mr Garth preferred to stick with the subcontractor. The plaintiff won two short jobs from Busby in 2013 after his Toll work ended in January 2013.
The plaintiff did not have his Western Star repaired in 2012. But, he had not intended to supply the Western Star to Busby for the wet hire work. He had intended to retain the more comfortable Western Star which he would drive doing Toll’s wet hire ammonium nitrate carting. He gave evidence that he had, prior to the damage on 19 September 2012, intended to supply his Mack to Busby for wet hire, after taking it back from Busby which had the Mack on dry hire.
The plaintiff took advantage of the idle Eagle at his yard and had it registered by 28 September.
The plaintiff did not make the Eagle available to Busby on 30 September or at the beginning of October for wet hire. I mention 30 September, because that was the date the plaintiff pleaded that he was to provide cartage services, “with Busby to nominate the specific starting date closer to that time”.[28] Nor did he make the Eagle or any truck available for Busby wet hire at the beginning of October. I use the word “beginning” because that was the plaintiff’s evidence of the date. The plaintiff led no evidence of an agreement that Busby was to nominate the specific starting date closer to the time.
[28]SASOC para 11B (b).
The plaintiff did not hire another truck so that he could offer it to Busby for wet hire on 1 October or at the beginning of October to fulfil his obligation under the alleged wet hire agreement. He did not suggest that it was beyond his means or impractical to do so. The plaintiff explained:
Because the hire company…would make more money than me. Well, I would make money, but very little…I didn’t think…that my Western Star would be that long, and by the time it was realised, the job with Busby’s had gone.[29]
[29]T1-31.
The plaintiff gave evidence that he told Busby that he would be late, that he did not know how long he would be and that it should not be too long. He explained:
…when I went to see Busby’s, they had already had someone else to do the job.
COUNSEL FOR THE DEFENDANT: And when did you go and see them? - - -
Well, I’d been in a couple of times, but they had someone, I think, in October. I’m not quite sure, but, yeah, and then when the Toll job finished, I went in, but they had their quota of trucks. I think I did a couple of loads for them, but not full-time.
The job with Toll did not finish until January 2013.
The plaintiff stopped working as an owner driver in 2015. By 2015, work was quiet.
The second issue: Can the plaintiff reframe his case in a way not pleaded?
The plaintiff claimed damages on 3 particular bases. The bases were set out in the Amended Statement of Claim and clarified in the opening and again on the second day of trial. The 3 bases were:
1. A claim for repairs to the Western Star. That claim was ultimately paid;
2. A claim for the cost of unloading and delivering the ammonium nitrate cargo from the inoperable Western Star. It was conceded by the defendant in addresses that this was established on the evidence and is payable. The plaintiff is entitled to damages in respect of that in the sum of $2,262.50;[30]
3. A claim for lost profits from an oral agreement made in about July 2012, that Busby would hire a truck and driver from the plaintiff from on or about 30 September 2012, with Busby to nominate the specific starting date closer to that date, on an on-going arrangement, terminable by either party on reasonable notice to the other party.[31] That agreement was further identified as the Busby Contract.
[30]Exhibit 3.
[31]SASOC paras 11A and 11B.
The plaintiff had originally pleaded a claim for lost hire charges to Busby without reference to any particular contract. That claim was amended to allege the Busby Contract and to claim the lost profits to be made pursuant to the Busby Contract. The original claim for lost hire was not maintained as an alternative. I infer that damages from a lost business opportunity to compete weekly for Busby wet hire work would have been less than the damages from a lost contract obliging Busby to accept the plaintiff’s vehicle and driver for wet hire and terminable only upon reasonable notice.
At least three features of the alleged oral agreement upon which the plaintiff carries the burden of proof were in contest. The three were whether:
1. There was a contract;
2. The parties’ obligations would continue for an indefinite period;
3. It was not terminable by a party unless upon reasonable notice.
The plaintiff’s case was that Busby would not have terminated the Busby Contract until late January 2015. It follows that the alleged Busby Contract had potential to be of high value to the plaintiff. The plaintiff alleged that his profits from the Busby Contract would have been $375,275.49 representing lost weekly income of $3,116.02.
During the plaintiff’s opening, counsel for the defendant rose to clarify that the plaintiff’s primary claim was confined to proof of loss of a specific contract, submitting:
So there’s not a claim for damages insofar as I generally lost business, or I lost the commercial opportunity to pursue my business, or my business suffered because of it. Rather, it is I lost specifically a contract of extremely high value. So there are issues as to whether that contract even existed or was probable and then whether it ought be seen as being too remote. But that’s – but your Honour is not confronted with a case where you’re otherwise asked to assess damages in a general sense as to what the business lost.
The central factual issue was thus identified by the defendant’s counsel as being whether the lucrative, long term “contract even existed”. Counsel emphasised that (apart from the small claim for the costs of unloading the inoperable truck) the plaintiff’s claim was for loss of a specific contract and not for any other loss.
Counsel for the plaintiff, hearing that, confirmed:
That, in a factual sense, your Honour, we agree with. So that’s a fair characterisation of the case, that we point to the Busby Contract as the contract of significance that we lost. And our claim is based upon that contract.
Counsel for the defendant emphasised the narrowness of the plaintiff’s case again on the second day where he submitted: [32]
And paragraph 15, (of the Second Amended Statement of Claim) which previously had a claim in 15(c) … “lost profits otherwise to be made” and then had a general particulars clause, was altered to read “lost profits otherwise to be made pursuant to the Busby Contract in the sum of X.” … there’s a plea of a specific contract which we say the evidence does not bear out … this is the objection to Mr Perkins’ report … Because Mr Perkins’ report proceeds on the fact a contract of that nature has been established. And we say the evidence goes no higher than it being a speculative arrangement that may have come into existence at some point in time …
[32]T2-13 ll 5-38.
I was asked to rule on the admissibility of Mr Perkin’s evidence but it was agreed I could postpone the ruling and make it in the course of my reasons for judgment. The objection taken by defence counsel was essentially that Mr Perkin’s opinions about loss were based upon a premise not established by the evidence, namely that there was a Busby Contract as pleaded.
The defendant’s first submission is that the Busby Contract, as alleged in the Second Further Amended Statement of Claim, is not established.[33] Counsel for the plaintiff identifies the first key question to be resolved in the proceeding as:
Did the Plaintiff have a sub-contract to commence haulage services for Busby from 1 October 2012 and, if so, what were the terms of that contract?
[33]Amended submissions on behalf of the defendants para 6(a).
I am not satisfied that the plaintiff and Mr Busby made an agreement in July, or August 2012 in the terms pleaded or on any of the terms pleaded.
The combined evidence of the plaintiff, Mr Busby and Mr Garth, if accepted at its highest for the plaintiff, was to the effect that:
1. If the plaintiff had offered a truck and driver to Busby for wet hire at the beginning of October 2012 he would have been offered a 4,000 kilometre job at 2 cents per kilometre, so long as the job had not been allotted to one of the other 3 subcontractors who were given the work the plaintiff could have been given in October;
2. If the plaintiff, or any other subcontractor, had been accepted by Busby to do a wet hire job at the beginning of October, there was further wet hire work available and likely to be consistently offered by Busby thereafter on a weekly basis to some or all of up to 3 subcontractors who had done a wet hire job in the beginning of October;
3. For as long as a reliable truck, trailer and driver was offered to Busby by a subcontractor who had proved to be reliable in that first and every subsequent job, that subcontractor had a good opportunity to win 4,000 kilometres of wet hire work weekly until Mr Busby sold Busby in 2014.
If other satisfactory subcontractors presented satisfactory trucks and drivers to Busby at the beginning of October, I am not satisfied that Busby would have rejected them to await the plaintiff. That is not relevant to whether there was a contract made in July 2012. It is relevant to whether any business opportunity to do wet hire for Busby was lost because of the damage to the Western Star or to the failure to have Mr Des Evans ready to drive by the beginning of October 2012.
The plaintiff has failed at the first issue. There was no Busby Contract made in July or in any later month. It follows that the expert evidence calculating loss on the basis of a hypothetical contract is irrelevant and, insofar as the expert report of Mr Perkins expresses opinions based upon the hypothesis that there was a contract, such opinions are inadmissible, unless they are relevant to a new claim for damages for a lost opportunity, if such a claim is allowed.
After both parties had closed their cases, the plaintiff submitted, in effect, that if the plaintiff had not proved that there was a Busby Contract, he had proved that the defendant’s breaches had caused him a lost business opportunity and he should have his damages for it. No application to amend the pleadings was made. Although there may have been scope to argue, under tort, contract and the ACL that the plaintiff lost the chance of an opportunity to work for Busby from week to week, this was not pleaded.
The defendant submits that once the plaintiff failed to prove the Busby Contract:
1. It means the end of the plaintiff’s claim for damage related to Busby wet hire work; and
2. Because the defendant has not fought a claim for damages for lost business opportunity it is unfair to allow the plaintiff to reframe the case as if the lost business opportunity is pleaded as an alternative claim.
I would allow the plaintiff to claim on a basis not expressly pleaded if it was fair to the defendant. It is not fair in this proceeding.
It would be unfair in the circumstances to treat the evidence from Mr Busby and Mr Garth as a proper foundation for developing a claim for a lost business opportunity. The defendant may have conducted the trial differently if it had been obliged to also meet an alternative claim for lost business opportunity. Even if the plaintiff limited the hypothetical claim to an analogous claim for lost opportunity to compete in October 2012 for Busby wet hire work, it would be a fundamentally different claim raising different issues. Among other issues, it would have been relevant to determine the date when the plaintiff would have had a driver available to offer Busby. It was unlikely to be before 3 October. If Busby had no contractual obligation to await the plaintiff before offering all its wet hire work to other subcontractors it would become relevant to determine the dates in October by which the other subcontractors received their first jobs. Perhaps the competing subcontractors were ready and offering trucks on wet hire before Mr Evans could have been available to drive any of the plaintiff’s trucks. It would be relevant to determine whether the plaintiff could have offered Mr Evans to Busby as the wet hire driver before the other subcontractors received wet hire work. Because the plaintiff had not, even by 19 September 2012, alerted Mr Evans to give two weeks’ notice of intention to quit, it is unclear whether Mr Evans was going to be available to drive early enough in October to satisfy Busby. The plaintiff’s delay in organising Mr Evans may have caused him to lose his business opportunity, independently of the defendant’s breaches of duty.
It is not open for me to find that the defendant’s breaches caused the plaintiff to lose an opportunity to work for Busby.
It is prudent that I make findings about mitigation.
The third issue: Did the plaintiff take reasonable steps to mitigate his loss?
The principle of mitigation is described in Halsbury’s Laws of Australia. The author writes, so far as is relevant (citations omitted):
[135-25] Principle of mitigation Plaintiffs who are the victims of a tort or breach of contract are required to respond reasonably to the defendant’s wrong. They cannot simply lie by and let the losses flowing from that wrong multiply. Rather, they must act to keep the damages down as far as is reasonable in all the circumstances of the case. If they fail to do so, their award of damages will exclude recovery for those losses which could reasonably have been avoided. If they do act reasonably in response to the defendant’s wrong…they will be able to recover the losses associated with their reasonable actions. [34]
[34] LexisNexis, Halsbury’s Law of Australia (at 1 April 2014) 135 Damages, ‘1 Nature of Damages’ [135-25].
On 28 September 2012, the plaintiff registered the Eagle and had it available for supply on wet hire or dry. For reasons the plaintiff never satisfactorily explained, he supplied the Eagle to Busby for dry hire. His alternative was to supply it to Busby for more lucrative wet hire. If there had been a Busby Contract, the wet hire would have been more lucrative each week and potentially much more lucrative because of the indefinite duration of the wet hire work of 4,000 kilometres per week. If there was no Busby Contract, the plaintiff could have offered the Eagle to Busby to exploit the business opportunity for more lucrative, weekly, continual and long term Busby wet hire which would have cleared more than $3,000 per week after expenses. The plaintiff did not offer the Eagle to Busby for wet hire. He did not ask Busby whether Busby would prefer to have his Eagle for wet hire or dry hire. He did not ask Busby which date it required a truck and driver for wet hire work and did not ask whether Busby was proposing to nominate a starting date for a wet hire subcontract. He did not ask Busby how long Busby would wait for one of his trucks for wet hire work before Busby offered steady work to another subcontractor. There is no obvious explanation for the plaintiff’s decision to use the Eagle for dry hire.
The plaintiff’s curious explanation for offering his truck to Busby for dry hire was that he wanted to appear reliable to Busby. It is curious because:
1. He was breaching an alleged contract to present a truck and driver to Busby for wet hire work at the beginning of October 2012; or
2. As I have found there was no contract, the plaintiff was demonstrating that he was not reliable about offering a truck and driver for wet hire at the beginning of October;
3. He was preferring a lower weekly earning rate for dry hire work to a higher weekly rate for wet hire;
4. He was preferring intermittent, irregular dry hire work to continuous, weekly and more profitable wet hire work which may have continued for an indefinite period.
Busby’s manager Mr Garth gave evidence that:
PLAINTIFF’S COUNSEL: if Mr Knauth did have a truck on dry hire?‑‑‑Yes.
PLAINTIFF’S COUNSEL: On a mine site for Busby?‑‑‑Yes.
PLAINTIFF’S COUNSEL: Would that be something that was difficult to bring to an end?‑‑‑No, not really, no. Just it’s day to day. If we could’ve swapped it out with one of ours or, yeah, if he needed the truck back or – we sort of work with people. We never had an agreement at all, so everything was just, yeah, spoken about as we went.
It was unreasonable that the plaintiff offered the Eagle to Busby for dry hire when he could have offered it to Busby for the more lucrative wet hire which was potentially much more lucrative. There was no evidence that Busby preferred to accept the truck for dry hire. It was unreasonable that the plaintiff did not ask for Busby’s opinion about or consent to using the plaintiff’s one Eagle to secure the opportunity for long term wet hire to Busby.
The plaintiff submitted:
The Plaintiff could not use the Mack or the International Eagle because they were otherwise committed. The Plaintiff could not hire another truck because this would have negated the benefit to him completely. As an owner/operator, once the Plaintiff lost the Western Star, he had no real opportunity to keep the Busby Contract and effectively missed his chance with Busby.
Four of those five submissions are rejected. The Mack was otherwise committed. It had been let to Busby on dry hire and was withdrawn on 20 September. It was reasonable for the plaintiff to then use the Mack to retain Toll work. The Mack was a reasonable choice as it had an explosives licence. As for the other four submissions:
1. The Eagle was not committed when the Western Star became inoperable. The Eagle was idle in the plaintiff’s yard and unregistered. It was registered on Friday 28 September and was not otherwise committed;
2. The plaintiff could have hired another truck to use for the wet hire subcontract to Busby and would have profited to a lesser extent than by the use of his own truck;
3. If there was a Busby contract, the plaintiff had a real opportunity to keep it by offering his Eagle to Busby, or by renting a truck and offering it to Busby at a reduced profit until his Western Star was repaired;
4. It was not lack of a vehicle which caused a missed chance with Busby. It was the plaintiff’s decision to use the Eagle for dry hire.
By its Second Further Amended Defence the defendant expressly alleged that the plaintiff could have used the Eagle for any other contract work.[35] The plaintiff’s denial by his Amended Reply[36] accords with the findings I make on the evidence which was led. The Eagle could not perform the work for Toll because it was not licensed to transport explosives. The Eagle was unavailable for the Busby wet hire work on the basis that it was used by the plaintiff to supply to Busby on dry hire.
[35]SFAD para 10 (d) and (f).
[36]AR para 2 (e).
If there had been a contract for wet hire to Busby to begin at the beginning of October 2012, the plaintiff repudiated that contract by failing to supply a truck and driver and lost the benefit of that contract as a result. The plaintiff failed to mitigate his loss by failing to act reasonably because he did not offer Busby the Eagle and a driver at the beginning of October.
Such a finding would be relevant to a claim for lost business opportunity to compete for Busby’s weekly dry hire work in October 2012 and following, if the plaintiff had been permitted to raise it.
Other issues
It becomes unnecessary to make findings on the other issues which would have remained if there had been a contract. It is usually responsible to assess quantum. In this proceeding it seems impractical as:
1. The plaintiff has all but conceded that the evidence failed to come up to proof of his case that he had a contract with Busby for anything more than one week’s wet hire;
2. I have ruled that he cannot raise at the end of the trial an alternative claim for lost business opportunity;
3. The plaintiff has failed to plead his hypothetical case based on lost opportunity and the defendant has failed to plead a defence to it;
4. Counsel may be inclined to make different submissions on quantum if I am to assess damages on some basis other than the basis that the plaintiff lost the benefit of the Busby contract until Busby went out of business in September 2014.
If the parties cannot agree costs they are at liberty to provide written submissions on costs within 7 days.
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