Super Start Batteries Pty Ltd v Shearer & Anor - [2023] QDC 241

DISTRICT COURT OF QUEENSLAND

CITATION:

Super Start Batteries Pty Ltd v Shearer & Anor [2023] QDC 241

PARTIES:

SUPER START BATTERIES PTY LTD
ACN 101 683 694

(plaintiff)

v
REBECCA LEE SHEARER

(first defendant)
SHAWN DEAN SHEARER

(second defendant)

AND

REBECCA LEE SHEARER AND SHAWN DEAN SHEARER
(plaintiffs by counterclaim)
v
SUPER START BATTERIES PTY LTD
ACN 101 683 694
(first defendant by counterclaim)
THE BATTERY STORE AUSTRALIA PTY LTD
ACN 147 781 431

(second defendant by counterclaim)

FILE NO/S:

3152/21

DIVISION:

Civil

PROCEEDING:

Trial

ORIGINATING COURT:

Brisbane

DELIVERED ON:

15 December 2023

DELIVERED AT:

Brisbane

HEARING DATE:

13-16 February, 29-30 May and 8 June 2023

JUDGE:

Jarro DCJ

ORDERS:

1.   Judgment for the plaintiff.

2.   The counterclaim is dismissed.

3.   I will hear from the parties as to any consequential orders, including costs.

CATCHWORDS:

CONTRACTS – BREACH – DAMAGES – where the plaintiff (and first defendant by counterclaim) seeks payment of outstanding invoices – where the defendants (and plaintiffs by counterclaim) admits to entering into the contract, receiving the relevant goods and not making payment for those goods – where the defendants seek to raise the defence to the breach of contract under s 17 of the Sale of Goods Act 1896 and s 23 of the Australian Consumer Law under the Competition and Consumer Act 2010 – whether the credit agreement and the deed of guarantee were unfair and therefore void – whether the relevant goods were of merchantable quality and fit for purpose

TRADE AND COMMERCE – COMPETITION, FAIR TRADING AND CONSUMER PROTECTION LEGISLATION – MISLEADING OR DECEPTIVE CONDUCT OR FALSE REPRESENTATIONS – where the plaintiffs by counterclaim allege that the defendants by counterclaim misled or deceived them in breach of s 18 of the Australian Consumer Law under the Competition and Consumer Act 2010 – where the plaintiffs by counterclaim have not specifically pleaded, but rely on s 29 of the ACL that the defendants by counterclaim made false or misleading representations

Sale of Goods Act 1896, s 17
Australian Consumer Law, s 18, s 23, s 24, s 29, s 236

Dialogue Consulting v Instagram [2020] FCA 1846
Paula Susan Chappell as Executor of Estate of Robert Hastings Hitchcock v Goldspan Investments Pty Ltd [2021] WASCA 205
Invisalign Pty Ltd v Smiles Direct Club LLC [2023] FCA 395

COUNSEL:

P O’Brien for the plaintiff (and second defendant by counterclaim)
D Kelly for the first and second defendants

SOLICITORS:

Enyo Lawyers for the plaintiff (and second defendant by counterclaim)
William Roberts Lawyers for the first and second defendants

Introductory Matters

The plaintiff is in the business of importing and selling batteries, associated technology and related products to customers throughout Australia. The second defendant by counterclaim distributes and sells batteries for the plaintiff, through a network of resellers and distributors. In conducting their battery business, the defendants entered into a written agreement with the plaintiff for the supply of batteries on credit (“credit agreement”). The plaintiff seeks to recover a debt in the amount of $68,163.05 pursuant to the credit agreement.[1]
[1]The original proceedings also sought a declaration for an equitable mortgage pursuant to the credit agreement, but that claim was not pressed at trial.
Although the defendants admit that the plaintiff sold and delivered the batteries to them (and rendered invoices for those goods), they deny that a debt is owed because the goods were not of merchantable quality or fit for purpose in accordance with the implied conditions under s 17 of the Sale of Goods Act 1896. By counterclaim, the defendants seek a declaration that a number of the terms in the credit agreement are unfair and void pursuant to s 23 of the Australian Consumer Law (“ACL”) under the Competition and Consumer Act 2010. They seek damages for what they assert to be misleading and deceptive conduct by the plaintiff and its associated entity being the second defendant by counterclaim. Damages in the amount of $336,355 have been sought pursuant to s 236 of the ACL.
By earlier order made by Porter KC DCJ, affidavits were to comprise the parties’ evidence-in-chief.
At the trial of this action, the parties proceeded on the basis that the defendants, being Mr and Mrs Shearer (“the Shearers”), would present their counterclaim first. Accordingly, the Shearers gave evidence about their interactions with the defendants by counterclaim, being Super Start Batteries (“Super Start”) and The Battery Store Australia (“TBSA”). In addition to the Shearers giving evidence, Mr Shearer’s parents, Mr Wayne Shearer and Mrs Noeleen Shearer, also gave evidence because of their involvement with their son and daughter-in-law’s newly established business, known as ‘The Battery Store Mareeba’. After a period of time, the Shearers opened another store in Cairns, known as ‘The Battery Store Far North Queensland’.[2] In addition to the Shearer family, the Shearers also called Cameron De Lai and Bhaskaran Nair in support of the defence and counterclaim. The purpose of that evidence was to provide context into the Shearers starting their battery business first in Mareeba, followed by Cairns, because Mr De Lai previously operated a battery outlet in Mareeba and Mr Nair previously operated a battery outlet in Cairns, and both of whom had dealings with Super Start and TBSA. Their evidence was led to corroborate some of the claims the Shearers said they experienced when dealing with Super Start and TBSA.
[2]Also referred to as ‘The Battery Store FNQ’.

Background Matters

After years of working with a local government council, Mr Shearer wanted a career change. He and his wife embarked upon their battery business after having had discussions with Mr Kishor Kumar. Mr Kumar was (and remains) an employee of TBSA. He knew the Shearers through their respective sons’ local sporting fixtures. The Shearers discussed Mr Shearer’s career move at the local fixtures with Mr Kumar (who was in a position to offer them a business opportunity).
The Shearers have asserted that representations were made by Mr Kumar, on behalf of Super Start and TBSA, that were not accurate. This was against a backdrop where they had never run a retail business before and, consequently, they relied upon Mr Kumar who had significant experience and encouraged them to allow him to run and support a new business for them until they gained sufficient experience. The Shearers were described by their legal representatives as “novices”.
So, the Shearers decided to start ‘The Battery Store Mareeba’. They ran everything past Mr Kumar, including the shop lease and location of their new business at Mareeba. Systems were set up in accordance with what Mr Kumar directed them to do. For instance, their accounting system was run through Xero and Mr Kumar had access to that system. Mr Shearer’s parents agreed to help their son and daughter-in-law with the new business, because the Shearers were not always present in the store, and, for an initial period of time, Mr Shearer still held his job at the local council. It seems common ground that Mr Kumar was significantly present at the Mareeba store, despite officially residing in Cairns.
Batteries were supplied to the Shearers by Super Start. However, according to the Shearers, not only was the quality of the batteries deficient, but the initial stock sold and delivered by Super Start, through TBSA as its agent, was “in fact old stock and second hand or returned stock from a business called BKN Battery Specialities Pty Ltd (“BKN”) to which [Super Start] had supplied the goods”.[3] BKN was owned by Mr Bhaskaran Nair. The Shearers also contend that TBSA, as agent for Super Start, sold and delivered goods to them “which comprised return stock from customers of BKN and Bruno’s Batteries previously supplied to BKN and Bruno’s Batteries by or on behalf of” Super Start.[4] Also, “goods sold and delivered by [Super Start] to the [Shearers] included stock that was branded and manufactured by [Super Start] but falsely labelled or badged as [Super Start’s] stock when that was not the case”.[5] Further, it was pleaded some of the batteries “included out of date, flat, sulphated and unusable stock presented as new stock when in fact it was recycled, used or returned stock”.[6]
[3]Amended Defence, [7(a)].
[4]Amended Defence, [7(b)].
[5]Amended Defence, [7(c)].
[6]Amended Defence, [7(d)].
It was also pleaded on the Shearers’ behalf that Mr Kumar as agent or representative of Super Start “used his access to the business systems in the [Shearers’] business to enter into the accounts records of stock which was not received by the [Shearers] or delivered from [Super Start] at any time, or to transact dealings for [Super Start] and TBSA on the account of the [Shearers]”.[7]   Other complaints and allegations were pleaded, including that:
(a)Mr Kumar:
(i)“used his access to the business systems in the [Shearers’] to record acceptance of discounts (offered by [Super Start] on defective stock invoiced by TBSA) on behalf of the [Shearers], without [their] authority”.[8]
(ii)“failed to account to the [Shearers] for stock and sales in that he conducted cash transactions with customers in Cairns but did not bank the proceeds to the credit of the [Shearers]”.[9]
(iii)“failed, neglected or refused to process warranty claims for defective stock from the [Shearers’] business by processing test results and warranty forms and returning stock to [Super Start] for credit”.[10]
(b)Super Start “failed, neglected or refused to credit the [Shearers] for warranty claims and defective or undelivered stock”.[11]
[7]Amended Defence, [7(e)].
[8]Amended Defence, [7(f)].
[9]Amended Defence, [7(g)].
[10]Amended Defence, [7(h)].
[11]Amended Defence, [7(i)].
It was because of these matters that a finding was sought on the Shearers’ behalf that there was no debt arising from any supply of the batteries by Super Start.
In addition, an assertion was made in the counterclaim on behalf of the Shearers that in about late 2019 and early 2020, during the course of the negotiations for them to commence their business in Mareeba, representations were made by Mr Kumar, on behalf of Super Start and TBSA, to enable the business to conduct its operations profitably. The representations were made orally and were that:
(a)Super Start was a substantial and reputable business.
(b)Super Start supplied quality Super Start branded batteries which the Shearers would be able to order through TBSA and sell into the retail markets in and around Mareeba and Cairns at a profit.
(c)TBSA was a substantial and reputable business.
(d)TBSA supplied quality batteries from sources including from Super Start, which the Shearers would be able to order from TBSA, and sell into the retail markets in and around Mareeba and Cairns at a profit.
(e)By acting as the local distributor or retail outlet for Super Start and TBSA, the Shearers would be able to set up and operate a business in each of Mareeba and Cairns and derive substantial profits by doing so.
(f)Super Start and TBSA would support the Shearers in and about the set up and conduct of their business by:
(i)providing quality stock on credit terms;
(ii)meeting valid claims by customers on warranty or otherwise in relation to defects in the goods or by providing credits for returns by customers; and
(iii)support in the conduct of their business operations by Kumar.
(“the representations”).[12]
[12]Counterclaim, [6].
The Shearers have claimed that in reliance upon the representations made by Super Start and TBSA, they:
(a)set up and continued to carry on business in Mareeba;
(b)set up a separate business in Cairns known as ‘The Battery Store FNQ’;
(c)entered into a credit account with Super Start and TBSA; and
(d)ordered stock from them.
The Shearers have asserted the representations were misleading and deceptive (or likely to mislead and deceive them) because the goods sold and delivered by Super Start and TBSA were not quality batteries, were falsely or incorrectly branded and described, and, were otherwise defective, deficient and unsatisfactory.
At trial, not an insignificant amount of reliance was placed on the Shearers’ behalf that Super Start had substantial disputes with BKN in relation to the sale, supply and distribution of battery stock. The stock, it was suggested, was deficient and defective or unable to be sold, and, the dispute between Super Start and BKN was not disclosed to the Shearers at any time when the representations were made during the negotiations to enter into the business. It was contended that there ought to have been disclosure. According to the Shearers, this was misleading and deceptive. In addition, other conduct said to be misleading and deceptive, extended to Super Start and TBSA holding a stock of batteries which they proposed and intended to (and did) deliver to the Shearers which comprised of old stock, second hand stock, returned stock from BKN and returned stock from customers of BKN.[13] It was contended that Super Start and TBSA though, intended to and did refer, customers of BKN with returns of warranty claims to the Shearers, notwithstanding the Shearers had not sold the relevant stock to the customers of BKN.[14] It was because of these matters, the Shearers deny Super Start’s claim of money owed because Super Start was unable to demonstrate that the goods sold and delivered to the Shearers were:
(a)new stock as represented;
(b)of acceptable quality;
(c)for the benefit of the Shearers (on the basis that such stock was in fact used to meet or replenish stock for returns for BKN customers, and to supply third parties);[15] and/or
(d)accepted by the Shearers and paid for willingly.
[13]Counterclaim, [14(d)].
[14]It was also pleaded that Mr Kumar used his access to the accounts and operating systems of the defendants’ business for his personal advantage or that of his employer and principal: Counterclaim, [14(f)].
[15]Such as Agric, Whelan, Insane and Cairns Batteries.
My overall assessment of the evidence was that much of the claims raised on behalf of the Shearers were far too broad, it invited speculation, it was general in nature and lacking with sufficient clarity or evidence, in order to substantiate the claims of misleading and deceptive conduct, including that the batteries supplied by Super Start and TBSA were not of merchantable quality or fit for purpose, or that the credit agreement entered into between the Shearers and Super Start was somehow unfair. For the reasons that follow, there is judgment for Super Start in the amount sought and the counterclaim is otherwise dismissed. Had there been more probative evidence led on behalf of the Shearers, then perhaps the outcome of this trial might have been different.

Uncontroversial Matters

It is not controversial that Super Start and TBSA are sellers of batteries around Australia.
After discussions with Mr Kumar, the Shearers decided to open a battery store in Mareeba in August 2019, which was initially largely managed by Mr Shearer’s parents, Noeleen and Warren Shearer (except for a few months when Mr Kumar operated the Mareeba store during COVID-19 lockdowns in 2020). At the time of the Shearers opening their store, BKN was the distributor of batteries for Super Start and TBSA in Far North Queensland. It supplied stock to the Mareeba store.
The Shearers signed credit application forms and guarantees in favour of Super Start and TBSA in February 2020. This allowed the supply of stock on credit.
After the opening of the Mareeba store, the Shearers opened a second store in Cairns after BKN ceased to be distributor for Super Start and TBSA in the region. This occurred in the first half of 2020.
Batteries were supplied to the Shearers and they were sold through both stores.
Mr Kumar operated the Cairns store daily for the Shearers from its opening until early to mid-2021.
In about early 2021, Super Start and TBSA began to follow up outstanding invoices owed by the Shearers, through Ms Rebecca Sarnelli, who was the finance manager for Super Start and TBSA. Despite this, Super Start continued to supply stock to the Shearers between March and September 2021. The Shearers were invoiced for payment. Some of the invoices (as pleaded) remain unpaid.
By early September 2021, Mr Shearer spoke with Ms Sarnelli over the telephone to discuss some matters regarding the invoices that were pressed for payment. He sent her an email dated 27 September 2021 setting out a series of questions outlining some of the issues and concerns he had about the stock.
Mr Theofinas Trigas, who is Super Start’s managing director and manager of TBSA, telephoned Mr Shearer on 29 September 2021 to discuss his concerns in the email of 27 September 2021. No resolution was reached on the telephone.
On 29 September 2021, Mr Shearer paid $10,000 towards the outstanding balance which had previously been invoiced.[16]
[16]See Amended Defence, [3(b)].
On or about 16 November 2021, Super Start lodged a caveat over the Shearers’ property based on the equitable charge contained in the guarantee and indemnity signed by the Shearers. The caveat was subsequently removed by consent to allow settlement of the sale of the property on the undertaking that $100,000 from the proceeds would be paid into Court.

Competing Cases

Given how the evidence proceeded (at the parties’ election), I propose to deal with the Shearers’ claims first, followed by the claim made against them by Super Start.

Shearers’ Claims against Super Start and TBSA

The Shearers’ pleaded case was that Super Start and TBSA misled or deceived[17] them in breach of s 18 of the ACL, as a consequence of which they suffered loss and damage. Damages totalling $366,355 was sought pursuant to s 236 of the ACL, comprising the following:
[17]Or the representations were likely to mislead and deceive.
(a)$29,152.59 costs of stock invoiced by Super Start and TBSA, but sold, transferred or delivered to third parties and paid for by the Shearers being:
(i)Whelan - $2,208.05;
(ii)Cairns Batteries - $3,554.03;
(iii)Insane - $6,087.74; and
(iv)Agric - $17,502.77.
(b)$41,891.53 for warranty claims not met by Super Start;
(c)$79,343.72 for losses incurred by meeting BKN claims and receiving other old, second hand and returned stock;
(d)$100,000 as an estimate for loss of profits;
(e)$102,787 for missing stock;
(f)$5,323.31 for cash not banked;
(g)$5,978 paid to TBSA under protest; and
(h)$1,682.86 for Mr Kumar’s payments.
A claim for $20,000 for compensation was sought on the Shearers’ behalf with respect to Super Start having lodged the caveat.
The pleaded representations have been identified above in paragraph [11] of the Reasons. The pleading also asserts:
“…
[14]The representations were misleading and deceptive, or likely to mislead and deceive, the [Shearers] in that:
(a)the goods sold and delivered by [Super Start] and TBSA to the [Shearers] during the period referred to [from in or about February 2020 to October 2021]:
(i)      were not quality batteries;
(ii)     were falsely or incorrectly branded or described (in the invoices and their physical presentation on delivery); and
(iii)     were defective, deficient and unsatisfactory in the ways sub-paragraphs 7(a), (b), (c) and (d) of the defence;
(b)[Super Start] had substantial disputes with BKN in relation to the sale, supply and distribution of battery stock, which stock was deficient and defective or unable to be sold (BKN dispute);
…
(c)the BKN dispute was not disclosed to the defendants at any time when the representations were made during the negotiations pleaded in paragraph 6 hereof;
(d)[Super Start] and TBSA then held a stock of batteries … which they proposed and intended to (and did) deliver to the [Shearers] which comprised old stock, second hand stock, return stock from BKN and return stock from customers of BKN previously supplied to BKN by or on behalf of [Super Start];
(e)[Super Start] and TBSA, by Kumar, intended to (and did) refer customers of BKN with returns or warranty claims to the [Shearers] notwithstanding that the [Shearers] had not sold the relevant stock to the customers of BKN;
(f)Kumar used his access to the accounts and operating systems of the [Shearers’] business for his personal advantage or that of his employer and principal;
…
[15]Contrary to the representations and in breach of the agreement between [Super Start] and the [Shearers] for the supply of goods and services (as pleaded in SOC4) [Super Start] engaged or was concerned in the conduct pleaded in Defence 7 and paragraph [14] hereof (the offending conduct).
[16]By the offending conduct each of [Super Start] and TBSA engaged or was concerned in conduct which was misleading or deceptive, or likely to mislead and deceive the [Shearers], in relation to:
(a)the stock and inventory supplied to the [Shearers] and the accounting for goods sold and delivered to the [Shearers];
(b)the correctness of the accounting for goods sold and delivered to the [Shearers].
[17]By reason that the matters pleaded at paragraphs 1 to 10 and 13 to 15 hereof [Super Start] breached the agreement for the supply of goods and services in consequence of which the [Shearers] have suffered loss and damage as hereinafter pleaded.
…”

Section 18 of the ACL provides a prohibition against misleading and deceptive conduct in trade or commerce. The section provides:
“A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.”
The concepts of misleading or deceptive conduct are a question of fact.
It has been contended on the Shearers’ behalf that the section prescribes misleading and deceptive conduct of the types engaged in by Mr Kumar as representative of Super Start and TBSA, such that Super Start and TBSA were parties to the relevant conduct.
Also, but despite not having been specifically pleaded, s 29 of the ACL was relied upon on behalf of the Shearers. That section provides:
“29.False or misleading representations about goods or services
(1)A person must not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services:
(a)     make a false or misleading representation that goods are of a particular standard, quality, value, grade, composition, style or model or have had a particular history or particular previous use; or
(b)     make a false or misleading representation that services are of a particular standard, quality, value or grade; or
(c)     make a false or misleading representation that goods are new; or
(d)     make a false or misleading representation that a particular person has agreed to acquire goods or services; or
(e)     make a false or misleading representation that purports to be a testimonial by any person relating to goods or services; or
(f)     make a false or misleading representation concerning:
(i)a testimonial by any person; or
(ii)a representation that purports to be such a testimonial;
relating to goods or services; or
(g)     make a false or misleading representation that goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits; or
(h)     make a false or misleading representation that the person making the representation has a sponsorship, approval or affiliation; or
(i)      make a false or misleading representation with respect to the price of goods or services; or
(j)      make a false or misleading representation concerning the availability of facilities for the repair of goods or of spare parts for goods; or
(k)     make a false or misleading representation concerning the place of origin of goods; or
(l)      make a false or misleading representation concerning the need for any goods or services; or
(m)     make a false or misleading representation concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy (including a guarantee under Division 1 of Part 3-2); or
(n)     make a false or misleading representation concerning a requirement to pay for a contractual right that:
(i)is wholly or partly equivalent to any condition, warranty, guarantee, right or remedy (including a guarantee under Division 1 of Part 3-2); and
(ii)a person has under a law of the Commonwealth, a State or a Territory (other than an unwritten law).”
As to the principles referrable to ss 18 and 29 of the ACL, I was referred to the decision of Invisalign Pty Ltd v Smiles Direct Club LLC [2023] FCA 395 where Anderson J stated:
“[700]The principles relevant to determining whether conduct contravenes ss 18 or 29 of the ACL are well-known and may be summarised as follows.
[701]There is no material difference between the terms ‘misleading or deceptive’ (used in s 18) and ‘false or misleading’ (used in s 29) and the prohibitions are regarded as similar in nature: Australian Competition and Consumer Commission v TPG Internet Pty Limited [2020] FCAFC 130; 278 FCR 450 (TPG2020) at 459 [21] per Wigney, O’Bryan and Jackson JJ.
[702]The central question, in assessing the application of s 18 and s 29 of the ACL, as stated by the Full Court in TPG2020 is ‘whether the impugned conduct, viewed as a whole has a sufficient tendency to lead a person exposed to the conduct into error (that is, to form an erroneous assumption of conclusion about some fact or matter)’: TPG2020 at 458 [22] per Wigney, O’Bryan and Jackson JJ.
[703]The Full Court in TPG2020 set out five subsidiary principles at 459 [22] as follows:
(a)first, conduct is likely to mislead or deceive if there is a real and not remote chance or possibility of it doing so;
(b)second, it is not necessary to prove an intention to mislead or deceive;
(c)third, it is unnecessary to prove that the conduct in question actually deceived or misled anyone. The question whether conduct is misleading or deceptive is objective and the Court must determine the question for itself;
(d)fourth, it is not sufficient if the conduct merely causes confusion; and
(e)fifth, where the impugned conduct is directed to the public generally, or a section of the public, the question is whether the conduct is likely to mislead or deceive has to be approached at a level of abstraction where the Court must consider the likely characteristics of the persons who comprise the relevant class to whom the conduct is directed and consider the likely effect of the conduct on ordinary or reasonable members of the class, disregarding reactions that might be regarded as extreme or fanciful.
[704]When considering a claim of false, misleading or deceptive conduct by representations, the initial question is whether the misconceptions alleged to arise are properly to be attributed to the ordinary and reasonable members of the class of prospective purchasers. Advertisements must be judged by their effect, or likely effect, on the ordinary and reasonable members of the relevant class of recipients of the advertising. Extreme or fanciful reactions should not be attributed to ordinary or reasonable members of the relevant class: Campomar Sociedad, Limitada v Nike International Ltd [2000] HCA 12; 202 CLR 45 per Gleeson CJ, Gaudron, McHugh, Gummow, Kirby and Callinan JJ) at [105].
[705]The question is not whether the conduct causes confusion or wonderment, but whether it meets the statutory description of ‘misleading or deceptive’.
[706]The central question is whether the impugned representations, viewed as a whole, have a sufficient tendency to lead a consumer to form an erroneous assumption or conclusion about some fact or matter. Only then does the Court consider whether the representations are false, misleading or deceptive, or likely to mislead or deceive: Australian Competition and Consumer Commission v Telstra Corporation Ltd [2007] FCA 1904; 244 ALR 470 (ACCC v Telstra) per Gordon J at [15].”
I have also been referred to the approach taken by the Western Australian Court of Appeal in Paula Susan Chappell as Executor of Estate of Robert Hastings Hitchcock v Goldspan Investments Pty Ltd [2021] WASCA 205, as a useful summary, with respect to s 18 of the ACL principles. There the Court stated the following:
“[405]Those principles are well established. The question whether conduct is misleading or deceptive, or is likely to mislead or deceive, is a question of fact. Characterisation is a task that generally requires consideration of whether the impugned conduct, viewed as a whole, has a tendency or lead a person into error. Characterisation of conduct as misleading or deceptive, or as likely to mislead or deceive, thus involves consideration of a notional cause and effect relationship between the conduct and the state of mind of the relevant person or class of persons. It is an objective question that the court must determine for itself.
[406]In undertaking the characterisation task, the court’s role is to examine the relevant course of conduct as a whole. It is determined by reference to the alleged conduct in light of all of the relevant surrounding facts, circumstances and context.
[407]As a general proposition, the prohibition on misleading or deceptive conduct in trade and commerce does not require a party to commercial negotiations to volunteer information which will be of assistance to the decision making of the other party. Nor does it impose on a party an obligation to volunteer information in order to avoid the consequences of the careless disregard, for its own interests, of another party of equal bargaining power and competence.
[408]However, non-disclosure of information may constitute misleading or deceptive conduct in some circumstances. Unless the circumstances are such as to give rise to the reasonable expectation that if some relevant fact exists it would be disclosed, mere silence will not support an inference that the fact that does not exist. To invoke the existence of a reasonable expectation that if a fact exists it will be disclosed is to do no more than direct attention to the effect or likely effect of non-disclosure, unmediated by antecedent erroneous assumptions or beliefs, or high moral expectations held by one person of another which exceed the requirements of the general law and the prohibition imposed by the statute.
[409]The effect of any relevant statements or actions, or any silence or inaction, occurring in the context of a single course of conduct must be deduced from the whole course of conduct. The state of knowledge of the person to whom the conduct is directed may be relevant, at least in so far as it relates to the content and circumstances of the conduct. In a case of alleged misleading and deceptive conduct by one party vis a vis another individual party, it will be necessary to consider the conduct of the former, bearing in mind what matters of fact each knew about the other as a result of the nature of their dealings and the conversations between them, or which each may be taken to have known. The existence of common assumptions and practices established between the parties or prevailing in the particular profession, trade or industry in which they carry on business, may also be relevant.
[410]In determining an action for misleading or deceptive conduct, it is necessary to first identify contravening conduct and then to identify a causal connection between that conduct and the loss and damage allegedly suffered. However, there may be practical overlaps in the resolution of those logically distinct questions. The characterisation of conduct may involve assessment of its notional effects, judged by reference to its context. The same contextual factors may play a role in determining causation. Determination of the causation of loss or damage may require account to be taken of subjective factors relating to a particular person’s reaction to conduct found to be misleading or deceptive or likely to mislead or deceive.”
It is convenient to restate the asserted representations pleaded on behalf of the Shearers, namely, that in about late 2019 and early 2020, Super Start and TBSA (through Mr Kumar) said that:
(a)Super Start and TBSA were each substantial and reputable businesses and supplied quality Super Start batteries which could be sold at a profit;
(b)By setting up business as a local distributor outlet for the Super Start and TBSA, the Shearers could set up a business in Mareeba and Cairns, and make a profit;
(c)Super Start and TBSA would support the Shearers in and about the setup and conduct of the business and provide quality stock on credit terms, meet valid warranty claims and support business through Mr Kumar.[18]
[18]Counterclaim, [6].
Although Mr Shearer’s evidence in chief pointed towards the representations[19], it was not the subject of significant contest at trial. That is probably because Mr Kumar accepted the representations that he made and provided an explanation as to their truth.[20]
[19]First affidavit of Mr Shawn Shearer [16].
[20]Affidavit of Mr Kumar [39]-[41].
Not only did Mr Kumar give evidence, but Mr Trigas gave evidence that the representations around Super Start and TBSA, namely that each was a substantial and reputable business and that each supplied quality Super Start batteries which could be sold at profit, were true. For instance, Mr Trigas said, that since 2002, he has expanded the operations of Super Start throughout Australia and has built a strong brand and reputation for Super Start in the industry. Since 2011, he expanded the operations of TBSA throughout Far North Queensland with a view to building a brand reputation. Therefore, there were reasonable grounds for making the representations.
There was insufficient evidence led on behalf of the Shearers, for me to safely act upon, to find that the representations were, in fact, false or misleading. When viewed objectively, the representations as pleaded were broad, invited undue speculation and lacked clarity or detail. For example, it is unclear to me the precise nature, quality, defect or otherwise of the batteries; the extent of the profit apparently identified to the Shearers; or their claim about the extent to which Mr Kumar would provide his support to assist in the business setup of the Shearers’ business. These matters were lacking and, to me, were not apparent at trial. I will expand further on the weaknesses in the Shearers’ claims later in these Reasons. Also, I note, as part of the assertion that the batteries were somehow unsatisfactory to the Shearers, that the Shearers were aware that the stock initially was going to be supplied on a consignment basis and Mr Shearer prepared the purchase orders to BKN.[21]
[21]See evidence of Noeleen Shearer who worked in the Mareeba store at [19] and T3-19.
The evidence led on behalf of the Shearers can be contrasted to the plausible evidence of Mr Trigas as to the batteries and the operations of Super Start and TBSA. He gave evidence about the size and nature of each business and provided satisfactory details of the relevant testing and quality assurance regime that was employed at the time of manufacture and on arrival of the stock in Australia. In essence, Mr Trigas identified that when batteries were imported, they were generally shipped to Super Start’s warehouse in Sydney where the quality testing procedure was as follows:
(a)each pallet of batteries arrives with an information sheet from the manufacturer;
(b)that information sheet is used to identify the order number, the model/part numbers on the pallet, the quantity within the pallet and the pallet number in the order;
(c)an average of four batteries from each pallet is randomly selected to undergo quality control testing. If any issues are identified among those randomly selected (for instance a low charge or no charge at all) then:
(i)each battery on the pallet will be tested; and
(ii)each battery would be recharged to full capacity and stored for a week before they recommence the testing process of the batteries on that pallet;
(d)the arrival date is handwritten onto the information sheet;
(e)the weight of one battery is handwritten on the information sheet where the pallet contains only one model/part number. Where there are more than one model/part number on the pallet, the weight of one battery from each of the model/part numbers is recorded;
(f)the batteries are then tested for voltage, Cold Cranking Amps (“CCA”), and Internal Resistance;
(g)the CCA recorded is then handwritten on the information sheet; and
(h)the date of the battery test is also handwritten on the information sheet.
Mr Trigas stated that once this process was completed, the pallet test was displayed on each pallet to show that they passed the quality control testing and then the product would be shipped to customers. Under Mr Trigas’ direction and guidelines, Super Start and TBSA staff were aware that they were not to unpack or distribute any stock that had not passed quality control testing. Until the batteries were sold, all batteries were routinely charged and retested to prevent the quality and life of the battery from diminishing. Mr Trigas instructed and trained all of his staff in the process of checking and charging batteries. It was also the responsibility of any agents who held stock on consignment that they be responsible for the routine charging and testing of batteries.
Both Mr Trigas and Mr Kumar gave evidence about the shelf life and proper maintenance of batteries and about the warranty scheme. For instance, Mr Kumar said that he would receive warranty claims/battery test sheets from either Shawn Shearer or Noelene Shearer for his review. When received, Mr Kumar would test the batteries himself and complete the weekly or monthly test sheet. He would send the completed test sheets by email to an employee at Super Start’s head office (who would review the warranties and process any necessary credits). Mr Kumar produced an example of the weekly and monthly test sheets that he completed. He explained that on arrival at Super Start or TBSA, each battery was again tested and assessed in order to determine if a warranty claim should be accepted. He always actioned the warranty claims in a timely manner, either on a weekly or monthly basis depending on the number of batteries coming through. Once the credits were received, he would forward those to Noelene Shearer for her to apply on the Shearers’ computer system as he did not have access to it. He denied that he failed to process the warranty claims on time and said that they were always done as soon as the quality tests were received from either Shawn Shearer or Noelene Shearer. I accept this evidence. A replacement battery or warranty credit would then be promptly issued. He also identified that as pertaining to the Shearers, the warranty claim process depended on the location, namely:
(a)If the batteries came into the Shearers’ Cairns store (where he was principally located), he would test them and determine if there was a manufacturing fault. If there was a manufacturing fault, Mr Kumar would then replace the battery for the customer and send the defective battery to Super Start for processing of the credit.
(b)For TBSA Mareeba, Shawn Shearer or Noelene Shearer would test the batteries and send the batteries to the Cairns store and it was their responsibility to replace the batteries. Cairns would apply for credits and Mr Kumar processed this paperwork. The batteries would be held there until a full pallet of batteries was received and the stock would be sent to the warehouse in Townsville.
Mr Kumar also indicated that not all warranty claims were accepted as only manufacturing faults were covered (as opposed to damage, user error or misuse). Credit to a reseller’s account was entered within a timely manner provided the warranty claim was accepted. Once a warranty claim was accepted, an adjustment note was issued by Super Start. The adjustment note would then need to be entered into the reseller’s accounting system. All resellers were to accept warranty claims for Super Start batteries purchased at other stores in order to provide good customer service. The reseller would receive credit for these warranty claims in the same manner as they would with stock purchased in their store.
I considered that both Mr Trigas’ evidence and Mr Kumar’s evidence withstood cross examination, and I am prepared to accept their evidence. The weight of this evidence in my view patently outweighs the evidence led on the Shearers’ behalf.
I also note that the Shearers indicated the Mareeba store was profitable. Clearly it was profitable enough because the Shearers were willing to open a second store in Cairns in early 2020 and Mr Shearer was also sufficiently confident to leave his position at the local council in November 2020 to work fulltime in his business. It was not, as was suggested on the Shearers’ behalf, that when BKN failed, the Shearers were ‘encouraged’ to open their Cairns store. My impression of the evidence was that there was no hint of any pressure or coercion having been applied to them by Super Start or TBSA, through Mr Kumar. It appeared to have been an entirely voluntary decision.

No evidence was led on behalf of the Shearers regarding the profitability or lack thereof (and if evidence was led, then I was not sufficiently apprised of it at trial in order to accept its veracity). For instance, there was no accounting report furnished to corroborate the Shearers’ claims about a lack of profitability. It therefore makes it difficult for me to find in favour of the Shearers such that representations regarding profitability were misleading or false given the evidentiary burden did not shift to Super Start or TBSA. On the contrary, Mr Kumar at least identified the extent of mark ups associated with the batteries, which he said, and I accept, the purpose was so that the Shearers could have an understanding of the profit they may be able to make.
Another difficulty for the Shearers was that there was insufficient evidence led on their behalf about the warranty claims and no particulars were provided of any incorrectly rejected warranty claims. Their dissatisfaction with any rejections of warranty claims granted does not render the representation untrue.
Evidence was also led from Mr John Altamirano, for Super Start and TBSA, with respect to warranties. His evidence included how warranties were met, the limitations on warranty claims, and the circumstances when warranty claims would not be met. His evidence also included and demonstrated, without sufficient challenge, that warranty claims were in fact met in some instances (and the claims that were not met). Importantly, as for the refusal, he gave explanations for any refusals. Further, the evidence led on behalf of Mr Shearer regarding his understanding of the warranty process and the claims process seemed to me to be consistent with that put forward not only by Mr Altamirano, but also Mr Kumar. I am satisfied there was a process for valid warranty claims. Some warranties were honoured for the Shearers. Mr Altamirano gave evidence that a Super Start representative would receive the weekly or monthly claim reports, together with the batteries, for testing on Super Start’s behalf. Tencia was the software used by Super Start to manage warranty claims. Upon receipt of the Super Start representative’s completed warranty sheet with corresponding test results, the data was encoded into an Excel file which allowed Mr Altamirano to check the purchases by that customer and warranty claims submitted. He reviewed the monthly or weekly warranty claims as completed by the sales representatives of the Shearers. All claims were reviewed using relevant guidelines.[22] After reviewing the warranty claims and test results, Mr Altamirano would make an assessment and issue credit notes or an adjusted tax invoice for those which were showing a manufacturing fault and were within the warranty period. If an eligible claim was made, a credit note was raised within 14 days through the software Tencia. Mr Altamirano produced a copy of all credit notes issued to the Shearers applied in reduction of their account. He indicated that if the batteries did not meet the warranty criteria, he made comments on the relevant credit notes as to why it was rejected. All the warranty claims received by the Shearers were assessed and completed in a timely manner, usually within 14 days. Mr Altamirano was not aware of any outstanding warranty claims by the Shearers after having reviewed the material in Tencia in order to check if there were any outstanding warranty claims in Super Start’s system.
[22]See paragraphs [9] – [15] of Mr Altamirano’s affidavit.
An uncontroversial fact is that Mr Kumar supported, to a significant extent, the establishment of the Shearers’ business such that it is difficult to see how the set up, conduct and/or business support was, on balance, false and misleading. Mr Kumar attended the stores. He worked in the Mareeba store during COVID-19, as well as the Cairns store daily from when it first opened and well into 2021. I did not form the impression that he charged excessively for his services (or that Super Start or TBSA did). I therefore reject the contention raised on the Shearers’ behalf that Mr Kumar “took advantage…as a result of the trust they reposed” in him.
I accept, as was submitted by Super Start and TBSA, that the representations relied upon on behalf of the Shearers had a “flavour of puffery and posturing”. That was part and parcel of ordinary, routine business negotiations. Just because there may have been “puffery and posturing”, does not render the representations false, deceptive or misleading.
It was also argued on the Shearers’ behalf that the representations were false and misleading in that:
(a)the goods sold and delivered by Super Start and TBSA were not quality batteries, were falsely branded and described, were defective and unsatisfactory as pleaded in paragraph (7)(a) – 7(d) of the Defence;
(b)Super Start had a dispute with BKN and the BKN dispute was not disclosed;
(c)Super Start delivered old, second-hand and returned stock from customers of BKN;
(d)BKN warranty claims were honoured by the Shearers;
(e)Mr Kumar used his access to accounts and operating systems for personal advantage and advantage of Super Start and TBSA.[23]
[23]Counterclaim, [14].
My assessment of the evidence led at trial was that those allegations were not sufficiently established and were otherwise lacking, such that I am not persuaded that that any of the representations relied upon were false or misleading. That is because of the following features:
(a)It is unclear on my assessment the true extent to which the batteries were said to be not of “quality”, on an objective basis, or how the true extent to which the batteries were said to be “falsely or incorrectly labelled”, branded and described or otherwise defective, deficient and unsatisfactory. This is particularly so given the period of time alleged is between February 2020 and October 2021. I presume that out of all of the batteries supplied during the period claimed, there were some, albeit undefined, that were quality batteries, or not defective or not falsely labelled as claimed on the Shearers’ behalf.
(b)On Mr Kumar’s evidence, all batteries were fresh stored and were not classified as old. In fact, Super Start and TBSA did not have any batteries that were either “new” or “old”. The batteries are “fresh stored”. In other words:
“once the batteries are sold to a customer – say, for example, if my customer in Townsville sells a battery to an end user, the warranty is given from that time. Not from the time the battery was shipped from China. It could have been two years for the battery to reach Townsville to be sold. So in BKN’s case, all batteries that he had as far as new, they were stocks, fresh stocks, new stocks that we could sell. And we checked them then by checking the voltage of the batteries.”[24]
[24]T4-56.
(c)Mr Trigas’s evidence was to the same effect. In fact, his description of the batteries as being “new” or “factory seconds” is consistent with the BKN stock which was provided to the Shearers.[25]
(d)Further, Mr Shearer himself gave evidence that warranty periods were from the date of purchase by a customer and not from the date of supply to the shop, so that date of manufacture and length of storage prior to sale is irrelevant to suitability for sale.
(e)According to Mrs Noeleen Shearer, some old and sulphated batteries were received into the Mareeba store, but also that they were then charged and were sold or they were the subject of warranty claims and Mr Shearer checked the warranty claims. No particulars, however, were identified on her behalf.
(f)Goods were sold at a discount by Super Start to the Shearers, and, on deferred payment terms. Relevantly, the evidence from Mr Kumar, of which I accept, was that batteries were supplied on discounted terms and on deferred payment terms in July 2020 and many of them were sold in advance of the date that Super Start and TBSA sought payment. There was no evidence that the stock was not sold and no particulars as to which were not sold (if any) had been provided.
(g)Further, as has been identified to me on behalf of Super Start and TBSA, in all of the documents regarding a claim as to the acceptance of the goods by email by Mr Shearer on 8 December 2020 that it was likely that Mr Kumar sent the email (which Mr Kumar himself refutes). There is nothing from Mr Shearer contemporaneously supporting that he did not send the email or authorise it. Even his email to Ms Sarnelli of September 2021 (when payment was pressed) did not state that he did not send the 8 December 2020 email or authorise its sending. He asked questions about it in the email of September 2021 to Ms Sarnelli, but never made it known that he did not send it or authorise it. Further, as it transpired, there was no dispute that the batteries were supplied and were paid for ultimately by the Shearers.
(h)As to the branding and labels on batteries, according to the evidence of Mr Shearer, the incorrect labels were clipped off and the batteries were placed on the shelf for sale.
(i)Regarding maintenance, charging and shelf life of batteries, there was no evidence led on behalf of the Shearers to establish that they have a claim in respect of any losses with respect to the supply of “old stock” or as to the quality of supply.[26]
(j)Regarding the dispute with BKN, Mr Shearer’s evidence was that he was told that BKN was not paying its account with Super Start and TBSA. This was the basis of the dispute between Super Start, TBSA and BKN. It is not a matter that affects the truth and falsity of any representations and was not a matter that damaged the Shearers’ business, but rather it created the opportunity for the Shearers to open the Cairns store and act as the local distributor. It is not a matter which elevated it to an obligation to disclose to the Shearers. I therefore reject the assertion made on the Shearers’ behalf that rather than honestly deal with the Shearers about that circumstance, Mr Kumar was “opportunistic, in order to support his employer and principal, by inducing” the Shearers into committing to a new store in Cairns.
(k)Regarding the assertion that Super Start and TBSA, by Mr Kumar, intended to (and did) refer customers of BKN with returns or warranty claims to the Shearers, notwithstanding that the Shearers had not sold the relevant stock to the customers of BKN, I accept Mr Kumar’s evidence regarding the process for accepting warranty claims from sales in other stores. Further, there was no pleaded representation about the warranty being limited to batteries sold by the Shearers. Therefore, it could not be viewed as false, misleading or otherwise deceptive.
(l)There was no satisfactory evidence (aside from speculation) as to any improper use of the systems by Mr Kumar (if in fact such conduct occurred), let alone that the representations were misleading or deceptive or likely to mislead or deceive. The uncontroversial evidence from the Shearers was that Mr Kumar had limited access to the Xero accounting system and had no access to the bank accounts. Only the Shearers had access to the bank accounts. In any event, the evidence was not compelling because it was only raised after a dispute with Super Start and TBSA had arisen and does not establish the falsity of any of the representations as asserted.
[25]Exhibit 19.
[26]The issue with BKN stocks and Bruno’s Batteries are two isolated supplies of batteries which cannot go to the issue of quality of supply as a whole across the length of the business dealings.
When viewed in light of the surrounding facts, circumstance and context, the relevant course of conduct by Mr Kumar, Super Start and TBSA, in my assessment does not, on balance, lead to a finding of false, misleading or deceptive conduct.
It has also been contended on the Shearers’ behalf that Super Start “contrary to the representations and in breach of the agreement…for the supply of goods and services” engaged in conduct which was misleading and deceptive or likely to mislead or deceive.[27] Again, for the reasons given above, I am not of the view, nor have I been satisfied, that there was misleading or deceptive conduct by Mr Kumar, Super Start or TBSA.
[27]Counterclaim, [15] – [16].
Additionally, there was insufficient evidence led on behalf of the Shearers to support any finding as to causation. It had not been pleaded on the Shearers’ behalf (nor sufficient evidence given) to demonstrate the necessary causal link between the alleged conduct in breach of s 18 of the ACL and losses.
Also, Mr Shearer gave evidence that he and his wife trusted Mr Kumar and through the representations, the Shearers opened the Mareeba store. He also gave evidence that because of his dealings with Mr Kumar, they suffered loss and damage. Yet minimal evidence/material (if anything) was led to adequately demonstrate how the losses have flowed from the alleged misleading and deceptive conduct (if in fact I found that such conduct arose in the circumstances). I accept, as has been submitted on behalf of Super Start and TBSA, that no evidence has been led which could support a finding of the critical causal connection between the alleged conduct in breach of s 18 and the alleged loss and damage claimed on the Shearers’ behalf. Causation for the misleading and deceptive conduct has not been proven.
Furthermore, the evidence regarding the loss and damage allegedly sustained was lacking. For example, a broad claim regarding $100,000 for loss of profits was asserted on the Shearers’ behalf. No satisfactory evidence was led to demonstrate how a quantification for this amount could be made, let alone inferred. The same could also be said with respect to the claim for “missing stock” or for “cash not banked”. There were no contemporaneous documents led in support of such amounts.
Regarding the claim for $29,152.59 for costs of stock invoiced to third parties (Whelan, Cairns Batteries, Insane and Agric), there is the evidence from Mr Kumar, which I accept, that explained the commercial relationship in each of these instances as between the Shearers and each of the parties (other than Cairns Batteries). There was evidence, which I am prepared to accept, that documents with respect to Cairns Batteries had no connection to the Shearers.[28] As to the claim regarding Insane, Mr Shearer accepted that he was aware of the credit granted to Mr Challacombe and continued dealing with him. There is also no documentary evidence supporting the claim on behalf of the Shearers for costs of stock invoiced to third parties.
[28]T4-70.
Further, the claims against third parties held by the Shearers are a matter for them in the conduct of their own businesses and are not, in my view, losses that should be attributed to Super Start and TBSA and have no connection to the alleged breach of s 18 of the ACL.
Claims have been made on behalf of the Shearers for “warranty claims not met” in the amount of $41,891.53 and “losses incurred by meeting BKN claims and for receiving old, second-hand stock” in the amount for $79,343.72. To support those amounts, a spreadsheet was prepared by Mr Shearer in 2022 (a time after the relationship between the parties had broken down). There was no evidence led on the Shearers’ behalf about how it was prepared or what documents were relied upon in order to prepare it. I am unable to act on this information. Mr Shearer accepted under cross-examination that some of the claims had been previously rejected as warranty claims, but he included them in the spreadsheet anyway with no evidence of any independent testing or other reasons for their re-inclusion.[29] Again, there is no discernment of what warranty claims were presented and rejected, and, no evidence as to the improper rejection (other than Mr Shearer’s own opinion). I am not confident on acting upon Mr Shearer’s evidence alone. It is not sufficient to contend on the Shearers’ behalf that “because of the shenanigans and manipulations, primarily as a result of conduct by [Mr] Kumar, there was no realistic basis to conduct a forensic examination of the accounts to calculate a precise accounting outcome of loss and damage suffered by the [Shearers], caused by [Super Start] and TBSA’s treatment of returns and warranty claims. Instead, the evidence shows that doing the best he is able, Shawn Shearer prepared a spreadsheet of warranty claims and the consequences which flow”.
[29]T1-66.
On the contrary, there was evidence from Mr Altamirano as to the process and the handling of warranty claims and there was no challenge made as to this evidence, sufficient to cast doubt upon the handling of warranty claims by Super Start and TBSA, in the way sought to be advanced by the Shearers. The reasonable inference is that all proper warranty claims were accepted. Also, regarding these amounts, there also seemed to be doubling up with respect to losses in respect of, in some instances, the same batteries twice in that the Shearers sought both the purchase price and the sales price from Super Start and TBSA. On balance, I have not been persuaded that there was a connection between any of these claimed losses and the alleged misleading and deceptive conduct.
A claim for $102,787 has been made for missing stock. The claim was said to be demonstrated through a spreadsheet Mr Shearer prepared. It related to stock arising at the Mackay Trade Show. To me, Super Start and TBSA have satisfactorily explained through its evidence that this issue arises from a ‘misunderstanding of the emails in evidence’.[30] Mr Kumar has explained the email traffic and the process of delivery of stocks to the Mareeba Trade Show. Mr Shearer accepted in evidence that, for example, invoice 501417 for show stock was either for the Cairns or Mareeba Trade Show, but he could not be sure which. In either case, he was at each of these trade shows to sell the show stock. It was not contentious that Mr Shearer and Mr Kumar were present at the Mareeba Trade Show and were present for the sale of products and for the taking of cash proceeds in respect of sales. Mr Shearer was given the cash from the sales. The evidence is that he took it home so that there is no loss or damage related to this stock. Mr Kumar’s evidence, which I accept, was that the stock was sold, and any profits generated were for the benefit of the Shearers’ business. There was no dispute between the parties about an improper sale of the stock at the Mackay Trade Show. Further, there was no evidence from Mr Shearer about how any stock was said to be missing. For example, there was no evidence of serial numbers of stock, or stock which was received and paid for, or about how or why the stock was said to be missing. I find the evidence led on behalf of the Shearers’ lacking.
[30]Exhibit 13.
A feature highlighted by Super Start and TBSA, which is not conclusive on its own, was the fact that there was documentary evidence that the Shearers had still been selling battery stock over the Facebook medium after the business was closed down.[31]
[31]Exhibit 5.
In the end however, I have not been persuaded with the evidence led to find in favour of the Shearers for the $102,787, or at all, and nor am I persuaded by any satisfactory evidence led to find a causal connection to the representations.
As for the claim for $5,978 which was said to be paid to TBSA under protest, this related to a New South Wales claim which cannot now be relitigated. Further, it was not shown to me any causal connection to the claim for misleading and deceptive conduct.
Regarding the other matters sought to be claimed on behalf of the Shearers (i.e. $5,323.31 for cash not banked and $1,682.86 for Mr Kumar’s payments), there was no evidence to support these unsubstantiated allegations (through, for example, cash reconciliations or contemporaneous complaints), and, as for the latter claim of $1,682.86, I considered that Mr Kumar was able to provide sufficient details of some matters.[32] In any event, these personal dealings provide no basis for establishing liability against Super Start and TBSA, nor was it established that there has been a causal connection to the claim for any misleading and deceptive conduct (if in fact I found it to be the case).
[32]See for example T5-73 to T5-75.

The end result is that the evidence led on behalf of the Shearers at trial was lacking and deficient. Allegations were made by them against Super Start and TBSA, but on the whole, there was no independent evidence to corroborate the evidence given by the Shearers themselves (which would lead me to support any findings that Super Start and TBSA, by Mr Kumar, engaged in trade or commerce which was misleading or deceptive or otherwise likely to mislead or deceive) and resulted in loss and damage. I was persuaded by the reasonably cogent evidence given by Super Start and TBSA to militate against a finding of misleading and deceptive conduct. The evidence given by Cameron De Lai and Bhaskaran Nair did not assist the Shearers demonstrating the acceptance of the counterclaim. I reject the submission advanced on behalf of the Shearers that “the evidence Mr Nair and Mr Di Lai respectively about the Shearers’ predecessors in Cairns (BKN) and Mareeba (Bruno’s Batteries) pointed to the histories of problems concerning their business undertakings and demonstrated that the issues in this dispute were recurring themes relating to misconduct, dishonesty, misleading and deceptive conduct, failures to honour warranties and other breaches of contract by Super Start and TBSA which portrayed the reality of a dysfunctional and deeply flawed ‘system’ or network”. I formed the impression that the Shearers, whilst eager to have a successful business, were unable to do so and unfortunately the reality did not fit within their plans and aspirations. The business did not prove as successful for them. The fact is, however, that their business endeavours cannot be attributed the actions of Super Start or TBSA. The counterclaim has not been established and must be dismissed.

Super Start’s Claim against the Shearers

That then leaves Super Start’s claim which involves a claim in contract seeking payment of outstanding invoices. The essential parts of the claim have been admitted by the Shearers. In particular, the Shearers have admitted that they:
(a)signed a credit agreement in the form of a credit application with the Super Start (“the credit agreement”);
(b)entered into a deed of guarantee and indemnity (“the guarantee”);
(c)received goods supplied on credit from Super Start; and,
(d)have not been paid for those goods.[33]
[33]Amended Defence, [2(a)], [3(a)] and [4(a)].
The invoices pleaded in the statement of claim are admitted as the invoices which have not been paid.
The Shearers seek to raise a defence based upon the implied terms of sale pursuant to s 17 of the Sale of Goods Act 1896 that the batteries supplied by Super Start were not of merchantable quality and fit for purpose. Reliance has also been placed on their behalf upon s 23 of the ACL, alleging that the terms of the credit agreement and the deed of guarantee and indemnity were unfair and therefore void.[34]
[34]Especially clause 7 of the terms and conditions and the charging clause contained in the deed of guarantee and indemnity.
Relevantly, clause 7 of the terms and conditions stated the following:
“Claims:
7.1.Subject to clause 2.2 herein, Super Start shall not be liable for any loss or damage whatsoever and howsoever arising whether direct, indirect or consequential or in respect of any claim whenever and however made for any loss or damage, deterioration, deficiency or other fault or harm in the goods manufactured, work executed or services provided on or behalf of any arrangement with Super Start or occasioned to [the Shearers] or any third or other parties to their property or interest and whether or not due to negligence of [Super Start], its servers or agents.
7.2As soon as any of the facts or matters which form any part of any claim or complaint whatsoever become known to [the Shearers], [the Shearers] shall within fourteen days, notify Super Start in writing of same.
7.3Super Start shall not be liable in any circumstances for any:
(i)defects or damages caused in whole or in part by misuse, abuse, neglect, electrical or other overhand non-suitable lubricant, improper installation or repair or variation (other than by/or accident);
(ii)any transport freight charges, installation or removal, labour or other costs;
(iii)defects in goods not manufactured by it, but will endeavour to pass on to [the Shearers] the benefit of any claim by Super Start and accepted by the manufacturer of such goods under a warranty given by the manufacturer of such goods provided that nothing contained in this subparagraph limited the rights of [the Shearers] against Super Start pursuant to the Trade Practices Act 1974; and
(iv)technical advice or assistance given or rendered by Super Start] to [the Shearers] or not in connection with the manufacturer construction or supply of goods for or to [the Shearers] provided always [Super Start] has rendered such service with due care and skill and that any material supplied in connection with those services was reasonably fit for the purpose for which they are supplied;
7.4The exemptions, limitations, terms and conditions in these terms and conditions shall apply whether or not the loss or damage caused by negligence or actions constituting fundamental breach of the contract.”
Further, the material terms of the guarantee, as pleaded in paragraph [7] of the statement of claim, were as follows:
(a)Pursuant to clause 1 of the guarantee, the Shearers agreed to be answerable to Super Start for the due payment by the Business of all monies now or time to time hereafter, owing to Super Start on any account or any manner whatsoever by the Business either directly or indirectly and either alone or jointly with any other person firm and/or corporation, and including but without limiting the generality of the foregoing any interest accruing on any monies owing or unpaid and any legal costs and disbursements incurred by the Super Start in enforcing payment.
(b)Pursuant to clause 2 of the guarantee, the guarantee was a continuing guarantee to Super Start for all monies which are now or may from time to time be owing or remain unpaid.
(c)Pursuant to clause 9 of the guarantee, the Shearers agreed to charge with payment of any indebtedness due herein to Super Start all beneficial interest (freehold and leasehold) in land and personal property held now or in the future by the Shearers.
It has been pleaded on the Shearers’ behalf that, as a consequence of the breach of the implied terms, the Shearers paid for all goods sold and delivered which satisfied the implied terms so that there was no amount due and owing.[35]
[35]An alternative was pleaded, namely that there ought to be a set off between any amounts owed between the parties, but because the counterclaim is dismissed it is unnecessary to consider any set off.
A series of allegations were made on the Shearers’ behalf, namely the following:
(a)The guarantee signed by them was not required because they were liable to pay amounts to Super Start in their own right pursuant to the terms and conditions.
(b)Clause 7 of the credit agreement purports to exonerate Super Start from liability.
(c)Each of the terms and conditions in the credit agreement and the guarantee were a small business contract within s 23 of the ACL and were unfair, overreaching and unduly onerous.
(d)The equitable charge on property contained in the guarantee was unnecessary because Super Start was sufficiently protected by the personal liability of the Shearers.
(e)There was a significant imbalance between the parties because of clause 7 of the credit agreement and the charging clause contained in the guarantee.
(f)Application of and reliance on the terms and conditions of the credit agreement and guarantee caused financial and other detriment to the Shearers.
The allegations result in the pleading that clause 7 of the terms and conditions and the charging clause in the guarantee are unfair and are void pursuant to s 23 of the ACL.
Section 23 of the ACL provides as follows:
“23Unfair terms of consumer contracts and small business contracts
(1)A term of a consumer contract or small business contract is void if:
(a)     the term is unfair; and
(b)     the contract is a standard form contract.
(2)The contract continues to bind the parties if it is capable of operating without the unfair term.
(3)A consumer contract is a contract for:
(a)     a supply of goods or services; or
(b)     a sale or grant of an interest in land;
to an individual whose acquisition of the goods, services or interest is wholly or predominantly for personal, domestic or household use or consumption.
(4)A contract is a small business contract if:
(a)     the contract is for a supply of goods or services, or a sale or grant of an interest in land; and
(b)     at the time the contract is entered into, at least one party to the contract is a business that employs fewer than 20 persons; and
(c)     either of the following applies:
(i)the upfront price payable under the contract does not exceed $300,000;
(ii)the contract has a duration of more than 12 months and the upfront price payable under the contract does not exceed $1,000,000.
(5)In counting the persons employed by a business for the purposes of paragraph (4)(b), a casual employee is not to be counted unless he or she is employed by the business on a regular and systematic basis.”
The relevant time to assess the terms of the contract for the purposes of s 23 is the date of the contract. Beech J in Dialogue Consulting v Instagram [2020] FCA 1846 at [322] stated:
“… this regime is to be applied carefully and its text is not to be glossed over with moralistic sentiment. Further, the term “unfair” is not to be inflated with imprecision or subjectivity. Section 24(1) clearly sets out the three factors which cumulatively must be satisfied for a term to be “unfair”. But there is no scope for interlard other feel good factors or niceties in order to remedy any perceived disparity between the parties.”
Section 24 of the ACL provides as follows:
“24 Meaning of unfair
(1) A term of a consumer contract or small business contract is unfair if:
(a) it would cause a significant imbalance in the parties’ rights and obligations arising under the contract; and
(b) it is not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term; and
(c) it would cause detriment (whether financial or otherwise) to a party if it were to be applied or relied on.
(2) In determining whether a term of a contract is unfair under subsection (1), a court may take into account such matters as it thinks relevant, but must take into account the following:
(a)    the extent to which the term is transparent;
(b)     the contract as a whole.
(3) A term is transparent if the term is:
(a)    expressed in reasonably plain language; and
(b)     legible; and
(c)    presented clearly; and
(d)    readily available to any party affected by the term.
(4) For the purposes of subsection (1)(b), a term of a contract is presumed not to be reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term, unless that party proves otherwise.”
The three factors set out in s 24(1) of the ACL are as follows:
(a)the term would cause a significant imbalance in the parties’ rights and obligations arising under the contract; and
(b)it is not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the terms; and
(c)it would cause detriment (whether financial or otherwise) to a party if it were to be applied or relied upon.
Therefore, these matters must be satisfied before the Shearers are entitled to succeed with their defence.
Here, as has been highlighted to me by Super Start, the reality was that there was a supply on credit terms, and a form of security was required to support that credit. To me, that does not create a significant imbalance for the purposes of the legislation because it is not unusual, rare or uncommon, particularly in the context of commercial dealings between parties. Further, there was no evidence of any detriment of any kind adduced on the Shearers’ behalf to support a finding of unfairness under the ACL because:
(a)The Shearers were receiving supply from Super Start and only decided to sign these documents when they wished to access the supply of stock on credit terms.
(b)The charging clause was reasonably necessary to protect the legitimate interests of Super Start where Super Start was granting credit to the Shearers in a substantial amount. The contract as a whole operated to allow the Shearers to access credit initially at an amount of $25,000, and then $200,000.
(c)The language used in the charging clause was given in clear terms and was reasonably necessary for the provision of security. It could hardly be viewed as oppressive.
(d)There was no detriment created at the time of the entry into the contract. The only detriment alleged is the lodging of the caveat in the present instance. However, the caveat was subsequently removed. Therefore, any emphasis relied upon has no application to the present facts and it is irrelevant to consideration of the unfairness of the term where it could only arise after the date of the contract in that the charging clause did not operate to create a caveat over the property, but rather created an equitable charge which later gave a right to Super Start to lodge the caveat in respect of that equitable interest.
(e)The clause does not fit within any of the examples in s 25 of the ACL.
As to clause 7 of the terms and conditions, I agree with the submission advanced by Super Start that the clause was reasonably necessary to protect the legitimate interests of Super Start where it limits the liability of Super Start to its own products and reasonably limits liability by ensuring that product complaints are brought promptly. It was unclear to me on the evidence led on behalf of the Shearers how such a clause could be construed as unfair for the purposes of s 23, other than that there was a significant power imbalance. Here I have found there not to have been a significant power imbalance. There is also no evidence of any detriment caused by this clause. In the circumstances, I have not been persuaded of the application of the ACL sufficient to deem any unfairness.
Regarding the implied term arising under s 17 of the Sale of Goods Act 1896, that section provides as follows:
“Subject to the provisions of this Act and of any statute in that behalf, there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale, except as follows:
(a)     when the buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods are required, so as to show that the buyer relies on the seller’s skill or judgment, and the goods are of a description which it is in the course of the seller’s business to supply (whether the seller is the manufacturer or not), there is an implied condition that the goods shall be reasonably fit for such purpose;
(b)     however, in the case of a contract for the sale of a specified article under its patent or other trade name, there is no implied condition as to its fitness for any particular purpose;
(c)     when goods are bought by description from a seller who deals in goods of that description (whether the seller is the manufacturer or not) there is an implied condition that the goods shall be of merchantable quality;
(d)     however, if the buyer has examined the goods, there is no implied condition as regards defects which such examination ought to have revealed;
(e)     an implied warranty or condition as to quality or fitness for a particular purpose may be annexed by the usage of trade, if the usage is such as to bind both parties to the contract;
(f)     an express warranty or condition does not negative a warranty or condition implied by this Act unless inconsistent therewith.”
On a proper construction, there are no implied terms as to merchantable quality or fitness for purpose unless one of the subparagraphs apply. Here none of the subparagraphs apply, nor is there any pleading as to which subparagraph is applicable on the Shearers’ behalf. There was no pleading of material facts or evidence that would allow for any of those subparagraphs to be satisfied. There is no evidence about a disclosed purpose or as to the goods bought by description. I am not in a position to make any determination as to whether this section applies because of the way the matter was conducted at trial. No adequate defence has been shown to me.
Complaint was made about the batteries supplied and about how Mr Kumar conducted himself on behalf of Super Start. The allegations are:
(a)The initial stock of batteries sold was old and second-hand stock from customers of BKN.
(b)Stock sold and delivered to the Shearers was returned stock from customers of BKN and Bruno’s Batteries.
(c)Goods sold and delivered were not stock of Super Start, but was falsely labelled as goods of Super Start.
(d)Goods sold and delivered included out of date, flat, sulphated and unusable stock presented as new stock.
(e)Mr Kumar used access to the Shearers’ systems to enter account records of stock which was not received or delivered by Super Start and to transact dealings on the accounts of the Shearers.
(f)Mr Kumar used access to systems to record acceptance of discounts without authority.
(g)Mr Kumar failed to account to the Shearers for stock and sales for cash transactions not banked.
(h)Mr Kumar failed, neglected or refused to process warranty claims for defective stock.
(i)Super Start failed, neglected or refused to credit the Shearers for warranty claims and defective and undelivered stock.
I have addressed what I consider to be a sufficient number of these matters earlier when dealing with the counterclaim to reject the contentions raised by the Shearers.
Also, it is clear from the evidence that Super Start’s claim are for invoices dated from 1 March 2021 to 6 September 2021. On the Shearers’ behalf, complaints had been made about stock delivered well in advance of the invoices which have been sought by Super Start. They all relate to the initial stock provided which was at the Mareeba store when it opened in June 2019 or to stock delivered in or around July 2020. They cannot be used to support a defence to the allegations as to non-payment in the statement of claim.
In addition, clauses 7.1, 7.2 and 7.3 preclude the defence which has been agitated on behalf of the Shearers. The Shearers have no claim in respect of the goods which were delivered and accepted, and, where no complaint was made until after demands for payment of Super Start’s claimed invoices had been made, I am unable to accept the veracity of any complaint lodged on the Shearers’ behalf with respect to non-payment. It is in those circumstances that the defences relied upon on behalf of the Shearers have not been established by the evidence or at all and Super Start must succeed on its claim.

Conclusion

There is judgment for the plaintiff on its claim. The counterclaim is dismissed. Because moneys have been paid into court, I will hear from the parties as to the form of the order and costs.

CITATION:	Super Start Batteries Pty Ltd v Shearer & Anor [2023] QDC 241
PARTIES:	SUPER START BATTERIES PTY LTD ACN 101 683 694 (plaintiff) v REBECCA LEE SHEARER (first defendant) SHAWN DEAN SHEARER (second defendant) AND REBECCA LEE SHEARER AND SHAWN DEAN SHEARER (plaintiffs by counterclaim) v SUPER START BATTERIES PTY LTD ACN 101 683 694 (first defendant by counterclaim) THE BATTERY STORE AUSTRALIA PTY LTD ACN 147 781 431 (second defendant by counterclaim)
FILE NO/S:	3152/21
DIVISION:	Civil
PROCEEDING:	Trial
ORIGINATING COURT:	Brisbane
DELIVERED ON:	15 December 2023
DELIVERED AT:	Brisbane
HEARING DATE:	13-16 February, 29-30 May and 8 June 2023
JUDGE:	Jarro DCJ
ORDERS:	1. Judgment for the plaintiff. 2. The counterclaim is dismissed. 3. I will hear from the parties as to any consequential orders, including costs.
CATCHWORDS:	CONTRACTS – BREACH – DAMAGES – where the plaintiff (and first defendant by counterclaim) seeks payment of outstanding invoices – where the defendants (and plaintiffs by counterclaim) admits to entering into the contract, receiving the relevant goods and not making payment for those goods – where the defendants seek to raise the defence to the breach of contract under s 17 of the Sale of Goods Act 1896 and s 23 of the Australian Consumer Law under the Competition and Consumer Act 2010 – whether the credit agreement and the deed of guarantee were unfair and therefore void – whether the relevant goods were of merchantable quality and fit for purpose TRADE AND COMMERCE – COMPETITION, FAIR TRADING AND CONSUMER PROTECTION LEGISLATION – MISLEADING OR DECEPTIVE CONDUCT OR FALSE REPRESENTATIONS – where the plaintiffs by counterclaim allege that the defendants by counterclaim misled or deceived them in breach of s 18 of the Australian Consumer Law under the Competition and Consumer Act 2010 – where the plaintiffs by counterclaim have not specifically pleaded, but rely on s 29 of the ACL that the defendants by counterclaim made false or misleading representations Sale of Goods Act 1896, s 17 Australian Consumer Law, s 18, s 23, s 24, s 29, s 236 Dialogue Consulting v Instagram [2020] FCA 1846 Paula Susan Chappell as Executor of Estate of Robert Hastings Hitchcock v Goldspan Investments Pty Ltd [2021] WASCA 205 Invisalign Pty Ltd v Smiles Direct Club LLC [2023] FCA 395
COUNSEL:	P O’Brien for the plaintiff (and second defendant by counterclaim) D Kelly for the first and second defendants
SOLICITORS:	Enyo Lawyers for the plaintiff (and second defendant by counterclaim) William Roberts Lawyers for the first and second defendants