Matland Holdings Pty Ltd v NTZ Pty Ltd - [2004] FCA 710

FEDERAL COURT OF AUSTRALIA
Matland Holdings Pty Limited v NTZ Pty Limited [2004] FCA 710
CONTRACT – Breach of collateral agreement to execute petroleum supply agreement – meaning of “collateral agreement” – whether agreement merged in conveyance – whether agreement void for incompleteness or uncertainty due to absence of price discount
TRADE PRACTICES – Misleading or deceptive conduct – Trade Practices Act 1974 (Cth) ss 51A and 52 – Fair Trading Act 1999 (Vic) ss 4 and 9 – Fair Trading Act 1985 (Vic) ss 10A and 11 – representation as to future matters – obligation to qualify promise – whether claim survives repeal of Fair Trading Act 1985 (Vic) –whether misleading representation made that supply agreement would be executed
NEGLIGENCE – Negligent misrepresentation causing economic loss – whether duty of care owed where no vulnerability shown
TRADE PRACTICES – Unconscionable conduct – Trade Practices Act 1974 (Cth) s 51AA – whether any ‘special disadvantage’ in loss of value of business
TRADE PRACTICES – Anti–competitive conduct – Trade Practices Act 1974 (Cth) ss 45(2), 45B, 45C(2), 47, 53A(2) of the TPA – whether petroleum supply agreement has effect of substantially lessening competition – whether agreement constitutes price fixing or exclusive dealing
WORDS & PHRASES – “collateral agreement”
Trade Practices Act 1974 (Cth) ss 45(2), 45B, 45C(2), 47, 51A, 51AA, 52, 53A(2)
Fair Trading Act 1999 (Vic) ss 4, 9
Fair Trading Act 1985 (Vic) ss 10A, 11
Interpretation of Legislation Act 1984 (Vic) s 14(2)(e)
Petroleum Retail Marketing Franchise Act 1980 (Cth) s 17(1), 17B(4)
Federal Court Rules O 4 r 3(1)(b), O 13 r 2
Wigan v Edwards (1973) 47 ALJR 586 referred to
David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 referred to
J J Savage & Sons Pty Ltd v Blakney (1970) 119 CLR 435 referred to
Hoyt’s Pty Ltd v Spencer (1919) 27 CLR 133 referred to
Heilbut, Symons & Co v Buckleton [1913] AC 30 referred to
Christopoulos v Angelos (1996) 41 NSWLR 700 considered
Saunders v Cockrill (1902) 87 LT (NS) 30 referred to
Lawrence v Cassel [1930] 2 KB 83 referred to
Dean v Gibson [1958] VR 563 applied
Australasian Conference Association Ltd v Carver [1988] ANZ ConvR 516 referred to
Hawkins v Gaden (1925) 37 CLR 183 applied
Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd (1982) 149 CLR 600 applied
Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 referred to
Australian & New Zealand Banking Group Ltd v Frost Holdings Pty Ltd [1989] VR 695 referred to
British Steel Corp v Cleveland Bridge & Engineering Co Ltd [1984] 1 All ER 504 referred to
Courtney & Fairbairn Ltd v Tolaini Brothers (Hotels) Ltd [1975] 1 WLR 297 referred to
May & Butcher Ltd v R [1934] 2 KB 17 considered
Toyota Motor Corporation Australia Ltd v Ken Morgan Motors Pty Ltd [1994] 2 VR 106 applied
Vroon BV v Foster’s Brewing Group Ltd [1994] 2 VR 32 considered
Thorby v Goldberg (1964) 112 CLR 597 applied
Dem Compagnie Pty Ltd v Telxon Australia Pty Ltd [2004] NSWCA 66 referred to
Pagano v Cama (1998) 6 BPR 14,128 referred to
Foley v Classique Coaches Ltd [1934] 2 KB 1 applied
Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 applied
Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 applied
Fried v Dixie Holdings Pty Ltd [2000] FCA 1048 applied
Re Ku-ring-gai Co-operative Building Society (No 12) Ltd (1978) 22 ALR 621 considered
Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 applied
Henville v Walker (2001) 206 CLR 459 applied
Ting v Blanche (1993) 118 ALR 543 applied
Phoenix Court Pty Ltd v Melbourne Central Pty Ltd (1997) ATPR (Digest) 46-179 applied
Wheeler Grace & Pierucci Pty Ltd v Wright (1989) ATPR 40-940 referred to
Futuretronics International Pty Ltd v Gadzhis [1992] 2 VR 217 referred to
Felman v Law Institute of Victoria (1997) 150 ALR 363 referred to
PSL Industries Ltd v Simplot Australia Pty Ltd [2003] VCSA 7 considered
Agtrack (NT) Pty Ltd v Hatfield [2003] VCSA 6 considered
Cropper v Smith (1884) 26 Ch D 700 referred to
Caltex Oil (Australia) Pty Ltd v The Dredge “Willemstad” (1976) 136 CLR 529 referred to
Perre v Apand Pty Ltd (1999) 198 CLR 180 applied
Woolcock Street Investments Pty Ltd v CDG Pty Ltd [2004] HCA 16 considered
Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 considered
Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (2003) 197 ALR 153 applied
Cameron v Qantas Airways Ltd (1994) 55 FCR 147 referred to
Stirling Harbour Services Pty Ltd v Bunbury Port Authority (2000) ATPR 41-752 applied
John S Hayes & Associates Pty Ltd v Kimberly-Clark Australia Pty Ltd (1994) ATPR 41-318 applied
Outboard Marine Australia Pty Ltd v Hecar Investments (No 6) Pty Ltd (1982) ATPR 40-327 followed
O’Brien Glass Industries Ltd v Cool & Sons Pty Ltd (1983) ATPR 40-376 followed
Eastern Express Pty Ltd v General Newspapers Pty Ltd (1991) 30 FCR 385 applied
Sodastream Ltd v Electronics (Broken Hill) Pty Ltd (1985) ATPR 40-572 applied
MATLAND HOLDINGS PTY LIMITED ACN 005 558 912 AND CALTEX AUSTRALIA PETROLEUM PTY LIMITED ACN 000 032 128 v NTZ PTY LIMITED ACN 005 154 165, GEORGE NTZOUNAS AND HELCO PETROLEUM PTY LIMITED ACN 080 758 738
VG 581 of 1999
KENNY J
4 JUNE 2004
MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

VG 581 OF 1999

BETWEEN:

MATLAND HOLDINGS PTY LIMITED ACN 005 558 912
FIRST APPLICANT

CALTEX AUSTRALIA PETROLEUM PTY LIMITED ACN 000 032 128
SECOND APPLICANT

AND:

NTZ PTY LIMITED ACN 005 154 165
FIRST RESPONDENT

GEORGE NTZOUNAS
SECOND RESPONDENT

HELCO PETROLEUM PTY LIMITED ACN 080 758 738
THIRD RESPONDENT

JUDGE:

KENNY J

DATE OF ORDER:

4 JUNE 2004

WHERE MADE:

MELBOURNE

THE COURT ORDERS AND DIRECTS THAT:
1.On or before Friday, 11 June 2004, the parties file and serve any submissions concerning the orders to be made in light of the reasons for judgment delivered today, addressing, if appropriate, the question of interest.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

VG 581 OF 1999

BETWEEN:

MATLAND HOLDINGS PTY LIMITED ACN 005 558 912
FIRST APPLICANT

CALTEX AUSTRALIA PETROLEUM PTY LIMITED ACN 000 032 128
SECOND APPLICANT

AND:

NTZ PTY LIMITED CAN 005 154 165
FIRST RESPONDENT

GEORGE NTZOUNAS
SECOND RESPONDENT

HELCO PETROLEUM PTY LIMITED ACN 080 758 738
THIRD RESPONDENT

JUDGE:

KENNY J

DATE:

4 JUNE 2004

PLACE:

MELBOURNE

REASONS FOR JUDGMENT
the claims

The applicants seek damages for breach of a collateral contract, alternatively, for misleading and deceptive conduct, alternatively, for negligent misrepresentation. They also seek payment of a debt in the sum of $29,087.54 due from the third respondent to the second applicant. The respondents, by a cross-claim, seek declarations that the applicants have engaged in contraventions of Pt IV, IVA and V of the Trade Practices Act 1974 (Cth) (“the TPA”). They also seek compensation for the cost of replacing computer equipment that the applicants wrongfully removed and a refund of franchise fees.
The proceeding commenced in the Supreme Court of Victoria on 1 September 1998. It was subsequently transferred to this Court pursuant to the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Vic). Pursuant to an order made by a Registrar on 1 March 2000, the issues of liability and quantum were split, with the issue of liability to be determined first.
the parties
The applicants are members of the same group of companies. The first applicant, Matland Holdings Pty Ltd (“Matland”) is a subsidiary of Solo Oil Australia Pty Ltd (“Solo Oil”), which is, in turn, a subsidiary of the second applicant, Caltex Australia Petroleum Pty Ltd (“Caltex”). Caltex was previously known as Australian Petroleum Pty Ltd (“Australian Petroleum”). Australian Petroleum was previously known as Ampol Ltd (“Ampol”). Ampol merged with Caltex Oil (Australia) Pty Limited (“Caltex Oil”) on 1 June 1995, changing its name to Australian Petroleum. On 1 June 1998, Australian Petroleum changed its name to the present name of Caltex Australia Petroleum Pty Ltd. In these reasons, unless otherwise indicated, “Caltex” includes “Ampol” and “Australian Petroleum”.
Matland was the corporate vehicle through which Ampol and its other subsidiary, Solo Oil, held numerous assets, including real property. Until 28 November 1997, Matland was the registered proprietor of the land and improvements situated and known as 1519 Dandenong Road, Oakleigh, in Victoria. There was and is a retail service station on this land, which I refer to below as the Oakleigh site.
The first respondent, NTZ Pty Ltd (“NTZ”) is a company under the control of the second respondent, George Ntzounas (or Jounas as he is also known). NTZ was the nominated purchaser of the land, which was the subject of the contract of sale referred to below. Mr Ntzounas also controls the third respondent, Helco Petroleum Pty Ltd (“Helco”). Helco is an operating or trading company through which Mr Ntzounas acquired stock and fuel. In November 1997, Helco operated the retail business located at the Oakleigh site. Mr Ntzounas also controlled Chrisanna Holdings Pty Ltd (“Chrisanna”). This company held a franchise of the Oakleigh site, initially granted by Solo Oil on 3 November 1994 for a term of years. On 14 November 1995, the franchise was varied, with the consequence that the Oakleigh site became an Ampol site.
After the merger of Ampol and Caltex in 1995, the new Caltex group engaged in a divestment program, pursuant to which it sold a number of service station sites. The Oakleigh site was one of them. The contract of sale that was ultimately concluded between Matland and NTZ on 12 November 1997 provided for the parties (or their interests) to enter into an agreement for the supply of petroleum products. This proceeding arises out of the respondents’ failure so to do.
the evidence
The applicants relied on the affidavits of Frank Cotronea sworn on 23 May 2000 and 20 March 2001; Brian David Redfern sworn on 22 June 2000; Melissa Lambrianew sworn on 24 May 2000 and 16 March 2001; David Fredricksen sworn on 9 June 2000; Kathy Youil sworn on 17 May 2000, 30 October 2000 and 28 March 2001; Stephen Peter Gallagher sworn on 9 May 2001; David Kingsford Cash sworn on 31 July 2000 and 26 March 2001; Snezana Davies (nee Filipovic) sworn on 22 May 2000; Jennie Tonner sworn 30 May 2000; Kim Thomas sworn on 19 May 2000; Greg Ochs sworn 19 May 2000; and Neville Robert Norman sworn on 18 May 2000 and 14 May 2003. (I defer discussing Dr Norman’s evidence until later in these reasons.) There was cross-examination of all deponents, save for Ms Tonner, Ms Thomas and Mr Ochs.
The applicants also tendered an affidavit sworn by Mr Geoff Sincock on 26 April 2000, to which was annexed a report on the applicant’s claim for loss of profits. (The parties agreed that the respondents would defer any cross-examination of Mr Sincock until after the trial on liability).
The respondents relied on the affidavits of George Ntzounas sworn on 1 December 2000 and 14 May 2003, Michael David Norbury sworn on 6 December 2000 and Mr Maurice Bernstein sworn on 19 May 2003. Both Mr Ntzounas and Mr Norbury were cross-examined.
The parties also relied on a number of transactional and other documents.
what happened
As the following account shows, there was considerable disagreement between the applicants’ and the respondents’ witnesses as to what actually happened. Where different accounts of conversations and events have been given, I refer to them all and indicate, where appropriate, which account I prefer.
(a) A sale is contemplated – events in 1996
About April 1996, Caltex received a market valuation for the Oakleigh site of $880,000. About July 1996, a Caltex business manager, Ms Kathy Youil, approached Mr Ntzounas to discuss the possible sale of the Oakleigh site to him (or his interests). On or about 7 August 1996, Ms Youil prepared a “retail proposition approval sheet” for submission to the then national property manager, Mr David Cash.
Ms Youil’s evidence was that, when she initially spoke to Mr Ntzounas, he told her that he was “very interested” in acquiring the site. She also said that, in this initial discussion, she told Mr Ntzounas that he would have to enter into a supply agreement if he were to purchase the site.
Mr Ntzounas said that, in about September 1996, he told Ms Youil that he was interested in purchasing the site. He agreed that she told him that “if [he] wanted the site [he] would have to buy petrol from Ampol”. In cross-examination, he also said that Ms Youil had mentioned something about his remaining at the site until the end of the franchise agreement if he could not negotiate the purchase and something about buying out his tenure.
Following his expression of interest, Mr Ntzounas had on-site discussions about the possible sale with Mr Cash in December 1996. Mr Cash deposed that, before this first meeting, Mr Ntzounas had already told him, by telephone, that he was “keen” to purchase the site and that he had told Mr Ntzounas that “the standard conditions of sale were that the purchaser enter into a supply agreement and a deed of first refusal”. Mr Cash added that Mr Ntzounas “initially queried whether he had to enter a distribution agreement but I told him it was a requirement and that the terms of the agreement were to be advised by the Business Manager for the site”. As it turned out, the parties did not reach agreement regarding the sale in 1996.
I accept the evidence of Ms Youil and Mr Cash that, from the beginning of the negotiations, Mr Ntzounas was keen to purchase the Oakleigh site. From this time too, the applicants’ representatives made it clear to him that they would sell the land to him only if he entered into a supply agreement with them, pursuant to which he took their petroleum products and that, if there were no sale, he could remain on the site until the end of his franchise agreement.
(b) A contract of sale is concluded
In cross-examination, Mr Ntzounas said that he was excited about his proposed purchase of the site. He had further discussions with Ms Youil and Mr Cash in April 1997. He deposed that Ms Youil told him that Caltex would not sell the site to him unless he entered into a supply agreement to buy all his petrol from it. In his 1 December 2000 affidavit, Mr Ntzounas stated:
I asked her how much of a rebate would Ampol give me. She told me it would be 1½ cents per litre better off than I was at that time. I said to her that if I entered into a Supply Agreement at that price I would go bankrupt because I could not [be] operating at a profit. … She said to me that Ampol might go to 2½ cents. She said that the first thing is to agree on a sale price for the site. She said to me that if I was not prepared to do something now, that Ampol would sell the site out from under me.
In cross-examination, Mr Ntzounas gave a different account of his conversation with Ms Youil. He said that, after telling her that he wanted 2.5 cents per litre (“cpl”), she said:
Well, you know, they’re not going to give [it to] you, but you know you can have a discussion with them.
Later in cross-examination, Mr Ntzounas said that:
Kathy Youil – said to me, “Well, … you know, probably go to 2 and a half”. I said, “2 and a half accepted, but 1.5, you know, look” - I said to her, “As you know at the moment we’re losing, totally. There’s no two ways about it”.
Ms Youil maintained that she had never indicated to Mr Ntzounas that he might be able to negotiate more than a 1.5 cpl discount.
In her 17 May 2000 affidavit, Ms Youil denied saying that, if Mr Ntzounas did not buy the premises, it would be sold from under him. She also denied saying that he might be able to obtain a discount price of 2.5 cpl. She maintained this position in cross-examination. Indeed, in her affidavit of 30 October 2000, she said that, after looking at the retail proposition approval sheet relating to the site, she could confirm that she had proposed that there was to be a supply agreement for a period of 5 years with a discount of 1.5 cpl. Her evidence was clear that she had said nothing that could have led Mr Ntzounas to expect a better deal than 1.5 cpl and, in any case, the 1.5 cpl figure was the upper limit of her authority. In her affidavit of 28 March 2001, she also stated that she had told Mr Ntzounas that he had an option of a branded or unbranded agreement and that he had told her that he would enter a branded agreement. She said that she provided him with a blank form of the agreement at a subsequent meeting.
In so far as the evidence given by Mr Ntzounas differed from the evidence given by Ms Youil, I prefer the evidence of Ms Youil. Ms Youil, who is no longer employed by Caltex, gave clear and cogent evidence about her dealings with Mr Ntzounas, notwithstanding the passage of time.
Mr Cash met Mr Ntzounas again in late April 1997. According to Mr Cash, Mr Ntzounas “again told me that he was interested in purchasing the site but that he did not wish to enter into a supply agreement”. Mr Cash deposed that he told Mr Ntzounas that:
[I]t was a condition of any sale of sites such as his that they be sold subject to a supply agreement with a right of first refusal to buy back the site within 5 years. He told me that he planned to upgrade the site.
Mr Ntzounas also said that Mr Cash told him that the land would only be sold to him if he entered into a supply agreement. According to Mr Ntzounas, he told Mr Cash that if he “was to sign a Supply Agreement with a 1½ cents per litre discount [he] would go bankrupt”. In his first affidavit, Mr Cash deposed that he told Mr Ntzounas that he should speak with his business manager about the terms of the supply agreement, including the price of fuel. Mr Cash reiterated this in cross-examination (although he also conceded that he could not, in cross-examination, recall making the statement). Mr Cash denied that Mr Ntzounas had told him that he would not sign a supply agreement with only a 1.5 cpl discount and that he would go bankrupt if he did so.
Mr Cash and Mr Ntzounas also differed about the course of negotiations as to the price for the sale of the site. By May 1997, however, they had agreed upon a sale price of $700,000. On 22 May 1997, Mr Cash gave instructions to the applicants’ solicitors, who were Allen Allen & Hemsley (“Allens”), to act in the matter of the sale. After 22 May 1997, the parties and their solicitors corresponded about the transaction.
I accept the evidence of Mr Cash and Mr Ntzounas to the extent that they agreed and the evidence of Mr Cash to the extent that they did not. Although Mr Cash became confused from time to time in the course of cross-examination, this was largely on account of the passage of time and his inability to recollect matters distinctly. I accept, however, that he was an honest witness, who sought to place before the Court the evidence as best he could recall it. For reasons set out below, I did not find Mr Ntzounas a credible witness.
Mr Cotronea, who took over from Ms Youil as business manager in early July 1997, said, in cross-examination, that he had sent an uncompleted pro forma unbranded supply agreement to Mr Ntzounas in July 1997, after Mr Ntzounas had said that he did not want a branded agreement. Mr Ntzounas agreed in cross-examination that Mr Cotronea had given him such a pro forma agreement at this time. I accept that Mr Cotronea gave Mr Ntzounas a pro forma unbranded supply agreement in July 1997.
In August 1997, Mr Ntzounas retained Mr Michael Norbury of the firm of Norbury Pereira in relation to the purchase of the site and sought advice regarding the proposed supply agreement, having previously sought advice from this and other firms about the proposed supply agreement and related matters. I interpolate that Mr Norbury’s file contained a letter of advice of 22 July 1997 from another firm, referring to the possibility that Mr Ntzounas “may consider breaching the [supply] Agreement”. In the course of cross-examination, Mr Norbury conceded that he must have known of this advice and he also identified a number of his file notes, which showed that, early in his retainer, Mr Ntzounas had asked him how the supply agreement might be “broken”.

Also in early August 1997, Mr Ntzounas said, in cross-examination, that he consulted Mr Chris Wallis, then of counsel, and had given Mr Wallis a copy of the pro forma agreement, which he had earlier received from Mr Cotronea. I accept Mr Ntzounas’ evidence in this regard.
In September 1997, Norbury Pereira questioned the nature of the supply agreement. By letter dated 22 September 1997, Norbury Pereira noted that Mr Ntzounas agreed “to contracts for sale at $700,000”, but that “[w]e … are uncertain as to which particular agreement for the supply of motor spirit is to form part of the contract of sale”. Mr Cash replied, by letter dated 30 September 1997, that “[t]he Supply Agreement will be a standard Ampol Retail Franchise Agreement (independently owned premises) which has been discussed with your client”.
Mr Ntzounas had further conversations with Mr Cotronea and Mr Cash in September 1997. In the course of one of these, Mr Ntzounas deposed that he told Mr Cotronea that he was “not prepared to accept the 1½ cents per litre rebate that had been offered by Kathy Youil”. Mr Ntzounas said that Mr Cotronea had said “he would see what he could do”. Mr Ntzounas also deposed that he had another conversation with Mr Cotronea in mid October 1997 when:
Frank Cotronea said that the amount of the rebate was 1.5c per litre, and [Mr Ntzounas] told him that maybe [he] would not be buying the property. Frank did not reply and just left.
Mr Cotronea agreed with Mr Ntzounas that they had discussed the sale, the supply agreement and the discount in September 1997 when Mr Cotronea went to the site to complete an asset audit. In his affidavit, Mr Cotronea deposed that:
At that time George told me that he wanted an “unbranded supply agreement” rather than a “branded” agreement because he did not want to pay the $5,000 annual fee for a “branded” site. We also discussed the discount to apply of 1.5 cents per litre. Kathy Youil had told me this was the figure and I believe I confirmed that figure with George on that occasion.
In cross-examination, Mr Cotronea reiterated that he had confirmed that the price discount was to be 1.5 cpl with Ms Youil in July and Mr Ntzounas in September 1997. His evidence, in cross-examination, was that there was a company direction to the effect that the price discount for sites sold to incumbent franchisees was 1.5 cpl. I accept Mr Cotronea’s evidence that, from the time he took over as business manger, he made it clear to MrNtzounas that the discount price in any supply agreement would be 1.5 cpl, but that, as he had indicated in the previous July, whether the agreement was to be branded or unbranded was negotiable.
Mr Ntzounas deposed that, shortly after the deposit was paid on 3 November 1997, he again asked Mr Cotronea about the price discount and that Mr Cotronea said “the Supply Agreement would provide for a discount of 1½ cents per litre” and that “if I didn’t sign the Supply Agreement the matter would not settle”. According to Mr Ntzounas, he asked Mr Cotronea for a letter to this effect and he told Mr Cotronea that he “would not enter into a Supply Agreement with a discount of 1½ cents per litre, that [he] would withdraw from the purchase”. In cross-examination, Mr Ntzounas maintained that Mr Cotronea had not ruled out that Mr Ntzounas might be able to get 2.5 cpl.
Mr Cotronea deposed that, around the final quarter of 1997, he visited the Oakleigh site “once every few weeks” in order to conduct site audits, although he had no recollection of discussing the sale of the site with Mr Ntzounas in the course of any of these subsequent visits. In cross-examination, however, Mr Cotronea acknowledged that, after the deposit had been paid, he and Mr Ntzounas had in fact discussed the discount and Mr Ntzounas had indicated that he was unhappy with the figure of 1.5 cpl. Mr Cotronea agreed that he had said that the matter would not settle if Mr Ntzounas did not sign the supply agreement. When asked whether Mr Ntzounas had said that he would not enter into the supply agreement if it provided for no more than 1.5 cpl, Mr Cotronea said:
No, he just said that he would – he basically wanted a better rate. But he never said to me that he would not enter in[to] a supply agreement.
I accept Mr Cotronea’s evidence in preference to Mr Ntzounas’ evidence concerning these conversations. Mr Cotronea’s evidence was consistent with the position that he and Ms Youil had consistently adopted over the preceding period of the negotiations.
In early October 1997, Mr Norbury drafted heads of agreement, which he sent to Mr Ntzounas and Mr Cash. Mr Cash forwarded the document to Allens. The heads of agreement made no mention of a supply agreement. According to Ms Tonner, a solicitor at Allens, on 7 October 1997, she received instructions from Caltex to draw the special conditions to be included in the contract of sale. Before the contract of sale was executed, these special conditions, which included provision for a supply agreement, were the subject of correspondence between the parties’ solicitors.
On 20 October 1997, Norbury Pereira faxed a letter to Mr Wallis (which Mr Ntzounas claimed not to have seen, though the letter was in his possession prior to trial) which relevantly read:
George Jounas has asked that we make an appointment with you for George to consult you in relation to a proposed petrol supply agreement. Ampol has apparently offered some sort of supply agreement which he wishes to discuss with you. He does not want to consult us in relation to this agreement, on the basis that you know what was in the other proposed supply agreements, and he likes your style.
Perhaps you could telephone us to make a suitable arrangement.
In cross-examination, Mr Ntzounas conceded that he did not tell any Caltex representative before he entered into the contract of sale that he would not enter into a supply agreement, because, according to him:

I had discussions, you know, with them, as far as the 1 cent a litre – the difference between … what I asked and what they gave to me. If they offer me 2 and a half cents and I didn’t say no, well, in that case I’m responsible for it.

In this context, Mr Ntzounas admitted that he was keen to buy the land. I accept Mr Ntzounas’ evidence in cross-examination in this regard.

Mr Norbury deposed (and I accept) that, under cover of a letter dated 3 November 1997, he sent Allens the deposit of $70,000 and a number of documents “in escrow pending the receipt of a satisfactory title search”, including the original contract of sale, which had been executed on behalf of the purchaser by an employee solicitor under a power of attorney. On 12 November 1997, Matland and NTZ (under power of attorney) executed the contract for the sale of land (“the contract of sale”), pursuant to which Matland agreed to sell the Oakleigh site to NTZ for a price of $700,000. Under the contract of sale, settlement was fixed for 28 November 1997. The contract of sale included a number of special conditions. Condition 15 of the contract of sale provided as follows:
15.1Acknowledgement by Purchaser
The Purchaser acknowledges that it has informed the Vendor that it or a person or entity associated with the Purchaser (an Associated Party) wishes to enter into an agreement with the Vendor for the supply by the Vendor of petroleum products to the Purchaser or the Associated Party from the date of settlement. The Purchaser also acknowledges that, in reliance upon the Purchaser’s statement of its (or the Associated Party’s) intention, the Vendor has agreed to enter into such an agreement on or before settlement in substantially the form of the agreement annexed to this contract and marked “A” (the Supply Agreement).
15.2Execution of Supply Agreement
The Vendor shall provide to the Purchaser the Supply Agreement in duplicate no later than 3 days before settlement. On or before settlement the Purchaser shall execute (or shall procure that the Associated Party executes) and deliver to the Vendor the Supply Agreement duly executed by the Purchaser or the Associated Party in duplicate. As soon as practicable after settlement the Vendor shall execute the Supply Agreement in duplicate and shall deliver a copy of the fully executed Supply Agreement to the Purchaser.
15.3Execution of Supply Agreement after settlement
If the Vendor is unable to provide to the Purchaser the Supply Agreement in duplicate within the time specified in clause 15.2, the Vendor shall not be in breach of this contract. In such circumstances, the Purchaser shall execute (or shall procure that the Associated Party executes) and deliver to the Vendor the Supply Agreement duly executed by the Purchaser or the Associated Party in duplicate within 3 days after receiving the Supply Agreement from the Vendor. This clause 15.3 shall survive settlement.
Annexed to the contract of sale was a form of supply agreement, entitled “Ampol Retail Franchise Agreement (Independently Owned Premises)”. This form of agreement provided for the relevant service station site to be operated as an Ampol franchise.
After execution of the contract of sale, however, on Mr Ntzounas’ instructions, Mr Norbury sent a letter, which was dated 19 November 1997, to Allens, saying:
We acknowledge receipt of one part of the contract of sale and purchase of the above site.
Unfortunately there has been an error in the preparation of the contract which was not previously noticed. Our client has agreed with Australian Petroleum Pty Ltd to enter into an “Ampol Unbranded Retail Supply Agreement”. Unfortunately, the agreement which forms part of the above contract is an “Ampol Retail Franchise Agreement”.
Please confirm that your client accepts that the agreement which should form part of the above contract of sale and purchase of land is the Ampol Unbranded Retail Supply Agreement.
Having regard to Mr Cash’s letter of 30 September 1997 (referred to above) and to his subsequent enquiries, I do not accept that there had in fact been a simple “error”, as Norbury Pereira sought to suggest. I return to this matter below. As a consequence of this letter, Mr Cash made enquiries of Mr Cotronea and gave instructions to Allens to respond to Norbury Pereira, by letter dated 21 November 1997, as follows:
Our client confirms that the supply agreement … to be entered into between the parties is the “Ampol Unbranded Retail Supply Agreement”. Our client is arranging for its business manager to supply the correct supply agreements to your client.
Towards the end of November 1997, Mr Cash told Mr Cotronea that there was to be a settlement of the sale of the Oakleigh site on 28 November 1997 and that Mr Cotronea should take steps to prepare the requisite documentation, including a supply agreement.
(c) The week before settlement: 24 – 28 November 1997
Mr Cotronea’s evidence was that he gave the documentation, including a completed unbranded supply agreement which named the parties as Matland and Helco, to Mr Ntzounas at the Oakleigh site on Monday, 24 November 1997. Mr Cotronea said that he telephoned Mr Ntzounas about the documents on 26 November 1997, and that Mr Ntzounas told him that they were “still with his solicitor”. On the afternoon of Thursday, 27 November 1997, Mr Cotronea telephoned Mr Ntzounas again and, on this occasion, Mr Ntzounas told him that the supply agreement had not been signed because Mr Ntzounas “had some issues he wanted to discuss”.
Mr Ntzounas deposed that Mr Cotronea gave him a copy of an unbranded supply agreement on Tuesday, 25 November or Wednesday, 26 November 1997. In his first affidavit, Mr Ntzounas said that this copy was blank in relation to “the price discount cents per litre”. He added:
I asked Mr Cotronea at what price would the Supply Agreement allow me to purchase fuel? He said at a discount of 1½ cents per litre. I said I was not prepared to sign the supply agreement unless I got a discount of 2½ cents per litre. He said that he could only give me 1½ cents per litre, but that he would have a talk with David Cash. He did not say he would be back to sign the document after I signed, and I did not say anything that could have given him the impression that I was prepared to sign the Supply Agreement if the discount remained at 1½ cents per litre.
In cross-examination, Mr Ntzounas resiled from part of this evidence, conceding that the copy of the agreement given to him in the week before settlement referred to a price discount of 1.5 cpl, but, according to him, the other party to the agreement was Australian Petroleum, not Matland. Mr Ntzounas said, in cross-examination, that he put this document in his desk drawer, because the agreement referred to his wife and he did not “want to get involved my wife [sic] at any stage with my business”. He added, “I had no idea what was written inside there”.
Mr Ntzounas could not explain why, if this were the case, he had not asked Mr Cotronea to amend the document by deleting the reference to his wife. In subsequent cross-examination, Mr Ntzounas gave a different explanation, saying that, though he would not sign an agreement naming his wife as guarantor, his real reason for not signing the agreement was the “1.5 cents a litre” price. He added:
Because I told him very clear, you give me 2 and a half and I sign it. But not the document which has got [my wife] on it.
Mr Ntzounas reiterated, in cross-examination, that he told Mr Cotronea, “You give me 2 and a half and I sign”.
Mr Ntzounas denied, or could not recall, that Mr Cotronea had indicated that he would come back for the signed agreement and had telephoned him on the Wednesday or Thursday before settlement. In cross-examination, Mr Ntzounas also said that he could not recall whether Mr Norbury had told him the substance of the advice given by his barrister (Mr Wallis) on the Wednesday prior to settlement, but he did recall that, on Thursday, 27 November, he saw Mr Wallis and received written advice from him.
I prefer the evidence of Mr Cotronea to the evidence of Mr Ntzounas concerning the events and conversations prior to the day of settlement. It was plain enough that, in the week before settlement, Mr Cotronea gave Mr Ntzounas a copy of an unbranded supply agreement for him to execute and that this agreement referred to a price discount of 1.5 cpl. Mr Cotronea’s evidence in this regard was supported by the evidence of Mrs Davies, whose evidence I accept entirely. She was, as I observe below, assisted in her recollection of events by records that she had created at the time of the events in question. I accept that, on the balance of probabilities, Mrs Davies gave Mr Cotronea a copy of an unbranded supply agreement between Matland and Helco on 25 November 1997, which he gave that day to Mr Ntzounas. I accept the applicants’ submission that I should not place too much weight on the fact that, in cross-examination, some years after she made her affidavit, Mrs Davies could not recall why she placed the “Matland” agreement first in time ahead of the “Australian Petroleum” agreement referred to below.
Mr Ntzounas was not a credible witness. He changed his evidence a number of times, including about the document he received from Mr Cotronea in the week before settlement and as to why he would not execute the supply agreement after Mr Cotronea gave it to him for execution. Some of his evidence was improbable, including that he put the agreement in his desk drawer because it referred to his wife, or a price discount of 1.5 cpl, rather than raise the issues with Mr Cotronea. The evidence showed that Mr Ntzounas was astute to safeguard his commercial interests and to seek legal advice. It was plain enough that, at a number of significant points, he reconstructed his evidence because he could not actually recall what had been said or what had happened, but he was determined to give evidence that supported his case.
In cross-examination, Mr Norbury said that he did not know whether Mr Ntzounas spoke to Mr Wallis about the supply agreement. Mr Norbury said:
I did speak to Chris Wallis and say, “George wants to talk to you about the supply agreement. He doesn’t want to deal with me in relation to the supply agreement”.
Also in cross-examination, Mr Norbury agreed that he had written to Mr Wallis on 26 November 1997, asking him to telephone him to “discuss the proposed supply agreement”, and that Mr Wallis had telephoned him the same day. According to Mr Norbury, he made a file note of this conversation, which read:
TF Chris Wallace
Will supply advice today
His view is let property settlement proceed
Then try to negotiate changes.
Mr Norbury’s file also contained a memorandum of advice, which was over the name of Chris Wallis and dated 27 November 1997, although Mr Norbury claimed he had no recollection of reading it prior to settlement. The memorandum of advice recorded, amongst other things, that counsel had been “briefed to advise in relation to the execution of an unbranded Retail Supply Agreement delivered by Australian Petroleum Pty Ltd … to Helco Petroleum Pty Ltd” (emphasis added). It referred to the possibility that, on account of matters mentioned in the memorandum:
our client may be able to avoid executing a Clause 15 agreement. Alternatively our client may execute it and then attempt to order fuel from Matland rather than from [Australian Petroleum]. Naturally Matland will not be able to supply fuel.
I interpolate here that the respondents’ counsel relied on the references to Australian Petroleum in counsel’s memorandum of advice as supporting Mr Ntzounas’ account that the first supply agreement named this company and not Matland. I reject this submission, because, as the applicants’ counsel pointed out, Mr Ntzounas’ evidence was that he gave Mr Wallis the uncompleted unbranded agreement that Mr Cotronea had given him in July of that year. This document referred to Australian Petroleum as the supplier. Mr Ntzounas’ evidence was that the document that Mr Cotronea gave him in the week prior to settlement remained in his desk drawer. The Wallis memorandum cannot therefore assist in resolving the question of whether Mr Cotronea first gave Mr Ntzounas a completed agreement naming Matland or Australian Petroleum.
At about 10.00 am on Friday, 28 November 1997, Mr Cotronea went to see Mr Ntzounas in his office at the Oakleigh site. He deposed that:
When I arrived I went to the office at the rear of the site and asked George [Ntzounas] for the documents.
[Mr Ntzounas] said words to the effect “No I am not going to sign them there are problems”. I was surprised and slightly irritated. I said to him “Why have you left it until now to tell me?” He said “Who is Matland Holdings”. I said that it is a subsidiary of Solo and it was selling the site to him. He said “But Matland can’t supply me with petrol”. I said that Matland can direct Ampol to supply fuel. He was unhappy with that arrangement and I suggested to him that I speak to his solicitor. We then rang his solicitor, Mr Michael Norbury, from the telephone at [the] office at the site. George introduced me and I spoke to Mr Norbury who asked whether Matland could supply fuel. I told him that it would not actually supply the fuel but that Ampol would supply it on Matland’s behalf. He then said words to the effect “Also my client is not happy with the discount of only 1.5c per litre”. I told him that 1.5c per litre was the standard rate and that I thought George had known about it since Kathy Youil was managing the site. He said words to the effect that his client wanted 2.5c per litre and I said I was sorry but it couldn’t be done. I told him that if Matland was an issue I would find out if we could re-issue the supply agreement which he suggested that I do. I told him that I would speak to David Cash and handed the phone to George Ntzounas.
According to Mr Cotronea, he stepped out of the office to use his mobile phone to speak to Mr Cash and Mr Cash reluctantly agreed to the substitution of Australian Petroleum for Matland. Mr Cotronea’s evidence was that, after making this call, he returned to Mr Ntzounas’ office and spoke to Mr Norbury again by telephone. Mr Cotronea deposed that:
I told him that I had spoken to David Cash and that he was agreeable to changing the parties to the supply agreement by substituting Australian Petroleum Pty Ltd for Matland Holdings Pty Ltd. I asked Michael Norbury if George was now prepared to sign the agreement and he said that he (George) was but that he wished to speak to George once again.
I handed the telephone back to George and he then spoke to Michael Norbury in my presence. He did not say anything specific during his discussion with Mr Norbury and it was a brief discussion but he said words like “yep, yes, ok” etc. He hung up the phone.
I then said to George that I would reissue the contracts with Australian Petroleum Pty Ltd and I asked him if he was going to sign the supply agreement. He said words to the effect “yep not a problem”. Then he said but I am still not happy with 1.5c a litre, I want 2.5c. I said to him do you want to buy or not that’s the deal. He said “no no that’s ok”.
Mr Cotronea said that, on returning to his office, he asked Mrs Davies to prepare a new form of supply agreement naming “Australian Petroleum” as the supplier.

In cross-examination, Mr Cotronea was adamant about the fact that, at Mr Ntzounas’ request, Australian Petroleum replaced Matland in the supply agreement. Mr Cotronea said that Mr Cash gave him the details for the supply agreement and that Mr Cash had “expressly told [him] that the vendor had to be the company that was holding the property” and when he “saw George Ntzounas on the day, he expressly said to [him], ‘Well, Matland can’t supply the fuel’, and [he] said, well – and that’s when we got into the debate or the discussion of who was Matland”. Mr Cotronea conceded that he had told Mr Ntzounas that, if he did not sign the supply agreement, then there would be no settlement; and that Mr Ntzounas said that he would “be coming with [his] money at 3.30 pm for the settlement”. Apart from this, however, Mr Cotronea denied Mr Ntzounas’ and Mr Norbury’s accounts of his conversations with them on the morning of 28 November 1997. He denied Mr Ntzounas’ allegation that, at this meeting, he had scribbled Matland’s name on a copy of the agreement and that Mr Ntzounas told him that he would not sign unless the supply agreement included a discount price of 2.5 cpl.
In his first affidavit, Mr Ntzounas deposed that, when Mr Cotronea came to see him on Friday, 28 November 1997:
I said to Mr Cotronea that I would not sign the Supply Agreement which he had given to me because the contract of sale of land provided for the supplier to be Matland Holdings Pty Ltd but that the Supply Agreement showed the supplier was going to be Ampol. I had obtained legal advice in relation to whether or not I could be required to execute the Supply Agreement and it was my understanding that I could not be forced to sign a Supply Agreement unless the seller was Matland Holdings Pty Ltd. In my presence on page 25 of the Supply Agreement, Mr. Cotronea crossed out the name Australian Petroleum Pty Ltd and also its ACN, and wrote Matland Holdings Pty Ltd instead.
Mr Ntzounas said that Mr Cotronea wrote on a copy of the uncompleted supply agreement that he had given Mr Ntzounas earlier in the year. (I interpolate that, in cross-examination, Mr Ntzounas said that, when he made his first affidavit, he had done so on the basis that Mr Cotronea had delivered an uncompleted supply agreement in the week before settlement. He realised that he was mistaken about this when he found a further bundle of papers in his possession. He produced these papers at the trial.) Mr Ntzounas continued:
The form of agreement was between Australian Petroleum Pty Ltd and the purchaser named in item 5 of the Schedule. Item 5 of the Schedule was blank. The price discount in Annexure III was blank. I asked Mr. Cotronea what the discount would be and he replied that it would be 1½ cents per litre. I said to Frank Cotronea that if you want me to sign the Supply Agreement it must be 2½ cents per litre, otherwise I will not sign because I will go bankrupt. Mr. Cotronea would not agree to this amount of discount, and I told him that I was not going to sign unless I got a 2½ cents per litre discount. Mr. Cotronea said that in that case there will be no settlement. I then told him that I would be coming with my money at 3.30 pm for the settlement. Frank then asked to speak to my solicitor.
Mr Ntzounas gave further evidence about his conversation with Mr Cotronea in cross-examination, saying:
I said to him I’ve got an advice from Mr Wallis – from legal advice and Matland Holdings … is not supplier company, that means therefore Matland Holdings can’t supply me fuel. He said to me, “Who told you this?”. I said, “legal advice”. If I recall correct he left out – he said to me he not going to sign. Well, I said to him that I can sign, but it’s useless and he said to me, “One minute”. He run out and he come back in about X amount of time, he come back then he said to me, “You want Matland Holdings to supply your fuel”, I said yes. He scrapped this one and write down “Matland Fuel only” and say to me, “There you are, you can sign now.” And I said to him, how much going to be the rebate; he said to me 1.5. I said, “I told you before, 1.5, I’m not going to sign”.
Elsewhere in cross-examination, he said:
And when [Frank Cotronea] come in the morning he said to me, “Are you willing to sign the supply agreement?” and I took the supply agreement out of my drawer and I show it to him and I explained the situation regarding the Matland Holdings. He went out - I think he make a phone call. I’m not too sure exactly what he’s done and when he come back again he said to me, “You want supply – to be supplied by Matland Holdings?” And then he write down - he said to me he want it signed now.
Mr Ntzounas reiterated in cross-examination that Mr Cotronea wrote down Matland’s name on the uncompleted agreement that he had given Mr Ntzounas earlier in the year, presumably in about July of 1997. He said in cross-examination that he told Mr Cotronea that:
1.5 I’m going bankrupt … with 1.5 cents a litre I’m not interesting to buy [sic] the property.
Mr Ntzounas conceded, in cross-examination, that he could not recall “word for word” what was said in the 28 November 1997 conversation with Mr Cotronea, and could not remember anything of the conversation between Mr Cotronea and Mr Norbury. He maintained, however, that Mr Cotronea had only one conversation with the solicitor. He denied that Mr Cotronea said that he would reissue the contract. He agreed that Mr Cotronea had asked him if he would sign the supply agreement and claimed that he replied:
You give me 2 and a half cents and I’ll sign now and save everybody’s [sic] problem”.
Mr Norbury deposed that, on the morning of 28 November 1997, he had a conversation with a person, who was apparently Mr Cotronea. Of this conversation, he said:
I disagree with his recollection of our conversation. I did not ask Mr. Cotronea whether Matland Holdings Pty Ltd could supply fuel. I had no conversation with him about the supply of fuel. Further, I had no conversation with Mr. Cotronea about either a discount of 1.5 or 2.5 cents per litre. I had no conversation with him concerning the supply price of petrol or what Mr. Jounas had discussed with Ampol’s representatives in that regard. There was no break in my telephone conversation with this person. I did not tell him that Mr. Jounas was prepared to sign a supply agreement. I told him that Mr. Jounas would not be providing an executed supply agreement at the settlement arranged for that afternoon. He replied, “You can’t do that” or words to that effect.
When counsel for the applicants asked Mr Norbury in cross-examination whether he told Mr Cotronea that Mr Ntzounas would not be supplying an executed supply agreement at settlement, Mr Norbury replied:
I could have said that.
…
In fact, I told him that George hadn’t signed a supply agreement and I could tell he was surprised to … hear me say that. There was a kind of pause and he sucked in breath.
When the applicants’ counsel drew his attention to the discrepancy between this account and the account in his earlier affidavit, he conceded that his affidavit was likely to be more accurate. Mr Norbury also said in cross-examination that he could not recall whether, on the morning of settlement, he first spoke to Mr Ntzounas or Mr Cotronea.
Mr Norbury identified the handwriting of “Matland Holdings Pty Ltd” on the uncompleted supply agreement document as his own. When asked by the applicants’ counsel whether the handwriting was his, Mr Norbury said:
That looks like mine, doesn’t it?
When asked whether he recalled writing it, he said:
No, I don’t, but it’s my handwriting, almost certainly my handwriting.
I accept that, on the balance of probabilities, the handwriting that appeared on the copy of the uncompleted supply agreement was that of Mr Norbury and not of Mr Cotronea. The existence of the handwriting does not, therefore, support Mr Ntzounas’ case.
Mr Norbury gave evidence in cross-examination that Mr Ntzounas was keen to settle on 28 November 1997 although, on the night before settlement, he had a conversation with Mr Ntzounas in which Mr Ntzounas told him that he had not signed the supply agreement. Mr Norbury kept no note of this conversation. He conceded that, even though he knew that the supply agreement was part of the contract of sale and that Caltex was relying on the agreement, he did not tell Allens or any other representative of the applicants (other than, on his account, Mr Cotronea) that Mr Ntzounas was not intending to provide an executed supply agreement at settlement.
In cross-examination, Mr Norbury’s evidence was that he knew that Mr Ntzounas had raised the possibility with him and other lawyers of arranging an alternative fuel source and he conceded that Mr Ntzounas might have told him that he was considering “a breach of an agreement”. Mr Norbury said that he had never seen the completed supply agreement documents which Mr Cotronea gave to Mr Ntzounas before and after settlement. Mr Norbury claimed that he had never formed a “view based on [his] own reading of the various petroleum supply agreements because [he] never read them.” He maintained that Mr Ntzounas had not wanted him to consider these agreements and he “didn’t pay a great deal of attention” to what the other lawyers had written. He conceded, however, that it was clear “on the face of the documents [that Mr Ntzounas] sought advice on how to get out of the agreement”.
Mr Norbury’s conduct, as a lawyer, was not in issue in this proceeding. I did not, however, find him a reliable witness. Save to the extent that he was able to identify his file notes as contemporaneous and accurate records of the events with which this proceeding is concerned, I accept little of his evidence. There were numerous inconsistencies between his affidavit and his evidence at trial, which he did not satisfactorily explain. He was at times evasive. Much of his evidence of his dealings with Mr Ntzounas was implausible, especially concerning his knowledge of Mr Ntzounas’ state of mind with respect to the supply agreement. In so far as his evidence is inconsistent with that of Mr Cotronea, I prefer that of Mr Cotronea.
As I have indicated, I did not find Mr Ntzounas a credible witness. His evidence concerning his conversations with Mr Cotronea was not consistent. There was ultimately no evidence to support his allegation that Mr Cotronea wrote the name “Matland” on an uncompleted copy of the supply agreement. As already noted, Mr Ntzounas reconstructed the evidence he gave either because he had no recollection or because he wanted his evidence to fit his case better. There was evidence that Mr Ntzounas had never really wanted to enter into a supply agreement with the applicants, although he had been keen to buy the land. He had sought advice as to how he might dishonour any such obligation. At times, Mr Ntzounas was expansive in giving his evidence, particularly when stating his case, whilst at other times, his answers in cross-examination were plainly evasive. In saying this, I have borne in mind that Mr Ntzounas did not have good command of the English language, although his facility was adequate for giving evidence at trial and apparently for the daily running of his business.
I would add here, lest the matter be overlooked, that the applicants did not seek to make anything of the absence of Mr Wallis. In his affidavit of 19 May 2003, the respondents’ solicitor, Mr Bernstein, deposed to the unsuccessful efforts made by the respondents to subpoena Mr Wallis to give evidence at the trial.
Mr Cotronea’s evidence about the conversations on 28 November 1997 was consistent with his subsequent conduct. I accept that he sought Mr Cash’s approval to change the name of the supplier in the supply agreement and that, as Mrs Davies said, he asked her to reissue the supply agreement in the name of Australian Petroleum. He did not inform any representative of the applicants that Mr Ntzounas, or Mr Norbury on his behalf, had told him that Mr Ntzounas would not make any supply agreement because of the 1.5 cpl price discount. Mr Cotronea’s conduct, before and after settlement, is strongly supportive of the fact (which I find) that Mr Norbury told him that Mr Ntzounas would enter into an unbranded supply agreement if the name of the supplier were altered. It was on this basis that Mr Cotronea agreed that he would reissue the supply agreement after settlement and that the settlement should proceed. I accept that, on the balance of probabilities, Mr Norbury told Mr Cotronea that, although his client would not be providing an unbranded supply agreement at settlement, he would execute, or have executed, an agreement after settlement that provided for a price discount of 1.5 cpl on the basis that Mr Cotronea would reissue the agreement in the name of Australian Petroleum.
I would add that, in preferring Mr Cotronea’s evidence to that of Mr Ntzounas and Mr Norbury, I have borne in mind that, at times, Mr Cotronea’s evidence was confused and that he too did not, as he conceded, always have a clear recollection of pertinent events, including the events in the week prior to settlement. In cross-examination, he stated that he had lost his diaries for the relevant years some two or three years ago. He also stated that the Ampol file for the sale of the Oakleigh site had been lost sometime after March 2000, when it was in his possession. Notwithstanding these deficiencies, however, Mr Cotronea’s account was plausible, consistent, and supported by other witnesses called by the applicants.
As I have mentioned, in her affidavit of 22 May 2000, Mrs Snezana Davies, who was a retail marketing analyst with Caltex in 1997, deposed that, on 24 November 1997 and at the request of Mr Cotronea, she prepared an unbranded supply agreement between Matland and Helco. She said that she gave a copy of this agreement to Mr Cotronea on 25 November 1997. In giving this evidence, she relied, in part, on diary notes and a documents register kept by her at the time of the events in question. Mrs Davies also said that, on 28 November 1997, Mr Cotronea asked her to amend this agreement by changing the name of the supplier to Australian Petroleum, which she did on 1 December 1997. She said that she gave Mr Cotronea the amended document on 2 December 1997. She was unable to recall in cross-examination why she was sure that “Australian Petroleum” had replaced “Matland”, rather than the other way round. I am satisfied, on the balance of probabilities, that, on the day of settlement, Mr Cotronea asked Mrs Davies to change the name in the supply agreement for the Oakleigh site from Matland to Australian Petroleum, which she did on 1 December 1997. Mr Cotronea provided this amended document to Mr Ntzounas on or shortly after 2 December 1997.
Mr Ntzounas and Mr Norbury attended the settlement on 28 November 1997. Their uncontradicted evidence was that the vendor’s representative did not mention the supply agreement. I accept this evidence. In an affidavit sworn on 19 May 2000, Ms Kim Thomas, the conveyancing clerk who attended settlement for the vendor on 28 November 1997, deposed that she had no “particular recollection” of the settlement.
(d) After the settlement
Mr Cotronea maintained that an amended supply agreement, which named “Australian Petroleum” as the supplier instead of “Matland”, was sent to Mr Ntzounas on 2 December 1997, although he had no actual recollection of sending the revised agreement on this particular date. In his affidavit of 23 May 2000, Mr Cotronea deposed that, in early December 1997, Mr Ntzounas told him that he would not sign the revised agreement. According to Mr Cotronea:
[Mr Ntzounas] said that he wanted a discount of 2.5 c per litre. I told him 1.5 c per litre was the agreed discount and that I could not give him 2.5 c per litre.
Mr Cotronea deposed that Mr Ntzounas reiterated his rejection of a 1.5 cpl discount at another meeting on 17 December 1997.
When asked what had happened after the settlement, Mr Cotronea said:
Look, the fact that George didn’t sign a supply contract on the day of the settlement – we were still doing business with George after that. He never gave me any impression that he wouldn’t sign it in a month’s time or in two weeks’ time. There was never any – you know, we still had works at the location. So there’s – George never said a categoric, “No, no, I’m not going to sign it”.
I accept Mr Cotronea’s evidence in this regard and about his conversations with Mr Ntzounas after settlement. It is consistent with the account that Ms Lambrianew gives of subsequent events.
Ms Melissa Lambrianew took over as the site’s business manager in January 1998. She recalled that, when Mr Cotronea introduced her to Mr Ntzounas on 8 January 1998, Mr Cotronea asked Mr Ntzounas when he would sign the supply agreement. Mr Ntzounas stated, so she said, that he would not sign because he wanted a better deal than 1.5 cpl and Mr Cotronea replied that 1.5 cpl “was the original agreement … and it would not be changed”. For the reasons stated below, Ms Lambrianew was a reliable witness.
In cross-examination, Mr Ntzounas said that Mr Cotronea gave him an amended supply agreement in Matland’s name after the settlement, on “about Tuesday [of] the next week”. He agreed that Mr Cotronea had asked him repeatedly to sign the supply agreement. He also deposed to telling Mr Cotronea in December 1997 that he would sign “an Unbranded Supply Agreement if Ampol gave [him] 6 cents off its list price or alternatively 2½ cents off the ‘MAP’”. His evidence in this regard was largely consistent with that of Mr Cotronea.
(e) The matter of the credit
Ms Lambrianew’s evidence was that she again spoke to Mr Ntzounas in early February 1998, when Mr Ntzounas stopped a direct debit for fuel delivered to the site. On 10 February 1998, accompanied by Mr Cotronea, she went to the site to discuss the matter with Mr Ntzounas. According to Ms Lambrianew, Mr Ntzounas referred to three matters at that meeting. She deposed:
First he said he was entitled to a rebate of 1.5 cents per litre since the date of settlement on 28 November 1997. Frank told him that he was not entitled to such a rebate because he had not signed the supply agreement. Secondly, he claimed that the second respondent owed him money for outstanding claims in respect of other sites previously operated by him. Frank and I told him that we had no idea what he was talking about and requested copies of documentation for us to investigate the matter. He had no documents with him at this time and said he would obtain copies and send them to Caltex. Thirdly, Mr Ntzounas sought repayment of $30,000 previously paid by him for the Solo franchise. Frank told him that we needed to investigate the matter and report back to him.
Ms Lambrianew’s evidence was that, that day or perhaps on 16 February 1998 and after speaking to a superior, she entered a credit of $20,000 to the trading account of Helco. This was of the franchise fee payable to Solo Oil. She said that:
It was not until later that day when I spoke with the corporate solicitor employed by Caltex, Greg Ochs, that I became aware that the franchise fee was not repayable and so I immediately reversed the credit to the trading account. As the credit and subsequent debit occurred on the same day, the transactions were not processed to, or recorded on, Mr Ntzounas’ bank account. However, the Caltex computer system automatically generated a document of the journals raised to Mr Ntzounas’ trading account, and that document was automatically posted to him.
Mr Greg Ochs, a corporate solicitor employed by Caltex, deposed that he recalled giving advice to Ms Lambrianew about refunding part of the franchise fee following the purchase of a site. He recollected that his advice was that “a refund ought not to be made”. Ms Lambrianew said that she explained the position to Mr Ntzounas on 27 February 1998.

Ms Lambrianew specifically denied Mr Ntzounas’ account of the meeting on 10 February 1998, including that Mr Cotronea had said that she should put through a credit for $20,000. She maintained that nothing was agreed at this meeting, and that she and Mr Cotronea had indicated only that they would explore the matters raised by Mr Ntzounas.
In relation to the meeting of 10 February 1998, Mr Cotronea deposed:
Brian Redfern, the works manager of Ampol, was present at the site when we arrived. Melissa and I went to George’s office at the rear of the site and spoke to him. I asked why he had stopped payment for fuel supplied and he said that he was owed money by Ampol from another site from five years ago. He also said that he was entitled to a discount of 1.5 cents per litre on fuel purchased since 29 November 1997 and that Ampol owed him $20,000 of the $30,000 franchise fee he had paid to Solo Oil. I told him to “forget about it” and that the real issue was payment of his last delivery of fuel and that if he did not pay we would not supply him with fuel. …
When we left the site Melissa and I discussed the possibility of crediting the $20,000 franchise fee to his credit account. I told Melissa that without a supply agreement I was not prepared to give George a discount of 1.5c per litre on fuel purchased from November 1999. I suggested that she speak to Greg Ochs, corporate solicitor at Ampol, about whether it was appropriate to credit the $20,000 franchise fee. I did not say to George on that occasion or any other occasion that I was prepared to credit $20,000 to his fuel account. I did not instruct Melissa Lambrianew in the presence of George to do it.
In cross-examination, Mr Cotronea reiterated this evidence.
At the relevant time, Mr Brian Redfern was a Caltex works supervisor reporting to Mr Cash. Mr Redfern’s evidence was that he was at the Oakleigh site when Ms Lambrianew and Mr Cotronea had their discussion with Mr Ntzounas, although he was not privy to that conversation.
In his 1 December 2000 affidavit, Mr Ntzounas said that, in or about November 1997, he negotiated with Mr Cotronea a rebate of the franchise fee on the basis that the franchise agreement was to be terminated after only three years of its nine years’ operation. He also deposed that, in a conversation with Mr Cotronea on or about 16 February 1998, in the presence of Ms Lambrianew and Mr Redfern:
[He had] mentioned the agreement of the part refund of the franchise fee, and Frank said to Melissa Lambrianew to put a credit through for the $20,000. As soon as Mr. Cotronea said this to Melissa, she immediately wrote something down on a piece of paper. Also on this occasion Frank Cotronea asked me about the EFPEC. I opened the contract to page 6 and pointed to the item “EMS Equipment” and said words to this effect “It does not say EFPEC. We all call it EFPEC. The EMS has a Caltex stamp on it. The EMS is yours”. Frank replied that EMS means EFPEC. Melissa Lambrianew just listened.
I refer to the “EFPEC” matter below.
In cross-examination, Mr Ntzounas gave at least two different accounts of the February 1998 meeting between himself, Mr Cotronea, Ms Lambrianew and, according to parts of his evidence, Mr Redfern. His accounts of the meeting differed from that of Ms Lambrianew and Mr Cotronea. Mr Ntzounas also said, in cross-examination, that Mr Redfern had arranged the meeting, a matter not mentioned in his previous affidavits. Mr Ntzounas could not recall any conversation with Ms Lambrianew on or about 27 February 1998, in which she had explained the matter of the credit to him. He reiterated this in cross-examination.
As regards the matter of the credit, I prefer the evidence of Mr Cotronea and Ms Lambrianew to that of Mr Ntzounas. As already indicated, Mr Ntzounas gave a number of different accounts of what had been said. No-one other than he gave evidence that Mr Redfern was present and I accept, on the balance of probabilities, that he was not. Ms Lambrianew was a reliable witness in part because her diary, which was written at the time, supported her account. Her account was also consistent with the account given by Mr Cotronea.
the applicants’ case
By their second further amended statement of claim (referred to below as “the statement of claim”), the applicants claim:
(a)    the respondents breached an agreement (or term) collateral to the contract of sale in that they failed to execute a supply agreement as they were obliged to do;
(b)   the respondents breached a representation and warranty that, in lieu of an agreement in the form of the supply agreement annexed to the contract of sale, they would execute an Ampol Unbranded Retail Supply Agreement;
(c)    the respondents breached an agreement and warranty that - the second applicant having been substituted for the first applicant - the first respondent would execute promptly, and the second respondent would cause the first respondent to execute promptly, the substituted supply agreement;
(d)   the respondents breached an agreement that they would waive the requirements in the contract of sale regarding the annexation of the supply agreement to it;
(e)    the first applicant acted in reliance on the various warranties, agreements, and representations in that it settled the sale of the land;
(f)     the second applicant undertook certain works as a result of the various warranties and representations;
(g) the respondents’ conduct contravened s 52 of the Trade Practices Act 1974 (Cth) (“the TPA”) and s 9 of the Fair Trading Act 1999 (Vic) and, in the case of the second respondent, was negligent;
(h)    the third respondent is indebted to Caltex in the sum of $29,087.54 for petrol products supplied to it in January and February 1998.
the respondents’ case
Apart from denying the applicants’ claims, by their second further amended defence (referred to below as “the defence”), the respondents alleged that:
(a)the collateral agreement was not supported by any consideration or, if there was consideration, it was past consideration;
(b)the settlement of the sale was a legal consequence of the contract of sale and not the result of the breaches alleged by the applicants;
(c)the special conditions 15.1 and 15.2 of the contract of sale, which required the execution of a supply agreement, merged in the conveyance;
(d)the supply agreement annexed to the contract of sale was void for uncertainty;
(e)the applicants’ requirement that the respondents buy the land on the relevant terms and conditions, or “have it sold from under them”, was unconscionable, or involved the use of coercion, having regard to various factors, including the substantial sums of money that the respondents (and associated entities) had expended on the business connected with the land;
(f)the supply agreement was in contravention of ss 45(2)(a)(ii), 45(2)(b)(ii), 45B(2), 45C(2), and 47 of the TPA;
(g)a sum of $20,000, in respect of refunds of franchise fees, and an unspecified sum in relation to credit card sales, is to be set off against any debt owing by the respondents.
The respondents, by way of an amended cross-claim, also claimed:
(a) the sum of $19,859 said to have been expended on computer equipment as a result of the applicants’ allegedly wrongful conduct; and
(b) declarations in respect of contraventions of the TPA (see par (f) above) to the effect that the agreements were void.
In their reply and defence to cross-claim, the applicants joined issue with the respondents and, by way of defence to the amended cross-claim, they asserted that the requirements for the operation of relevant provisions of the TPA were absent. They also said that the computer equipment was expressly excluded from the contract of sale.
was there a breach of collateral warranty?
The applicants did not plead directly and expressly that the respondents were in breach of the contract of sale. Instead, the applicants pleaded that, by failing to execute a supply agreement:
(1)NTZ breached an agreement, contained in special condition 15, that was collateral to the contract of sale (“the first collateral agreement”);
(2)In his conversation with Mr Cotronea prior to settlement on 28 November 2004, Mr Norbury, on behalf of NTZ and Mr Ntzounas, agreed that NTZ would promptly execute, and Mr Ntzounas would cause NTZ promptly to execute, a supply agreement in the form of the agreement given by Mr Cotronea to Mr Ntzounas in the week before settlement, in consideration for Matland completing the sale and Australian Petroleum (i.e., the second applicant) being substituted for Matland in the supply agreement; and
(3)By the letter of 19 November 1997 and Mr Norbury’s statements to Mr Cotronea on 28 November 1997 (just mentioned), NTZ and Mr Ntzounas agreed to a variation of the collateral agreement contained in special condition 15 of the contract of sale to the effect they would execute an unbranded supply agreement and waive any requirement in special condition 15.1 that NTZ annex an unbranded supply contract to the agreement.
By virtue of the respondent’s defence and reply, and the evidence as it now stands, each pleaded agreement raises different considerations.
(1) The first collateral agreement
The applicants contended that there was a collateral agreement contained in special condition 15 of the contract of sale. This agreement was that, before or within three days after settlement, NTZ would execute, or cause an associated party to execute, a supply agreement substantially in the form annexed to the contract of sale, under which NTZ, or an associated party, would acquire all its supply of petroleum products for resale at the Oakleigh site from Matland for a term of five years. I deal below with the contention that this obligation survived settlement.
Whilst I accept that the obligation pleaded against NTZ as a collateral agreement did not precisely follow the language of the obligation assumed by it in special condition 15.2, I reject the respondents’ submission to the effect that the pleading was not a fair expression of the substance of that obligation. Whilst special condition 15 did not refer to a term of years, there was a term of five years specified in the branded supply agreement that was annexed to the contract of sale and to which the obligation in special condition 15.2 was referrable. Whilst the parties to the contract of sale subsequently agreed to substitute an unbranded for a branded agreement (see below), there is no evidence that they agreed to vary the term. There was a term of five years specified in the unbranded supply agreement that Mr Cotronea provided to Mr Ntzounas in July 1997, and the weight of the evidence was against any variation of the term.
I reject the respondents’ submissions that the applicants’ pleading of a collateral agreement was untenable and that the alleged “collateral” agreement must fail for want of consideration. I accept that the applicants’ pleading might well have been clearer than it was, but, for the reasons I am about to give, it was not essential to plead that the so-called collateral agreement was entered into in consideration of the contract of sale.
I begin by noting the applicants’ contention that the consideration for this agreement was (1) the entry into the contract of sale by Matland; (2) Matland’s promise to sell the land to NTZ; (3) Matland’s performance of the contract of sale on 28 November 1997; or (4) Matland’s performance of its obligations under special conditions 20.2, 20.3 and 20.4 of the contract of sale. In final submissions, the applicants’ senior counsel submitted that the correct legal characterisation of special condition 15 was that of an “agreement … embedded in a contract of sale of land, which does not form part of the conveyance or the promise to convey”. I also note the respondents’ submission that, since (save for (1) above) each of these alleged bases of consideration was also the consideration for the contract of sale, and the contract of sale and the collateral agreement could not share the same consideration, then, the alleged consideration was past consideration. Also, as the respondents pointed out, a promise to perform an existing legal duty is no consideration at all: Wigan v Edwards (1973) 47 ALJR 586 at 594.
On the respondents’ defence, these issues of pleading and consideration arise only in relation to the first collateral agreement, a fact that was, perhaps, overlooked in submissions. The parties used the words “collateral agreement” in three distinctly different ways. In final submissions, senior counsel for the applicants attributed the widest meaning to the expression, referring to a collateral agreement as “another, generally subsidiary, contract in a more complex transaction”: see The Laws of Australia (The Law Book Co Limited) vol 7, “Contract: General Principles”, Introduction, p xv and David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 365 per Mason CJ and Deane, Toohey, Gaudron and McHugh JJ. On the other hand, counsel for the respondents invariably used the expression “collateral agreement” in the technical sense of “a contract the consideration for which is the making of some other contract (the main contract)”: see Halsbury’s Laws of Australia (Butterworths) vol 6, [110-2050]; also J J Savage & Sons Pty Ltd v Blakney (1970) 119 CLR 435 at 442 per Barwick CJ, Kitto, Menzies, Owen and Walsh JJ; Hoyt’s Pty Ltd v Spencer (1919) 27 CLR 133 at 139 per Knox CJ, 147 per Isaacs J; and Heilbut, Symons & Co v Buckleton [1913] AC 30 at 47 per Lord Moulton. I accept that, as the respondents submitted, there can be no collateral contract in this technical sense if the main contract is not the consideration for the statement relied on as the collateral contract.
The expression “collateral agreement” has been used in another sense, however, to signify an agreement which, because it is “collateral” to a contract for the sale of land, does not merge in the conveyance. Paragraph 7A of the statement of claim alleged a collateral agreement in this sense.
The doctrine of merger was stated by Powell JA, dissenting on another issue, in Christopoulos v Angelos (1996) 41 NSWLR 700 at 706, where his Honour said:
[T]he doctrine of merger … is to the effect that, where parties enter into an executory agreement which is to be carried out by a deed, or other like instrument, afterwards to be executed, the real completed contract is to be found in the deed, or other like instrument, the most common instance of the application of this principle being that of a contract for the sale of land followed by conveyance, or memorandum of transfer, on completion. In the case of a contract for the sale of land, all the provisions in the contract which the parties intend should be performed by the conveyance, or memorandum of transfer, are merged in the conveyance, or memorandum of transfer, and all the rights of the purchaser in relation thereto are thereby satisfied although if there are provisions in the contract which are collateral to the main duties of proving title, conveyance, or transfer and the like, the obligations imposed by this stipulation is not discharged by the performance of those main duties. Although the doctrine of merger appears first to have been developed in the context of contracts relating to land held under Old System Title … the doctrine applies equally to land held under Torrens Title … .
Terms far more intimately connected to the primary object of the contract of sale than special condition 15 have been held to constitute an agreement that is collateral to the conveyance of the property and not merged in the conveyance: see, for example, Saunders v Cockrill (1902) 87 LT (NS) 30; Lawrence v Cassel [1930] 2 KB 83; and Dean v Gibson [1958] VR 563 (“Dean v Gibson”). In Dean v Gibson, the defendant who was a builder, contracted with the plaintiffs to sell to them a block of land, pursuant to a contract of sale containing a special condition that the defendant would erect a dwelling on the land “in conformity with the local government … regulations”. After finding the defendant in breach of the special condition, Monahan J said, at 572:
It then becomes necessary to consider whether that condition was a suspensory condition of the contract of sale or an agreement collateral to it capable of being relied upon after completion of the contract for the sale of the land. Was it, in the contemplation of the parties, one of the things which was to be extinguished by the conveyance? In Clarke v. Ramuz, [1891] 2 Q.B. 456, at p. 461, Bowen, L.J., said: “It is true that the execution of the conveyance puts an end to all contractual obligations which are intended to be satisfied by the execution of the conveyance. But that doctrine does not apply to cases where the contractual obligation is of such a kind that it cannot be supposed to have been the intention that it should be extinguished by the conveyance.” … In Lawrence v. Cassel, [1930] 2 K.B. 83, by an agreement in writing, the defendant agreed to sell to the plaintiff a plot of land, part of a building estate, with a dwelling-house thereon in course of erection, and to complete the dwelling-house in accordance with plans of other houses with fittings similar in all material particulars to those in other houses erected on the estate. A deed of conveyance of the premises to the plaintiff was subsequently executed by the parties. The deed contained no reference to the building of the house or to any work done or to be done by the defendant in the way of completing it or otherwise. The plaintiff brought an action for breach of the agreement alleging that the defendant had thereby contracted that the builder’s work should be carried out in a proper efficient and workmanlike manner and that the materials used should be fit and proper for the purpose and averring that none of these terms or conditions had been fulfilled. The Court of Appeal held that the agreement to complete the house being collateral to the deed of conveyance was not merged therein and that, breaches of that agreement having been proved, the plaintiff was entitled to recover. To these authorities I think I should add a reference to Saunders v. Cockrill (1902), 87 L.T. 30. It seems to be well-settled law, therefore, that an agreement, whether express or implied, which is collateral to the conveyance of the property is not merged in the deed of conveyance. I am of opinion that on the proper construction of special condition 2 of this contract of sale, it is an express agreement collateral to the sale of the land and that the plaintiffs can therefore maintain this action for damages for its breach. If I am wrong in this view, I am nevertheless of opinion that an undertaking by the defendant to procure a permit for the erection of the house ought to be implied in the circumstances of this case as collateral to the main contract. (Emphasis added)
The question is whether, upon the proper construction of the contract of sale, the parties intended that the obligation imposed on NTZ by special condition 15.2 was to continue beyond the completion of the contract of sale if the obligation was then unfulfilled: compare Australasian Conference Association Ltd v Carver [1988] ANZ ConvR 516; (1998) NSW ConvR 55-435.
The contract of sale dealt with a number of matters, including the promise by Matland to convey, or transfer, to NTZ its estate or interest in land, and the promise by NTZ to execute a supply agreement on or before settlement substantially in the form annexed to the contract of sale. Plainly enough, any obligation on Matland’s part to convey or transfer the land to NTZ could not continue beyond settlement, and any such obligation merged in the memorandum of transfer, at the latest when it was registered. This was not the case with NTZ’s obligation to execute a supply agreement. Special condition 15.1 made it plain enough that the supply agreement was to run for a term of years from the date of settlement. Special condition 15.2 contemplated duties beyond settlement since it imposed a duty on Matland to execute the agreement “as soon as practicable after settlement”. Special condition 15.3 made it tolerably clear that NTZ’s obligation was to continue beyond settlement, in the event that Matland was unable to provide it with the supply agreement in duplicate within the time specified in special condition 15.2. In these circumstances, it is impossible to hold that it was the intention of the parties that, in the event that Matland gave NTZ the supply agreement within the time stipulated in special condition 15.2, NTZ’s obligation should merge in the memorandum of transfer were that obligation unfulfilled. It follows that, notwithstanding the completion of the contract of sale, NTZ remained subject to the collateral obligation imposed by special condition 15.2.

The authorities established that damages for economic loss for breach of a duty of care may be recoverable in some circumstances: see Caltex Oil (Australia) Pty Ltd v The Dredge “Willemstad” (1976) 136 CLR 529 and Perre v Apand Pty Ltd (1999) 198 CLR 180 (“Perre”). Although the law in Australia in this area is not without difficulty, I accept the respondents’ submission that no duty of care of the kind alleged by the applicants arose in the circumstances of the case.
In this context, the mere foreseeability of damage is not always a sufficient test for liability. As Gleeson CJ said in Perre at 194:
In relation to the giving of advice or information, questions of reliance and actual foresight of the possibility of harm, (or, what is the same thing, the foresight that a reasonable person would have), are closely related. Moreover, knowledge (actual, or that which a reasonable person would have) of an individual, or an ascertainable class of persons, who is or are reliant, and therefore vulnerable, is a significant factor in establishing a duty of care.
In the same case, McHugh J considered that the factor of vulnerability was likely to be decisive. His Honour said at 220:
What is likely to be decisive, and always of relevance, in determining whether a duty of care is owed is the answer to the question, ‘How vulnerable was the plaintiff to incurring loss by reason of the defendant’s conduct?’ So also is the actual knowledge of the defendant concerning that risk and its magnitude. If no question of indeterminate liability is present and the defendant, having no legitimate interest to pursue, is aware that his or her conduct will cause economic loss to persons who are not easily able to protect themselves against that loss, it seems to accord with current community standards in most, if not all, cases to require the defendant to have the interests of those persons in mind before he or she embarks on that conduct.
The principles concerned with reasonable foreseeability of loss, indeterminacy of liability, autonomy of the individual, vulnerability to risk and the defendant’s knowledge of the risk and its magnitude are, I think, relevant in determining whether a duty exists in all cases of liability for pure economic loss.
In the most recent decision in the High Court in this area of the law, Woolcock Street Investments Pty Ltd v CDG Pty Ltd [2004] HCA 16, the absence of vulnerability on the part of the purchaser of a commercial building was the decisive factor against a finding of duty of care. Gleeson CJ, Gummow, Hayne and Heydon JJ, in a joint judgment, emphasised the significance of vulnerability in economic loss cases. Their Honours said at [23]:
Since Caltex Oil, and most notably in Perre v Apand Pty Ltd, the vulnerability of the plaintiff has emerged as an important requirement in cases where a duty of care to avoid economic loss has been held to have been owed. ‘Vulnerability’, in this context, is not to be understood as meaning only that the plaintiff was likely to suffer damage if reasonable care was not taken. Rather, ‘vulnerability’ is to be understood as a reference to the plaintiff’s inability to protect itself from the consequences of a defendant’s want of reasonable care, either entirely or at least in a way which would cast the consequences of loss on the defendant. (Citations omitted)
There was no duty of care, so their Honours held at [31], because neither the pleaded facts nor those set out in the case stated showed that the appellant purchaser “could not have protected itself against the economic loss it alleges it has suffered”.
In a separate concurring judgment, McHugh J decided that the appellant could not make out the “critical issue” of vulnerability. His Honour said at [80]:
Whether or not the plaintiff was vulnerable to the risk of injury from the defendant’s conduct is a key issue in determining whether the defendant owed a duty of care to the plaintiff. Indeed, the issue of the purchaser’s vulnerability to economic loss is the critical issue in determining whether those involved in the construction of commercial premises owe a duty of care to the purchaser. In this context, vulnerability to risk means not that the plaintiff was exposed to risk but that by reason of ignorance or social, political or economic constraints, the plaintiff was not able to protect him or herself from the risk of injury.
In the present case, the applicants were part of a substantial commercial enterprise. They retained solicitors to represent them in their legal dealings with the respondents. The applicants were not incapable of protecting themselves from the consequences of the respondents’ want of care. They were not incapable of protecting themselves from the consequences of the respondents’ failure to supply an executed supply agreement at the settlement. There are, moreover, other matters which militate against a finding of a duty of care, including the availability of contractual and statutory remedies: see Perre at 192-193 per Gleeson CJ, 226-228 per McHugh J, 253 per Gummow J; and Woolcock at [90], [95]-[96] per McHugh J and [227] per Callinan J.
The applicants’ claim in negligence fails because no duty of care has been established.
the debt claim
As earlier stated, the applicants claimed that Helco is indebted to Caltex for petrol products supplied to it in January and February 1998. An employee of Caltex who worked in the company’s credit department at the relevant time deposed that Caltex’s electronic books of account showed that Helco was indebted to Caltex in the sum of $29,087.54 for the supply of fuel. Exhibited to this employee’s affidavit were relevant invoices and credit notes issued by Caltex to Helco from 9 January, when Helco cancelled a direct debit, to 10 February 1998. Mr Ntzounas conceded in cross-examination that Caltex had delivered the fuel to him and that he had not paid for it. I find that Helco is indebted to Caltex in the sum of $29,087.54, as the applicants alleged, for petroleum products supplied to it in January and February 1998.
the respondents’ defence and cross-claim
(1) Unconscionable conduct under s 51AA of the TPA
In paragraph 34 of the defence, the respondents alleged that the applicants contravened s 51AA of the TPA, by “confront[ing] the first and second respondents with the choice of facing the prospect of losing their financial investment and businesses … unless they agreed to purchase the freehold of the premises and to bind themselves for … five years to purchase all of their supplies of petroleum products for resale at the premises from the second applicant”. The respondents alleged that Ms Youil told Mr Ntzounas that if he did not buy the service station site, “the site would be sold from under him”. The applicants denied these allegations.
The pleadings raise the question whether the applicants engaged in conduct that was “unconscionable within the meaning of the unwritten law”, and fell, therefore, within the conduct proscribed in s 51AA of the TPA. The relevant form of unconscionable conduct was conduct of the kind considered to be unconscionable in Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 (“Amadio”). Conduct of this kind is the unfair, unconscientious exploitation by one person of another’s inability, by reason of a special disadvantage, to protect his or her own interests: see Amadio at 462 per Mason J.
The position of the respondents in this case was analogous to that of the lessees in Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (2003) 197 ALR 153 (“Berbatis”). In Berbatis, the lessors of premises in a shopping centre had stipulated, as a condition of their consent to a proposed renewal or extension of a lease, that the lessees would abandon certain claims against them. The lessees were in a difficult bargaining position, since they had no option to renew their lease and their prospects of making an advantageous sale of their business depended upon the lessors’ co-operation: see Berbatis at 154 per Gleeson CJ. Gleeson CJ, Gummow, Hayne and Callinan JJ held that the mere fact that the lessees were in a difficult bargaining position did not constitute a special disadvantage within the principle stated in Amadio. Gleeson CJ said at 157-158:
All the people involved in the transaction were business people, concerned to advance or protect their own financial interests. The critical disadvantage from which the lessees suffered was that they had no legal entitlement to a renewal or extension of their lease; and they depended upon the lessors’ willingness to grant such an extension or renewal for their capacity to sell the goodwill of their business for a substantial price. They were thus compelled to approach the lessors, seeking their agreement to such an extension or renewal, against a background of current claims and litigation in which they were involved. They were at a distinct disadvantage, but there was nothing “special” about it. They had two forms of financial interest at stake: their claims, and the sale of their business. The second was large; as things turned out, the first was shown to be relatively small. They had the benefit of legal advice. They made a rational decision, and took the course of preferring the second interest. They suffered from no lack of ability to judge or protect their financial interests. What they lacked was the commercial ability to pursue them both at the same time.
In this case, the respondents were keen to buy the Oakleigh site, but they could not do so without entering into a supply agreement with the applicants. They had a choice – to buy the land and bind themselves to purchase the applicants’ petroleum products for a term of years, or not to buy the land at all. They made a decision to buy the land and enter into a supply agreement. In making this decision, they suffered from no relevant inability to protect their financial interests. They had the benefit of legal advice. Their only disadvantage was that they had less bargaining power than the applicants. This is, however, no “special disadvantage” for the purposes of the unwritten law, as it is expressed in Amadio: see Amadio at 461-463 per Mason J and Berbatis at 157 per Gleeson CJ and 168 per Gummow and Hayne JJ.
Further, there was no evidence that the applicants’ conduct was unconscientious: compare, for example, Cameron v Qantas Airways Ltd (1994) 55 FCR 147 at 179. As already stated, I accept Ms Youil’s evidence that she did not tell Mr Ntzounas that the site would be sold from under him if he did not buy the premises. Mr Ntzounas conceded that Ms Youil had mentioned that he could remain at the site until the end of the relevant franchise agreement.
The respondents’ claim in relation to s 51AA of the TPA must fail.
(2) Coercion
In paragraph 35 of the defence, the respondents pleaded that the applicants had used coercion “in connexion with the sale … or the possible sale … of an interest in the land” in contravention of s 53A of the TPA. For the reasons already stated, in light of the evidence, this claim also failed.
(3) Anti-competitive conduct
The respondents alleged breaches of ss 45(2)(a)(ii), 45(2)(b)(ii), 45B(2) and 45C(2) of the TPA. These provisions relate to various forms of proscribed anti-competitive conduct.
The alleged breaches of ss 45(2)(a)(ii) and 45(2)(b)(ii) of the TPA arose from the respondents’ assertion that, if NTZ had entered into a supply agreement for five years, it would not have been “contractually free to purchase its supplies of petroleum products in the market place from a supplier of petroleum products other than the second applicant at a price less than the price which it would be required to pay for the supply of its petroleum products from the second applicant”. For this purpose, the respondents defined the market place as constituted by Caltex, Mobil Oil Australia Ltd, Shell Australia Ltd, BP Australia Ltd and their wholesale distributors throughout the Melbourne metropolitan area. The respondents claimed that an alleged substantial lessening of competition would have precluded them “from competing freely in the retail market place in the south-eastern suburbs of Melbourne and its environs[;] from using their resale marketing capacity to reduce the cost of supplies of petroleum products so purchased by them[;] from having the consequent ability to resell the said products at a substantially reduced price to their customers and prospective customers [; and] otherwise obtaining supplies of petroleum products and being thus able to resell the same at a price of up to 5 to 7 cents per litre less than Ampol’s price”.
The respondents bore the onus of proof that the applicants’ conduct has or is likely to have the effect of substantially lessening competition: see Stirling Harbour Services Pty Ltd v Bunbury Port Authority (2000) ATPR 41-752 at 40,732 [115] per French J; and John S Hayes & Associates Pty Ltd v Kimberly-Clark Australia Pty Ltd (1994) ATPR 41-318 at 42,237 per Hill J.
Save, perhaps, for Mr Ntzounas’ evidence that he was able to purchase fuel at a cheaper price from suppliers other than Caltex, the respondents adduced no evidence in support of these claims. These claims must, therefore, fail.
In any case, the respondents’ claims were misconceived. They adopted a mistaken notion of the relevant market that s 45 is intended to protect and an erroneous concept of the conduct that may have the effect of “substantially lessening competition”. The authorities establish that the prohibitions in s 45 are concerned with the effect of conduct on competition as a whole within a market, rather than the impact on any individual participant: see Outboard Marine Australia Pty Ltd v Hecar Investments (No 6) Pty Ltd (1982) ATPR 40-327 at 43,983-43,984 per Bowen CJ and Fisher J; and O’Brien Glass Industries Ltd v Cool & Sons Pty Ltd (1983) ATPR 40-376 at 44,455-44,456 per Fox J. The fact that an individual cannot compete on the same terms as another does not of itself substantially lessen competition in the relevant market. As Wilcox J said in Eastern Express Pty Ltd v General Newspapers Pty Ltd (1991) 30 FCR 385 at 420-421:
[E]very commercial contract lessens competition to some degree. Each party is taken out of the market to the extent of its commitment. The parties, being bound to each other, are unable to buy from, or sell to, others the goods or services the subject of the contract. To that extent, they are inhibited in their ability to compete with others for purchases or sales. But those restrictions are fundamental to contract law; law which the Trade Practices Act was designed to supplement, not to supplant.
The applicants also adduced the evidence of Professor Norman, an academic and consultant economist. His evidence, as an expert economist, was that “the market definition that best facilitates the study of competition in this matter is almost certainly larger” than “a market defined regionally as confined to the south-eastern suburbs of Melbourne and its environs”. He emphasized, however, that, even if he were wrong about the market definition, his conclusion regarding competition effects would be the same. Professor Norman deposed that:
The competitive pressures operating within the south-eastern suburbs of Melbourne in the petroleum products distribution sector are strong and vigorous. Competition used here is a characteristic of the market sector and not a description of the ‘competitive situation’ of an individual trader … .
Given the highly competitive background to the industry and the currently vigorous and strong competition in the retail sector of the petroleum products market in southern and eastern suburbs of Melbourne, there is little scope in principle or practice for the impact of any supply agreement involving an individual supplier therein to cause any significant detriment to the competition so found.
In cross-examination, Professor Norman gave cogent evidence that the respondents’ approach to assessing whether the impugned conduct had the effect of substantially lessening competition was erroneous. In summary, his evidence established that there was no substance to the respondents’ claims based on ss 45(2)(a)(ii) and 45(2)(b)(ii).
The respondents’ claims in relation to s 45B must also fail for the reason that there was no evidence to support them. Further, the claim in relation to s 45B was based on the same misconceived concept of “market” and “competition”. The claim in relation to s 45C was also misconceived, for that section applies to parties in competition with each other and not, as here, to buyers and sellers.
Finally, the respondents’ claims in connexion with s 47 of the TPA were also untenable. The general principles to be applied in determining the relevant market and whether conduct substantially lessens competition in that market are well established. The respondents bore the onus of proof, which they did not discharge: see Sodastream Ltd v Electronics (Broken Hill) Pty Ltd (1985) ATPR 40-572 at 46,651 per Beaumont J.
(4) Unjust enrichment
In paragraphs 22 to 33 of the defence, the respondents pleaded that, by reason of certain circumstances concerning the occupation and development of the Oakleigh site as a business by Chrisanna, any proposal by Caltex to sell the site to any person other than a person related to the first respondent would result in “financial loss and economic hardship and deprivation, and the applicants would have become unjustly enriched”. There was, however, no evidence of any proposal to sell the site to any other person that would have resulted in the applicants being “unjustly enriched”, as the respondents pleaded. Save for Mr Ntzounas’ allegation that Ms Youil had told him that the site would be sold from under him if he did not buy the premises (which I have rejected), there was no other evidence of any threat of a forced sale to undermine the franchisee’s occupation of the site for the term of the franchise. The parties concluded the contract of sale after arms length negotiations. The respondents had the benefit of legal advice, and made a rational decision, free from any mistake, duress or illegality, to purchase the land. In the absence of a qualifying or vitiating factor such as mistake, duress or illegality, the claim for unjust enrichment fails: see David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 378-379 per Mason CJ, Deane, Toohey, Gaudron and McHugh JJ.
the rebate
In their cross-claim, the respondents pleaded that, if Helco was indebted to Caltex, then Caltex was liable to reimburse Helco in the sum of $20,000, because Mr Cotronea had agreed to credit this sum, being two-thirds of the trade mark fee paid under the franchise agreement, to Helco’s account in reduction of the purchase price (“the rebate claim”). They further claimed that Caltex had failed to credit the account of Helco for various sales and rebates, and had wrongfully included dishonour fees. This latter claim was not, however, further particularised or pursued at trial.
The particulars to the rebate claim were that:
In November 1997 the second respondent negotiated with Frank Cotronea on behalf of the second applicant a rebate of two-thirds of the trade mark fee referred to in paragraph 22A … on the basis that the franchise agreement was to be terminated after three years of operation when it was originally understood to run for nine years. Frank Cotronea, in further discussion with the second respondent, instructed Melissa Lambrianew on behalf on the second applicant to allow a credit of $20,000.
The applicants accepted, as the respondents maintained, that by virtue of the Petroleum Retail Marketing Franchise Act 1980 (Cth) and the rights of renewal for which it provided, the franchisee could enjoy the benefit of the franchise for nine years. This is, it seems, the combined effect of ss 17(1) and 17B(4) of that Act. The franchise agreement provided for a term of three years from 3 November 1994 (cl 2 read with sch 1). The franchisee agreed to pay the trade mark fee of $30,000 (cl 3.1 read with sch 2) on the signing of the agreement: see also defence and cross-claim, paragraph 22A.

The evidence established that, on 10 February 1998, Mr Ntzounas, Mr Cotronea and Ms Lambrianew met and discussed the possibility of a rebate. I find, however, that no agreement was reached on this occasion that a rebate would be made. Mr Ntzounas’ 1 December 2000 affidavit was the principal evidence for such an agreement. He deposed that Mr Cotronea agreed that a rebate would be credited to Helco’s trading account and that he instructed Ms Lambrianew to arrange for this to be done. Mr Cotronea and Ms Lambrianew denied that any such agreement had been concluded. Their evidence was, in substance, that, at the 10 February 1998 meeting, they and Mr Ntzounas discussed the issue of the rebate; that no agreement was reached; and that it was left to Ms Lambrianew to investigate the matter further.
In cross-examination, Mr Ntzounas gave at least two different accounts of the 10 February 1998 meeting. In some parts of his evidence, he said that Mr Redfern was also present, although Mr Redfern and the other Caltex representatives denied this. His evidence about the meeting and the rebate was neither consistent nor clear. Ms Lambrianew was, as noted already, a credible witness. Her account of events was consistent with that of Mr Cotronea. I prefer the evidence of Ms Lambrianew and Mr Cotronea to that of Mr Ntzounas.
The respondents submitted that the Court should infer from the existence of a credit note (indicating that Helco was credited and debited with $20,000 on the same day) that an agreement was reached and that Caltex reneged on the agreement. I would not draw this inference. Ms Lambrianew satisfactorily explained the existence of the credit note. The evidence of Mr Ochs, an in-house solicitor employed by Caltex, supported her explanation. I accept too that Ms Lambrianew explained the reversal of the credit to Mr Ntzounas in a telephone call on 27 February 1998. Her evidence in this regard was consistent with her diary note that she made at the time.
I am not satisfied, on the balance of probabilities, that an agreement was reached to credit the sum of $20,000 to Helco’s account. The third respondent has not made out its claim that Caltex is liable to reimburse Helco as alleged.
the efpec claim
NTZ claimed to be entitled to damages for breach of cl 11 of the contract of sale in relation to what it termed the EFPEC Console Phase 2+ (“the console”) which, by virtue of cl 11, was an item of plant and equipment sold to NTZ. The respondents alleged that the console was rendered worthless after 15 May 1998 when Caltex removed certain items of plant and equipment from the Oakleigh site. They claimed the cost of replacing the console.
The applicants submitted that the respondents failed on the evidence and that, in any case, the console was an excluded item, covered by the term “EMS equipment” in cl 11.5 of the contract of sale. EMS (or Electronic Marketing System) was software that sat inside the console. Mr Cotronea explained, in his affidavit, that the console was like a cash register that controlled the self‑serve petrol pumps, and the EMS equipment supported the console.
Mr Ntzounas’ affidavit evidence was that, on 15 May 1998, Caltex “stopped the console equipment from operating by doing something to the modem”. His evidence was that the console required adjustment in order to operate efficiently. The representatives of the only maintenance company that could service the console did not come when he requested them to do so. As a result, the console was inoperable and he had to replace it.
At the relevant time, Brian Redfern was a Caltex works supervisor. His evidence was that, in February 1998, he had arranged for a contractor to remove the EFPEC console from the site. The contractor had been unable to do so, because Mr Ntzounas had refused access to the building where the console was situated. When Caltex subsequently removed the pumps (as it was entitled to do), the pumps were automatically disconnected from the console. His evidence was that the console was not rendered inoperative by this disconnection. Mr Redfern’s evidence was clear and he was a credible witness. Mr Ntzounas’ evidence on the issue was vague and unclear. I accept Mr Redfern’s evidence in preference to that of Mr Ntzounas.
I am not satisfied, on the balance of probabilities, that Caltex rendered the console inoperative and that it is liable for the loss the respondents claimed. In light of this finding, it is unnecessary to consider the parties’ written submissions and argument as to how the contract of sale should be construed, including whether parol evidence could be admitted to do so and whether the contra proferentem rule of construction should be applied.
disposition
For the reasons stated, I would make the following orders:
1.The applicants be granted leave to amend their second further amended statement of claim by substituting references to the Fair Trading Act 1985 (Vic) for references to the Fair Trading Act 1999 (Vic) wherever appearing.
2. The cross-claim be dismissed.
3.Judgment be entered for the applicants against the first and second respondents for damages to be assessed.
4.Judgment be entered for the second applicant against the third respondent in the sum of $29,087.54.
5.There be a case management conference, at a date to be fixed, before a Registrar of this Court to prepare the matter for trial on the question of damages.
Before making these orders, I shall, however, give the parties an opportunity to consider them. I direct that the parties file and serve any submissions concerning the proposed orders referred to above on or before Friday, 11 June 2004, addressing, if appropriate, the question of interest.

I certify that the preceding one hundred and eighty five (185) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny.
Associate:
Dated: 4 June 2004

Counsel for the Applicant: Mr M J Crennan SC with Mr P D Corbett

Solicitor for the Applicant: Hall & Wilcox

Counsel for the Respondent: Mr C A Connor

Solicitor for the Respondent: Bernstein & Associates

Date of Hearing: 15 May 2003

Date of Judgment: 4 June 2004

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 581 OF 1999

BETWEEN:	MATLAND HOLDINGS PTY LIMITED ACN 005 558 912 FIRST APPLICANT CALTEX AUSTRALIA PETROLEUM PTY LIMITED ACN 000 032 128 SECOND APPLICANT
AND:	NTZ PTY LIMITED ACN 005 154 165 FIRST RESPONDENT GEORGE NTZOUNAS SECOND RESPONDENT HELCO PETROLEUM PTY LIMITED ACN 080 758 738 THIRD RESPONDENT
JUDGE:	KENNY J
DATE OF ORDER:	4 JUNE 2004
WHERE MADE:	MELBOURNE

JUDGE:	KENNY J
DATE:	4 JUNE 2004
PLACE:	MELBOURNE

Counsel for the Applicant:	Mr M J Crennan SC with Mr P D Corbett
Solicitor for the Applicant:	Hall & Wilcox
Counsel for the Respondent:	Mr C A Connor
Solicitor for the Respondent:	Bernstein & Associates
Date of Hearing:	15 May 2003
Date of Judgment:	4 June 2004