United Rentals Australia Pty Ltd v Pacific Formwork (Aust)
[2023] ACTMC 30
MAGISTRATES COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | United Rentals Australia Pty Ltd v Pacific Formwork (AUST) Holdings Pty Limited |
Citation: | [2023] ACTMC 30 |
Hearing Date: | 5 September 2022; 8 September 2022; 19 December 2022 |
Decision Dates: | 5 September 2022; 30 March 2023; 28 August 2023 |
Before: | Chief Magistrate Walker |
Decisions: | See [32], [86-88], [96-98] |
Catchwords: | CIVIL LAW – Application for damages in the torts of trespass, conversion or detinue – Applicability of the Uncollected Goods Act 1996 (ACT) – whether costs claimed under the Uncollected Goods Act 1996 (ACT) are reasonable |
Legislation Cited: | Acts Interpretation Act 1901 (Cth) s 33(2A) Acts Interpretation Act 1954 (QLD) s 32CA(2) Court Procedure Rules 2005 (ACT) r 2.10 Interpretation Act 1987 (NSW) s 9(2) Interpretation of Legislation Act 1984 (VIC) s 45(2) Legislation Act 2001 (ACT) s 160(1), 146 Uncollected Goods Act 1996 (ACT) (‘UG Act’) ss 3(1), 3(2), 5, 6, 7, 26(1), 26(2), 27, 32 |
Cases Cited: | Calderbank v Calderbank [1975] All ER 333 Hatton v Beaumont (1978) 20 ALR 314; 52 ALJ 589 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 R v Delly [2003] ACTSC 113 |
Texts Cited: | Lexis-Nexis Australian Legal Dictionary 2016 |
Parties: | United Rentals Australia Pty Ltd (‘United’) ( Plaintiff) Pacific Formwork (AUST) Holdings Pty Limited (‘Pacific’) ( Defendant) |
Representation: | Counsel Anca Costin ( Plaintiff) Brienna Anderson ( Defendant) |
| Solicitors Bartier Perry Lawyers ( Plaintiff) Aulich Civil Law ( Defendant) | |
File Number: | CS 7 of 2022 |
CHIEF MAGISTRATE WALKER:
Decision as to the applicability of the Uncollected Goods Act 1996 (ACT) (5 September 2022)
1․The claim is brought by the plaintiff, United Rentals Australia Pty Limited (“United”) against Pacific Formwork (AUST) Holdings Pty Limited ("Pacific”) for damages in the torts of trespass, conversion and detinue.
2․The claim arises in relation to the fact that Pacific has possession of nine shipping containers which were left on their land by a third party, Wridgway, when the latter went into liquidation. United owns the shipping containers which were leased to Wridgway and stored on property leased from Pacific. That lease terminated when Wridgway went into liquidation. Pacific defends the matter on the basis that the items have not been collected as required pursuant to provisions of the Uncollected Goods Act 1996 (ACT) (the UG Act) and counterclaims the costs incurred in relation to possession of the shipping containers pursuant to the UG Act.
3․The matter commenced before me today and was to proceed on the papers, with argument as to the plaintiff's application to rely on statements of Mr Craig Baker, an employee of United. Following receipt of opening submissions, the parties agreed that it would be beneficial for me to determine in the first instance whether the UG Act applies to the agreed facts dated 22 June 2022.
4․The UG Act’s long title is “an Act to provide for the disposal of uncollected, lost or abandoned goods, and for related purposes”.
5․Goods are defined in the dictionary to the UG Act as “movable personal property, including animals and food”. Subsection 3(2) excludes certain items not relevant for the purpose of these proceedings.
6․This dispute is in respect to shipping containers which clearly fall within the definition of goods.
7․Section 3(1) states that the UG Act applies to goods in the possession of a person, regardless of the timing of when they came into that person’s possession.
8․Section 160(1) of the Legislation Act 2001 (ACT) provides that, “where an act references a person, that generally includes a reference to a corporation as well as an individual”. I am satisfied that that is the case in the UG Act.
9․Certain categories of goods are subject to regulation as to how they are to be dealt with pursuant to the UG Act, being uncollected goods and goods found on Territory premises or property.
10․Section 5 of the UG Act operates to deem certain goods uncollected goods for the purposes of the Act. This section introduces the concept of possessor. Possessor is defined in the UG Act as “a person in possession of goods belonging to another person”.
11․The preliminary issue is whether the shipping containers are uncollected goods in accordance with the UG Act.
12․United alleges that the shipping containers are not uncollected goods because they were not held in the absence of an agreement regarding collection of the goods because of the written sublease arrangement between Pacific and Wridgways requiring Wridgways to remove the shipping containers on termination of the subleased property arrangement. Alternatively, because Pacific made a request to United to collect the goods after United had already demanded possession of them, they were not, therefore, “uncollected”. Further, the request by Pacific to collect the goods pursuant to the UG Act was non-compliant with the mandatory provisions of sub-section 7(2)(b) of the Act. And finally, United alleges that in any event, a statement of costs made by Pacific pursuant to subsection 7(2)(v) was not reasonable and the notice was therefore invalid.
13․Pacific submits that the shipping containers are clearly goods as defined within the UG Act and were in its possession at all relevant times. Pacific submits that the goods are deemed uncollected by virtue of subsection 5(1)(a) of the UG Act and that there was an agreement as to collection of the goods between it and Wridgway and that Wridgway should be considered an owner on the basis that whilst not having legal title, its possession and control of the shipping containers were sufficient to establish ownership.
14․I am satisfied on a reading of the UG Act that, dealing as it does with goods, and the shipping containers clearly fall within the definition of goods, it has potential application to these facts. I am further satisfied that the goods were in the possession of Pacific at all relevant times. There is nothing in the UG Act which precludes its operation by virtue of a demand by an owner for return of goods.
15․The more difficult issue is whether the goods are to be treated as uncollected goods having regard to section 5.
16․In my view, subsection 5(1)(a) has no application in this case. It deals with the situation where the possessor receives or holds goods in pursuance of an agreement under which the owner was to collect the goods at a certain time. Whilst that may have been the arrangement between Wridgway and Pacific having regard to the lease arrangement between them, particularly the “make good” provision at paragraph 18 of that lease, that does not reflect the situation as between Pacific and United. I make this finding without drawing any conclusion as to whether a person who is renting an item, such as the containers, can be said to be the owner for the purpose of the subsection as it is not necessary in light of my conclusion as to the applicable provision of section 5.
17․This factual scenario is more properly considered through the lens of section 5(1)(c) in that the goods (shipping containers) are held by the possessor (Pacific) absent any agreement regarding collection of the goods with the owner (United). It follows that pursuant to subparagraph 5 (1)(c)(ii), the question arises whether United has refused or failed to comply with a request made in accordance with section 7 to collect the goods.
18․I turn to consider the sufficiency of the notice issued pursuant to section 7 of the UG Act. The Defendant relies upon a letter dated 8 November 2021 under the hand of Ms Caitlin Holloway, lawyer for Pacific, addressed to Mr David Creais, solicitor for United, as constituting the relevant notice.
19․Section 7 falls within division 2.2 of the UG Act. Section 6 provides, also in that division, that the division applies to goods received or held in the absence of an agreement to their collection. On my factual findings, this division applies to the arrangement as between United and Pacific. The letter from Ms Holloway asserts that the goods were deemed uncollected because of Wridgway’s breach of its contractual obligation to remove them. This assertion reflects what I have found to be a misinterpretation of the UG Act, albeit not on the grounds submitted by United. Nonetheless, the letter purports to issue a request (also referred to as a demand) to United to collect goods in accordance with section 7 of the Act.
20․Section 7(1) provides that a possessor may request the owner of goods to collect them within seven days of the request. That is what was requested of United.
21․Pursuant to subsection 7(2) the request shall comply with certain other requirements. I will return to the significance of the use of the word shall following consideration of the notice.
22․The notice was in writing; the goods were described as containers and their identifying numbers included in the notice; the notice warned that if the goods were not collected within seven days from the date of the notice, the goods may be disposed of in accordance with part 3 of the UG Act; a statement of costs that must be met by the owner before the goods would be released by the possessor was included; the request was sent to the owner's solicitors and no issue has been taken as to that being an appropriate address. The issues which remain outstanding are that the notice did not specify the address at which the items could be collected and the times at which, or the hours between which, the goods would be available for collection. United submits that the statement of costs was non-compliant as it was not reasonable.
23․It follows that United submits that the notice was invalid, and the goods were not properly deemed uncollected.
24․Pacific submits that there was no requirement for the notice to be strictly compliant, and that in any event an address was provided in the letter and, by not specifying a particular time for collection, it was open to infer that the goods could be collected at any time or by arrangement.
25․I observe that whilst there is reference to a block and section number where the goods had been left, this does not amount to an address as people ordinarily consider that term. Address ordinarily refers to a number, street and suburb or town which can be discerned on an ordinary map. I reject the notion that simply not referring to a time leaves it open to infer that the goods could be collected at any time or via arrangement; there is simply no basis for such an inference to be made. I am satisfied that a document purporting to be a statement of costs was provided. The fact that the reasonableness of the costs claim may be subject to review on an application does not derogate from the nature of the document as a statement of costs. Noting the two instances of non-compliance with the notice, however, the question arises as to whether strict compliance with the section is required.
26․This depends upon whether the requirements of subsection (7)(ii) are mandatory. United asserts that the use of the word shall makes each of the requirements mandatory, relying on the definition given in the LEXIS-NEXIS Australian Legal Dictionary 2016 which provides “in statutory interpretation this term generally means has a duty to; is required to”. The acts interpretation legislation in most Australian jurisdictions has provided that shall, where it is used to impose a duty, indicates that the duty must be performed (for example Interpretation Act 1987 (NSW) section 9(2)); or where it is used in conferring the power, is to be construed as meaning that the power must be exercised (for example, Interpretation of Legislation Act 1984 (VIC) section 45(2)). The word must has been used as an equivalent term; for example, Acts Interpretation Act 1954 (QLD) section 32CA(2). The Commonwealth interpretation legislation simply states that for recent legislation the word may imposes a discretion, without requiring the determination first of whether the provision confers a power rather than a duty: Acts Interpretation Act 1901 Commonwealth, section 33(2A). However, courts have often found exceptions to this rule, determining whether a provision is mandatory or directory by examining the particular provision in the context of the case: for example, Hatton v Beaumont (1978) 20 ALR 314; 52 ALJ 589. Whether or not an action performed in breach of a statutory obligation is invalid is determined by applying the principles of statutory interpretation to conclude whether the legislative intent would be for a breach to produce invalidity: Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355.
27․Pacific submits that the word shall is to be interpreted having regard to the purposes of the UG Act, that is to protect possessors and therefore should be read favourably to their position. I reject the notion that the purpose of the UG Act is simply for the protection of possessors. Its aim is clearly to fairly regulate relations between possessors and owners with their potentially competing interests.
28․I do note that section 7 includes within the notice requirements three forms or levels of obligation: at subsection 1, a possessor may request the owner to collect goods within a certain timeframe; at subsection 2 a request shall have certain characteristics; and at subsection 3, a request must be sent to a certain location. One must assume that the legislature had regard to different levels of obligation required in respect to these different aspects of the notice. Must is clearly mandatory and given that it is applied in relation to what in legal process might be considered service, one can appreciate why the direction is so clear. In relation to the use of may, this clearly indicates a discretion under the control of the possessor. Shall appears to fall between the two, both literally but also as a matter of interpretation, figuratively. The only decision the parties were able to draw to my attention to assist on this point was that of the former Chief Justice Higgins in R v Delly [2003] ACTSC 113. His Honour was there dealing with an application for a stay of criminal proceedings relating to the disposition of a motor vehicle. The only observation made by his Honour was that at pages 351-2 of the decision in which he noted that a purported notice under the UG Act may be non-compliant in relation to the failure to give public notice, for example through a newspaper advertisement, when an owner’s address was unknown to the possessor. It does not assist in this case, particularly as the obligation in relation to addresses falls under the clear mandate of “must”.
29․It is unfortunate that the term shall appears in the UG Act and is inconsistent with current drafting practice. I note that the Act predates the Legislation Act 2001 (ACT) in which the terms may and must are considered in section 146 but in which the term shall does not appear.
30․Given the apparent sliding scale of obligations provided for in section 7, I am satisfied that the use of the word shall is a reflection of its related concept of should which imports a high level of obligation, but less than an absolute mandate. Not only does this interpretation make sense of the section as a whole but also reflects something less than absolute compliance may be sufficient to properly inform the owner and thus allow compliance with the notice. The compliance must be substantial as the ramifications of the notice, that is the ability to treat goods as uncollected and dispose of them, are significant. Those defects which have been identified by United in this case are not such as to render the notice ineffective and I find it is a compliant notice.
31․In so far as United asserts that the statement of costs is non-compliant, that is not made out. Clearly United has a concern as to the amount of costs claimed, that is the reasonableness of it is challenged. That per se does not render the statement non-compliant. The avenue of redress for that issue is an application for a review pursuant to section 27 of the UG Act.
32․In conclusion, I find that the UG Act applies; the notice issued for collection of those goods was substantially compliant rendering the goods “uncollected goods” and may be relied upon to enliven subsequent rights and obligations under the Act.
Decision as to what constitutes reasonable costs (30 March 2023)
Introduction
33․This matter commenced by way of Originating Claim filed 24 January 2022. United Rental Australia Pty Ltd (United) (previously known as Royal Wolf) sought damages from Pacific Formwork (AUST) Holdings Pty Limited (Pacific) for trespass, conversion and detinue in relation to nine shipping containers (the containers) belonging to United.
The claim
34․The amount claimed by United in its Originating Claim was $47,723.76 reflecting the value of the containers and lost revenue from their use, plus interest.
35․Pacific responded to the Originating Claim with a defence and counterclaim. The defence was, in short, that the UG Act applied to the circumstances in which Pacific held the containers and that United had not met the costs claimed by Pacific for their return. The claim was, Pacific argued, statute barred pursuant to section 32 of the UG Act. Pacific counterclaimed for the payment of its reasonable expenses/costs pursuant to section 26(2) of the UG Act.
36․In its reply and defence to the counterclaim, United argued that the UG Act did not apply as the containers were not uncollected goods within the meaning of section 5 of the Act, that no compliant request was made pursuant to section 7(2) of the Act and that a statement of costs provided with a purported request on 8 November 2021 did not reflect “reasonable costs” incurred by Pacific in complying with the Act or in storing and maintaining the containers prior to collection.
Procedural history
37․The matter proceeded to mediation on 2 August 2022 but regrettably did not resolve. It came before me for hearing on 5 September 2022. Following initial argument, that day I found that the UG Act applied, that the notice issued for collection of the containers was substantially compliant rendering them “uncollected goods” and could be relied upon to enliven subsequent rights and obligations under the Act.
38․I further found that the statement of costs was compliant. I observed that United’s challenge to the reasonableness of it was properly by way of an application for review pursuant to section 27 of the UG Act.
39․The matter was adjourned to allow the parties to consider their respective positions with encouragement to consider settlement given the rapidly accruing legal costs vis a vis the amounts in dispute.
40․The matter came back before me on 8 September 2022. On that occasion I determined that United’s common law claim was barred by operation of section 32 of the UG Act. I directed that United’s Claim could be relied upon to prosecute a review of charges sought by Pacific pursuant to section 27 of the UG Act. The parties sought time to file affidavit evidence. A timetable was agreed and an in chambers orders was made reflecting this.
41․The matter proceeded by way of both affidavit and oral evidence on 19 December 2022. A timetable for written submissions was then agreed. The matter was listed for delivery of decision on 1 March 2023. Due to pressure of court listings, the matter was further adjourned until 30 March 2023.
Facts
42․Much of the factual basis of the matter was uncontentious.
43․United deals, relevantly, with the supply of shipping containers to the removals industry.
44․Pacific is part of a group of approximately 15 companies engaged in construction and related activities in the ACT.
45․In 2019, United hired the containers to Wridgways Pty Ltd (Wridgways). The containers were stored on property which Wridgways Australia Pty Ltd (Widgways Australia) sub-leased from Pacific. On 9 December 2020, Wridgways went into liquidation. On 12 March 2021, Pacific terminated the sub-lease, as a result of which Wridgways Australia was required to remove all its items from the leased property. On 25 May 2021, Wridgways Australia vacated the property. No-one removed the containers.
46․On an unspecified date, Pacific arranged to relocate the containers, and other items abandoned by Wridgways Australia on the sub-leased land, to property in the same suburb, Hume. This property belonged to Pacific’s related company, National Formwork, (the related company). The move was effected using equipment and personnel belonging to the related company, with supervision by Ms Andre Ferreira, Operations Manager for Pacific. They have been, and continue to be, stored outdoors on the related company’s property (T82/7).
47․From at least 1 August 2021, United, through solicitors Hall Chadwick, sought clarification of what containers were left by Wridgways on the Pacific site. On 2 August 2021, Mr Ferriera, on behalf of Pacific, asserted, based on legal advice, that the UG Act applied. He noted that the contents of some containers were being made available to people who contacted Pacific and paid a fee for their release.
48․At that time, United were not even aware how many containers remained with Pacific. United requested this information on 2, 4 and 12 August 2021.
49․Pacific responded on 17 August 2021 that they could not provide that information as they were unable to locate the containers “due to lockdown”. United’s request was repeated on 25 August 2021, noting in an email on that date “…as you are aware, the containers are owned by Royal Wolf and need to be collected by Royal Wolf”. On 1 September 2021, United again reiterated its request. On that same date, Mr Ferreira responded that he could not attend the site due to (Covid-19) stay at home orders. On 16 September 21, United asked again for details of what containers Pacific held in order to be able to update people who may have belongings in them.
50․On 19 September 21, Mr Ferreira sent photographs to United. On 11 October 2021, Hall Chadwick for United confirmed that the containers identified now by number were in fact Royal Wolf (United) containers and sought access for their removal.
51․I interpolate that there is no evidence before the court as to when Pacific became aware that United had an interest in the containers or indeed when United became aware that Wridgways (Aust) had abandoned them on the Pacific site. There is no evidence that Pacific had requested United to collect the containers prior to United making an enquiry as to which or how many of its containers were held by Pacific by the email on 1 August 2022.
52․There is also no evidence as to exactly when the containers were removed to the related company site, although it seems unlikely to have been before 25 May 2021 when Wridgways Australia vacated the sub-leased property.
53․On 15 October 2021, Mr Ferreira referred to a quote submitted to Royal Wolf “some time ago” which had not been paid. Mr Craig Baker, National Manager Removals for Royal Wolf, was confused but noted that he wished to remove the containers as soon as possible.
54․I note there is no “quote” in evidence and it appears that United had no inclination of any claim for payments of costs prior to Mr Ferreira’s email of 15 October 2021.
55․On 18 October 2021, Ms Graciette Ferreira (Ms Ferriera) sent an invoice “in respect of moving and storage of containers” to United. That invoice detailed “costs” for the period 1 April 2021 to 5 November 2021. It incorporated one off removal costs of $10,870 and storage costs of $109,929.55. The “one off costs” relate to at least some items which were later found to be unrelated to United: Home pack, moving boxes, sorting boxes. The storage costs were calculated on the basis of 337.5 units (that is cubic metres) at $10 per unit for 31 weeks. Leaving aside what appear to be mathematical errors in various aspects of the invoice, the amount was calculated as $109,929.55 less a discount of $46,731.33 leaving an invoiced amount of $63,198.21 plus 10% GST, a total of $69,518.03.
56․On 22 October 2021, United demanded return of the containers. On 25 and 26 October 2021, Pacific stated that it required reasonable compensation before handing over the containers.
57․On 27 October and 3 November 2021, Pacific requested proof of ownership which United provided on 4 November 2021.
58․On 8 November 2021, Pacific invited United to collect the containers upon payment of “the enclosed statement of costs”. That is the invoice relied on by Pacific to reflect costs now sought, that is $69,518.03, plus interest. That amount has not been paid.
59․On 1 December 2022, Pacific paid its related company $330,412.50 for storage of the containers on its land. The amount is said by Pacific to be calculated on the same basis as the initial invoice but for the additional days since that 8 November 2021 invoice. However, that amount was not even invoiced to the related company until 23 November 2022.
60․Whilst the factual matters relevant to determination of the issue are largely agreed, there was a real dispute as to how the costs claimed by Pacific were calculated and, in particular, whether the basis for the calculation was reasonable.
61․Mr Craig Baker gave oral evidence in support of his affidavit dated 11 November 2022. He is experienced in self-storage arrangements through previous employment; he attested that self-storage facilities are usually purpose built, provide a controlled environment and personalised customer access. He is currently engaged in the management of national removalist customers for United, including hire and sale of shipping containers to national removalist companies, and managing stock of containers to meet demand in that area. He provided a lost hire fee calculation for the containers based on $4.05 per container per day. He stated that rehire of the nine containers in the ACT would have been easy, interstate removals being commonplace, in particular Department of Defence removals. He also gave evidence of the costs of storage of shipping containers at container storage facilities at an average of $1 per day. He estimated the cost of replacing the 9 containers at $52,645.68 based on current prices, noting a delay in supply since Covid-19.
62․Ms Ferreira also gave oral evidence supplementing her affidavit of 17 October 2022. She did so in her capacity as Chief Executive Officer of Pacific. She stated that she contacted 3 or 4 companies, details of which she could not recall, who were in the business of “providing storage to customers”. She clarified that they were storage companies like Wridgways, for example, Grace Removals or Kent Removals, so not self-storage facilities, but removals companies that would store belonging in containers. She could not in evidence identify which companies she actually contacted. She said that she asked how much they would have charged for a cubic metre for an indeterminate period (t27/42). She said she was told 10, 15 or 20 (dollars) but that she did not want to cause distress to people whose goods may have been in storage so she chose 10. Somewhat oddly she stated also that she added the quotes and divided the total by the number of quotes she had obtained. She said the result was $10 which was the figure she provided to Pacific, to calculate costs to charge United. She observed that the companies she contacted were not self-storage companies but removalists.
63․Mr Ferreira gave evidence as Operations Manager for Pacific by affidavit dated 17 October 2022, supplemented by oral evidence. He said that he supervised removal of the containers from the Pacific property to the related company in order to mitigate loss caused by termination of the Wridgway lease. He stated that “there would have been” an invoice relating to use of machinery and personnel to move the containers, but none was produced. He said he calculated the cubic metre capacity of the nine containers by taking the capacity figure written on each, adding it up and arriving at a total capacity of 337.5 cubic metres. He used this figure to calculate the costs of storage plus a proportion of removal costs (there being other items removed from the Pacific property not belonging to United). Mr Ferreira stated that he prepared the invoice from, and approved payment for, an amount of $330,412.50 to the related company on 1 December 2022. He also stated that certain individuals had been charged by Pacific to access their belongings from the containers once relocated to the related company’s premises in the sum of $5,678.32.
64․Ms Phoebe Logan, a paralegal at Aulich Civil Law, provided evidence in affidavit form of quotes for self-storage from four companies at between $10.75 and $21.23 per cubic metre.
65․There is no evidence before the court as to whether the presence of the containers on the sub-leased land belonging to Pacific in any way interfered with Pacific’s ability to relet or otherwise use that land. There is no evidence before the court as to the usual use of the related company’s property and whether the presence of the containers in any way interfered with it use. Nor is there evidence before the court as to what was the usual use of that property.
The issue
66․Pacific requires United to pay the invoiced amount pursuant to section 26(2) of the UG Act which provides that “The possessor may, before handing over goods under subsection (1), require the owner to pay – (b) the reasonable costs incurred by the possessor in storing and maintaining the goods prior to collection”, prior to releasing the containers to United. However, what constitutes “reasonable costs incurred….” is in issue.
Submissions
67․In short, United submits the following:
68․Pursuant to section 26(2)(b) of the Act, Pacific has the burden to satisfy the court that:
(a)Costs were incurred by Pacific;
(b)That the costs were in relation to complying with the Act and storing and maintaining the containers;
(c)That costs were reasonable, according to Ms Costin meaning “warranted or necessary as opposed to fair”.
69․That costs claimed are not costs at all but charges – a distinct concept, in part because the amount charged reflects a profit element (not actual loss). Public policy supports a cautious approach to the assessment of reasonable in relation to costs so as to discourage possessors from seeking to profit from goods in their possession under the UG Act.
70․United submits that the amount alleged to have been incurred reflects “an artificial charge between related companies based on fees identified after some minimal research.”
71․It is unreasonable for Pacific to claim costs for periods of time in which United were prevented from retrieving their containers. (I note in that respect that many requests to recover the containers were either not actioned or refused, purportedly because of the Covid-19 lockdown. If Pacific could not access the site nor the containers, and also had not indicated any costs being incurred during that period, it is not reasonable to require United to pay for costs subsequently claimed to have been incurred during that period).
72․United further submit that if any costs are recoverable, that should not be until 7 days after a compliant notice is sent to the owner. As that was found to be on 8 November 2021, costs, if allowed at all, ought not begin to accrue until 15 November 2021. This submission is supported by the assertion that adopting the alternative, as submitted by Pacific, would allow a possessor to retain goods for whatever period it wished before giving notice, and claim costs for that entire period, even in circumstances where the owner may not be aware that the goods are held by the possessor.
73․Whilst Pacific became possessors through no fault of its own, equally United was dispossessed through no fault of its own.
74․Further, if any cost was incurred, the more reasonable basis for it is the $1 per day identified by Mr Baker as industry standard translating to $270 monthly for the 9 containers. United accepts “its portion” of the costs of the containers being moved to the related company’s premises.
75․Pacific submits that:
(a)United bears the evidential onus to disprove that the claimed costs are reasonable.
(b)The court should accept its evidence as to the costs incurred which were worked out having regard to appropriate enquiries by Ms Ferreira, calculated on a reasonable basis and fairly discounted.
(c)Its claim that the costs sought are reasonable is supported by the fact that they are only a proportion ($69,518.03) of the actual cost now incurred ($330,412.50, originally $109,929), leaving Pacific out of pocket by $260,894.47.
76․United submits that costs ought not be calculated from the expiry of any notice period, that the Act is silent on the issue and that costs ought reasonably be calculated from when the possessor takes possession of the goods.
77․Further in determining what is reasonable in this case, Mr Baker’s evidence is irrelevant because Pacific is not in the business of storing shipping containers, particularly not at the scale of United.
Consideration
78․The UG Act is silent as to who bears the onus of proving or disproving whether costs claimed are reasonable. The usual approach in civil matters is that she or he who asserts must prove. The statutory task is one of review of the reasonableness of the costs. The court should consider all evidence properly available to it noting that some matters may be particularly within the knowledge of one or other party. The determination must be made on the balance of probabilities; mere assertion of reasonableness without evidence to support the basis upon which the claim is arrived at is unlikely to be persuasive.
79․A question arises as to when costs are incurred but for the reasons which follow, I do not intend to determine that in these proceedings.
80․Cost is not defined in the UG Act. It should not be limited to an amount paid to another as lost opportunity, for example, may carry with it costs. But amounts charged are not an automatic proxy for costs; charges may bear little resemblance to economic cost. For example, a professional may incur costs in running a practice – rent, stationery, wages. These are the costs of doing so. However, what is charged to a client may be significantly higher than the costs incurred. Unless the claimant can establish that the amount charged has been lost, for example by way of lost opportunity to make a profit from that usual activity, a charge cannot reasonably be characterised as a cost. In this case, there is no evidence of what the property upon which the containers were held was ordinarily used for and what, if any, profit was lost from the alternative use of storing the containers. This contrasts with some evidence of an actual cost incurred in moving the containers.
81․The basis upon which the claimed costs were calculated, whilst superficially attractive, does not bear scrutiny. Ms Ferreira stated that there was no discussion of what the related company would charge Pacific before removal of the containers to its premises; she had expected that there would be a charge for “rent” for the land. It appears that based on legal advice, she then determined to carry out market research as to commercial rates for storage. Despite initial confusion in her evidence, it appears that she was not looking at the cost of self-storage, but rather storage by removalists. Her evidence in this respect is vague. Ms Baker’s industry survey for self-storage was more specific. But neither reflect the costs that were genuinely incurred in keeping the containers on the related company’s land.
82․The fact that the related company raised an invoice, based on what the CEO of Pacific said the related company should charge it, which was then paid in full, albeit far in excess of the amount sought to be recovered from United, demonstrates that this was a paper exercise between related companies to justify the claim made on United rather than a proper assessment of the reasonable costs incurred in holding the nine containers.
83․As to moving costs, whilst United accepts that some of these costs were incurred by Pacific, it is not evident that these costs should be treated as a reasonable cost to be borne by United. There is no evidence of the need to move the items. Mr Ferreira stated that this was done on legal advice to mitigate loss following termination of Wridgway Australia’s lease. But I conclude based on the limited evidence before me that it would have been open to Pacific to approach United to require it to remove the containers directly from the sub-leased property. They were identifiable as “Royal Wolf” containers (as United was at that time); they had been abandoned by Wridgways and Wridgways Australia. But there is no evidence that Pacific attempted to identify the owner; indeed the best evidence is that United pursued Pacific to identify which of its containers were held by Pacific. Even when United pressed for clarification of which of its containers were held by Pacific, Pacific was unable or unwilling to respond for the period 1 August 2021 until 19 September 2021 when Mr Ferreira finally responded to United’s request to identify the containers by providing photographs.
84․Further, there is a question as to the reliability of the calculation of the moving costs, in particular the spreadsheet relied upon which includes items that did not belong to United: home packs, moving and sorting boxes.
85․It follows that I cannot be satisfied that the costs claimed by Pacific were reasonable: they were not arrived at on a proper basis; they were allowed to accumulate even though United was keen to get their containers back; it would be akin to unjust enrichment to Pacific, especially as there is no evidence of any actual loss – other than a much larger payment to a related company for no apparent reason. Absent any other reliable evidence as to what costs were in fact incurred, there is no basis for Pacific to recover costs from United.
Orders
86․The Originating Claim is statute barred.
87․The counter claim is dismissed.
88․Each party is to bear its own costs unless submissions to the contrary are received by 4pm 6 April 2023.
Decision as to Costs (28 August 2023)
89․With leave, both sets of submissions were filed with the court on 20 April 2023, an administrative delay followed.
United’s submissions
90․United submits that the dispute remains on foot as the court has made no order as to what should happen with the shipping containers. It submits that this can be rectified utilising the slip rule.
91․United claims 50% of its costs in respect to the Statement of Claim and 100% of its costs of the Review Application on the basis that Pacific has not been awarded any of its claimed storage costs.
92․As to Pacific’s claim for indemnity costs, United counter claims for indemnity costs from 14 March 2022 in accordance with the principles enunciated in Calderbank v Calderbank [1975] All ER 333 and from 12 April 2022 in accordance with Part 2.10 of the Court Procedure Rules 2005 (ACT) on the basis that Pacific did not accept United’s offer and received a less favourable outcome than that offer.
Pacific’s submissions
93․Pacific submits that it succeeded in its defence to United’s statement of claim as the court found that the UG Act applied in the circumstances, and that the common law claim was barred. Pacific made repeated efforts to resolve the matter. Further, Pacific acted reasonably in rejecting United’s settlement offer of $10,000 inclusive of legal costs which was ambiguous and did not provide reasons for the legal position asserted. Therefore United should pay the Pacific’s costs on a party/party basis up until 5 September 2023.
94․Pacific submits that the court’s determination of the review application as to “reasonable costs” being nil ought not lead to an award of costs to United. Whilst the result was in United’s favour, the process was an assessment, rather than a “win/lose” decision. Therefore each party should bear its own costs.
Determination
The shipping containers
95․In so far as the court made no order as to return of the shipping containers to United, the slip rule does not apply; it was not an oversight or administrative error not to have made an order as to this. Whilst that issue is at the root of the dispute, what was left to be determined after the statement of claim was struck out, and the UG Act found to apply, was a review of the possessor’s costs pursuant to section 27 of the UG Act. That section provides that:
The owner of uncollected goods may, at any time before the goods are disposed of under this part, apply to the Magistrates Court for a review of any costs that the possessor requires the owner to pay under section 26 (2) and the court may make an order—
a)that the goods not be disposed of until the application has been determined; or
b)disallowing the possessor's costs in whole or in part.
96․The possessor’s claimed costs were wholly disallowed. The legal effect of that assessment is that section 26(1) applies, and the goods may be given to United as it has satisfied Pacific that it is the owner of the goods, the precondition of a requirement to pay reasonable costs having been addressed by my assessment.
Costs
97․Having found that the UG Act applied, those aspects of the claim which were directed to a common law claim were, in my view, ill-conceived. They were also unnecessary. At all times the real issues between the parties were United’s desire to have the shipping containers back and Pacific’s demand for costs they claimed to have incurred in holding them. Pacific had no desire to keep the containers but its demand for costs was, as I have found, unreasonable.
98․Whilst the tone of communications between the parties was at times terse, it is clear that Pacific was keen to engage in the essential discussion of “how much” prior to and after the commencement of proceedings. Unfortunately, the litigation became unnecessarily protracted due to the parties’ inability to engage with the real issues in dispute.
99․Given that I determined the common law proceedings to be ill-conceived, the significant costs which have now no doubt accumulated could have been saved had an application for review been sought instead. The defendant should have its costs of the common law claim until 8 September 2022.
100․After 8 September 2022, the reasonableness of the defendant’s claimed costs was the sole issue to be determined. The defendant’s position as to its claimed costs was, on my findings, evidentially untenable. The plaintiff should have its costs from 9 September 2022 to 20 April 2023 when final submissions were filed.
101․I am not persuaded that there is anything in the exchange of offers that enlivens the Calderbank principles. Costs as awarded shall be on a party/party basis.
| I certify that the preceding one hundred and one [101] numbered paragraphs are a true copy of the Reasons for Decision of her Honour Chief Magistrate Walker Associate: Olivia Ferguson Date: 28 August 2023 |
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