Transerve Pte Ltd v Blue Ridge WA Pty Ltd - [2015] FCA 953

FEDERAL COURT OF AUSTRALIA
Transerve Pte Ltd v Blue Ridge WA Pty Ltd [2015] FCA 953

Citation: Transerve Pte Ltd v Blue Ridge WA Pty Ltd [2015] FCA 953

Parties: TRANSERVE PTE LTD, PT MULYA SURYA and LEEMBRUGGEN BUTLER PTY LTD (ACN 153 055 513) v BLUE RIDGE WA PTY LTD (ACN 147 886 173) and ALAN NEIL MACKENZIE

File numbers: SAD 269 of 2012

Judges: BARKER J

Date of judgment: 28 August 2015

Catchwords:
CONSUMER LAW – whether second respondent made misleading or deceptive representations – personal liability of second respondent – second respondent not acting merely as corporate organ of first respondent – whether agency arrangements – pleaded representations not proved

CONSUMER LAW – whether second respondent engaged in unconscionable conduct – circumstances of termination of subcontract – whether agency arrangements – conduct motivated by commercial interests – not unconscionable

TORTS – whether second respondent intentionally interfered with contractual relations – second respondent understood first applicant to be in breach of subcontract –
second respondent did not intend to cause or induce first respondent to breach subcontract – second respondent did not make conduct his own

Legislation: Australian Consumer Law s 18, s 21, s 22, s 22(1), s 22(2), s 236
Competition and Consumer Act 2010 (Cth) Sch 2
Trade Practices Act 1974 (Cth) s 51AC, s 52

Cases cited:
Allphones Retail Pty Ltd v Hoy Mobile Pty Ltd (2009) 178 FCR 57; [2009] FCAFC 85
Australian Competition and Consumer Commission v Keshow [2005] ASAL 55-142; [2005] FCA 558
Australian Competition and Consumer Commission v Samton Holdings Pty Ltd (2002) 117 FCR 301; [2002] FCAFC 4
Australian Competition and Consumer Commission v Simply No-Knead Franchising Pty Ltd (2000) 104 FCR 253; [2000] FCA 1365
Australian Securities and Investments Commission v Narain (2008) 169 FCR 211; [2008] FCAFC 120
Australian Securities and Investments Commission v National Exchange Pty Ltd (2005) 148 FCR 132; [2005] FCAFC 226
Body Bronze International Pty Ltd v Fehcorp Pty Ltd (2011) 34 VR 536; [2011] VSCA 196
Cleary v Australian Co-Operative Foods Ltd (No 2) (1999) 32 ACSR 701; [1999] NSWSC 1062
Director of Consumer Affairs Victoria v Scully (2013) 303 ALR 168; [2013] VSCA 292
Finishing Services Pty Ltd v Lactos Fresh Pty Ltd [2006] FCAFC 177
Henderson v McSharer [2015] FCA 396
Houghton v Arms (2006) 225 CLR 553; [2006] HCA 59
Hurley v McDonald’s Australia Ltd (2000) ATPR 41-741; [1999] FCA 1728
Legione v Hateley (1983) 152 CLR 406
Matheson Engineers Pty Ltd v El Raghy (1992) 37 FCR 6
Monroe Topple and Associates Pty Ltd v Institute of Chartered Accountants in Australia (2002) 122 FCR 110; [2002] FCAFC 197
O’Brien v Dawson (1942) 66 CLR 18; [1942] HCA 8
Root Quality Pty Ltd v Root Control Technologies Pty Ltd (2000) 177 ALR 231; [2000] FCA 980
Tonta Home Loans Australia Pty Ltd v Tavares (2011) 15 BPR 29,699; [2011] NSWCA 389
Watson v Foxman (1995) 49 NSWLR 315
Yorke v Lucas (1985) 158 CLR 661; [1985] HCA 65

Standard Chartered Bank v Pakistan National Shipping Corp (No 2) [2003] 1 AC 959; [2002] UKHL 43

Date of hearing: 4-8 August 2014, 6-8 October 2014, 2 December 2014

Date of last further submissions requested by the Court: 11 December 2014

Place: Perth

Division: GENERAL DIVISION

Category: Catchwords

Number of paragraphs: 425

Counsel for the Applicants: Mr PJ Adams

Solicitor for the Applicants: DMAW Lawyers

Counsel for the Second Respondent: Mr AP Hershowitz

Solicitor for the Second Respondent: Granich Partners

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY

GENERAL DIVISION

SAD 269 of 2012

BETWEEN:
TRANSERVE PTE LTD
First Applicant

PT MULYA SURYA
Second Applicant

LEEMBRUGGEN BUTLER PTY LTD (ACN 153 055 513)
Third Applicant

AND:
BLUE RIDGE WA PTY LTD (ACN 147 886 173)
First Respondent

ALAN NEIL MACKENZIE
Second Respondent

JUDGE:

BARKER J

DATE OF ORDER:

28 AUGUST 2015

WHERE MADE:

PERTH

THE COURT ORDERS THAT:
1.The proceeding be dismissed.
2.The Court will hear from the parties as to any consequential orders and costs.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY

GENERAL DIVISION

SAD 269 of 2012

BETWEEN:
TRANSERVE PTE LTD
First Applicant

PT MULYA SURYA
Second Applicant

LEEMBRUGGEN BUTLER PTY LTD (ACN 153 055 513)
Third Applicant

AND:
BLUE RIDGE WA PTY LTD (ACN 147 886 173)
First Respondent

ALAN NEIL MACKENZIE
Second Respondent

JUDGE:

BARKER J

DATE:

28 AUGUST 2015

PLACE:

PERTH

REASONS FOR JUDGMENT

Sometimes it is best to start near the end.
On 29 March 2012, at a fourth and last site meeting at Surabaya in Indonesia, Mr Alan Mackenzie purported to terminate a subcontract that he, on behalf of Blue Ridge WA Pty Ltd, had earlier made with Transerve Pte Ltd to construct accommodation units for the Roy Hill mining project in Western Australia.
Subsequently, Blue Ridge constructed the required accommodation units for the mining project.
How these events came about is at the heart of the matters in issue in this proceeding.
In short, the applicants contend that in the course of termination of the subcontract and itself constructing the accommodation units, Blue Ridge “expropriated” the subcontract and thereby caused the applicants to suffer financial loss.
The applicants identify three central issues concerning Mr Mackenzie, in relation to their complaints, namely, whether Mr Mackenzie personally engaged in unconscionable conduct, or in misleading and deceptive conduct, or interfered with contractual relations.
As explained further below, because Blue Ridge went into liquidation prior to the trial of this proceeding, at trial Mr Mackenzie was the only respondent against whom the applicants sought relief.
Mr Mackenzie denies all claims against him, says Blue Ridge, by him, was entitled to terminate the subcontract, and says that at no time did he or Blue Ridge act unconscionably, or engage in misleading or deceptive conduct, or interfere with contractual relations.
On 20 December 2011, a little more than three months before the purported termination, Roy Hill awarded Blue Ridge the head contract for the design and supply of 476 accommodation units for the Roy Hill mining project, to be fabricated in three separable portions, the first being for 233 units.
On 22 December 2011, Roy Hill provided Blue Ridge with the layout requirements, which were forwarded by Blue Ridge to Mr Geoffrey Leembruggen at Leembruggen Butler Pty Ltd in Perth, Western Australia, which company at material times acted as Transerve’s agent. While not an officer of the company, Mr Leembruggen was authorised by Leembruggen Butler to represent it in all material dealings with Blue Ridge.
On 23 December 2011, Blue Ridge forwarded a copy of the notice of award provided by Roy Hill to Transerve in Singapore, and to Leembruggen Butler in Perth. The notice contained drawings, comments and handwritten amendments.
Confirmation of the award of the subcontract by Blue Ridge to Transerve and Leembruggen Butler followed soon after on 4 January 2012, with the formal subcontract executed on 16 January 2012 in favour of Transerve alone; as was always the intention.
The award of the subcontract followed dealings over more than two months between Blue Ridge, Leembruggen Butler and Transerve.
In October 2011, when Blue Ridge had been invited by Roy Hill to tender for the head contract, Mr Mackenzie met with Mr Leembruggen to discuss the project.
On 17 October 2011, Mr Mackenzie provided Mr Leembruggen and his daughter, Ms Natasha Butler, a director of Leembruggen Butler, with quotation drawings.
On 20 October 2011, Ms Butler emailed the pricing for four‑man, three‑man and two‑man units, based on the quotation drawings, to Mr Mackenzie.
On 24 October 2011, the Blue Ridge tender was accepted for consideration by Roy Hill.
By about 16 November 2011, Blue Ridge had requested that Mr Leembruggen provide a delivery schedule. Mr Leembruggen that day emailed to Mr Mackenzie a new quote for three‑man and four‑man units.
Mr Leembruggen had explained to Mr Mackenzie in the course of those dealings that Transerve would be the subcontracting party. On 5 December 2011, Ms Butler, Mr Leembruggen and Mr Robert Liu and Mr Baharudin Paiman of Transerve, met with Mr Mackenzie in Perth.
On 7 December 2011, Roy Hill notified Mr Mackenzie that bank guarantees would be required from Blue Ridge under the head contract, if awarded, and that the first progress payment under the head contract would be made upfront upon submission of the bank guarantees. In particular, Roy Hill told Blue Ridge that all bank guarantees under the head contract were to be issued by Blue Ridge.
That notification was also forwarded to Mr Leembruggen by Blue Ridge. It was understood at material times that the subcontract, if awarded, would be “back to back” with the head contract, reflecting the terms of the head contract, so that similar bank guarantees obligations would apply between the parties to the subcontract.
On 7 December 2011, Mr Leembruggen emailed Mr Mackenzie outlining Transerve’s financing arrangements for any subcontract through Bank DKI in Indonesia, and confirmed a final price of $73,000 for each of the four‑man units.
On 8 December 2011, Transerve confirmed the offer from Blue Ridge for a subcontract to manufacture and supply 233 accommodation units – being the first separable portion under the proposed subcontract.
By mid-December, Mr Mackenzie and Blue Ridge understood that PT Mulya Surya, an Indonesian company based in Surabaya, would be engaged by Transerve to manufacture and supply the units.
On 14 December 2011, Mulya provided a confirmation letter from Bank DKI to Mr Mackenzie confirming bank guarantees would be issued to Mulya for the purpose of satisfying Transerve’s obligations under any subcontract.
At this point a decision concerning the award by Roy Hill of the head contract was imminent.
On 14 December 2011, Mr Mackenzie for Blue Ridge received annexure Part A to the proposed head contract from Roy Hill, which he forwarded to Mr Leembruggen requesting that he sign off on it and explaining some additional engineering costs.
Mr Leembruggen that day confirmed to Mr Mackenzie that Transerve had suitably qualified personnel and that it would produce a product in accordance with the Building Code of Australia (BCA) and Australian Standards.
On 16 December 2011, Mr Mackenzie advised Mr Leembruggen, via email, that “Leembruggen Butler” (that is to say, Transerve) would get the project.
Then, on 20 December 2011, Roy Hill indicated it would award the head contract to Blue Ridge.
Following that, as explained above, on 22 December 2011, Roy Hill provided Blue Ridge with the layout requirements, which were forwarded by Blue Ridge to Mr Leembruggen the same day. On 23 December, Roy Hill sent the notice of award to Blue Ridge and Blue Ridge forwarded a copy of the notice of award, with drawings, comments and handwritten amendments, to Transerve.
There was much activity following these events, as one would expect, given that the contracts provided for the manufacture and supply of the first 50 units of the first separable portion of 233 units by 31 March 2012.
On 27 December 2011, Mr Mackenzie and Mr Philip Richardson, an employee of Blue Ridge, met with Mr Leembruggen.
On 31 December 2011, Mr Leembruggen again met with Mr Mackenzie and Mr Richardson. Mr Mackenzie was then about to go on holidays and thereafter was overseas until 21 January 2012. Mr Richardson was to be Blue Ridge’s contract manager in his absence. Further meetings followed, involving Mr Leembruggen, Ms Butler, Mr Richardson, and Mr Suharto of Mulya.
On 4 January 2012, Blue Ridge confirmed that Transerve had been appointed to manufacture and supply the units in accordance with the notice of award. While it stated in its written notice that both Transerve and Leembruggen Butler had been awarded the subcontract, it was understood, and later clarified, that Transerve was the sole contracting party.
By its notice dated 4 January 2012, from Mr Richardson of Blue Ridge, Blue Ridge advised:
This is to advise that Blue Ridge has accepted and appointed Transerve PTE LTD/Leembruggen Butler Pty Ltd (exclusive agents for Transerve) to manufacture and supply the abovementioned accommodation buildings as per the attached Notice of Award for the agreed price of $73,000 per 14.4 x 4.2m 4 Person Staff Quarter.
All terms and conditions are back to back with Roy Hill Purchase order.
It was well understood by all parties at that point that the necessary finance to carry out the required manufacture under the head contract and subcontract and payments to be made thereunder would be facilitated by the provision of an initial bank guarantee of 10% of the relevant contract sums – by Blue Ridge providing bank guarantees in that regard under the head contract to Roy Hill, and by Transerve providing similar bank guarantees to Blue Ridge under the subcontract. As noted above, Mulya had earlier confirmed to Blue Ridge it would supply the required bank guarantees to satisfy Transerve’s contractual obligations in this regard. This was never an issue for Blue Ridge.
On 12 January 2012, Mulya raised a bank guarantee for 10% of the contract sum through Bank DKI and presented it to Blue Ridge (first bank guarantees).
On 13 January 2012, Blue Ridge inquired of Mr Leembruggen as to the status of the architectural drawings.
On 16 January 2012, Blue Ridge and Transerve formally concluded the subcontract between them for Transerve to manufacture and supply the 233 accommodation units as per the first separable portion of the Roy Hill award.
By letter dated 16 January 2012 from Mr Richardson of Blue Ridge to Mr Robert Liu of Transerve, Blue Ridge advised Transerve that it had accepted and appointed Transerve to manufacture and supply the units “as per the attached Notice of Award” for the agreed price of $73,000 per unit, with the following bullet points noted:
ŸPayment milestones back to back with Roy Hill payment terms to Blue Ridge
ŸDelivery dates as per Roy Hill letter of intent to Blue Ridge.
ŸTaxes – Transerve to deliver CIF Dampier excluding all taxes.
ŸInsurance – 20M public liability as submitted by Leembruggen Butler.
The letter concluded by confirming that all terms and conditions were back to back with the Roy Hill purchase order.
Relevantly, for both the head contract and the subcontract, by annexure Part A, item 12, supplier’s security was dealt with. By (b) the amount or maximum percentage of the contract sum was stated as follows:
Bank Guarantees;
Ÿ1 x 10% Bank Guarantee; to be held as a Performance Guarantee
Ÿ2 x 10% Bank Guarantee; to be held as an advance payment bond, 1st supplied on initial payment. 2nd supplied on second payment
Delivery delay of completed units by the Purchaser shall not prevent the release of the above listed Bank Guarantees.
By cl 24.1, and item 32 of Part A, as modified for the purposes of the subcontract, Transerve was entitled to the first progress payment in the sum of $1,700,900, upon the provision of the first 10% bank guarantee to be held as a performance guarantee.
By item 33 of Part A, the period for payment under cl 24.1 of the head contract was stated to be 30 days from the date on which a correctly rendered and fully substantiated invoice was submitted. Item 33 further provided that substantiation of invoices was to consist of approval by the purchaser’s representative of attainment of the claimed milestone.
On 16 January 2012, Mr Leembruggen, Ms Butler and Mr Richardson met in Perth, with Mr Mackenzie participating in the meeting by telephone from Scotland.
On 17 January 2012, a kick-off meeting was held between Blue Ridge, Roy Hill and Mr Leembruggen.
From that point on, Leembruggen Butler was actively engaged in Perth on behalf of Transerve in doing what appeared to be required to perform the subcontract, at least at the Perth end. On 18 January 2012, it received preliminary findings regarding BCA compliance.
On 20 January 2012, Transerve forwarded drawings of the floor layout to Blue Ridge, which returned them to Transerve with comments.
On 21 January 2012, Mulya provided an official English translation (dated 16 January 2012) of the first bank guarantees to Blue Ridge, as requested.
On 21 January 2012, Mr Leembruggen forwarded to Blue Ridge the final architectural drawings. Blue Ridge then requested a date to inspect a prototype or mockup of the units.
On 23 January 2012, Mr Leembruggen proposed that the inspection of the mockup take place on 8 or 9 February 2012.
On 24 January 2012, Transerve received confirmation that the drawings complied with the BCA requirements.
Between 24 January and 10 March 2012, Transerve issued a number of technical queries (TQs) to Blue Ridge. It expected these to be passed to Roy Hill and responded to in a timely manner.
On 31 January 2012, following provision of the first bank guarantees, Transerve issued an invoice to Blue Ridge for the first progress payment under the subcontract.
That day, Mr Mackenzie advised Mr Leembruggen that the first bank guarantees were unacceptable to National Australia Bank (NAB) in their current format.
In relation to the first bank guarantees, Blue Ridge sought from Transerve a letter of transfer, following a request by NAB, which documentation was then provided by Transerve to Mr Mackenzie.
Construction activity nonetheless continued apace. On 1 February 2012, there was a meeting between Ms Butler and Mr Richardson to finalise the inspection and test plan. Blue Ridge that day notified Transerve by Leembruggen Butler that the supplier list needed to be amended.
On 6 February 2012, Roy Hill requested an update from Blue Ridge regarding the provision of its bank guarantees (second bank guarantees) to Roy Hill under the head contract.
That same day, Blue Ridge requested Transerve to provide a progress report on the project.
On 8 February 2012, in accordance with the earlier request, the first site inspection of the mockup took place in Surabaya, at the premises of Mulya, attended by representatives of the parties and Mr Bob Gill, an inspector engaged by Roy Hill. Mr Gill made a report which marked certain manufacturing specification points to be on “hold” which was subsequently provided to Blue Ridge.
The next day, 9 February 2012, a kick‑off meeting took place in Surabaya attended by those same representatives of Roy Hill, Blue Ridge, Transerve, Leembruggen Butler and Mulya.
That same day, Roy Hill wrote to Blue Ridge giving notice of non-conformance with the head contract due to Blue Ridge’s failure to provide the second bank guarantees to Roy Hill.
On 13 February 2012, as a result of the 8 February first site inspection, Transerve produced a procurement register which identified the expected delivery dates of the first 50 units being 31 March 2012.
It also that day wrote to Blue Ridge requesting payment of the first progress payment under the subcontract.
Also that day, as a result of dealings between Mr Mackenzie and Mulya, initiated by Mr Leembruggen, Mulya arranged the second bank guarantees to enable Blue Ridge to respond to the notice of non‑conformance issued by Roy Hill on 9 February 2012. This was done on the basis that Blue Ridge would pay Mulya an arrangement fee of $230,000. As discussed below, while there is no dispute about the essence of this bank guarantee agreement, there is dispute as to when the arrangement fee was to be paid by Blue Ridge: whether immediately on provision of the second bank guarantees, or when they were accepted by Roy Hill.

On 14 February 2012, Blue Ridge provided an audit or inspection report to Transerve.
On 18 February 2012, Transerve advised Blue Ridge that due to the fact that drawings would need to be redone, following the comments received, there may be an impact on the overall timing and cost of the project.
On 21 February 2012, Transerve submitted final structural drawings to Blue Ridge.
That day, Mr Mackenzie emailed Mr Robert Liu at Transerve advising that the second bank guarantees had been submitted to Roy Hill.
The next day, 22 February 2012, Ms Butler received an English language translation of the second bank guarantees and passed it on to Blue Ridge.
That same day, Mr Leembruggen and Mr Walter Liu followed up Mr Mackenzie regarding signed drawings in order to proceed with construction and to complete the mockup.
At that time, the first progress payment under the subcontract had, on the face of the subcontract, become due and payable by Blue Ridge on 1 March 2012, that date being 30 days after the issue of the invoice for that progress payment on 31 January 2012, as provided by item 33 of Part A.
On 1 March 2012, the second site meeting at Mulya’s premises in Surabaya occurred, which was attended by representatives of Blue Ridge, Transerve and again by Mr Gill. Ms Butler and Mr Leembruggen were present at the site but did not participate in the meeting. There were concerns expressed about how advanced the mockup was.
On 3 March 2012, Transerve wrote to Blue Ridge outlining its concerns, following this meeting, including about the fact that the first progress payment had not been paid and that it still did not have approved‑for‑construction (AFC) drawings from Blue Ridge.
On 6 March 2012, Blue Ridge emailed Leembruggen Butler, Mulya and Transerve attaching a tersely worded report of Mr Mackenzie outlining his concerns following the meeting of 1 March 2012.
On 7 March 2012, Transerve, harbouring its own concerns about Blue Ridge’s performance of the subcontract, wrote to Blue Ridge noting that it could not proceed with construction in the absence of AFC drawings and answers to TQs.
That same day, without the knowledge of Transerve, Leembruggen Butler or Mulya, Mr Mackenzie met, at his request, with representatives of Roy Hill. Mr Mackenzie raised the possibility of Blue Ridge fabricating the second and third separable portions of the head contract in place of Transerve, citing Blue Ridge’s concerns about the ability of Transerve to perform the subcontract.
Coincidentally, that same day Transerve, by Mr Walter Liu, emailed Mr Mackenzie requesting an urgent meeting involving Blue Ridge, Mulya, Transerve and Roy Hill.
The next day, 8 March 2012, Mr Mackenzie advised Mr Liu by email that Roy Hill would not be involved in any such meeting.
That same day, the third site meeting occurred at Surabaya, attended by representatives of Blue Ridge (on this occasion by Mr Craig Mackenzie, Mr Mackenzie’s nephew), Transerve, Mulya, Mr Leembruggen and, again, Mr Gill.
Then on 9 March 2012, Mr Mackenzie advised Transerve that it had no chance of getting contracts for the second and third separable portions.
That same day, Mr Mackenzie provided a submission to Roy Hill regarding Blue Ridge’s proposition that Blue Ridge should take over the second and third separable portions of the head contract.
On 12 March 2012, Transerve again followed up Blue Ridge regarding AFC drawings and payment of the first progress payment.
Mr Mackenzie emailed Mr Walter Liu of Transerve the same day, advising of the need for Transerve to continue work on the mockup unit.
The next day, 13 March 2012, Mr Mackenzie again met with representatives of Roy Hill in Perth. Again, this was without the knowledge of the applicants. During this meeting Mr Mackenzie raised the prospect of Blue Ridge performing all work under the subcontract, including the work then being undertaken by Transerve under the subcontract on the first separable portion.
From that point onwards, until the purported termination of the subcontract by Mr Mackenzie, for Blue Ridge, just over two weeks later, at the fourth and final site meeting at Surabaya, events went quickly downhill.
On 15 March 2012, Transerve provided a daily report to Roy Hill and Blue Ridge concerning the completed mockup.
That same day, Mr Mackenzie provided a proposal to Roy Hill for fabrication of the full scope of the first separable portion by Blue Ridge, again without the applicants’ knowledge, and thereby effectively cutting Transerve out of the works.
On 16 March 2012, Blue Ridge nonetheless requested that Transerve confirm the forecasted completion dates for the first 50 units. Transerve replied that they could not estimate a date until they received signed drawings and a written commitment as to when the first progress payment would be paid, but would likely require 10 days to get the remaining items to site, plus 30 days for production of the 50 units.
Roy Hill wrote to Mr Mackenzie the same day, confirming receipt of his proposal for Blue Ridge to take over construction of all the units and scheduling a meeting for 18 March 2012.
On 19 March 2012, Roy Hill, without the applicants’ knowledge, conducted an audit of Blue Ridge’s facilities in Perth.
On 20 March 2012, Blue Ridge issued “Contract Direction No 1” to Transerve and Leembruggen Butler requiring them to “suspend” contract works due to Transerve’s alleged non‑performance and failure to meet the delivery schedule; and it then arranged the site meeting of 29 March 2012.
On 21 March 2012, Roy Hill wrote to Blue Ridge, again without the applicants’ knowledge, proposing terms on which Blue Ridge could be engaged to manufacture all units. Mr Mackenzie for Blue Ridge accepted Roy Hill’s terms the following day, 22 March.
The next day, 22 March 2012, Mr Walter Liu of Transerve wrote to Roy Hill advising Transerve had received Contract Direction No 1 to suspend works from Blue Ridge.
On 26 March 2012, Transerve wrote to Blue Ridge giving formal notice under the subcontract alleging that Blue Ridge was in breach of the subcontract by virtue of its failure to pay the first two progress payments.
On 27 March 2012, in advance of the proposed fourth site meeting on 29 March 2012, Blue Ridge requested Roy Hill to provide a “cancellation letter” to Transerve. When such a letter had not been provided by 29 March, Blue Ridge renewed its request to Roy Hill. On 29 March, Roy Hill emailed Mr Mackenzie indicating that such a cancellation letter would not be provided, and stating, in effect, that Blue Ridge’s dealings with its subcontractor were its own affairs, not Roy Hill’s.
Then, on 29 March 2012, everything came to a head – and an end – at the fourth site meeting in Surabaya. This meeting was attended by Mr Mackenzie, Mr Craig Mackenzie and Mr Richardson of Blue Ridge, Mr Walter Liu and Mr Baharudin of Transerve, Mr Leembruggen and Ms Butler of Leembruggen Butler, and Mr Suharto of Mulya. No Roy Hill representative was present. Mr Mackenzie purported to terminate the subcontract on the basis that the mockup offered by Transerve was of no use to Blue Ridge or Roy Hill.
The next day, 30 March 2012, Roy Hill wrote to Blue Ridge confirming acceptance of the proposal to fabricate the first separable portion of the head contract at Blue Ridge’s facilities in Perth.
On 2 April 2012, Transerve wrote to Blue Ridge rejecting the purported termination of the subcontract and notifying its intention to continue performing under the subcontract, and demanding payment of the first and second progress payments it then claimed were due under the subcontract, totalling AUD3,401,800.
The next day, 3 April 2012, Mulya wrote to Blue Ridge, requesting payment of monies allegedly owing to it.
On 10 April 2012, Blue Ridge wrote to Transerve formally terminating the subcontract and advising that Roy Hill had cancelled its contract with Blue Ridge.
It was in these broadly stated factual circumstances that Transerve, Mulya and Leembruggen Butler commenced this proceeding against Blue Ridge and Mr Mackenzie in 2012.
After the proceeding was commenced, Blue Ridge went into voluntary liquidation. Subsequently a court‑appointed liquidator was appointed by the Court on the application of Transerve. The claims against Blue Ridge are no longer pursued by the applicants. A cross‑claim against Transerve, made with the voluntary liquidator’s leave, was withdrawn following the appointment of a court‑appointed liquidator.
Consequently, at trial, pursuant to the third amended statement of claim, the applicants sought relief against Mr Mackenzie only, alleging he is liable to each of them personally for contraventions of the Australian Consumer Law (ACL) (which is Sch 2 to the Competition and Consumer Act 2010 (Cth)) and as a person involved in contraventions of the ACL by Blue Ridge. They allege Mr Mackenzie engaged in misleading and deceptive conduct, unconscionable conduct, was involved in similar contraventions by Blue Ridge, and also that he interfered with contractual relations. Mr Mackenzie denies all claims against him.
The key issues in the proceeding are whether:
(1)Mr Mackenzie made misleading precontractual representations to the applicants about Blue Ridge’s financial capacity and experience;
(2)Mr Mackenzie made misleading second bank guarantees representations to the applicants that the second bank guarantees had been accepted by Roy Hill and/or were acceptable to Roy Hill;
(3)Mr Mackenzie made misleading Roy Hill termination representations to the applicants in relation to the termination of Blue Ridge’s contract by Roy Hill;
(4)Mr Mackenzie and Blue Ridge engaged in unconscionable conduct in purporting to terminate and terminating the subcontract;
(5)Mr Mackenzie interfered with contractual relations; and
(6)if Mr Mackenzie is liable to the applicants, the applicants have established loss and damage as claimed.
DID MR MACKENZIE MAKE THE ALLEGED FINANCIAL CAPACITY AND EXPERIENCE REPRESENTATIONS PRIOR TO THE MAKING OF THE SUBCONTRACT?
By [9A], [9B] and [9C] of the statement of claim the applicants plead that:
9A.Prior to entry into the Subcontract pleaded in paragraph 9 below. MacKenzie and Blue Ridge represented to the Applicants that:
9A.1Blue Ridge had the financial capacity to raise the bank guarantees that would be due to Roy Hill under the Main Contract; and
9A.2Blue Ridge had the necessarv experience and competence to perform its obligations under the Main Contract and Subcontract;
(together, the Precontractual Representations)
Particulars
The representations were made by Alan Mackenzie to Geoff Leembruggen in oral discussions from 17 October 2011 to 27 December 2011.
9B.Transerve was induced to enter into the Subcontract in reliance on the Pre‑Contract Representations.
9C.The Pre‑Contract Representations were false.
At [45.1] of the statement of claim, Transerve alleges that by reason of the misleading and deceptive conduct pleaded in [9A] to [9C] (amongst other conduct pleaded) it suffered loss and damage:
45.1.1by losing the opportunity to perform the remainder of its obligations under the Subcontract, and so losing the opportunity to obtain profits from the performance of the Subcontract;
45.1.2further and alternatively, by continuing to perform its obligations under the Subcontract, pleaded at paragraph 9 above, and incurred costs that it would not otherwise have incurred in the amount of not less than $623,787.64;
It may be said that the lost opportunity to perform the subcontract referred to in [45.1.1] is not obviously referable to the precontractual representations plea; although the loss and damage referred to in [45.1.2] arguably is.
At [45.2] of the statement of claim, Mulya pleads that it suffered loss and damage as follows:
45.2.1loss of the opportunities that otherwise would have been available to it to obtain amendment of the Second Bank Guarantees so that they were acceptable to Roy Hill;
45.2.2lost the opportunity that otherwise was available to it to negotiate a refund of the administration fee for the Second Bank Guarantees;
45.2.3incurring liabilities to suppliers that it would not have incurred had it known that the Second Bank Guarantees had not been accepted;
45.2.4continuing to perform its obligations under the subcontract that it had with Transerve which it would not otherwise have done; and
45.2.5costs in the amount of $1,206,300.51;
None of the loss and damage complained of by Mulya immediately appears to be referable to the precontractual representations plea, save for [45.2.4], but rather appears to relate to the second bank guarantee representations pleading, which is dealt with further below.
Leembruggen Butler pleads, at [45.3], that it suffered the following loss and damage by reason of the misleading and deceptive conduct pleaded in [9A] to [9C]:
45.3.1by continuing to perform its obligations under the agency agreements that it had with Transerve and Mulya, pleaded at paragraphs 11 and 12 above, and thereby incurring costs that it would not have incurred; and
45.3.2costs in the amount of $303,494.59.
Mr Mackenzie says that it is uncontroversial that he was the sole director of Blue Ridge at material times and, in its dealings with Transerve and other parties, represented Blue Ridge in his capacity as a director of the company and not as its alter ego, and so cannot be found liable for anything he may have represented on behalf of the company.
Mr Mackenzie also questions whether Leembruggen Butler (or Mr Leembruggen) was the agent of Transerve or Mulya at material times, as pleaded.
Mr Mackenzie denies in any event that the pleaded representations were made.
Further, Mr Mackenzie contends that Transerve carried out its own due diligence and satisfied itself as to Blue Ridge’s financial capacity, experience and competence and so any representations that were made by him prior to entry into the subcontract did not induce Transerve to enter into the subcontract.
The question of what loss or damage, if any, suffered by the applicants in relation to the precontractual representation plea is a question raised by Mr Mackenzie in his defence.
Section 18 of the ACL provides that a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
In this proceeding, it is not in question that the alleged representations, as indeed other pleaded representations, if made, were made in trade or commerce.
If the representations were indeed made, the primary questions are by whom they were made and to whom they were made and whether they were representations that were misleading or deceptive or likely to mislead or deceive.
The proscription of such conduct applies to a “person”, not just a corporation, and so a director of a company, such as Mr Mackenzie, may be found liable for contravening s 18 notwithstanding that he is a director of a company on whose behalf, ostensibly, he was acting. In other words, the mere fact that a person purportedly made representations on behalf of the company, whether as a director or otherwise, does not immunise them from an allegation that they contravened s 18.
In Australian Securities and Investments Commission v Narain (2008) 169 FCR 211; [2008] FCAFC 120, an officer of a listed public company who was instructed to send a statement to the Australian Stock Exchange (ASX) that proved to be misleading was found by the primary judge not to be liable because his involvement in the matter was “ministerial, as an organ of the company” or “an agent” of Mr Narain, who had authorised the officer to send the statement.
The primary judge found that Mr Narain may have been engaged personally in the conduct of the preparation and drafting of the release, but he was not personally engaged in sending it to the ASX. That conduct was engaged in by the company and the person who transmitted the release to the ASX, who was not Mr Narain (at [7]). On appeal, Finkelstein J, however, considered that Mr Narain was, on the facts, responsible for the publication of the release to the ASX (at [19]).
Similarly, Jacobson and Gordon JJ, in a joint judgment, considered Mr Narain was personally liable for the contravention by having authorised another person to send the announcement to the ASX. While their Honours considered that the other officer’s actions were “ministerial, as an organ” of the company or as an agent of Mr Narain, Mr Narain’s participation was a different order in that he participated in the preparation and drafting of the announcement, adopted and approved the contents, as well as authorised and directed its transmission to the ASX (at [98]‑[99]).
At [97], their Honours made the point that the authorities establish that it is a question of fact in each case whether all the elements of a contravention are made out.
Their Honours also emphasised, by reference to Houghton v Arms (2006) 225 CLR 553 at [40]; [2006] HCA 59 (Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ) and Standard Chartered Bank v Pakistan National Shipping Corp (No 2) [2003] 1 AC 959 at [20] (Lord Hoffman), [39]‑[40] (Lord Rodger); [2002] UKHL 43, that the status of a person as an employee or director of a company does not divest him or her of personal liability for wrongful acts committed in that capacity including under provisions such as s 52 of the former Trade Practices Act 1974 (Cth) – to which s 18 is the successor – and other statutory analogues.
Their Honours noted that in Cleary v Australian Co-Operative Foods Ltd (No 2) (1999) 32 ACSR 701 at [54], [56] and [57]; [1999] NSWSC 1062, Austin J found the case before his Honour was not one where the directors acted “merely as a corporate organ, binding the corporation but not binding themselves individually”. By passing resolutions each director individually authorised the chairman and management team to communicate to others on his behalf. The directors’ conduct of distributing materials gave rise to a finding of misleading and deceptive conduct.
It may also be said, at this point, that the fact that the applicants do not proceed against the company, now in liquidation, does not have the effect of relieving a person who has contravened a relevant provision of the ACL from being found to have been involved in the contravention by the company: see Matheson Engineers Pty Ltd v El Raghy (1992) 37 FCR 6 at 9 (French J).
The applicants therefore contend that not only may Mr Mackenzie be found directly liable for contravening s 18 of the ACL for making the precontractual representations pleaded, he might also be found liable as a person “involved” in the alleged contravention of Blue Ridge, for the purposes of s 236 of the ACL. In the latter case, however, the applicants accept a proviso that Mr Mackenzie must first be found to have had actual knowledge of the essential elements constituting Blue Ridge’s contravention (as required by Yorke v Lucas (1985) 158 CLR 661 at 670; [1988] HCA 65), that is, he knew of the representations made by Blue Ridge, although it is not necessary that he knew that the particular conduct was unlawful. They say this knowledge is established by the evidence.
I accept that the fact Mr Mackenzie was a director, indeed the sole director, of Blue Ridge does not automatically immunise him from liability for contravention of s 18 (or other relevant provisions of the ACL discussed below) if, as a matter of fact, all the elements of alleged contravention are made out.
On the facts of this case, it cannot reasonably be suggested that Mr Mackenzie acted merely as a corporate organ, not binding himself individually. He engaged in direct negotiations as the sole director of Blue Ridge with representatives of Leembruggen Butler and was actively engaged in the negotiation of a subcontract and, subsequently, upon the award of the subcontract, contract management. He attended site meetings, wrote emails and sent texts. He was, personally, intricately involved with the company and took complete responsibility for all dealings under consideration. It is unnecessary to find that Mr Mackenzie was the “alter ego” of the company in order to establish his personal liability under s 18 (or other relevant provisions) of the ACL, although he should also be considered to have been that.

The question of the claimed agency arrangement between Leembruggen Butler, Mulya and also Transerve then arises. First, it is difficult to see how Mulya can rely on representations made by Mr Mackenzie to Mr Leembruggen. While Mr Leembruggen plainly acted for Leembruggen Butler at material times and for Transerve, I do not accept that Mr Leembruggen or Leembruggen Butler was relevantly acting as the agent for Mulya at the time of these precontractual dealings, or indeed at any other material time, save as discussed below in relation to the second bank guarantees representations.
The only evidence given to support a more general agency was that of Mr Leembruggen that Mulya and Leembruggen Butler had entered into a memorandum of understanding in about October 2011. But when taken in cross‑examination to that document, which was unsigned, Mr Leembruggen could not explain why he had said that there was a signed memorandum, although he believed there was. A signed memorandum was never produced. Ms Butler gave evidence that there was no signed memorandum of understanding.
Mr Leembruggen, in cross‑examination, was taken to a letter dated 27 October 2012, well after the events in issue, which was provided by Mulya to Leembruggen Butler appointing it as agent, but it plainly was incapable of supporting an agency arrangement as of and about September/October 2011.
Ms Butler gave evidence to the following effect, namely, that the document dated 27 October 2012 was given at that time in respect of Leembruggen Butler’s agency arrangement with Mulya after the termination of the subcontract and that the company only became agents for Mulya in late 2012 and not before then.
In effect, in the course of the trial, counsel for the applicants conceded no agency arrangement could be established involving Mulya prior to October 2012, at least as a general proposition.
There is little evidence upon which the Court can properly found an inference that at material times in the precontractual period, Leembruggen Butler (or Transerve for that matter) were acting as the agent of Mulya. No representative of or witness for Mulya was called to give evidence in the proceeding, and no explanation was provided as to why that was so.
In all the circumstances, the Court is unable to accept a submission that Mr Leembruggen or Leembruggen Butler acted as the agent of Mulya at the time of the pleaded precontractual representations.
In those circumstances, the apparent claim for damages for the misleading and deceptive conducted pleaded at [9A] to [9C] must necessarily fail so far as Mulya’s claim is concerned. Mulya do not rely on any evidence of the making of the pleaded representations apart from Mr Leembruggen’s. Accordingly, in the absence of an agency arrangement between Mulya and Leembruggen Butler at material times, Mulya has no claim against Mr Mackenzie in respect of the alleged precontractual representations. There is, in effect, nothing to link Mr Mackenzie to Mulya.
The claims of Transerve and Leembruggen Butler, however, so far as the precontractual representations are concerned, stand on a different footing. I accept that Mr Leembruggen acted as the agent of Transerve and was the relevant representative of Leembruggen Butler at material times, including in the precontractual dealings. Mr Leembruggen’s representation of Leembruggen Butler is not seriously in contest and, in any event, cannot be doubted.
As to an agency arrangement between Leembruggen Butler and Transerve, Mr Mackenzie submits, however, that the document said to exhibit that agency (tab 5 of the trial bundle) was not in fact an agency agreement between those parties. He observes it was in fact an appointment by Leembruggen Butler as agent by Transerve Cabins Pte Ltd, a separate legal entity, and that in cross‑examination Mr Leembruggen said there was no official agency agreement between the relevant parties.
Mr Mackenzie also notes that when asked in cross‑examination what the commercial arrangements were between Transerve and Leembruggen Butler to act as agent, Mr Leembruggen gave evidence that it was a commission structure, whereby Leembruggen Butler would receive 45% and Transerve 55% on the sum of $10,000 to be earned on each unit produced.
As Mr Mackenzie submits, it may be contended the arrangement was not in fact one of agency but shared profits, and a finding that there was no agency as pleaded would be consistent with the opening of counsel that Leembruggen Butler had entered into a joint venture partnership with Transerve.
In my view, however, whatever the commission or profit sharing arrangements between Leembruggen Butler and Transerve truly were, Leembruggen Butler was represented to be the agent of Transerve in the course of dealings between Mr Mackenzie, on behalf of Blue Ridge, and Mr Leembruggen and Ms Butler of Leembruggen Butler.
Mr Leembruggen in his evidence‑in‑chief said he and Mr Robert Liu of Transerve agreed that Leembruggen Butler would become the Australia “sales agent” for Transerve. Mr Leembruggen said that in his first meeting on 17 October 2011 with Mr Mackenzie he represented that Leembruggen Butler was the agent for Transerve and could potentially fill the role that Mr Mackenzie had identified, being an entity with which to subcontract in order to fulfil the contract with Roy Hill. There is no doubt that Mr Mackenzie and Blue Ridge were aware of Transerve, as Mr Mackenzie (according to Mr Leembruggen whose evidence on this point I accept) asked Mr Leembruggen whether he could provide Transerve’s financials, which were subsequently provided. Again, Mr Leembruggen said that he told Mr Mackenzie that Leembruggen Butler was the agent for Transerve and Transerve would have to be named as the subcontractor. That is of course exactly how events unfolded. Indeed, in Blue Ridge’s letter of 4 January 2012 confirming the award of the subcontract, Blue Ridge expressly identified Leembruggen Butler as the exclusive agent of Transerve.
Based on this evidence, I have no hesitation in finding that, as a matter of fact, Leembruggen Butler was the disclosed agent of Transerve at material times in its dealings (through Mr Leembruggen and Ms Butler) with Blue Ridge, and that Blue Ridge (and Mr Mackenzie) were well aware of that agency.
The next question is whether the pleaded precontractual representations were made to Transerve and Leembruggen Butler. I have difficulty in finding that the representations as pleaded were made. While accepting assumptions might well have been made by Transerve and Leembruggen Butler about Blue Ridge’s relevant capacities, that is, in this case, a different proposition from finding the representations were made as alleged.
As Mr Mackenzie points out by reference to Watson v Foxman (2000) 49 NSWLR 315 at 318‑319, where spoken words are relied upon to prove a representation they should be proved with a degree of precision sufficient to enable the Court to be reasonably satisfied that the representation was made. Precise evidence concerning spoken words is lacking in Mr Leembruggen’s evidence which is that relied on by Leembruggen Butler and Transerve. While Mr Walter Liu gave evidence, he was not involved in any precontractual negotiations.
The evidence of Mr Leembruggen in cross‑examination establishes that Leembruggen Butler and Transerve sought the financial statements of Blue Ridge to satisfy Transerve as to the financial position of Blue Ridge, both in relation to a proposed acquisition by Transerve of Blue Ridge discussed early on, and in relation to the project generally by way of due diligence. Mr Leembruggen’s evidence was that he was not really interested in the financial statements and passed them on to Transerve. Mr Leembruggen gave evidence that they were satisfied with a letter stating projected jobs coming up and “we were just confident that he [Mr Mackenzie] was really quite financial”. Mr Leembruggen gave evidence that he accepted the financial viability of Blue Ridge on the basis of what he saw in the yard and what he had been told prior to seeing any figures. Ms Butler, in cross‑examination, said that the fact that Roy Hill had entered into a head contract gave Leembruggen Butler comfort about Blue Ridge’s financial position and that she was happy with the projects that were in the pipeline.
As Mr Mackenzie submits, as part of its own due diligence Transerve satisfied itself as to the financial capacity of Blue Ridge and as to its necessary experience and competence. No witness was called from Transerve who could talk about the due diligence undertaken or what factors it relied upon in entering into the subcontract. Mr Walter Liu did not give such evidence.
In the circumstances, I am not satisfied that the pleaded representations have been proved. While representations need not be express, and may reasonably arise from all the circumstances of a case and what was said and done during negotiations, I do not consider what was said and done in the relevant period of negotiations conveyed the precontractual representations pleaded. Apart from anything else, there was no circumstance in which Mr Mackenzie was, in effect, called on to vouch for Blue Ridge’s financial capacity or experience. All there is, is general evidence of dealings between Mr Mackenzie and Mr Leembruggen over an extended period between 17 October 2011 and 27 December 2011 from which the representations are said to arise. The inexactness of what was said or done by them in this period, taken with the general tenor of the applicants’ evidence, does not permit the Court to conclude the representations alleged were conveyed.
In those circumstances, the claim for damages made by the applicants based on the pleaded precontractual representations must fail.
DID MR MACKENZIE MAKE THE SECOND BANK GUARANTEES REPRESENTATIONS?
By [38] of the statement of claim it is alleged that prior to 18 April 2012, Mr Mackenzie and Blue Ridge represented to the applicants that:
(1)the second bank guarantees were acceptable to Roy Hill or had been substantially accepted by Roy Hill and only minor details needed to be resolved; and
(2)there was no dispute that Blue Ridge owed the sum of $230,000 to Mulya pursuant to the bank guarantee contract between Blue Ridge and Mulya.
The applicants plead that by reason of the second bank guarantees representations they were led to believe that the second bank guarantees had been accepted or substantially accepted and only minor details remained left to resolve; further, that there was no dispute that Blue Ridge owed $230,000 to Mulya and that Blue Ridge had paid $165,020 as part payment of the outstanding amount under the bank guarantee agreement, which representations were false, misleading or deceptive and so Mr Mackenzie or Blue Ridge contravened s 18 of the ACL.
It is not in dispute that item 12 of Part A of the head contract, set out above, was a term of the subcontract.
I also find it was a further term of the subcontract, by virtue of cl 24.1 of the head contract and item 32 of Part A, modified in order to be incorporated into the subcontract, that Transerve would be entitled to the first progress payment of $1,700,900 upon the provision of the bank guarantee to Blue Ridge.
The first bank guarantees obtained by Mulya on behalf of Transerve were provided to Blue Ridge in English language form on 21 January 2012.
Blue Ridge by Mr Mackenzie, in an email to Mr Leembruggen dated 31 January 2012, indicated that NAB, its bank, had advised that the bank guarantees were unacceptable “in their present format” and he attached a document advising that NAB were looking for a letter of credit under internationally recognised terms and not under Indonesian law as at present.
On 31 January 2012, a “confirmation letter” issued by Bank DKI confirmed that if Mulya was to default the bank would make payments directly to Blue Ridge. That was provided to Blue Ridge and addressed to Mr Mackenzie.
No issue was raised by Blue Ridge concerning the acceptability of the first bank guarantees obtained on account of them being obtained from Bank DKI by Mulya.
That same day, 31 January 2012, Transerve provided Blue Ridge with an invoice for the first progress payment, “milestone claim number 001”, in the amount of $1,700,900 in accordance with the subcontract term mentioned above. There was no suggestion on behalf of Blue Ridge at that point that it was not liable to pay that sum to Transerve.
By 6 February 2012, Transerve was concerned about the payment of the first progress payment. By an email of that date from Mr Walter Liu of Transerve to Mr Richardson of Blue Ridge and copied to others, including Mr Leembruggen, it was noted that the first bank guarantees were issued the previous month by Mulya “and the team hopes to receive first progress payment within the month in order to meet our cashflow commitments”. The email further stated:
Please note PT Mulya is requesting a letter from Blue Ridge to Transerve stating that ‘all payment milestones for this project shall be back to back with Roy Hill payment terms’ and to provide the bank account details set up for this project. Likewise, Transerve has prepared a similar letter to PT Mulya. (Geoff [Leembruggen] can confirm this is true)
As it transpires, on 6 February 2012, Roy Hill, by Ms Monique De Villiers, emailed Mr Mackenzie and Mr Richardson at Blue Ridge concerning the second bank guarantees due under the head contract from Blue Ridge to Roy Hill and asking for “an update on the progress of the bank guarantees”.
Three days later, by letter dated 9 February 2012, Ms De Villiers on behalf of Roy Hill wrote to Mr Mackenzie giving notice that Blue Ridge “has not conformed” to two conditions of the head contract, being item 6, supplier’s submission, and, relevantly, item 7, security, and stated:
As per Clause 3.1 of Part A Item 12, a 10% bank guarantee is due twenty business days after Date of Contract, nominally 20^th January 2012 and an additional 10% bank guarantee is due thirty-five business days after Date of Contract, nominally 13^th February 2012. Further to sub‑clause 24.1 and Part A Item 32, an invoice for the first milestone cannot be submitted until receipt of both bank guarantees.
The letter stated that Roy Hill would appreciate “urgent action” in rectifying the above non‑conformance issues.
Neither this notice of nonconformance nor its substance was immediately supplied or communicated to any of the applicants at the time it was received by Blue Ridge.
However, the applicants, or at least Leembruggen Butler and Mr Suharto at Mulya, soon enough became aware of the problem Blue Ridge had in providing Roy Hill with the required second bank guarantees. It appears that the issue was discussed during the site visit in Surabaya on or about 8 February 2012. Given that the notice of nonconformance from Roy Hill to Blue Ridge was dated 9 February 2012, perhaps the discussion in question took place after that. In this regard, in his email dated 13 February 2012, Mr Mackenzie thanked Mr Leembruggen and Mr Suharto (and Mr Krisno of Mulya) “for your assistance during our visit last week”. Mr Mackenzie also advised them that he had met with “our client” – Roy Hill – that morning and referred also to discussions with Mr Leembruggen that day regarding Roy Hill’s requirements for the bank guarantees. He thanked all concerned “for your patience, understanding and assistance in arranging new BG’s being 2 off at 5% and 1 off at 20%. We understand this will take 3>5 days to complete”.
Mr Mackenzie further noted that:
On acceptance of the new Bank Guarantees by Roy Hill, Blue Ridge agree to pay your facilitation fee of $230k and will immediately raise the invoice for 10% of the contract price to Roy Hill. This amount should be payable by them in 30>35 days in accordance with their terms.
That email followed an email earlier in the day on 13 February 2012 from Mr Leembruggen to Mr Mackenzie, Mr Suharto and Mr Krisno in which he advised the Mulya representatives that Mr Mackenzie had accepted their offer to assign a bank guarantee to Roy Hill and that Mr Mackenzie would forward a copy of how the new bank guarantee should read.
Mr Leembruggen in that email further stated that:
BR will pay Mulya A$230,000 as cost incurred. Please proceed with the change immediately. Alan [Mackenzie] will also send you an email confirming this transaction and he will also submit a letter stating that on receipt of the bank guarantee, Blueridge will immediately submit their invoice for the first 10% and he will show that the payment should be made in approx. 30 days from submission of his invoice.
Just before that, on 11 February 2012, Mr Leembruggen had emailed Mr Walter Liu at Transerve and Mr Suharto at Mulya acknowledging their assistance and seeking to reassure them about the carrying out of the project “as one unit”, indicating he would be meeting with Blue Ridge regarding the bank guarantee “which I believe is holding up payments”.
There is little doubt that, through the initiative of Mr Leembruggen, the cooperation of Mulya was obtained in order to help progress performance of the head contract and the subcontract. In that email, Mr Leembruggen advised Mr Walter Liu and Mr Suharto that he would “be having a very frank discussion with Alan Mackenzie re his companies (sic) nonperformance in this matter”. He added that he would need the support of each of them.
Consequently it is clear that the applicants became aware of the problems that Blue Ridge had encountered in providing the requisite second bank guarantees to Roy Hill under the main contract.
On 13 February 2012, Mr Walter Liu of Transerve both wrote to and emailed Mr Richardson, copying Mr Mackenzie into the email, reminding Blue Ridge of the “status of our 1^st milestone payment per Roy Hill Contract …”. The letter requested Blue Ridge to provide:
(1)a copy of “similar guarantees submitted to Roy Hill per back to back arrangement”;
(2)a letter to Transerve stating that all “payment milestones shall be back to back with Roy Hill payment terms” and to provide the bank account details set up for this project (Mr Liu noted that Transerve had prepared a similar letter to Mulya); and
(3)information as to the “Status of Roy Hill Contract issuance”.
Ultimately, by 21 February 2012, Mulya arranged the second bank guarantees in the name of Blue Ridge from DKI Bank, paid an administration fee of $230,000 in the course of doing so, and provided these second bank guarantees in their untranslated format to Blue Ridge.
On 21 February 2012, Mr Mackenzie sent an email to Transerve, Mulya and Leembruggen Butler stating that the second bank guarantees and Blue Ridge’s invoice for its first progress payment had been provided to Roy Hill.
At that point, work on the subcontract proceeded, albeit on the understanding that signed drawings and answers to TQs had still not been supplied.
In that regard, on 22 February 2012, Mr Leembruggen had emailed Mr Mackenzie, Mr Walter Liu and others stating, amongst other things, that they did not have signed drawings or an interior furniture list and exterior wall clad approvals. That same day Mr Walter Liu emailed Mr Mackenzie and others agreeing with Mr Leembruggen’s comment and stating that:
We need confirmation in writing to proceed based on the submitted drawings/documents as AFC.
(Emphasis in original.)
Mr Mackenzie responded by email dated 22 February 2012, stating “Comments understood and appreciated, however …”, then mentioning a range of questions suggesting that there were delays he was not responsible for and they were things that should not hold anything up at that stage. He emphasised the need for the mockup to be advanced in order to identify issues or material changes of a minor nature.
Mr Mackenzie also said he was promised invoices from suppliers the previous week and noted that any items for the mockup coming from Perth must be airfreighted that week.

Mr Mackenzie concluded his email, not by taking a backward step, but by stating:
Let me remind everyone that liquidated damages apply to this project and repairs or material replacement in the Pilbara will cost you at least ten times that of doing it right the first time.
The next day, 23 February 2012, Mr Mackenzie emailed Mr Leembruggen, Mr Walter Liu and others stating, in relation to the second bank guarantees provided by Blue Ridge to Roy Hill, as follows:
A few questions from their commercial people re the BG’s submitted. I note the originals have arrived and on their way to BR per E-mail from Natasha [Butler].
That same day, Mulya, via Ms Butler, provided Blue Ridge with the certified translated versions of the second bank guarantees.
About this same time, emails about construction of the units kept flowing between the parties, principally Mr Mackenzie and Mr Richardson, on the one hand, and Mr Walter Liu and Mr Leembruggen, on the other. There were also continuing meetings. By 23 February 2012, Mr Walter Liu and Mr Leembruggen were, between themselves, expressing considerable concern about not having received signed drawings and also about progress with the second bank guarantees. Mr Leembruggen plainly considered that Mr Mackenzie was avoiding him. There was also a question of urgently sending goods from Perth to Surabaya, which needed to be paid for by someone.
On 24 February 2012, just before a weekend, Mr Leembruggen was in communication with Mr Mackenzie, by a series of SMS text messages, about the payment of the bank guarantee arrangement fee of $230,000. Mr Leembruggen told Mr Mackenzie that Mr Suharto at Mulya was expecting an email from Mr Mackenzie, at the latest by the next day, to indicate that he would pay the $230,000 immediately after issue of the bank guarantee. In one of the text messages Mr Leembruggen stated:
The email has just got to be clear that he will get paid once it is issued. I confirm that he had made the payment on your behalf as the bank director would not initiate the new BG without it. I hope u appreciate how difficult it is to do things like this.
Mr Mackenzie replied by asking:
Did you get my e-mail confirming payment?
Mr Leembruggen responded stating he had not but would read it when he got back to the hotel. Mr Leembruggen later texted Mr Mackenzie again indicating that he had spoken to Mr Suharto and had asked him to send an email “to authorize me to pay for products to be sent to Sby [Surabaya] from Australia using part of the $230,000 from yourself”. Mr Leembruggen stated he would gather invoices and forward them to Mr Mackenzie as soon as possible, noting that “[w]e might just need a deposit for now and the rest on Mon if possible”. Mr Mackenzie responded to that text by stating “Ok”. Mr Leembruggen replied by thanking Mr Mackenzie. Mr Leembruggen then asked Mr Mackenzie whether he had “got the PO [purchase order] number from RH [Roy Hill]”. Mr Mackenzie responded, “Not yet, still hopeful for PM”. Mr Leembruggen asked for the “PO number by today”. Plainly, Mr Leembruggen (and Mulya) considered that the issuing of the purchase order would signify acceptance of the second bank guarantees by Roy Hill and that the first progress payment could be expected to flow down the contract line to Blue Ridge, Transerve and Mulya soon after.
On 27 February 2012, following the weekend, Mr Mackenzie indicated to Mr Leembruggen by SMS text, “No PO yet. Now we need to register as a supplier with them to get on their system! It just goes on and on!”. Mr Leembruggen immediately responded by text saying Pak Harto from Mulya was “disappointed. He works really hard to get the BG in five days for u and now he is waiting for a PO number and a supplier registration ……?? Alan it is out of hand I can see things boiling over here. U need to sort this out!!!!!”. Mr Mackenzie immediately replied by text:
Calm down, we are registered it’s only the change of address and the bank details, standard practice.
Mr Leembruggen answered immediately that the matter cannot “go on and on” and pointed out that Mr Mackenzie’s original text had said that he needed to “register”, not “change a address”. Mr Mackenzie replied saying that he did not want to play with words and:
The details are purely for the accounts department, nothing more.
That same day, plainly responding to Mr Leembruggen’s exhortations, Mr Mackenzie emailed Ms De Villiers at Roy Hill stating that “we really need to get some quick responses on these items and the delay in getting the PO details in particular is concerning”. He added that “we really need to get this simple reference in order that we can show good faith to our manufacturer and suppliers, given the materials already ordered and the expenses to date”.
Ms De Villiers replied indicating that she required a copy of all outstanding TQs to be re‑sent and she would provide a response to all the next day.
By separate email that day, in respect of the purchase order (PO) issue, Ms De Villiers advised Mr Mackenzie:
The issue of the purchase order has not and will not delay payment to you or affect progress as per the contract. The purchase order is merely a reference number in SAP to track payments to you. The first payment milestone in the contract is on submission of bank guarantees and the delay in that has caused the delay in payment to you.
The bank guarantees are currently under review from the Roy Hill Finance and Legal teams to check their alignment with the contract terms and conditions. I will respond to you shortly with comment.
The next day, 28 February 2012, the question of the payment to ElectSales, for the goods urgently needed in Surabaya, was pursued by Tan Beng Seng at Leembruggen Butler who sent an email to Mr Mackenzie attaching an invoice in the sum of $130,213.09 together with the bank account details of ElectSales for payment.
Mr Mackenzie replied that he had just made arrangements with “Jason”, followed by a further email stating that it was “sorted”.
On 29 February 2012, Blue Ridge says it paid $10,000 to ElectSales towards the invoiced expense, not the full amount.
It is in these particular circumstances, which might be called frenetic, that the applicants allege Mr Mackenzie and Blue Ridge represented to them that the second bank guarantees “were acceptable to Roy Hill or had been substantially accepted by Roy Hill and only minor details needed to be resolved”, and also that “there was no dispute that Blue Ridge owed the sum of $230,000 to Mulya pursuant to the bank guarantee contract”.
Mr Mackenzie submits that the applicants have not adduced evidence to prove that Mr Mackenzie and Blue Ridge as a fact made a representation that the second bank guarantees were “acceptable to Roy Hill”. I accept that submission. The real question is whether they represented that the second bank guarantees “had been substantially accepted by Roy Hill and only minor details needed to be resolved”. Mr Mackenzie submits that the documentary evidence suggests something different and that Ms Butler said in cross‑examination that this was never represented to Leembruggen Butler.
Ms Butler accepted, as a director of Leembruggen Butler, that Mr Mackenzie and Blue Ridge never said that the bank guarantee was accepted, at least not “expressly”. She added that she “knew that they weren’t rejected”. She said that she did not know what status they were – if they were in with the legal department. She said, “we weren’t getting any feedback as to what changes needed to be made…”.
It was put to Ms Butler that Leembruggen Butler knew that the second bank guarantees had not been accepted, whether substantially or otherwise, and that it did not matter whether they had been substantially accepted or not, because Roy Hill had not “ticked off” and Leembruggen Butler knew that. Ms Butler replied saying that she “knew that. I think it’s a difficult – because with this situation there was never anything expressly said, so a lot of stuff that we did we were working off actions”.
In my view, it is difficult to conclude, on the basis of this evidence, that Mr Mackenzie represented that the second bank guarantees had been substantially accepted by Roy Hill and only minor details needed to be resolved.
While Mr Mackenzie, as a result of his communications with Ms De Villiers, understood that Roy Hill’s consideration of the second bank guarantees had been delayed, because of Blue Ridge’s delay in submitting them, and that the documents would have to be considered within Roy Hill to ensure that they aligned with the head contract obligations, that is not exactly what Mr Mackenzie represented to Mr Leembruggen and through him to Transerve.
In passing, I should note that, at this point, Mr Mackenzie must also have appreciated that Mr Leembruggen was representing Mulya’s interests in relation to the payment of the $230,000 arrangement fee and was reporting back to Mr Suharto at Mulya on progress with the second bank guarantees – which I infer he did appreciate. It is reasonable, therefore, to find, as I do, that in relation to these particular pleaded representations, Mr Leembruggen of Leembruggen Butler were agents of Mulya at material times.
But what exactly was represented?
As noted above, on 27 February 2012, Mr Mackenzie told Mr Leembruggen, when pressed, that everything was registered and the only things that needed to be arranged were change of address and bank details “purely for the accounts department, nothing more”. That, of course was about the “PO” – purchase order. But it seems to have been understood by all concerned in these exchanges – Mr Leembruggen and Mr Mackenzie – that the issuing of the purchase order and the acceptance of the bank guarantees went hand in hand. Mr Mackenzie was aware at that point, from what Ms De Villiers had told him, that the finance and legal departments of Roy Hill were checking whether the bank guarantees were in alignment with the terms of the head contract. Mr Mackenzie was plainly putting a less concerning “spin” on the delay by referring just to the “PO” and putting off Mr Leembruggen, Transerve and Mulya. He knew there was delay with the bank guarantees, but was anxious to avoid conveying any sense of concern about acceptance by Roy Hill of the bank guarantees.
Mr Mackenzie emphasises that the evidence given on behalf of the applicants was to the effect that they were aware that the second bank guarantees had not been accepted by Roy Hill. Mr Walter Liu gave evidence that Transerve had not been given notice that the second bank guarantees had been substantially accepted. Those words were not used. Ms Butler conceded that the second bank guarantees had not been accepted. Mr Mackenzie submits she also accepted they had not been substantially accepted.
It certainly may be said that express words to the effect that the second bank guarantees had been “substantially accepted” was not given. The question is whether the conduct of Mr Mackenzie pleaded gave rise to a representation to that effect: whether, for example, saying that a change of address and bank details was all that was required “purely for the accounts department, nothing more” conveyed that there was in fact substantial acceptance, subject to those things happening.
Mr Mackenzie contends that the SMS text communications (tab 273 of the trial bundle) do not assist and the text in which Mr Mackenzie told Mr Leembruggen that the details were “purely for the accounts department, nothing more” could not not be taken to suggest that the second bank guarantees had been substantially accepted by Roy Hill. No reference was made to Roy Hill at all in that SMS exchange or what position they had adopted in relation to the second bank guarantees.
In my view, while it may reasonably be said that the words “purely for the accounts department, nothing more” which are pleaded in [29] of the statement of claim as one of the key facts upon which the pleaded representation is based might be taken to support the pleaded representation, the content of those texts must be taken with the other communications made and, generally speaking, the context in which the various texts were exchanged. Transerve and Leembruggen Butler had been pressing Mr Mackenzie, as had Mulya through Mr Leembruggen, for news on when a purchase order (PO) would be provided by Roy Hill to Blue Ridge. It was understood, I infer, that when the purchase order was placed, it would signify that the second bank guarantees had been accepted and the head contract was being conformed with by Blue Ridge – and so they would, together, soon enough see their respective first progress payments. The applicants were aware of the problems with Blue Ridge’s bank guarantee conformity issue. Mr Leembruggen, when given various explanations about progress in the texts by Mr Mackenzie, pointed out that the answers were becoming contradictory. In context, while Mr Mackenzie was plainly evading giving a clear response, I do not consider that the particular communications made can be construed as a representation that Roy Hill had substantially accepted the second bank guarantees subject to some details being processed in the accounts department. As Ms Butler said in her evidence, Leembruggen Butler only knew the second bank guarantees had not been rejected. That is not the same as saying they had been substantially accepted, subject to paperwork.
The contemporaneous events surrounding relevant communications, including the insistence that the $230,000 agreement fee be paid, and the arrangements made soon thereafter for the ElectSales invoice to be paid (or partly paid as to $10,000) all go to indicate that the applicants generally were concerned that the purchase order be produced. At the very least, what Mr Mackenzie was telling Mr Leembruggen at that point plainly did not satisfy any of the applicants that the second bank guarantees had been approved (substantially or otherwise). In those circumstances it seems to me that it is not possible to say that what was done and said actually conveyed a representation to the applicants, as pleaded, that the second bank guarantees had been substantially accepted by Roy Hill and only minor details needed to be resolved.
I find that the first of the second bank guarantees representations – that the bank guarantees had been substantially accepted by Roy Hill and only minor details needed to be resolved – is not made out.
The further question is whether the second of the pleaded second bank guarantees representations is made out, namely, that there was no dispute that Blue Ridge owed the sum of $230,000 to Mulya pursuant to the bank guarantee agreement.
Mr Mackenzie contends that the evidence does not support the alleged representation and establishes that Mr Mackenzie made it clear that until such time as the second bank guarantees had been accepted by Roy Hill there would be no payment of the $230,000 to Mulya. He says the fact that Blue Ridge agreed to make a part payment to a supplier cannot displace the unequivocal communication that payment of the arrangement fee would only be made when the second bank guarantees had been accepted by Roy Hill.
In the event, I accept the submissions made on behalf of Mr Mackenzie. The evidence concerning whether or not $10,000 (or some other sum) was paid effectively as part payment of $230,000 is unclear. It is more unclear that in agreeing to assist with (some) payment towards the ElectSales invoice, Mr Mackenzie represented that the $230,000 agreement was immediately due. The exchange of correspondence concerning the timely payment of $230,000, including what Mr Leembruggen conveyed to Mr Mackenzie as to what Mulya had said about it, all indicates that there was an understanding that Mulya wanted to see early payment and that its patience was running thin, but also that Mr Mackenzie was insisting it was not formally due until Roy Hill accepted the second bank guarantees. There was, in effect, something of a commercial impasse. Mr Mackenzie seems to have appreciated the commercial importance of being seen to be doing something and acquiescing to providing some funding for the ElectSales purchase, or at least saying he would do this.
Having regard to what the parties actually said in writing about payment of the $230,000 fee being made on acceptance of the second bank guarantees by Roy Hill, I am not satisfied on the balance of probabilities that the other conduct and statements made by Mr Mackenzie support the pleading in [38.2] of the statement of claim that Mr Mackenzie represented there was no dispute that Blue Ridge owed the sum of $230,000 to Mulya pursuant to the bank guarantee agreement at the time that the conduct pleaded occurred. The full context of what was said and done must be taken into account.
Accordingly, I find this further pleaded second bank guarantees representation is not made out.
In those circumstances, the claim for damages made by the applicants based on the second bank guarantees representations must fail.
DID MR MACKENZIE MAKE THE ROY HILL TERMINATION REPRESENTATIONS?
The applicants plead at [39A] of the statement of claim that:
39A.By reason of the conduct of Mackenzie pleaded at paragraphs 33, 36, 36A and 36B above, Mackenzie represented to the Applicants (Roy Hill Termination Representations) that:
39A.1 Roy Hill was considering cancelling the Main Contract in or around March 2012; and
39A.2Roy Hill did cancel the Main Contract in March 2012 or April 2012.
The relevant pleadings at [33], [36], [36A] and [36B] of the statement of claim are as follows:
33.On 20 March 2012, Blue Ridge issued a purported notice of suspension of the Subcontract:
33.1which was signed by Mr MacKenzie; and
33.2by which Mr MacKenzie represented to the Applicants that Blue Ridge was presently in negotiations with Roy Hill, as to proceeding with the current supply agreement, or face the possibility of cancellation, due to Transerve’s non-performance and failure to meet the delivery schedule.
Particulars
The purported notice was in writing dated 20 March 2012, titled ‘Contract Direction No 1’, and was sent to Robert Liu, Walter Liu and Lily PNG of Transerve, Natasha Leembruggen [Natasha Butler] of Leembruggen Butler, Suharto of Mulya, and Geoff Leembruggen by Mackenzie.
36.By letter dated 10 April 2012, Blue Ridge:
36.1advised Transerve that Roy Hill had cancelled the Main Contract with Blue Ridge for the reason that Blue Ridge had formed the view that Transerve had failed to comply with the design, material selection and delivery dates required under the Subcontract; and
36.2purported to give formal notice to Transerve that it thereby terminated the Subcontract.
Particulars
The purported notice was in writing dated 10 April 2012 and was e‑mailed by Mackenzie on 11 April 2012 to Robert Liu of Transerve, Suharto of Mulya and Geoff Leembruggen.
36A.The letter dated 10 April 2012 pleaded in paragraph 36 above was signed by Mackenzie and the contents of that letter constitute representations made by Mackenzie.
36B.In fact:
36B.1 Roy Hill had not cancelled the Main Contract; and
36B.2 Blue Ridge continued to undertake work under the Main Contract until at least August 2012.
By [39B], the applicants plead these Roy Hill termination representations were false, misleading and deceptive conduct or conduct likely to mislead or deceive in that Roy Hill was not considering cancelling the head contract in or around March 2012 and did not cancel the head contract in March or April 2012.
By [39C], the applicants plead that by reason of the Roy Hill termination representations they were led to believe that Roy Hill had cancelled the head contract prior to Blue Ridge purporting to terminate the subcontract and that Blue Ridge was entitled to terminate the subcontract.
The applicants plead that each has suffered loss and damage in the terms pleaded in [45] of the statement of claim, which has already been set out above in the course of dealing with the precontractual representations.

Mr Gill also said, however, that the methods of construction used by both Transerve and Blue Ridge did not meet best practice. In his opinion neither had the capability or capacity to meet the schedule they had committed to.
In cross‑examination Mr Gill said of the last visit in Surabaya in early March 2012 (which I infer was this third site meeting on 8 March), that one mockup building had been attempted. He said that it was at this time, probably, that he formed the view that neither Transerve nor Blue Ridge had the ability to complete compliant units. In referring to compliant units he said he was talking about finished units, ready for shipment.
I have little doubt on the evidence, especially that given by Mr Gill who had no particular axe to grind in the matter, that as of the third site meeting of 8 March 2012, the mockup of the unit was far from satisfactory.
While Mr Gill appeared to agree AFC drawings were important, from Mr Gill’s point of view, he by then also considered neither Transerve nor Blue Ridge appeared to be competent or likely to complete the work in the required timeframe.
Mr Mackenzie, by an email dated 9 March 2012 that appears to have been sent to Mr Leembruggen, Ms Png, Mr Robert Liu, Mr Baharudin and Mr Suharto, emphasised there was no need to have the client at the meeting and that they (Transerve) should be solving issues with the construction. He insisted that the notice of award gave them the go ahead to manufacture and they did not, therefore, need Roy Hill’s further approval – that is to say, Mr Mackenzie considered they did not need to await the AFC drawings before proceeding with the manufacture of the units.
Mr Mackenzie added that the second bank guarantees were not in English and not in the format required for the contract and therefore until Roy Hill’s legal team signed off and accepted Blue Ridge’s in the current format, Roy Hill would not process the invoices and so they (Transerve) would only get paid thirty days from Roy Hill’s acceptance. Mr Mackenzie insisted that he had already explained this.
In this email Mr Mackenzie added:
I suspect you have no chance of completing 50 units by mid‑April let alone end of March. Too much time has been wasted on material selection and getting basic steelwork on the shop floor. You should by now have had the majority of chassis completed and at least 50% of all frames stood and started on the fit out. You still do not have ANY Australian compliant material on site.
After further exhorting Transerve, Mulya and Leembruggen Butler to “get building” and apply 24 hours a day to the task, he added:
The client will today award the installation contract and they need DATES for supply. I NEED TO KNOW BY RETURN TODAY, WHEN THE FIRST 50 WILL BE SHIPPED???????????????????? NOT A GUESS A COMMITMENT!!!!!!!!!!!!
(As in original.)
That same day, 9 March 2012, Mr Mackenzie provided a submission to Roy Hill regarding the proposition that it should take over the second and third separable portions of the head contract. In his email to Ms De Villiers that day, Mr Mackenzie made a number of points to Roy Hill that should be noted, including that:
·He had received a verbal report from Craig Mackenzie the evening before that indicated some improvement on the documentation requirements and some further chassis on the shop floor but that he continued to share “your views and concerns” over the delivery schedule.
·The first shipment would not be ready before the end of March 2012 and while the yard continued to insist that they would meet the mid‑April date, which they believed was accepted, he had been unable to secure a guarantee that this will be achieved.
·He had also been looking at the possibility of sending people from Blue Ridge to site to push production along.
·Transerve and Mulya would be in Perth on the Tuesday and had suggested that they meet with Roy Hill but that was “simply a request to discuss the BG’s and payments, which I have explained to them already”.
·“I will leave it with you to let me know, if you would like to take this opportunity to vent your frustration and concerns, without venturing into discussion on the following proposal”.
·“On the matter of not only separable portion 1, but 2 and 3, I am seriously looking at pulling the pin on the overseas supply in favour of local build, although we may have to allow that first two shipments to go ahead. To this end we have already started our spread sheet on materials, labour and production”.
·The final production schedule point made was that, “[e]ven if we allowed Separable portion 1 to be completed, we would undertake to start on 2 & 3 almost immediately to Guarantee delivery”.
·“As we know, bank guarantees have been an issue. I would propose, with units being manufactured locally, that we can revert back to the standard practice we have in place with Rio Tinto and FMG and others” of a 10% deposit on order to proceed, other payments as current and two retentions of 5% again reducing, as per existing arrangements.
·“I trust this offers some comfort, that BR recognise the shortcomings of Indonesia at this stage and are prepared to resolve matters NOW to regain your trust and safe in the knowledge that local supply will ensure the product meets your expectations”.
Mr Michael Mattes of Roy Hill responded to that email stating that the situation was a “major concern” and that a Roy Hill director would like to go with him in the next “couple of weeks” to attend the manufacturing facility, which I infer meant Blue Ridge’s, and work through the issues highlighted.
It may reasonably be inferred at this point that Mr Mackenzie had formed the view that while there may still be some possibility that at least the first separable portion of 50 units might be produced under the current schedule, more or less on time, there was no way that Transerve could be relied upon to fulfil the second and third separable portions of the head contract.
In my view, as frustrating as Mr Mackenzie’s mode of communication with Transerve, Mulya and Leembruggen Butler plainly was, it is not apparent that at that point he had acted in a manner which can be described as unconscionable – arguably in anticipatory breach of the subcontract – but not unconscionable.
It must be acknowledged that Transerve was insisting that it needed AFC drawings and payment of the first progress payment. One can readily understand that in the circumstances as they existed, Transerve was not only frustrated by Mr Mackenzie’s manner but more particularly by Transerve’s inability to get not only answers to a range of TQs, but AFC drawings and, most importantly, payment of the first progress payment due under the subcontract. That payment of course, in a practical sense, depended upon Roy Hill processing the second bank guarantees and making the first progress payment under the head contract to Blue Ridge. Ms Png’s expressed concerns as to the difficult circumstances in which Transerve found itself and whether or not they were being “taken for a ride” were no doubt magnified at this point.
Mr Mackenzie’s apparent frustration then saw him, on 13 March 2012, again meeting with representatives of Roy Hill. At this meeting he expressly raised the prospect of Blue Ridge performing all work under the subcontract including under the first separable portion. Undoubtedly at this point Mr Mackenzie decided that Blue Ridge might, in prospect, terminate the subcontract with Transerve and come to an arrangement with Roy Hill to provide all the required accommodation units.
On 13 March 2012, Ms Png emailed Mr Mackenzie, with copies to others, disputing Mr Mackenzie’s claims that Transerve had given all kinds of excuses. At this point there had been a number of exchanges about ISO requirements. Ms Png told Mr Mackenzie that he had chosen to disregard and ignore all of Transerve’s emails and compliance requirements and demanded that they proceed forward. She pointed out that the project was a several million dollar project and that initially Transerve did not wish to take the project on as it had to be carried out overseas and required a lot of resources. She noted that the terms of payment were not favourable and they did not want to “jam” their bank facilities with $5.88 million earmarked for bank guarantees which would affect their facilities running existing projects. Thus it was that Mulya had obtained the bank guarantees and handled the procurement and fabrication.
Ms Png added that from 22 February 2012 until that time, Transerve had assisted Mulya with almost SGD600,000 to assist it purchase further goods, and complained that Mr Mackenzie was “impatient” and proceeded without checking if his presumptions were correct.
She added that she would have to bring these issues to the attention of Roy Hill and let them decide whether they would still want to proceed with the project which would have to be handled in accordance with “proper procedures and policies to be set by Transerve”.
At that point, as may be appreciated, resolution of the impasse, so far as the subcontract was concerned, was effectively out of Transerve’s hands and was about to be resolved through the side dealings between Mr Mackenzie and Roy Hill.
Nonetheless, in my view, it cannot be said that Mr Mackenzie’s proposals, as they were at this stage, were borne of any conduct that is unconscionable. Rightly or wrongly, he considered that the performance of Transerve under the subcontract was unsatisfactory and, in particular, that they were unlikely to produce the required units on time.
At the same time, while no evidence has been led in the proceeding from any representative of Roy Hill, the Court is apprised of the evidence of Mr Gill and, as noted above, he plainly was less than impressed with the capability of Transerve, and Blue Ridge, to produce the required units and to produce them on time. No doubt that information was fed back into Roy Hill. One can infer that in all the circumstances, Roy Hill was prepared to listen to the proposals being put by Mr Mackenzie on behalf of Blue Ridge, first in relation to the second and third separable portions of the head contract, and then, from 13 March 2012, in relation to the construction of the units under the first separable portion, because of what it knew, including from Mr Gill, about progress on the head contract and subcontract.
As noted above, Roy Hill is not a party to these proceedings and its officers have not been required to give evidence in the proceedings. By inference, they were concerned to protect their own interests, obviously enough, in seeing the substance of the terms and conditions of the head contract complied with and, in particular, the accommodation units produced in the required numbers, of appropriate quality, and on time.
Thereafter, the evidence, including the documentary evidence, shows that both Transerve and Blue Ridge by Mr Mackenzie were occupying what might be called an uncertain space. On 15 March 2012, Transerve provided a report to Roy Hill and Blue Ridge concerning the completed mockup of the unit, which had not been done a week earlier, and which both Craig Mackenzie and Mr Gill, I accept, doubted could be produced in seven days.
That same day Mr Mackenzie put a proposal to Roy Hill for Blue Ridge to fabricate the full scope of the separable portion of the head contract, effectively cutting Transerve out of the works.
The next day, 16 March 2012, Blue Ridge requested Transerve to confirm the forecasted completion dates for the first 50 units. It must be said that, at this point, Mr Mackenzie for Blue Ridge must necessarily have been anticipating that Transerve would not be able to meet its obligations to produce the first 50 units at the end of March 2012, or, as he had said in the earlier email, even by mid-April.
Transerve’s response was that they could not estimate a date until they received the AFC drawings and the written commitment as to when the first progress payment would be paid, and would likely require 10 days to get the remaining items on site, plus 30 days for production of the 50 units.
That same day Roy Hill wrote to Mr Mackenzie confirming receipt of his proposal for Blue Ridge to take over construction of all of the units and scheduled a meeting with Blue Ridge for 18 March 2012.
On 19 March 2012 Roy Hill conducted an audit of Blue Ridge’s facilities in Perth.
In the light of that audit, Mr Mackenzie plainly felt that, if he were to proceed to terminate the subcontract with Transerve, he would be able to conclude appropriate alternative arrangements with Roy Hill for the construction of the accommodation units.
It was in those circumstances that on 20 March 2012, Blue Ridge issued Contract Direction No 1 to Transerve.
By Contract Direction No 1, signed by Mr Mackenzie and dated 20 March 2012, provided to Transerve, Leembruggen Butler and Mulya, Blue Ridge stated as follows:
Further to our site visits, your e-mail from Lily Png on 13 March and our discussions with Roy Hill, you are hereby instructed to suspend all works, including the purchase of materials, until further notice. We will not be making payment for the shipping of the containers currently sitting in Jakarta, pending their possible return to WA.
We advise that BR is presently in negotiations with RH, as to proceeding with the current supply agreement, or face the possibility of cancellation, due to your nonperformance and failure to meet the delivery schedule by Transerve.
Given this situation, BR will visit Surabaya on Thursday 29 March to carry out an audit and determine the future of our relationship and this project in particular.
On the same day, 20 March 2012, a memorandum from Mr Mackenzie on behalf of Blue Ridge, dated 15 March 2012, was circulated amongst various officers of Roy Hill. It referred to the meeting on 13 March 2012 and noted the view Blue Ridge expressed at the meeting that “our selection of Transerve as overseas manufacturers of separable portion 1 was proving to cause us concern on a number of levels, not least, their ability to meet the scheduled delivery dates”.
The memorandum went on to say that they had discussed the possibility of limiting the number of units from offshore and supplementing supply from Blue Ridge’s yard at Welshpool. It was then stated:
Subsequent to that proposal, we received your instruction to consider the ‘Fabrication of the full scope of Separable Portion 1’.
In relation to its proposal to consider fabricating the first separable portion, in the memorandum Blue Ridge requested a formal letter from Roy Hill instructing Blue Ridge to terminate the current arrangements with immediate effect, based on non‑performance and inability to meet contract delivery dates.
Blue Ridge also proposed changes to the current terms of the bank guarantees.
Blue Ridge further stated that:
The reason for making this offer is simply, we made a wrong choice in contracting TRANSERVE and we pay the price.
Finally, Blue Ridge stated:
In conclusion, BR was privileged to receive this order to supply accommodation units to RH and having identified the problems with our contractor at the earliest opportunity, trust that our honesty in approaching you now, rather than have matters fester and get out of control, will, in addition to our offer to maintain the unit price, enable us the opportunity to retrieve the situation and gain your support and respect.
In order to minimise further activity offshore and allow us to make an immediate start to local sourcing and production, we respectfully request a decision from you no later than noon on Friday, 16^th March.
In the circumstances, while the question of Transerve’s alleged default under the subcontract can be debated long and hard, and it may reasonably be contended, as did Ms Png in her email to Mr Mackenzie, that Transerve’s difficulties were to be explained by Mr Mackenzie’s failure to progress AFC drawings, answers to TQs and to ensure that the first progress payment under the subcontract was made, those contract performance issues do not, in my opinion, justify a finding that Mr Mackenzie, or Blue Ridge, thereby engaged in unconscionable behaviour.
In relation to what was happening at about this point, and happened later when the contract was formally terminated and Blue Ridge made fresh arrangements with Roy Hill to carry out the same works, Transerve contends that in effect Blue Ridge and Mr Mackenzie engaged in conduct to “expropriate” the subcontract of Transerve with Blue Ridge. That may in a practical sense have been the consequence of what occurred, for in fact, in my view, a fresh head contract was made between Roy Hill and Blue Ridge which saw Blue Ridge perform, subject to different financial terms, price and delivery schedule, the substance of the works required under the subcontract. But the reason why Contract Direction No 1 and the subsequent termination notice were given by Blue Ridge and Mr Mackenzie is what is presently important to the question whether or not either or both acted unconscionably in terms of s 21 of the ACL. In my view, as sharp and concealing as Mr Mackenzie’s conduct was at this point – ensuring that Transerve did not get any wind of his side‑dealings with Roy Hill – that conduct was driven by the factors set out in Mr Mackenzie’s and Blue Ridge’s correspondence to Roy Hill and set out in the memorandum circulated amongst Roy Hill officers on about 20 March 2012. It was to do with commercial concerns and the estimation made, rightly or wrongly, by Mr Mackenzie that unless he took the action he was proposing, the existing contractual arrangements that Blue Ridge had with Roy Hill and the subcontract arrangements that Blue Ridge had with Transerve would effectively collapse to Blue Ridge’s financial and reputational disadvantage.
Consequently, I do not consider that in issuing Contract Direction No 1, Mr Mackenzie exhibited any conduct that can be described as unconscionable for the purposes of s 21 of the ACL, even though his actions may have exposed Blue Ridge to a damages claim for breach of contract.
Following Contract Direction No 1, matters proceeded to the final purported termination of the subcontract by Blue Ridge rather quickly. In receipt of Contract Direction No 1, Mr Walter Liu emailed Blue Ridge and others noting the Contract Direction No 1 and a number of other factors and also noting that Transerve’s request for signed drawings (revision J) and the date of the first progress payment “still stands”.
That same day, 21 March 2012, Ms De Villiers of Roy Hill sought clarification from Mr Mackenzie on his proposal to manufacture the units in Perth, requiring a response by close of business that day.
The next day, Mr Walter Liu decided to write to Mr Peter Jewell at Roy Hill and copied in Ms De Villiers, obviously seeking to retrieve the fast declining situation, stating that:
At the same time, we have through the appropriate channels (Blue Ridge) requested the following which we do not know if it has been made known to Roy Hill:
1.Signed drawings and the sign off on mockup (completed on 17 Mar 2012)
2.Written confirmation of actual date of payment of 1^st milestone and 2^nd milestone
3.Formal reply to our documents/ procedures/ TQs submitted.
On 22 March 2012, Blue Ridge by Mr Mackenzie provided the clarification that Ms De Villiers had sought in her letter of 21 March 2012.
On 26 March 2012, Mr Walter Liu provided Blue Ridge with Transerve’s response to Contract Direction No 1, disputing that the notice had been correctly served in accordance with the contract (but noting that activities would be suspended nonetheless) and disputing the reasons for the suspension. Again, the issues of the fault of Blue Ridge were raised, including:
·delays in approval of TQs;
·no formal acceptance of design by way of AFC drawings as discussed at the site meeting 8 March 2012;
·the absence of inspectors on 15 March 2012 to review and approve the revised mockup as discussed during the site meeting on 8 March 2012; and
·default of payment of project milestone claims (progress payments).

Transerve advised Blue Ridge it considered Blue Ridge in substantial breach of the contract, pursuant to cl 25.5(b). It was noted that failure by Blue Ridge to remedy that breach as requested under s 25.7(a) would result in Transerve having the right to terminate the contract and claim all reasonable damages. It was stated:
The above suspension measures (items 1 to 3) will remain in force until such time as the substantial breach has been remedied and all due payments have been received in full.
A fourth site meeting was set for 29 March 2012. On 27 March 2012, Mr Richardson from Blue Ridge emailed Ms De Villiers to ask if she could advise Mr Mackenzie, Mr Craig Mackenzie or him via text message when she had emailed “the letter” so that they could print it before their meeting with Transerve. The letter was referred to as the “cancellation letter”.
Prior to the site meeting of 29 March 2012, Ms De Villiers advised Mr Mackenzie and Craig Mackenzie that further to their telephone conversation earlier that morning, it was “Blue Ridge’s responsibility to manage its subcontractors and we will not enter into discussions surrounding your contract with Transerve”.
She added:
With regards to the Blue Ridge/Roy Hill relationship going forward we have not received formal approval from Roy Hill regarding the manufacturer of separable portion 1 of the contact. We have recommended to the client that Blue Ridge manufacture the units in your Welshpool facility, however until the client approves this recommendation, we cannot give you formal notification to do so.
The email added:
This email is not a direction to proceed with manufacture in Perth or acceptance of your proposal, It is for information purposes only.
(Emphasis in original.)
At the site meeting, which was attended by Mr Mackenzie, Craig Mackenzie and Mr Richardson as well as representatives of Transerve, Mulya and Leembruggen Butler, Blue Ridge, according to a minute prepared by the applicants’ representatives, advised in the following terms:
·Mr Mackenzie mentioned that the “mockup unit is of no use to Blue Ridge & Roy Hill and therefore the contract is terminated”;
·Craig Mackenzie mentioned that the construction “is a shambles as quality is important and the finishing works on the mockup is not acceptable”;
·Craig Mackenzie and Mr Richardson mentioned that the “building is uninhabitable to anyone and will not sign‑off for delivery”;
·water ingress is a major factor as unit will be subjected to leakage during shipment;
·Mr Mackenzie mentioned that the first drawing from Siam Steel is the AFC drawing by Blue Ridge;
·Craig Mackenzie mentioned that Blue Ridge wished to end the contract amicably with all parties and wanted to know the applicants’ future plan despite saying that Blue Ridge has no intention to buy over the steel or any materials purchased for the project;
·Mr Mackenzie mentioned that Mr Gill of Roy Hill had visited and seen the mockup and the progress photos and reported its status to Roy Hill, and “[t]hat was the reason for termination of contract”;
·Mr Leembruggen mentioned to Mr Mackenzie that Transerve to date had not received any signed AFC drawings, then Mr Mackenzie got upset and said “[d]on’t even go there, you were given approved drawings during the award and TPL [Transerve] were supposed to work off that drawing”;
·Mr Mackenzie terminated the contract “based on non‑performance and failure to deliver” despite not issuing AFC drawings and unanswered TQs; and
·the meeting became heated and Blue Ridge walked out of the meeting at 11.30am.
Those minutes were signed by Transerve and Mulya but not by Blue Ridge.
Also, on 29 March 2012, Craig Mackenzie responded to Ms De Villiers’ email concerning her observation that it was Blue Ridge’s responsibility to manage its subcontractors, stating that:
we understand that you are unable to give direction to proceed with production in Perth at this time, and we are only looking for instructions to cease production of the units overseas and understand you have no involvement with our subcontractors.
On 2 April 2012, Transerve by Mr Robert Liu disputed that Blue Ridge was entitled to terminate the subcontract and was of the view that the purported termination was unlawful and in breach of the subcontract. It advised that in accordance with the subcontract, the parties must continue to perform their obligations. Demand was then made under the subcontract for the amount of AUD3,401,800 to be paid pursuant to invoices 15225 and 15227, which were attached, being the first two progress payment invoices.
Consistent with my view set out earlier, I do not consider that at the time of the termination or purported termination of the subcontract on 29 March 2012, it can be said that either Blue Ridge or Mr Mackenzie was motivated other than by their direct commercial interests. In the circumstances I do not consider that their conduct can be properly characterised as unconscionable for the purposes of s 21 of the ACL.
In these circumstances, the claim for damages against Mr Mackenzie based on his alleged unconscionable conduct or involvement in the unconscionable conduct of Blue Ridge must fail.
DID MR MACKENZIE INTERFERE WITH CONTRACTUAL RELATIONS?
By [40A] of the statement of claim, the applicants plead that:
By his conduct pleaded at paragraph 39D above, Mackenzie intentionally induced Blue Ridge to break the Subcontract, with the knowledge that Blue Ridge was not entitled to break the Subcontract except by complying with section 25, 25A or 26 of the Subcontract.
The conduct pleaded at [39D] of the statement of claim is the unconscionable conduct referred to above, but particularly pleaded out as follows:
39D.1Mackenzie knew that Transerve had complied with the security requirements under the Subcontract, by reason of the matters pleaded at paragraphs 14, 14A, 14B and 16 above;
39D.2Mackenzie knew that Transerve was precluded from building the accommodation units because it had not been provided with approved drawings and had not had technical queries answered, by reason of the matters pleaded at paragraphs 9A, 18A, 27A, 28A, 32B, 32C, 32D and 32E above;
39D.3Mackenzie knew that Blue Ridge had breached the Main Contract by failing to provide the security required to Roy Hill, by reason of the matters pleaded at paragraphs 6B, 6C, 16C, 160, 16E, 18B, 18C, 18D and 28B above;
39D.4with the knowledge of the matters pleaded at paragraphs 39D.1 to 39D.3 above, Mackenzie caused Blue Ridge to cancel the Subcontract with Transerve, as pleaded at paragraphs 32A, 32F, 32G, 32H, 32J, 33A, 33B, 33D, 34 and 36 above; and
39D.5while Mackenzie undertook the conduct pleaded at paragraph 39D.4 above, he continued to represent to Transerve that they were under an obligation to continue to build the accommodation units, as pleaded at paragraphs 26A and 32E above, despite the knowledge pleaded at paragraphs 39D.1 to 39D.3 above.
In essence, for the reasons that have led to the Court finding that the unconscionable conduct case is not made out against Mr Mackenzie, the Court also finds that the tort of intentional interference with contractual relations is not made out.
The applicants contend that the documents and the evidence of Mr Mackenzie given under cross‑examination establish “irrefutably” that he had knowledge of the existence of the contract, and this is not disputed by Mr Mackenzie, either in his pleadings or in his evidence.
It is further contended that Mr Mackenzie was both aware of and understood that Blue Ridge would be liable for costs provided for under the subcontract resulting from a termination for convenience. With that knowledge and with the intent of both bringing about the termination of the subcontract and avoiding for Blue Ridge a liability to make payments to Transerve in accordance with cl 26 of the subcontract, Mr Mackenzie brought about Blue Ridge’s “wrongful termination” for alleged breach.
The applicants further contend that Mr Mackenzie engaged in direct interference with Blue Ridge’s contract with Transerve in that he persuaded, induced and procured Blue Ridge to breach the contract by terminating for alleged breach, rather than for convenience.
Additionally, they contend Mr Mackenzie personally benefitted from the interference with contractual relations in that in cross‑examination he admitted that substantial sums of money had been paid to him or entities relating to him which he controlled as a direct consequence of Blue Ridge taking over performance of the works from Transerve.
Mr Mackenzie acknowledges that the case put against him is that he intentionally induced Blue Ridge to break the subcontract with the knowledge that Blue Ridge was not entitled to break the subcontract except by complying with cll 25, 25(a) or 26 of the subcontract.
Mr Mackenzie submits that at material times he acted within the scope of his authority as a director of Blue Ridge and cannot be held liable for procuring Blue Ridge to breach the subcontract (which is denied in any event).
Mr Mackenzie says that if the claim of intentional interference is available to the applicants, the evidence establishes that he understood that Transerve was in breach of its contractual obligations for failure to provide a bank guarantee and due to its inability to perform.
He submits that on any analysis of the evidence it is not open to the Court to find that he had knowledge that Blue Ridge was not entitled to break the subcontract. Mr Mackenzie submits that, rightly or wrongly, he understood Transerve to be in breach of the subcontract and had the firm understanding that it was incapable of performing under the subcontract entitling him to cause Blue Ridge to issue the notice of termination.
It is common ground that the requirements of the tort include the following elements:
(1)There must be a contract between an applicant and a third party.
(2)The respondent in the proceeding must know that such a contract exists.
(3)The respondent must know that if the third party does, or fails to do, particular acts, conduct of the third party would be in breach of contract.
(4)The respondent must intend to induce or procure the third party to breach the contract by doing or failing to do the particular act.
(5)The breach must cause loss or damage to the applicant.
See generally Balkin RP and Davis JLR, Law of Torts (5^th ed, LexisNexis, 2013) at 612-620.
In this case it is not in issue that there was a relevant contract between Transerve and Blue Ridge. It is also not in dispute that the respondent, Mr Mackenzie, knew that the contract existed at material times.
What is in dispute is whether Mr Mackenzie knew that if Blue Ridge did or failed to do a particular act its conduct would be in breach of the contract and whether Mr Mackenzie intended to induce or procure Blue Ridge to breach the contract by ultimately purporting to terminate the subcontract.
In this case, for the reasons I have given in dealing with the unconscionable conduct claims, I consider that while the applicants, and in particular Transerve, may consider that Mr Mackenzie acted quite unfairly at material times, he did not cause or induce Blue Ridge to act in the way that it did, ultimately resulting in the termination of the subcontract, knowing that such conduct would be a breach of contract. I accept that Mr Mackenzie acted at all material times on the basis, rightly or wrongly, that Transerve was incapable of performing the subcontract by producing the accommodation units of appropriate quality on time.
Accordingly, I accept the submission made on behalf of Mr Mackenzie that it is not open to the Court to find that Mr Mackenzie had knowledge that Blue Ridge was not entitled to break the subcontract.
Mr Mackenzie also makes a submission, referring to O’Brien v Dawson (1942) 66 CLR 18; [1942] HCA 8, that an officer of a company, if he is acting within the scope of his authority and causes the company to breach its contract, cannot be held liable for the company’s actions. In O’Brien v Dawson, Starke J, at 32, said that the acts of Doyle, a director of the relevant company with whom another director was alleged to have conspired:
were the acts of the company and not his personal acts which involved him in any liability to the plaintiff. But I would add that it does not follow that a director of a company would escape personal liability under cover of the company’s responsibility if he himself became an actor and invaded the plaintiff’s rights, as by trespassing on his land, or seizing his goods and so forth.
The line of cases concerning directors being held liable because they have made the act or conduct their own, as distinct from that of the company, and those going in the other direction, are discussed by Finkelstein J in Root Control Pty Ltd v Root Quality Technologies Pty Ltd (2000) 177 ALR 231 at [127] and following; [2000] FCA 980.
In the circumstances of this case, I do not think that it can be fairly said that Mr Mackenzie went beyond acting as a director of the company at material times and so I do not consider that his conduct should, in any event, be seen as capable of justifying a finding that he separately caused or induced Blue Ridge to breach the subcontract.
For these various reasons, I find that the claim for damages against Mr Mackenzie based on intentional interference with contractual relations must fail.
THE QUESTION OF LOSS AND DAMAGE
In these circumstances, it is unnecessary to further consider the questions relating to whether the applicants would have made out the claims to loss and damage suffered.
CONCLUSION AND ORDER
The appropriate primary order that should be made is that the applicants’ claims against Mr Mackenzie be dismissed.
I will hear from the parties as to any other orders that may be considered appropriate, and also as to the question of costs.
The orders are:
(1)The proceeding be dismissed.
(2)The Court will hear from the parties as t any consequential orders and costs.

I certify that the preceding four hundred and twenty-five (425) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Barker.
Associate:
Dated: 28 August 2015

Citation:	Transerve Pte Ltd v Blue Ridge WA Pty Ltd [2015] FCA 953
Parties:	TRANSERVE PTE LTD, PT MULYA SURYA and LEEMBRUGGEN BUTLER PTY LTD (ACN 153 055 513) v BLUE RIDGE WA PTY LTD (ACN 147 886 173) and ALAN NEIL MACKENZIE
File numbers:	SAD 269 of 2012
Judges:	BARKER J
Date of judgment:	28 August 2015
Catchwords:	CONSUMER LAW – whether second respondent made misleading or deceptive representations – personal liability of second respondent – second respondent not acting merely as corporate organ of first respondent – whether agency arrangements – pleaded representations not proved CONSUMER LAW – whether second respondent engaged in unconscionable conduct – circumstances of termination of subcontract – whether agency arrangements – conduct motivated by commercial interests – not unconscionable TORTS – whether second respondent intentionally interfered with contractual relations – second respondent understood first applicant to be in breach of subcontract – second respondent did not intend to cause or induce first respondent to breach subcontract – second respondent did not make conduct his own
Legislation:	Australian Consumer Law s 18, s 21, s 22, s 22(1), s 22(2), s 236 Competition and Consumer Act 2010 (Cth) Sch 2 Trade Practices Act 1974 (Cth) s 51AC, s 52
Cases cited:	Allphones Retail Pty Ltd v Hoy Mobile Pty Ltd (2009) 178 FCR 57; [2009] FCAFC 85 Australian Competition and Consumer Commission v Keshow [2005] ASAL 55-142; [2005] FCA 558 Australian Competition and Consumer Commission v Samton Holdings Pty Ltd (2002) 117 FCR 301; [2002] FCAFC 4 Australian Competition and Consumer Commission v Simply No-Knead Franchising Pty Ltd (2000) 104 FCR 253; [2000] FCA 1365 Australian Securities and Investments Commission v Narain (2008) 169 FCR 211; [2008] FCAFC 120 Australian Securities and Investments Commission v National Exchange Pty Ltd (2005) 148 FCR 132; [2005] FCAFC 226 Body Bronze International Pty Ltd v Fehcorp Pty Ltd (2011) 34 VR 536; [2011] VSCA 196 Cleary v Australian Co-Operative Foods Ltd (No 2) (1999) 32 ACSR 701; [1999] NSWSC 1062 Director of Consumer Affairs Victoria v Scully (2013) 303 ALR 168; [2013] VSCA 292 Finishing Services Pty Ltd v Lactos Fresh Pty Ltd [2006] FCAFC 177 Henderson v McSharer [2015] FCA 396 Houghton v Arms (2006) 225 CLR 553; [2006] HCA 59 Hurley v McDonald’s Australia Ltd (2000) ATPR 41-741; [1999] FCA 1728 Legione v Hateley (1983) 152 CLR 406 Matheson Engineers Pty Ltd v El Raghy (1992) 37 FCR 6 Monroe Topple and Associates Pty Ltd v Institute of Chartered Accountants in Australia (2002) 122 FCR 110; [2002] FCAFC 197 O’Brien v Dawson (1942) 66 CLR 18; [1942] HCA 8 Root Quality Pty Ltd v Root Control Technologies Pty Ltd (2000) 177 ALR 231; [2000] FCA 980 Tonta Home Loans Australia Pty Ltd v Tavares (2011) 15 BPR 29,699; [2011] NSWCA 389 Watson v Foxman (1995) 49 NSWLR 315 Yorke v Lucas (1985) 158 CLR 661; [1985] HCA 65 Standard Chartered Bank v Pakistan National Shipping Corp (No 2) [2003] 1 AC 959; [2002] UKHL 43
Date of hearing:	4-8 August 2014, 6-8 October 2014, 2 December 2014
Date of last further submissions requested by the Court:	11 December 2014
Place:	Perth
Division:	GENERAL DIVISION
Category:	Catchwords
Number of paragraphs:	425
Counsel for the Applicants:	Mr PJ Adams
Solicitor for the Applicants:	DMAW Lawyers
Counsel for the Second Respondent:	Mr AP Hershowitz
Solicitor for the Second Respondent:	Granich Partners

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION	SAD 269 of 2012

JUDGE:	BARKER J
DATE OF ORDER:	28 AUGUST 2015
WHERE MADE:	PERTH

JUDGE:	BARKER J
DATE:	28 AUGUST 2015
PLACE:	PERTH