Federal Court of Australia

Lobux Pty Ltd v Willshaun Pty Ltd [2022] FCA 204

ORDERS

THE COURT ORDERS THAT:

1.    The name of the respondent be amended to Willshaun Pty Ltd ACN 077 535 507.

2.    The respondent shall forthwith deliver up the 81658TDBS Hooklift Backdoor Vacuum Tank with Suction Boom bearing serial number 18111 (and any keys) to the applicant at 11 Shaw Road, Ingleburn, New South Wales, and the respondent shall pay the costs of such delivery.

3.    Delivery by the respondent pursuant to order 2 shall occur during business hours.

4.    By 4.00 pm Wednesday 16 March 2022, the respondent shall file and serve any submissions (limited to 5 pages) as to the necessity for any further relief in relation to clauses 5.2(a), 5.2(b), 12, 13.4, 13.7, 16.3 and 21.3 of the terms and conditions of the agreement, and the form of that relief.

5.    By 4.00 pm Friday 18 March 2022, the applicant shall file any submissions in reply to the submissions filed by the respondent pursuant to order 4 (limited to 5 pages).

6.    The parties shall file and serve any submissions as to costs (limited to 5 pages) by 4.00 pm Friday 18 March 2022.

7.    Liberty to apply.

THE COURT DECLARES THAT:

1.    Clauses 5.2(a), 5.2(b), 12, 13.4, 13.7, 16.3 and 21.3 of the terms and conditions of the agreement entered between the applicant and respondent on or about 26 September 2018 are unfair contract terms within the meaning of s 24 of the Australian Consumer Law (being Schedule 2 to the Competition and Consumer Act 2010 (Cth)) and are void by operation of s 23 of the Australian Consumer Law.

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

REASONS FOR JUDGMENT

DOWNES J:

INTRODUCTION

1    This case concerns the manufacture of a “Hooklift Backdoor Vacuum Tank” by the applicant (Lobux) for, and at the request of, the respondent (Willshaun).

2    Prior to the completion of the manufacture of the tank, Willshaun removed it from the possession of Lobux on the premise that it was going to have some work done on it elsewhere and then it would be returned. The tank was not returned (and has never been returned). Nor was the balance of the purchase price paid. Instead, Willshaun has used the tank in its business operations and was still doing so as at the date of the trial.

3    Lobux registered a security interest over the tank pursuant to the Personal Property Securities Act 2009 (Cth) (PPSA) and brought this proceeding, seeking orders for, in effect, the return of the tank and ancillary orders in relation to that relief.

4    Notwithstanding that it has not paid the entire purchase price for the tank, that the construction of the tank was not complete when it was removed, and that it has been using the tank in its business since September 2019, Willshaun has brought a cross-claim which alleges (amongst other things) that the tank is not fit for purpose. The cross-claim also seeks a declaration to the effect that it is not required to pay any further money for the tank by way of purchase price. The cross-claim also seeks orders which have the effect of preventing Lobux from enforcing its security interest, including a declaration that a broad range of contractual terms are void ab initio pursuant to s 250 of Schedule 2 of the Competition and Consumer Act 2010 (Cth).

5    The court heading does not contain the correct spelling of Willshaun’s name and this will be corrected in the orders which I will make.

6    Otherwise and for the following reasons, I will order that:

(a)    Willshaun shall forthwith deliver up the 81658TDBS Hooklift Backdoor Vacuum Tank with Suction Boom bearing serial number 18111 (and any keys) to Lobux at 11 Shaw Road, Ingleburn, New South Wales, and shall pay the costs of such delivery.

(b)    Delivery by Willshaun shall occur during business hours.

(c)    It be declared that clauses 5.2(a), 5.2(b), 12, 13.4, 13.7, 16.3 and 21.3 of the terms and conditions of the agreement entered between the applicant and respondent on or about 26 September 2018 are unfair contract terms within the meaning of s 24 of the Australian Consumer Law (being Schedule 2 to the Competition and Consumer Act) and are void by operation of s 23 of the Australian Consumer Law.

(d)    By 4.00 pm Wednesday 16 March 2022, the respondent shall file and serve any submissions (limited to 5 pages) as to the necessity for any further relief in relation to clauses 5.2(a), 5.2(b), 12, 13.4, 13.7, 16.3 and 21.3 of the terms and conditions of the agreement, as well as the form of that relief. These submissions should take into account the findings in these reasons, the evidence adduced at the trial and whether there is utility in making any further orders.

(e)    By 4.00 pm Friday 18 March 2022, the applicant shall file and serve any submissions in reply to the submissions filed by the respondent referred to in (d) (limited to 5 pages).

(f)    The parties shall file and serve any submissions as to costs (limited to 5 pages) by 4.00 pm Friday 18 March 2022.

(g)    Liberty to apply. This order will enable the parties to return to Court should there be any issues relating to the delivery up of the tank by the respondent.

CHRONOLOGY

7    On or about 23 May 2018, Lobux submitted quotation number 1805002 to Willshaun for the manufacture and supply of a 101658HDBS Hooklift BackDoor Vacuum Tank with Suction Boom with a capacity of 10,000 litres and other details and specifications for a total price of $140,000 plus GST. The quotation was prepared by Mr Michael Crawford, the sole director of Lobux.

8    On 30 August 2018, Willshaun purchased a truck that was capable of having the proposed vacuum tank mounted to it.

9    On 30 August 2018, Ms Robin Glover, an employee of Lobux, sent an email to Mr William (aka Liam) Walsh, director of Willshaun, and copied to Mr Crawford as follows:

Good Evening Liam,

Further to your discussions with Michael Crawford,

Attached please find: -

Invoice 00000047 – Deposit on tank only. (Further discussion required prior to revised quote and invoice being issued).

Customer Information Form –

Work Authorisation Form –

Please complete and return the Customer Info and Work Authorisation Forms to robintanksales@bigpond.com at your earliest convenience

Our Terms of Trade

If you require further information, please do not hesitate to contact the undersigned.

(emphasis added)

10    I infer from the emphasised words in the email that there had been some discussion or communications between the parties about a revised quotation being issued by Lobux. This inference finds support from the fact that a further quotation was issued on 24 September 2018, as referred to below.

11    The 30 August 2018 email attached an invoice from Lobux in the amount of $33,000 (including GST) with the description “Deposit on 1 x 101658HDBS Hooklift Backdoor Vacuum Tank with Suction Boom & Saddle Tanks Capacity: 10,000 litres”. The email also attached documents entitled “work authorisation form”, “customer information form” and “tank sales Australia - terms & conditions of trade”.

12    On 3 September 2018, Ms Glover sent a further email to Mr Walsh as follows:

Afternoon Liam,

As discussed, please reply to confirm receipt of.

13    On 6 September 2018, Willshaun paid the sum of $15,000 to Lobux and a further $15,000 the next day.

14    On 24 September 2018, Lobux provided Willshaun with quotation number 1809005. This quotation was for an 81658TDBS Hooklift BackDoor Vacuum Tank with Suction Boom with a capacity of 8,000 litres and other details and specifications for a total price of $140,000 plus GST.

15    The quotation also stated: Delivery time: 8 weeks from 30% deposit, “Progress Payments applicable” and under “other specifications”, it was stated, “Built to AS 1210 for vacuum vessel and AS 2809 for waste transport”.

16    Mr Crawford gave this evidence about this quotation:

This is the quotation that you contend is the relevant one for these proceedings?---It is.

It’s dated 24 September 2018?---Correct.

You prepared this document?---I did.

You selected the item name?---I did.

Mr Walsh never asked you for an “81658 TDBS Vacuum Tank”?---Incorrect.

This quotation is for a tank with a capacity of 8000 litres?---Correct.

You decided to change the description of the tank which was to be produced?---No. I didn’t.

Mr Walsh didn’t ask you to change the volume of the tank?---Yes. He did. He brought the truck to me. He measured the truck. He couldn’t fit any more than 8000 litres on it.

17    I infer from this evidence that the truck which Mr Crawford was referring to was the truck which had been purchased by Willshaun on 30 August 2018.

18    On 26 September 2018, Ms Glover sent a reply email to her email of 3 September 2018, including the attachments of the 30 August 2018 email, to Mr Walsh and copied Mr Crawford:

Good afternoon Liam,

Attached please find updated invoice reflecting payment received.

Could you please organise for the balance of $3000.00 to be paid at your earliest convenience.

Also, as previously requested, could you completed the attached paperwork and return.

19    Mr Walsh executed the customer information form and work authorisation form in the presence of a witness, “P. Hayward” who appears to have dated the documents 26.9.18. One of the forms was countersigned by Ms Glover and it bears the date “16/10/18”. The work authorisation form refers to a “Hooklift Backdoor Vacuum Tank with suction boom 10,000 LT”. There was no evidence as to who wrote these words; however, they did not appear on the form when it was sent to Willshaun by Ms Glover.

20    Each of the forms stated above the signature of Mr Walsh:

I have read and understood the TERMS AND CONDITIONS OF TRADE (overleaf or attached) of Lobux Pty Ltd T/A Tank Sales Australia which form part of, and are intended to be read in conjunction with this [form] and agree to be bound by these conditions. …I agree that if I am a director/shareholder (owning at least 15% of the shares) of the Customer I shall be personally liable for the performance of the Customer’s obligations under this contract.

21    The balance of the deposit, being $3,000, was paid to Lobux on 27 September 2018.

22    Lobux commenced the manufacture of the tank on 27 September 2018.

23    Although the September 2018 quotation stated, “Delivery time: 8 weeks from 30% deposit”, the tank was not manufactured and delivered within eight weeks of payment of the deposit. It is Lobux’s pleaded case that the estimated date of completion was revised because of the variations to the scope and design of the tank requested by Willshaun.

24    On 5 October 2018, Lobux sent an email to Willshaun which stated in part:

you have requested a larger engine and blower than that quoted, due to not knowing the price at this stage, please keep in mind that the amount will change slightly.

25    There is no evidence that Willshaun responded to this email when it was received and asserted that it had not made such a request.

26    Mr Crawford gave oral evidence about the change in size of the motor and blower, as well as other changes which were requested by Mr Walsh on behalf of Willshaun:

…both quotes he had were for a 123-horsepower four-cylinder Caterpillar. Along the proceedings he changed it to a larger blower which required 200 horsepower – 220 horsepower was available. Instead of a 4.4 litre, it was a 7-litre motor which was one of the changes he had made and he had to pay the motor direct.

…

It was one of the changes to the scope and design of the vacuum tank?---The original quote was for a four-cylinder motor which had the engine management system fitted by Caterpillar. The six-cylinder one didn’t come fitted with it.

…

You didn’t tell Mr Walsh that he would incur further costs?---Yes, I did.

You didn’t tell Mr Walsh it would take more time to deliver?---Yes, I did. Everyday he would come in and make a change. I told him it was going to take longer. And in the end, I told him to stop making changes.

Mr Walsh didn’t request any of the variations in paragraph 22 of your affidavit, did he? 21, I’m sorry. I’m corrected?---No, he ..... he requested all of them.

In fact, these were changes that you made to produce a tank that was appropriate for Mr Walsh’s purposes?---No. It was a change from what was quoted originally which was 1600 CFM to the larger blower. I will explain it to you not knowing exactly what is involved. But if you had ordered a four-cylinder car and when it’s delivered you said, “No. I want a six-cylinder car” the radiator, engine, gearbox, fuel tank, batteries – everything would have had to have been changed. Very similar in this case. The blower that he had requested or changed to was, I think, twice the capacity of the original one. Therefore, the aircloner, cyclone, primary, secondary, pipework, fuel tank, batteries, frame all had to be upgraded. And Mr Walsh was no idiot. He knew what mechanical things were. And he came in and saw it every couple of days. Things being changed – and asked for changes along the way.

27    The September 2018 quotation also stated, “Progress Payments applicable”. By December 2018 and other than payment of the deposit, Willshaun had not made any progress payments.

28    On 19 December 2018, following discussions between Mr Crawford and Mr Walsh, an email was sent by Ms Glover to Ms Hayward (the partner of Mr Walsh who assists in the business operated by Willshaun) which attached an invoice for a new Caterpillar industrial engine and which stated:

Further to discussions with Michael, attached please find the invoice for the motor as mentioned. If this could be paid direct to Energy Power Systems Australia Pty. Ltd. in lieu of a progress payment it would be appreciated.

29    This payment was deducted from the quoted purchase price of $140,000 plus GST as reflected in an invoice number 00000047, which stated that the payment was made “in lieu of a progress payment”. The invoice referred to quotation 180095, which was the September 2018 quotation (as did all subsequent invoices).

30    On 12 January 2019, invoice PP47a was issued for a progress payment in the amount of $11,000 and this was paid by Willshaun.

31    Other third party invoices were sent to Willshaun for payment on 11 March 2019, 12 March 2019 and 15 March 2019. In an email of 15 March 2019, Ms Glover again referred to the third party supplier being paid “in lieu of progress payment”.

32    The circumstances leading to the payments to the third party suppliers are in dispute. According to Mr Crawford, the payments were made by Willshaun because of financial difficulties which Willshaun indicated it would have in making progress payments. According to Mr Walsh, the payments were made because Lobux said that it was having financial issues in paying suppliers.

33    However, it is objectively unlikely that, instead of requiring Willshaun to make further progress payments to it, Lobux instead requested that Willshaun pay third party suppliers directly as Mr Walsh claims. Lobux would have gained nothing by having these payments made to third parties rather than having progress payments made to it. By contrast, Willshaun was assisted by such an arrangement in that it was only being required to pay particular amounts required to be paid at the relevant time to enable Lobux to continue the construction of the tank. For these reasons, I accept the evidence of Mr Crawford that Willshaun indicated that it was having financial difficulties and made the arrangement to pay third party suppliers directly in order to assist Willshaun.

34    The inference that Willshaun was not in a financially strong position is supported by its conduct shortly following delivery of the final invoice by Lobux, as referred to below.

35    On 21 March 2019, Lobux issued invoice 00000047 to Willshaun for the amount of $84,563.78. The invoice credited the payment of the deposit, one progress payment and various payments to third party suppliers (as being “in lieu of progress payments”) and contained this description:

1 x New 81658TDBS Hooklift Backdoor Vacuum Tank with Suction Boom

Serial Number 18111

As per quote 1809005

Capacity: 8,000 litres

36    At the bottom of the invoice were the words:

COMPLETED WORKS WILL NOT BE RELEASED UNTIL BALANCE OF MONIES ARE RECEIVED

37    By this time, it had been discussed between Mr Crawford and Mr Walsh that Lobux would be in a position to deliver the completed tank by the end of March 2019. Mr Walsh therefore knew that the final invoice needed to be paid within the next ten days or so.

38    However, the final invoice was not paid and has never been paid. At trial and having regard to its closing submissions, Willshaun accepted that the “balance purchase price payable” by Willshaun to Lobux is $84,563.78. The submissions of Willshuan also referred to it having an “obligation to pay the balance of the purchase price”.

39    On 22 March 2019, being the day after the issue of the final invoice, Lobux agreed that Willshaun could transport the tank to an entity called Genuine Auto Electrics for the purposes of some minor works being done to it. Mr Walsh gave this evidence about the arrangement at trial:

And when you were there that night [on 22 March 2019], you told Mr Crawford that you wanted to take the tank to GAE Electrical the next day; is that correct?---Yes.

And you told him that you wanted to do it because you wanted to get an emergency stop fitted?---Yes.

And you needed GAE Electrical to fit that emergency stop because Lobux didn’t have anyone qualified to fit it; is that correct?---Yes.

…

Okay. Now, the emergency stop was not something that you had initially asked Lobux to perform, was it?---It’s a standard item on machinery.

My question was did you ask them to perform – to install an emergency – an electrical stop?---No.

And it was on that basis that Michael told you that you could take it to – or could – by “it” I mean the vacuum tank to GAE to get it fitted; you agree with that?---Yes.

40    It was understood by Lobux that the tank would be returned to it and it was on this basis that the tank was released. Mr Crawford’s evidence at trial was as follows:

The tank was taken at about 10 o’clock on a Friday night, promised to return lunch time the following Saturday, which all the workers came in to work on it, but no tank turned up.

41    This oral evidence was consistent with an email which Mr Crawford sent to Mr Walsh on 5 April 2019 which stated:

Further, as agreed, the tank was picked up on Friday the 22nd of March to go to "Genuine Electrics" at Narellan to have “E” stops and the Throttle Linear Actuator wired up (which was part of our quote). I have been advised that further works are been done which is not part of our quote and has not been approved by [Lobux] for payment. You told me that the Hooklift Tank/Unit was required for 4 hours and would then be returned to [Lobux] premises at 11 Shaw Road, Ingleburn on Saturday the 23rd of March to be finished and a final check on operation of the Hooklift Tank/Unit before commissioning and handing the unit over. As of today, the tank has not been returned, [Lobux] agreed to cover 1 days hire of a vehicle (Thursday 21/3/19) only and will not be liable for additional hire days.

(italics omitted)

42    As at 23 March 2019, the tank was incomplete and further work needed to be performed by Lobux before delivery could occur pursuant to the agreement. As to this, Mr Walsh gave this evidence:

And [Mr Crawford] told you [that] you could take it there, but it needed to be returned later that day?---I don’t recall him telling me to return it. That’s incorrect.

But you knew you needed to return it to Lobux once the stop had been finished?---Yes.

And you knew that the vacuum tank wasn’t finished at that time, didn’t you?---Yes.

So Mr Crawford agreed to let you take the vacuum tank to GAE on 23 March to install the electrical stop; is that correct?---Yes.

And that once that had been installed, there was agreement that you would bring it back to Lobux; is that correct?---Yes.

And that Lobux would then finish the production of the vacuum tank?---Yes.

43    On 5 April 2019, Mr Crawford sent an email to Mr Walsh which quoted the email dated 5 October 2018 and which also stated:

To answer your question in regards to the additional costs: -

Cyclone, Muffler, Air Cleaner, Pipework, Pulleys and additional labour approximately

$16,500.00.

The Motor, Blower & Retractable Hose Reel were approx. $9,000.00 more expensive

FYI: -Please see attached email (5/10/18) where it states "you have requested a larger engine and blower than that quoted, due to not knowing the price at this stage, please keep in mind that the amount will change slightly".

Also attached is the email (19/12/18) requesting payment of the motor invoice, which you in turn paid for, this amount being deducted from your invoice.

…

The Hooklift Tank/Unit has not been paid for and remains the property of [Lobux] and must be returned to [Lobux] at Ingleburn for completion. We shall be requesting that the Auto Electrician advise when they have completed their work so we can arrange for the return of the Hooklift Tank/Unit (see attached "letter").

If the above is not adhered to, a fee of $3000.00 per day will apply from the date of removal from the Auto Electrician until full payment is received.

PLEASE NOTE: If the unit is attempted to be used, [Lobux] WILL NOT BE HELD LIABLE FOR ANY DAMAGE CAUSED as it has not passed final inspection and commissioned for work use.

44    On 26 April 2019, Willshaun arranged to have the tank inspected by Technoweld and a report prepared of that date which was signed by Mr Fry.

45    The tank has never been returned to Lobux and the invoice dated 21 March 2019 has never been paid. Willshaun claims that by its conduct in removing the tank, its contract with Lobux was terminated.

46    On 14 January 2020, Lobux registered a security interest on the Personal Property Securities Register against the tank pursuant to the PPSA.

THE ISSUES

47    The following issues arise:

(1)    Which documents formed the agreement between the parties? In particular, was the tank to be manufactured the one referred to in the May 2018 quote or September 2018 quote?

(2)    Does the agreement contain any unfair terms within the meaning of s 24 Australian Consumer Law?

(3)    Were any terms of the agreement breached by Lobux such that Willshaun was entitled to terminate the agreement?

(4)    Did Willshaun suffer any loss and damage by reason of any breach of the agreement by Lobux?

(5)    What, if any, relief should be granted to any party?

Which documents formed the agreement between the parties?

48    It was common ground that the documents which formed part of the agreement between Lobux and Willshaun included the executed work authorisation form (which referred to a 10,000 litre tank), executed customer information form and attached ‘terms & conditions of trade’.

49    There is dispute, however, in relation to whether the May 2018 quote (which referred to a 10,000 litre tank) or the September 2018 quote (which referred to an 8,000 litre tank) forms part of the agreement.

50    Willshaun has not run its case on the basis of a complaint about the size of the tank. Further, Lobux submits that regardless of which of the quotations are accepted as being the “correct” quotation, it bears no material effect on the agreement, insofar as it is relevant to the present dispute.

51    Notwithstanding this, Willshaun submits that the Court should find that the May 2018 quote formed part of the relevant contractual documentation. It submits that this is because:

(a)    there is no direct evidence that the September 2018 quote was sent to Willshaun;

(b)    Willshaun paid the $30,000 deposit (excluding GST) on 6 and 7 September 2018, some 18 days before the September 2018 quote even existed;

(c)    the work authorisation form, accompanied by the deposit, referred to a tank with a capacity of 10,000 litres, consistently with the May 2018 quote; and

(d)    certain importation documents refer to a tank with a capacity of 10,000 litres, consistently with the May 2018 Quote.

52    However, there is direct evidence that the September 2018 quote was sent to Willshaun. Mr Crawford deposed in his first affidavit that this quote was provided to Mr Walsh of Willshaun on 24 September 2018, and this evidence was not challenged. Further, the September 2018 quote was supplied by Willshaun to Mr Fry (its expert witness) and is referred to in his first report, and so it must have been received by Willshaun.

53    Further, the September 2018 quote was given following the email from Lobux dated 30 August 2018 which sought payment of the deposit and referred to the need for further discussions being held before a revised quote would issue. That is, the deposit was paid in anticipation of a revised quote, not as a deposit in relation to the quote issued some four months earlier.

54    While it is correct that documentation such as the work authorisation form referred to 10,000 litres, this is probably an error. Of more significance is the fact that the type of tank which was, in fact, removed in March 2019 by Willshaun and which is referred to in the invoices issued by Lobux is an 81658TDBS Hooklift BackDoor Vacuum Tank with Suction Boom (which is the tank referred to in the September 2018 quote) and not a 101658HDBS Hooklift BackDoor Vacuum Tank with Suction Boom (which is the tank referred to in the May 2018 quote). This is established by the report issued by Technoweld dated 26 April 2019, which states that it was asked by Willshaun to conduct an inspection of an 81658TDBS Hooklift BackDoor Vacuum Tank with Suction Boom on 26 April 2019. The invoice from Genuine Auto Electrics Pty Ltd dated 8 April 2019 also referred to an 81658TDBS Hooklift BackDoor Vacuum Tank with Suction Boom.

55    Accordingly, the May 2018 quote did not form part of the agreement between the parties. Rather, the September 2018 quote is one of the documents forming part of their agreement.

Does the agreement have any unfair terms?

Impugned terms and conditions

56    Willshaun alleges that 18 clauses of the ‘terms & conditions of trade’ along with a statement on the work authorisation form and customer information form were unfair terms within the meaning of s 24(1) Australian Consumer Law (being Schedule 2 to the Competition and Consumer Act). The clauses and statement are set out in Schedule A to the statement of cross-claim.

57    Several of the impugned clauses were abandoned by Willshaun during closing submissions (namely those listed in paragraphs 1(a), 1(b), 1(f), 1(g), 1(h) and 1(n) of Schedule A).

58    Paragraph 1 of the notice of cross-claim seeks declaratory relief pursuant to s 7 of the Contracts Review Act 1980 (NSW). However, there was no reference to this legislation in Willshaun’s closing submissions, and it appeared not to be pressed.

59    Lobux conceded that clauses 13.4, 13.7, 16.3 and 21.3 were unfair terms (being the clauses in paragraphs 1(o) – 1(r) of Schedule A).

60    Taking into account these matters, the remaining terms will now be considered.

Legal principles

61    Section 23 of the Australian Consumer Law provides:

23     Unfair terms of consumer contracts and small business contracts

(1)      A term of a consumer contract or small business contract is void if:

(a)      the term is unfair; and

(b)      the contract is a standard form contract.

(2)      The contract continues to bind the parties if it is capable of operating without the unfair term.

(3)      A consumer contract is a contract for:

(a)      a supply of goods or services; or

(b)      a sale or grant of an interest in land;

to an individual whose acquisition of the goods, services or interest is wholly or predominantly for personal, domestic or household use or consumption.

(4)      A contract is a small business contract if:

(a)      the contract is for a supply of goods or services, or a sale or grant of an interest in land; and

(b)    at the time the contract is entered into, at least one party to the contract is a business that employs fewer than 20 persons; and

(c)      either of the following applies:

(i)    the upfront price payable under the contract does not exceed $300,000;

(ii)      the contract has a duration of more than 12 months and the upfront price payable under the contract does not exceed $1,000,000.

(5)    In counting the persons employed by a business for the purposes of paragraph (4)(b), a casual employee is not to be counted unless he or she is employed by the business on a regular and systematic basis.

62    The meaning of unfair for the purpose of s 23 is provided by s 24, which provides:

24     Meaning of unfair

(1)      A term of a consumer contract or small business contract is unfair if:

(a)    it would cause a significant imbalance in the parties’ rights and obligations arising under the contract; and

(b)      it is not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term; and

(c)      it would cause detriment (whether financial or otherwise) to a party if it were to be applied or relied on.

(2)      In determining whether a term of a contract is unfair under subsection (1), a court may take into account such matters as it thinks relevant, but must take into account the following:

(a)     the extent to which the term is transparent;

(b)     the contract as a whole.

(3)      A term is transparent if the term is:

(a)      expressed in reasonably plain language; and

(b)      legible; and

(c)      presented clearly; and

(d)      readily available to any party affected by the term.

(4)      For the purposes of subsection (1)(b), a term of a contract is presumed not to be reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term, unless that party proves otherwise.

63    Section 25 provides a non-exhaustive list of examples of terms with may be unfair terms, including relevantly:

25     Examples of unfair terms

Without limiting section 24, the following are examples of the kinds of terms of a consumer contract or small business contract that may be unfair:

...

(f)     a term that permits, or has the effect of permitting, one party to vary the upfront price payable under the contract without the right of another party to terminate the contract;

...

(k)     a term that limits, or has the effect of limiting, one party’s right to sue another party;

...

(emphasis added)

64    Section 250 of the Australian Consumer Law provides:

250     Declarations relating to consumer contracts and small business contracts

(1)     The Court may declare that a term of a consumer contract is an unfair term, on application by:

(a)     a party to the contract; or

(b)     the regulator.

(2)     The Court may declare that a term of a small business contract is an unfair term, on application by:

(a)     a party to the contract, if the party was a business of the kind referred to in paragraph 23(4)(b) at the time the contract was entered into; or

(b)     the regulator.

(3)     Subsections (1) and (2) do not apply unless the contract is a standard form contract.

(4)     Subsections (1) and (2) do not apply if Part 2 – 3 does not apply to the contract.

(5)     Subsections (1) and (2) do not limit any other power of the court to make declarations.

65    In Australian Competition and Consumer Commission v Fuji Xerox Australia Pty Ltd (2021) 150 ACSR 165; [2021] FCA 153, Stewart J noted that the provisions regarding unfair contract terms under the Australian Securities and Investments Commission Act 2001 (Cth) are materially identical to the unfair contract provisions under the Australian Consumer Law.

66    The following general principles in relation to unfair contract terms were identified by Gilmour J (albeit in the context of interpreting the Australian Securities and Investments Commission Act) in Australian Competition and Consumer Commission v CLA Trading Pty Ltd [2016] ATPR 42-517; [2016] FCA 377 at [54]:

(a)    the underlying policy of unfair contract terms legislation respects true freedom of contract and seeks to prevent the abuse of standard form consumer contracts which, by definition, will not have been individually negotiated;

(b)    the requirement of a “significant imbalance” directs attention to the substantive unfairness of the contract;

(c)    it is useful to assess the impact of an impugned term on the parties’ rights and obligations by comparing the effect of the contract with the term and the effect it would have without it;

(d)    the “significant imbalance” requirement is met if a term is so weighted in favour of the supplier as to tilt the parties’ rights and obligations under the contract significantly in its favour – this may be by the granting to the supplier of a beneficial option or discretion or power, or by the imposing on the consumer of a disadvantageous burden or risk or duty;

(e)    significant in this context means “significant in magnitude”, or “sufficiently large to be important”, “being a meaning not too distant from substantial”;

(f)    the legislation proceeds on the assumption that some terms in consumer contracts, especially in standard form consumer contracts, may be inherently unfair, regardless of how comprehensively they might be drawn to the consumer’s attention;

(g)    in considering “the contract as a whole”, not each and every term of the contract is equally relevant, or necessarily relevant at all. The main requirement is to consider terms that might reasonably be seen as tending to counterbalance the term in question.

(citations omitted)

67    In Australian Competition and Consumer Commission v Smart Corporation Pty Ltd (No 3) (2021) 153 ACSR 347; [2021] FCA 347 at [65], Jackson J adopted the principles set out in CLA Trading to Part 2 – 3 of the Australian Consumer Law, which contains s 23 and s 24 on the basis that the legislation was not materially different. I will adopt the same approach.

68    In Australian Competition and Consumer Commission v Chrisco Hampers Australia Ltd (2015) 239 FCR 33; [2015] FCA 1204, Edelman J summarised the principles in relation to the application of s 24 at [43] as follows:

(1)     for a term to be unfair it must satisfy the requirements of all of s 24(1)(a) to (c);

(2)     the onus is upon the applicant to prove the matters in s 24(1)(a) and (c) but it is upon the respondent in relation to s 24(1)(b);

(3)     s 24(2)(a) only requires the Court to consider transparency in relation to the particular term that is said to be unfair and only in relation to the matters concerning that term in s 24(1)(a) to (c);

(4)     similarly, the assessment of the contract as a whole in s 24(1)(c) only requires the Court to consider the contract as a whole in relation to the particular term that is said to be unfair and only in relation to the matters concerning that term in s 24(1)(a) to (c);

(5)    as the Explanatory Memorandum to the Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010 (Cth) provided at [5.39], “if a term is not transparent it does not mean that it is unfair and if a term is transparent it does not mean that it is not unfair”; and

(6)     guidance can be had to s 25 which provides examples of unfair terms.

Analysis

69    It was common ground that the agreement was a standard form contract.

70    The next issue is whether the contract was a small business contract. The agreement was for the supply of goods, namely the tank; the upfront price payable under the agreement was less than $300,000; and Mr Walsh gave unchallenged evidence that Willshaun employed fewer than 20 employees. Consequently, the contract was a small business contract: s 23(4) Australian Consumer Law.

71    What remains to be considered is whether each of the impugned clauses is unfair.

Clause 5.2

72    The impugned parts of clause 5.2 provided:

At [Lobux’s] sole discretion, the Price shall be either;

(a)     as indicated on any invoice provided by [Lobux] to [Willshaun]; or

(b)     the Price as at the date of delivery of the Goods according to [Lobux’s] current price list; or

…

73    Clauses 5.2(a) and 5.2(b) are transparent within the meaning of s 24(3) Australian Consumer Law. They are expressed in reasonably plain language, they are legible, they are presented clearly and they were readily available to Willshaun. Willshaun did not submit otherwise.

74    However, clauses 5.2(a) and 5.2(b) operate to permit Lobux to vary the price under the agreement without the right of Willshaun to terminate. This is an example of an unfair term identified in s 25(f). As the terms and conditions do not provide any means of termination or other challenge by Willshaun in the event of such a unilateral variation of price, and do not contain any qualification or limitation on Lobux’s ability to vary the price, these clauses give rise to a significant imbalance in the parties’ rights of the kind described in CLA Trading.

75    Further, Lobux has not demonstrated that the clauses are reasonably necessary in order to protect its legitimate interests. It has therefore not rebutted the presumption which arises pursuant to s 24(4) Australian Consumer Law.

76    These clauses, if relied upon, would cause detriment to Willshaun within the meaning of s 24(1)(c) as they would allow for the unilateral variation of price by Lobux without restriction.

77    Consequently, clauses 5.2(a) and 5.2(b) are unfair terms within the meaning of s 24 Australian Consumer Law.

Clause 5.8

78    Clause 5.8 provides that:

[Willshaun] shall not be entitled to set off against, or deduct from the Price, any sums owed or claimed to be owed to [Willshaun] by [Lobux] nor to withhold payment of any invoice because part of that invoice is in dispute.

79    Lobux submits that the clause is reasonably necessary to protect its legitimate interests in circumstances where it is exposed to incurring significant costs in the production of the tank prior to payment being made and received from Willshaun.

80    Furthermore, Lobux submits that the clause is transparent as it is “obvious on its face what it provides”. I agree that the term is transparent within the meaning of s 24(3) Australian Consumer Law. It is expressed in reasonably plain language, it is legible, it is presented clearly and it was readily available to Willshaun.

81    Other than making passing reference to clause 5.8, Willshaun did not make specific submissions to support its claim that clause 5.8 is an unfair term or to demonstrate that all of the elements of s 24(1) had been met in relation to it.

82    If the agreement did not contain clause 5.8, a customer such as Willshaun could avoid paying the price for the machine ordered by it by making a spurious claim against Lobux for damages or by raising any form of dispute about the invoice. Absent clause 5.8, Lobux would be required to bear the burden of the costs incurred by it in relation to the manufacture of the machine until any such dispute was resolved.

83    While the effect of clause 5.8 is to shift the risk associated with any dispute away from Lobux, it does not “tilt the parties’ rights and obligations under the contract significantly in its favour” so as to justify a finding that there is a significant imbalance in the parties’ rights and obligations under the agreement. Further, in circumstances where Lobux will be exposed to incurring significant costs in the production of the tank prior to payment being received from Willshaun, the clause is reasonably necessary to protect Lobux’s legitimate interests.

84    Having regard to the agreement as a whole, and taking into account these matters, I am not persuaded that clause 5.8 is an unfair term.

Clause 6.4 (first two sentences)

85    The first two sentences of clause 6.4 which are the subject of Willshaun’s claim state:

The delivery period quoted commences from the date [Lobux] receives the required deposit with any time specified by [Lobux] for Delivery of the Goods is an estimate only. [Lobux] will not be liable for any loss or damage incurred by [Willshaun] as a result of Delivery being late.

86    Willshaun submits that the impugned sentences in clause 6.4 (along with clauses 12.2, 13.4, 13.7, 16.3 and 21.3) have the effect of severely limiting its right to sue Lobux within the meaning of s 25(k) of the Australian Consumer Law.

87    However, this submission cannot be accepted in relation to the first sentence of clause 6.4 which identifies when the delivery period commences and that any time specified by Lobux for delivery is an estimate only. That sentence does not “have the effect of severely limiting its right to sue Lobux” which is the professed basis of challenge to clause 6.4.

88    The second sentence in clause 6.4 does limit Willshaun’s right to sue Lobux. This corresponds with s 25(k) which lists, as an example of a term that may be unfair, a term that limits, or has the effect of limiting, one party’s right to sue another party. However, that the clause corresponds to an example given in the legislation is not conclusive, having regard to the words used in the chapeaux in s 25.

89    Lobux submits that clause 6.4 did not cause a significant imbalance in the parties’ rights and obligations arising under the agreement because time of delivery was not expressed to be of the essence and it was “inherently subject to change”.

90    Clause 6.4 forms part of an overall agreement for the manufacture of a custom-made machine. As it is custom-made, it is self-evident that issues might arise in its manufacture which Lobux could not reasonably anticipate when it gave its estimated delivery time of eight weeks from 30% deposit. Time was not expressed to be of the essence in the agreement and the delivery period referred to in the quotation is expressly agreed by the parties to be an estimate only. While clause 6.4 does operate to exclude Lobux’s liability for damages if delivery was later than that estimated, this was not unfair to Willshaun in these circumstances.

91    Further, the third sentence in clause 6.4, which is not the subject of complaint by Willshaun, provides that both parties agree that they shall make every endeavour to enable the “Goods” to be delivered at the time and place as was arranged between both parties. This ameliorates the limitation on the liability of Lobux which is found in the second sentence because it means that, although Lobux will not be liable if its estimated delivery date is not achieved, it still promises to make every endeavour to achieve it.

92    Clause 6.4 is also transparent within the meaning of s 24(3) Australian Consumer Law. It is expressed in reasonably plain language, it is legible, it is presented clearly and it was readily available to Willshaun. Willshaun did not submit otherwise.

93    In these circumstances and for these reasons, the impugned sentences in clause 6.4 are reasonably necessary to protect the legitimate interests of Lobux to exclude liability for loss as a result of delivery being later than any quoted (and estimated) date. Further, the inclusion of these sentences of clause 6.4 into the agreement did not cause a significant imbalance in the parties’ rights and obligations under the agreement, especially having regard to the third sentence in clause 6.4.

94    For these reasons, clause 6.4 is not an unfair term.

Clause 10.3

95    Clause 10.3 provides:

It is further agreed that, until ownership of the Goods passes to the Customer in accordance with clause 10.1:

(a)     the Customer is only a bailee of the Goods and must return the Goods to [Lobux] on request.

(b)     the Customer holds the benefit of the Customer’s insurance of the Goods on trust for [Lobux] and must pay to [Lobux] the proceeds of any insurance in the event of the Goods being lost, damaged or destroyed.

(c)     the Customer must not sell, dispose, or otherwise part with possession of the Goods other than in the ordinary course of business and for market value. If the Customer sells, disposes or parts with possession of the Goods then the Customer must hold the proceeds of any such act on trust for [Lobux] and must pay or deliver the proceeds to [Lobux] on demand.

(d)     the Customer should not convert or process the Goods or intermix them with other goods but if the Customer does so then the Customer holds the resulting product on trust for the benefit of [Lobux] and must sell, dispose of or return the resulting product to [Lobux] as it so directs.

(e)     the Customer irrevocably authorises [Lobux] to enter any premises where [Lobux] believes the goods are kept and recover possession of the Goods.

(f)     [Lobux] may recover possession of any Goods in transit whether or not delivery has occurred.

(g)     the Customer shall not charge or grant an encumbrance over the Goods nor grant nor otherwise give away any interest in the Goods while they remain the property of [Lobux].

(h)     [Lobux] may commence proceedings to recover the Price of the Goods sold notwithstanding that ownership of the Goods has not passed to the Customer.

96    By clause 10.1, which is not the subject of challenge as being an unfair term, the parties agreed that ownership of the tank would not pass until Willshaun had paid all amounts owing to Lobux and otherwise met all of its obligations.

97    Willshaun submits that clause 10.3 (along with clauses 11, 12.1 and 12.3) and the guarantee contained in the work authorisation form grant security interests to Lobux which provide “an overabundance of security in light of the reciprocal obligations of [Willshaun] and relative risk of non-payment by [Willshaun].”

98    The facts relied upon to submit that there is a relative risk of non-payment by Willshaun are not identified by reference to the evidence or otherwise. On its own case and at the time of entry into the agreement, Willshaun operated a small business. It had one director and only one or two employees. Lobux was engaged by Willshaun to manufacture a custom-made machine in relation to which it would incur upfront costs, and there was at least some risk that the machine would not be able to be readily sold if Willshaun did not pay the not insignificant price.

99    Lobux submits that clause 10 was reasonably necessary to protect its legitimate interests in circumstances where it is exposed to incurring significant costs in the production of the tank prior to payment being made and received from Willshaun.

100    In circumstances where clause 10.1 forms part of the parties’ agreement and is not challenged as being unfair, clause 10.3 identifies the parties’ rights and obligations when clause 10.1 applies.

101    That is, clause 10.3 identifies the terms of the parties’ agreement which apply to the situation where, as occurred here, the “Goods” came into the possession of the “Customer” in circumstances where the “Customer” had not paid for them and therefore ownership had not passed. Without clause 10.3, there would be a lack of clarity (and potential disputation) about the parties’ rights and obligations in this scenario, which would not be beneficial to either party.

102    For these reasons, clause 10.3 does not confer a security interest on Lobux as submitted by Willshaun and it does not “tilt the parties’ obligations under the contract significantly” in Lobux’s favour. For this reason and having regard to the agreement as a whole, the inclusion of clause 10.3 did not cause a significant imbalance in the parties’ rights and obligations under the agreement.

103    Clause 10.3 is transparent within the meaning of s 24(3) Australian Consumer Law. It is expressed in reasonably plain language, it is legible, it is presented clearly and it was readily available to Willshaun. Willshaun did not submit otherwise.

104    Further, clause 10.3 is reasonably necessary to protect the legitimate interests of Lobux in relation to the situation where Willshaun came into possession of the tank but had not paid all that was owing in relation to it, such that ownership in the tank had not passed.

105    For these reasons, clause 10.3 is not an unfair term.

Clause 11

106    Schedule A refers to clause 11, but without setting out any part of it. It appears to be accepted by Lobux that the attack is on the entirety of clause 11, and this is consistent with Willshaun’s submissions also. Clause 11 provides:

11.     Personal Properties Securities Act 2009 (“PPSA”)

11.1     In this clause financing statement, financing change statement, security agreement, and security interest has the meaning given to it by the PPSA.

11.2     Upon assenting to these terms and conditions in writing the Customer acknowledges and agrees that these terms and conditions constitute a security agreement for the purpose of the PPSA and creates a security interest in all Goods and/or collateral (account) – being a monetary obligation of the Customer to [Lobux] for Services – that have previously been supplied and that will be supplied in the future by [Lobux] to the Customer.

11.3     The Customer undertakes to:

(a)     promptly sign any further documents and/or provide any further information (such information to be complete, accurate and up-to-date in all respects) which [Lobux] may reasonably require to;

(i)     register a financing statement or financing change statement in relation to a security interest on the Personal Property Securities Register;

(ii)     register any other document required to be registered by the PPSA; or

(ii)     correct a defect in a statement referred to in clause 11.3(a)(i) or 11.3(a)(ii);

(b)     indemnify, and upon demand reimburse, [Lobux] for all expenses incurred in registering a financing statement or financing change statement on the Personal Property Securities Register established by the PPSA or releasing any Goods charged thereby;

(c)     not register a financing change statement in respect of a security interest without the prior written consent of [Lobux];

(d)     not register, or permit to be registered, a financing statement or a financing change statement in relation to the Goods and/or collateral (account) in favour of a third party without the prior written consent of [Lobux];

(e)     immediately advise [Lobux] of any material change in its business practices of selling the Goods which would result in a change in the nature of proceeds derived from such sales.

11.4     [Lobux] and the Customer agree that sections 96, 115 and 125 of the PPSA do not apply to the security agreement created by these terms and conditions.

11.5    The Customer waives their rights to receive notices under sections 95, 118, 121(4), 130, 132(3)(d) and 132(4) of the PPSA.

11.6     The Customer waives their rights as a grantor and/or a debtor under sections 142 and 143 of the PPSA.

11.7     Unless otherwise agreed to in writing by [Lobux], the Customer waives their right to receive a verification statement in accordance with section 157 of the PPSA.

11.8     The Customer must unconditionally ratify any actions taken by [Lobux] under clauses 11.3 to 11.5.

11.9     Subject to any express provisions to the contrary (including those contained in this clause 11), nothing in these terms and conditions is intended to have the effect of contracting out of any of the provisions of the PPSA.

107    Willshaun submits that clause 11, when considered with clause 10.3, 12.1, 12.3 and the work authorisation form, grants Lobux security interests which provide it with “an overabundance of security in light of the reciprocal obligations of [Willshaun] and relative risk of non-payment by [Willshaun]” and that therefore clause 11 is not reasonably necessary.

108    As observed earlier in these reasons, the facts relied upon to submit that there is a relative risk of non-payment by Willshaun are not identified by reference to the evidence or otherwise.

109    Lobux submits that clause 11 was not unfair as the terms of the clause were permitted under the PPSA or Personal Properties Securities Regulations 2010 (Cth) and the clause was reasonably necessary to protect its legitimate interests.

110    Those legitimate interests include, of course, protection of Lobux’s continued ownership of the tank pursuant to clause 10.1 (when that term applied). Lobux also had a legitimate interest in ensuring that Willshaun complied with its obligations under clause 10.3 (when that term applied).

111    While it is correct that, unlike clause 10.3, clause 11.2 creates a security interest in the tank in favour of Lobux, the balance of clause 11 is either permitted by the PPSA or is directed at protecting the security interest created by clause 11.2.

112    In the circumstances, clause 11 does not give rise to a situation where there is an “overabundance of security” when considered in the context of the agreement as a whole (leaving aside clause 12, which is addressed below). That is because clause 10.1 provides that ownership of the tank did not pass in certain circumstances, clause 10.3 delineated the parties’ rights and obligations when clause 10.1 applies and clause 11 provides Lobux with a form of legal protection of its ownership rights which protection was available to it pursuant to legislation which facilitated this.

113    Clause 11 is expressed in reasonably plain language, it is legible, it is presented clearly and it was readily available to Willshaun. It is therefore transparent within the meaning of s 24(3). Willshaun does not submit otherwise.

114    For these reasons, the clause does not cause a significant imbalance in the parties’ rights and obligations under the agreement and it is reasonably necessary to protect the legitimate interests of Lobux.

115    Clause 11 is not an unfair term.

Clause 12

116    Clause 12 provides as follows:

12.    Security and Charge

12.1    In consideration of [Lobux] agreeing to supply the Goods, the Customer charges all of its rights, title and interest (whether joint or several) in any land, realty or other assets capable of being charged, owned by the Customer either now or in the future, to secure the performance by the Customer of its obligations under these terms and conditions (including, but not limited to, the payment of any money).

12.2    The Customer indemnifies [Lobux] from and against all [Lobux’s] costs and disbursements including legal costs on a solicitor and own client basis incurred in exercising [Lobux’s] rights under this clause.

12.3    The Customer irrevocably appoints [Lobux] and each director of [Lobux] as the Customer’s true and lawful attorney/s to perform all necessary acts to give effect to the provisions of this clause 12 including, but not limited to, signing any document on the Customer’s behalf.

117    Willshaun again submits that clause 12 provides Lobux with “an overabundance of security in light of the reciprocal obligations of [Willshaun] and relative risk of non-payment by [Willshaun]” when read with clauses 10.3 and 11 as well as the work authorisation form.

118    Lobux submits that clause 12 was reasonably necessary to protect its legitimate interests in circumstances where it is exposed to incurring significant costs in the production of the tank prior to payment being made and received from Willshaun.

119    There was no submission by Willshaun that clause 12 was not transparent. However, clause 12.1 is not expressed in reasonably plain language which means that it cannot be concluded that it is transparent within the meaning of s 24(3) Australian Consumer Law. For example, the expression “any land, realty or other assets capable of being charged” is not expressed in reasonably plain language and would likely leave the customer in a position of uncertainty as to the meaning and effect of this clause.

120    When considered in the context of the agreement as a whole (including, in particular, clauses 10 and 11 which provide an appropriate level of protection of Lobux’s legitimate interests), clause 12 creates a significant imbalance in the parties’ rights and obligations arising under the agreement. It charges all rights, title and interests in all of the customer’s assets which are “capable of being charged” either “now or in the future”. Such a clause is excessive. Further, Lobux has not rebutted the presumption that the clause is not reasonably necessary in order to protect its legitimate interests. Finally, it is self-evident that clause 12 would cause detriment to Willshaun if Lobux sought to rely on it.

121    For these reasons, clause 12 is an unfair term.

Customer information and work authorisation forms

122    The customer information form and work authorisation form, to which the terms and conditions are attached, both provide the following declaration above the signature of the person who signs for the customer:

I agree that if I am a director/shareholder (owning at least 15% of the shares) of the Customer I shall be personally liable for the performance of the Customer’s obligations under this contract.

(emphasis added)

123    Having regard to the emphasised words, this statement is therefore made by a person who is a director/shareholder of the customer (being Willshaun in this case) and not by Willshaun. That is, Mr Walsh made this statement in his personal capacity.

124    Further, this statement, which is described by Willshaun as a guarantee, appears on forms which are separate to the terms and conditions. Those terms and conditions refer to two parties to the agreement, namely “TSA” which is defined as Lobux and the “Customer”.

125    The basis on which the statement by Mr Walsh is alleged to have formed part of the agreement between Lobux and Willshaun is not pleaded or otherwise the subject of submissions.

126    As it is not a term of the agreement between Lobux and Willshaun as alleged by Willshaun, it cannot have caused “significant imbalance in the respective rights and obligations of Willshaun and Lobux arising under the [agreement]” as pleaded by Willshaun. It therefore cannot be an unfair term in the manner which is alleged in Willshaun’s pleading.

127    For these reasons, Willshaun’s claim that the statement by Mr Walsh on the customer information form and work authorisation form is an unfair term is rejected.

Consequence of being an unfair term

128    On the basis that the agreement between Willshaun and Lobux was both a small business contract and a standard form contract, the following unfair terms are void by reason of s 23(1) Australian Consumer Law: clauses 5.2(a), 5.2(b), 12, 13.4, 13.7, 16.3 and 21.3.

Were any terms of the agreement breached by Lobux such that Willshaun was entitled to terminate the agreement?

The parties’ contentions

129    To meet the complaint that it removed the tank on or about 23 March 2019 and failed to return it, contrary to the agreement reached that it would do so, Willshaun claims that, by its conduct, it accepted the repudiatory conduct of Lobux and thereby terminated the agreement.

130    Willshaun claims that Lobux was in breach of two essential contractual obligations by 23 March 2019, which amounted to repudiation of the agreement by Lobux. The first of these was the failure by Lobux to make every endeavour to enable delivery of the tank within eight weeks from payment of the deposit. The second of these was a failure to manufacture a tank such that it was:

(a)    compliant and/ or would be compliant with Australian Standard 1210 without significant remedial works;

(b)    capable of being fit for the purpose of use as a vacuum tank in the provision of vacuum excavation services.

131    Willshaun did not press its case in relation to Australian Standard 2809.

132    Lobux denies that it breached the agreement. It says that, in circumstances where Willshaun made repeated and, in some instances, significant changes to the design of the tank, which changes continued to be made up to and including March 2019 (and which it agreed to perform), there was no breach by it of its obligation to use reasonable endeavours to deliver the tank within eight weeks of payment of the deposit, especially as the parties agreed that Lobux could have until the end of March to complete the construction of the tank. It also says that, in circumstances where the tank was removed before Lobux had the opportunity to finish carrying out the agreed scope of works, there has been no breach by Lobux because Willshaun’s conduct prevented it from completing the construction of the tank and performing the agreement.

Contractual obligation as to timing of delivery

133    Clause 6.4 of the terms and conditions provided as follows:

The delivery period quoted commences from the date [Lobux] receives the required deposit with any time specified by [Lobux] for Delivery of the Goods is an estimate only. [Lobux] will not be liable for any loss or damage incurred by [Willshaun] as a result of Delivery being late. However, both parties agree that they shall make every endeavour to enable the Goods to be delivered at the time and place as was arranged between both parties…

134    The September 2018 quote stated:

Delivery time: 8 weeks from 30% deposit

135    The delivery time was eight weeks from payment of 30% deposit. It is common ground that the final tranche of the 30% deposit was paid on 27 September 2018. Eight weeks from this date is 22 November 2018.

Delivery period was an estimate only

136    Clause 6.4 expressed in unambiguous terms that the quoted delivery period was an estimate only, and that Lobux would not be liable for any loss or damage incurred by Willshaun as a result of delivery being late. This has the consequence that Lobux promised to construct a custom-made tank in circumstances where it did not promise that delivery of that item would occur within the delivery period or by a particular date.

137    On that construction, a failure by Lobux to achieve delivery within that delivery period cannot (on its own) lead to a conclusion that Lobux had evinced an intention to no longer be bound by the agreement. Nor can it be held liable for loss and damage suffered by Willshaun if delivery within the estimated delivery period did not occur, especially if, as will be addressed, its conduct was the reason that Lobux failed to achieve delivery within the estimated time.

Whether Lobux made every endeavour to achieve delivery within 8 weeks

138    Clause 6.4 concludes with these words:

However, both parties agree that they shall make every endeavour to enable the Goods to be delivered at the time and place as was arranged between both parties. In the event that [Lobux] is unable to supply the Goods as agreed solely due to any action or inaction of [Willshaun], then [Lobux] shall be entitled to charge a reasonable fee for redelivery and/or storage.

139    Willshaun’s case is that Lobux breached this obligation. It complains that Lobux did not make every endeavour to enable delivery of the tank within eight weeks from payment of the deposit. By its particulars, it states that citing cash flow constraints did not permit or entitle Lobux to delay the manufacture and supply of the tank.

140    The agreement by both parties that “they shall make every endeavour to enable the Goods to be delivered at the time and place as was arranged between both parties” commences with the word “however” and therefore appears intended to qualify what came before it in clause 6.4. This means that the “arrangement” between the parties, at least as to time of delivery, is intended to be a reference to the estimated delivery period (if any) provided by Lobux.

141    This means that, notwithstanding that the delivery period was estimated to be eight weeks, and that Lobux was not prepared to accept liability for loss and damage if the estimated time period was not met, it was agreed that both parties would make “every endeavour to achieve it”.

142    Counsel for Willshaun agreed that the expression “every endeavour” meant “every reasonable endeavour” and accepted that Willshaun bore the onus of proving that Lobux had not taken reasonable endeavours.

143    By its written submissions, Willshaun submits that the expression “every endeavour” is probably on par with “best endeavours” which is a “slightly higher standard”. It cited the decision of QAD Inc v Shepparton Partners Collective Operations Pty Ltd (2021) 159 IPR 285; [2021] FCA 615 at [200] – [202], in which Thawley J stated that:

In Woodside at [41] to [43], French CJ, Hayne, Crennan and Kiefel JJ made three general observations as to the obligation to use reasonable endeavours (footnotes omitted):

[41]    Three general observations can be made about obligations to use reasonable endeavours to achieve a contractual object. First, an obligation expressed thus is not an absolute or unconditional obligation. Secondly, the nature and extent of an obligation imposed in such terms is necessarily conditioned by what is reasonable in the circumstances, which can include circumstances that may affect an obligor’s business. This was explained by Mason J in Hospital Products Ltd v United States Surgical Corporation, which concerned a sole distributor’s obligation to use “best efforts” to promote the sale of a manufacturer’s products. His Honour said:

“The qualification [of reasonableness] itself is aimed at situations in which there would be a conflict between the obligation to use best efforts and the independent business interests of the distributor and has the object of resolving those conflicts by the standard of reasonableness … It therefore involves a recognition that the interests of [the manufacturer] could not be paramount in every case and that in some cases the interests of the distributor would prevail.”

[42]    As Sellers J observed of a corporate obligor in Terrell v Mabie Todd & Co Ltd, an obligation to use reasonable endeavours would not oblige the achievement of a contractual object “to the certain ruin of the Company or to the utter disregard of the interests of the shareholders”. An obligor’s freedom to act in its own business interests, in matters to which the agreement relates, is not necessarily foreclosed, or to be sacrificed, by an obligation to use reasonable endeavours to achieve a contractual object.

[43]    Thirdly, some contracts containing an obligation to use or make reasonable endeavours to achieve a contractual object contain their own internal standard of what is reasonable, by some express reference relevant to the business interests of an [obligor].

As is made clear by the passage at [41], an obligation to use best or reasonable endeavours is not an absolute obligation. It is conditioned on what is reasonable in the circumstances. In making that point at [41], the majority cited (in a footnote to the third sentence) Mason J in Transfield Proprietary Ltd v Arlo International Ltd (1980) 144 CLR 83 at 101; 30 ALR 201 at 216, where his Honour stated:

A “best endeavours” clause thus prescribes a standard of endeavour which is measured by what is reasonable in the circumstances, having regard to the nature, capacity, qualifications and responsibilities of the [promisor] viewed in the light of the particular contract.

In Hospital Products Limited v United States Surgical Corporation (1984) 156 CLR 41 at 64; 55 ALR 417 at 429; 4 IPR 291 at 303, Gibbs CJ stated that a “best endeavours” clause “does not require the person who undertakes the obligation to go beyond the bounds of reason; he is required to do all he reasonably can in the circumstances to achieve the contractual object, but not more”.

144    During closing, Willshaun submitted that Lobux did not have a documented plan or schedule for when, how and by whom the work was to be done. It submits that Mr Crawford had given evidence of documents which had been prepared for the design of the tank, but had not put them into evidence. Willshaun also criticised Lobux for not tendering construction or manufacturing plans which Mr Crawford said had been prepared but “they’re not for the customer to see”. Willshaun submits that this was a “slapdash approach” which “suggests that not even reasonable endeavours were undertaken” let alone best endeavours.

145    However, when one has regard to Willshaun’s pleadings, it was not alleged that Lobux did not have a documented plan or schedule for when, how and by whom the work was to be done and that, by reason of this fact, Lobux breached clause 6.4 because it failed to make every endeavour to enable the tank to be delivered within the eight week delivery period. Nor did Willshaun plead a positive case that the cause of the failure by Lobux in achieving delivery within the eight week period was Lobux’s “own difficulties” such as “poor planning” (which is the finding sought by Willshaun in its closing submissions). The failure to plead such facts is contrary to rules 16.02(1)(c) and (d) Federal Court Rules 2011 (Cth).

146    Such an approach is unfair to Lobux which was only appraised of this case during closing submissions. Had such a case been pleaded, as it ought to have been, then the documents which Lobux did not tender might have been tendered by it (assuming that they were relevant to meet this allegation, which is what is suggested by Willshaun’s submissions).

147    For these reasons, I am not prepared to permit Willshaun to advance a case that Lobux breached clause 6.4 because it did not have a documented plan or schedule for when, how and by whom the work was to be done so as to achieve the estimated eight-week delivery period and I am therefore not prepared to make the finding sought by Willshaun in its closing submissions.

148    Even if Willshaun was permitted to advance this case, the lack of a documented plan or schedule prepared by Lobux does not justify a finding that Lobux did not use every endeavour to meet the eight week delivery timeframe. Although the tank was a custom-made machine, its price was only $140,000 plus GST. Mr Crawford has been involved in the manufacture of tanks for over 40 years and (according to his unchallenged evidence) sold “1,000”. Lobux runs a business of constructing tanks and there was no suggestion that the estimate given of eight weeks was not a reasonable one at the time that it was given. With his experience, Mr Crawford likely had insight and understanding of how long a tank of the kind which was the subject of the September 2018 quote would take to construct. Further, there was no expert evidence adduced by Willshaun which was to the effect that a lack of documented plan or schedule in relation to the construction of the tank was not reasonable such that its lack meant that Lobux did not use reasonable or best endeavours to construct the tank within that time frame. It follows that the lack of a “documented plan or schedule” does not demonstrate a “slapdash approach” such that it is open to find that clause 6.4 was breached by Lobux in the manner submitted (but not pleaded) by Willshaun in any event.

149    Willshaun also seeks a finding that the cause of the delay in achieving delivery within the eight week period was Lobux’s “own difficulties” such as “lack of financial resources” (which is the finding sought by Willshaun in its closing submissions).

150    I am not prepared to make the finding sought by Willshaun for the following reasons.

151    In his first affidavit, Mr Crawford referred to the fact that he had contacted Mr Walsh in December 2018 about making progress payments and Mr Walsh told him that “money was tight” and that they agreed that Willshaun would pay suppliers directly rather than make progress payments. This issue has been addressed earlier in these reasons. Such an arrangement could only have benefitted Willshaun, and I accept that it occurred as stated by Mr Crawford (that is, that it was Willshaun and not Lobux which had a lack of financial resources and for this reason, Willshaun paid suppliers directly rather than make progress payments to Lobux).

152    When he was cross-examined about this conversation, Mr Crawford said it was unlikely that he had not requested payment from Mr Walsh prior to 19 December 2018 (other than the deposit), and said that the quotation made clear that progress payments were applicable. He said that Mr Walsh told him that “money was tight all the way along”. This evidence was not challenged.

153    Mr Crawford also gave this evidence about the conversation on 19 December 2018:

In the conversation that you had with Mr Walsh on 19 December 2018, you told him you needed $20,000 to pay for the motor for the vacuum tank?---That was after the motor was – had been ordered for about, I don’t know, so many weeks earlier. It wasn’t an off-the-shelf item and it needed to be paid.

Well, you said those words to Mr Walsh, didn’t you, Mr Crawford?---I would have said them to him – must have said them to him.

Mr Walsh told you he would pay the motor supplier directly?---Correct.

154    According to Mr Crawford, the change to the size of the motor in the tank was one of the changes made by Willshaun to the tank’s design which was the cause of Lobux’s failure to achieve the eight week delivery timeframe. For the reasons explained below, I accept that this was the cause.

155    By its reply, Lobux pleads that:

(a)    the estimated date of completion was revised and agreed to by Willshaun on account of various variations to the scope and design of the tank requested by Willshaun;

(b)    the agreement was varied as a result of the variations to the scope and design of the tank requested by Willshaun and agreed to by Lobux.

156    Mr Crawford gave this evidence in support of this pleaded case:

Throughout the manufacturing process, William Walsh and his son attended our workshop on a regular basis.

I recall that Mr Walsh and/or his son would come to the factory every few days.

When Mr Walsh attended, he would request various changes to the scope and design of the Vacuum Tank.

In total, roughly 22 changes to the original design of the Vacuum Tank were requested.

The requested changes were significant variations to the original quote. These were:

(a)    Increased capacity of blower from 1,600 cubic feet per minute to 2,800 cubic feet per minute;

(b)    Increased engine size from 4-cylinder, 123 horsepower to 6-cylinder, 220 horsepower;

(c)    A larger engine frame;

(d)    Change standard ball float to custom stainless build arm cut off;

(e)    Increased secondary/cyclone from 470 millimetres to 600 millimetres;

(f)    Increased size of muffler from 470 millimetres to 600 millimetres;

(g)    Increased size of air cleaner from 470 millimetres to 600 millimetres;

(h)     Increased size of the pipework from 125 millimetres to 150 millimetres;

(i)    Increased size of hoses from 125 millimetres to 150 millimetres;

(j)    Larger fuel tank;

(k)     Larger batter box to accommodate extra battery;

(l)    Major modification to pump slides;

(m)     Major modification to the secondary overfill system;

(n)    Larger belt size including more pulleys;

(o)    Requested that light be fitted requiring aluminium square to be welded onto both saddle tanks;

(p)    Requested lights on the end of the extendable boom which required retractable wiring to be fitted to the boom;

(q)    Changed hose reel from standard reel to slewing auto retractable hose reel;

(r)    Changed the boom base to enable a hydraulic plug to be fitted;

(s)    Various custom-made fitting to fit the boom hose;

(t)    Requested a diesel-powered water pump, pipework, plumbing and hose reel to be fitted to Scania hooklift truck.

At the time, Lobux had the components to fulfil the original quote in stock but needed to manufacture or acquire new components to fulfil the requested variations.

I informed Mr Walsh that Lobux could fulfil the requested variations, but it would incur further costs and Willshaun would bear the cost of the variations as the scope of the work had now been changed at their request.

I also informed Mr Walsh that, as a result of the numerous variations, the delivery of the Vacuum Tank would likely take longer than originally estimated.

The conversations with Mr Walsh were numerous, and almost daily.

I do not recall the specific dates and times of the conversations, however all took place at the business premises of Lobux at Unit 2, 11 Shaw Road, Ingleburn in the State of New South Wales.

…

Lobux carried out the variations as instructed verbally by William Walsh.

157    Mr Crawford was not challenged on his recollection that Mr Walsh’s son had attended the premises, Mr Walsh did not give evidence to the contrary and Willshaun did not call Mr Walsh’s son. There was no explanation as to why he was not called, and I infer from these matters that his evidence would not have assisted Willshaun: Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361; [2011] HCA 11 at [63] – [64].

158    Further, notwithstanding that the tank is in Willshaun’s possession and an expert witness was called, no evidence was adduced by Willshaun that the tank did not have the various features referred to in Mr Crawford’s evidence, such as a six cylinder engine.

159    Mr Walsh denied that he requested any of the changes referred to in Mr Crawford’s evidence, other than installation of the lights which he had expected would be fitted as standard. However, Mr Walsh’s first affidavit also annexes an email from Mr Crawford dated 5 April 2019 which itself quotes from another email from Mr Crawford dated 5 October 2018 and which referred to Mr Walsh’s request for “a larger engine and blower than that quoted”. Mr Walsh’s evidence is contradicted by this documentary evidence.

160    Notwithstanding that the email dated 5 April 2019 support Mr Crawford’s evidence, Willshaun submits that Mr Crawford is not a credible witness such that his evidence concerning these variations ought not to be accepted.

161    Mr Crawford did not appear to be a sophisticated person. Generally, however, he gave forthright answers and consistent evidence in relation to the circumstances in which the changes had been requested by Mr Walsh to be made to the design of the tank (which is extracted later in these reasons). Mr Crawford appeared to be doing his best to recall the events of 2018 and 2019. He was also a witness who made appropriate concessions. For example, Mr Crawford conceded that around 1 December 2018, he told Mr Walsh that the tank would be ready by Christmas. When he was asked about the reference in his affidavit to one progress payment being the deposit, he accepted that he had made a mistake. For these reasons, I regarded Mr Crawford to be a witness of truth.

162    Through Lobux, Mr Crawford was asked by Willshaun to construct a custom-made vacuum tank like the many hundreds which he had constructed over the past four decades. Willshaun criticises him for the lack of documentary support for his evidence but it was plain that he was not the type of person who would record every conversation in a piece of paper or email. He was too busy getting the work done in the factory and he obviously trusted Mr Walsh. That he trusted him is apparent from the fact that he let Mr Walsh take the tank away to get work done on it on the basis that Mr Walsh would return it and even though the final invoice was outstanding.

163    Willshaun submits that Mr Crawford was not a credible witness because he was argumentative. I do not agree. While he appeared to become impatient at times during his evidence (perhaps because he considered that his previous answers had not been heard), Mr Crawford did not argue in favour of any position favourable to Lobux.

164    Mr Crawford is also criticised because it is said that there was a “substantial lack of clarity” around the conversations which he had with Mr Walsh during the period between October 2018 and March 2019. However, it would have been a surprising thing if Mr Crawford had been able to supply any such detail. Mr Walsh also could not recall the detail of his conversations with Mr Crawford. That criticism is rejected.

165    Mr Crawford is also criticised because “significant parts of [his] evidence were mentioned for the first time in cross-examination”. However, Willshaun does not suggest that Mr Crawford fabricated any aspect of his evidence (or that he had done so during his oral evidence) and so the fact that some matters were only mentioned for the first time during oral evidence does not really take the matter anywhere. For whatever reason, including possible decisions taken by legal representatives, that evidence did not find its way into Mr Crawford’s affidavits but that does not affect Mr Crawford’s credit.

166    An extraordinary submission was also made that Mr Crawford attempted to give evidence of a document which had been “deliberately withheld from disclosure” which he then tried to read into the record during his evidence, and that the value of Mr Crawford’s evidence is compromised by this. However, there was no order for general discovery in this case. More importantly, Willshaun accepts that Mr Crawford did not himself conduct a search for documents. Mr Crawford accepted that the letter was not exhibited to his affidavit but also stated that he did not know if it was in evidence or not, saying, “I was only aware of this [document] last night in fact”. When asked whether there were “many other documents” that he had “withheld from disclosure”, Mr Crawford answered, “Not withheld. I didn’t know about it. I found [it] last night. It would have been to my advantage to put that in”. He was not challenged on this response. In the circumstances, there is no basis for a finding that Mr Crawford was fabricating his evidence about his role in the (non-existent) discovery process and about the recent discovery of this document or that he had deliberately acted to withhold this document. For these reasons, I reject this submission.

167    It is not the case that there was no objective support for the evidence of Mr Crawford.

168    First, the email of 5 October 2018 referred to above, and the lack of any evidence of a response from Willshaun disputing that there was any request for “a larger engine and blower than that quoted”, supports Mr Crawford’s version of events.

169    Second, when Lobux sent an email on 5 April 2019 which referred to additional costs “to answer your question” and which referred to and quoted from the 5 October 2018 email, there is no evidence of any response from Willshaun (whether oral or in writing) disputing the content of that email. Further, it is objectively unlikely that the email of 5 April 2019 would have been sent by Lobux had there been no variations as Willshaun claims. It is apparent from the opening words of that email that there had been communications between the parties about the extra costs which Lobux would be charging for the changes requested by Willshaun.

170    The following evidence indicated that Mr Walsh played a bigger role in selecting the features of the tank than was portrayed by Willshaun’s counsel:

Other than capacity, Mr Walsh had no input into the other specifications field?---I discussed with him what he required and this is what he required. We did custom built tanks. So whatever he wanted, within reason, we did.

Well, what Mr Walsh asked you for was a vacuum tank. He didn’t say – isn’t that right?---No. he wanted to do – he wanted a pressure washer. He wanted a hydraulic ..... remote control. Powerpack. The whole works is what he was quoted on.

171    Mr Crawford gave evidence that he had many conversations with Mr Walsh. He said that Mr Walsh was a constant visitor to the factory “so there was no need for emails. It was talking face to face”.

172    Mr Crawford gave this evidence concerning the variations generally:

Mr Walsh didn’t ask you to procure any specific motor?---He paid for it .....

You don’t have a good recollection of these conversations?---Not perfect, no.

Well, it’s not even very good, is it?---Well, you will note in your own evidence that he paid 17-odd thousand plus GST for a six-cylinder Caterpillar when he was quoted on a four-cylinder Caterpillar.

Mr Crawford, your recollection of these conversations is not good, is it?---It’s not perfect.

You cannot say when they occurred?---Roughly when they occurred because it was sometime after discussing the larger blower and larger motor. He paid for the larger motor.

Can I ask you to look at paragraph 27 of your affidavit. There you give evidence that you don’t recall the specific dates and times of the conversations?--- Correct. Sorry, paragraph 27, I’ve got page 27. Correct.

Now, you don’t even give evidence of the rough dates or times of any of the particular conversations?---Well, it would have been in the months of October, November, and December. Most likely November for the major changes.

Well, as you sit there giving evidence today, Mr Crawford, you don’t have a recollection of any particular conversation?---Not – not perfectly, no.

Or not at all, I suggest to you?---Yes, of course. They didn’t change themselves. We must have discussed the changes. We had built all the items prior to December to suit the original quote as far as ..... and the like, and then we had to – well, then he changed the size of the blower which in turn changed the size of the motor, also changed the size of those other items that we had to build on and after Christmas. So it was in that period of November to December, most definitely.

You don’t recall Mr Walsh using any particular words?---No, I don’t.

And there’s no documents which records any of these variations?---From him, no – or me, I haven’t seen any.

You never sent an email with a revised scope of works?---No, it was verbal.

You never instructed Ms Glover to send an email with a revised scope of works?---Well, the changes were constant and many, so it was a bit hard to keep up.

Your evidence is that the variations would have required the purchase and manufacture of new components?---Correct.

…

One of the variations that you referred to paragraph 21 that was discussed in these conversations was to the engine management system?---Correct.

Your evidence is that the engine management system was not part of the original quote?---Of the bigger engine? Of course not. Caterpillar couldn’t supply it with it fitted at that stage because of the short timeframe that it was fitted.

Can I ask you to go to your second affidavit, Mr Crawford - - -?---Yes.

- - - and read page 3 paragraph 4?---Yes.

And there you say that the engine management system was not part of the original quote?---Correct.

It was one of the changes to the scope and design of the vacuum tank?---The original quote was for a four-cylinder motor which had the engine management system fitted by Caterpillar. The six-cylinder one didn’t come fitted with it.

There’s no reference to that in your affidavit?---Yes, there is. There it is there. The six-cylinder motor was never quoted.

Can I ask you to go back to page 21 of the exhibits to your first affidavit, Mr Crawford?---Right.

And you will see in about the fourth line of the line “items of payments” there’s a reference there for a payment director or ..... invoice?---Correct.

And that was the cost for the engine management system?---It was.

That’s deducted from the purchase price of $140,000?---At that stage, yes.

You didn’t tell Mr Walsh that he would incur further costs?---Yes, I did.

You didn’t tell Mr Walsh it would take more time to deliver?---Yes, I did. Everyday he would come in and make a change. I told him it was going to take longer. And in the end, I told him to stop making changes.

Mr Walsh didn’t request any of the variations in paragraph 22 of your affidavit, did he? 21, I’m sorry. I’m corrected?---No, he ..... he requested all of them.

In fact, these were changes that you made to produce a tank that was appropriate for Mr Walsh’s purposes?---No. It was a change from what was quoted originally which was 1600 CFM to the larger blower. I will explain it to you not knowing exactly what is involved. But if you had ordered a four-cylinder car and when it’s delivered you said, “No. I want a six-cylinder car” the radiator, engine, gearbox, fuel tank, batteries – everything would have had to have been changed. Very similar in this case. The blower that he had requested or changed to was, I think, twice the capacity of the original one. Therefore, the aircloner, cyclone, primary, secondary, pipework, fuel tank, batteries, frame all had to be upgraded. And Mr Walsh was no idiot. He knew what mechanical things were. And he came in and saw it every couple of days. Things being changed – and asked for changes along the way.

…

MR RUSSELL: You had a conversation with Mr Walsh in early March of 2019. Do you recall that?---Yes.

You told him - - -?---At that - - -

You told him the vacuum tank would be ready by the end of March?---Correct.

Mr Walsh told you - - -?---If – sorry. If he didn’t make any more changes was the end of the conversation.

Mr Walsh told you that if it wasn’t ready by the end of March he was going to take the tank and get it finished somewhere else?---He did. I agreed to it.

Yes. You haven’t given any evidence of the work which was performed in March?---In what respect? It was all being still built. The changes were still being made.

Well, there’s no evidence of what particular work you were doing in March or what was left to be done at that stage?---There is. At one – there’s one – I think ..... fabrications which he engaged in March to put extra lights on the unit and some other extra work done. So yes. There is evidence there was work being done in March.

…

You did not prepare a work schedule setting out what work would be done on the vacuum tank and by when?---Because it changed daily or every – every two or three days it changed. Put an extra or an addition or an alteration on it.

Well, even from the - - -?--- ..... only take eight weeks. We had built - - -

Well even - - -?---All the items we had built were for the – what we had quoted. All the cyclones, airclones, and the like were all sitting there ready to go. He changed all of that. So they all had to be remanufactured. And apart from that, the size we had to fit all the items was limited. The diameter of the standard aircloner is 470 millimetre. The ones he needed were 600 millimetre. That by three or four times makes it very, very difficult and tight and time-consuming and expensive to fit. That’s the reason why it took so long.

…

(emphasis added)

173    Mr Crawford was shown a photo from the first Technoweld report, and said it was unfinished work. His evidence continued:

You didn’t intend to reweld that section prior to delivering the vacuum tank to Wilshaun?---Certainly would have – the customer has got to approve the job before he takes delivery. The work doesn’t go out looking like that. It’s like an unfinished painting.

You hadn’t dealt with that issue at any point between December 2018 and March 2019?---The item was never finished.

It could have been fixed at any point between December of 2018 and March 2019, couldn’t it?---Not while the changes going on regularly, no. Only had three to four people working on it, so – didn’t have an army.

(emphasis added)

174    Mr Walsh’s credibility was damaged by the fact that he admitted under cross-examination that he had agreed with Mr Crawford that the tank would be removed from Lobux’s possession for certain works to be performed on it and “there was [an] agreement that [he] would bring it back to Lobux [and] Lobux would then finish production of the tank”. This was his evidence:

And when you were there that night, you told Mr Crawford that you wanted to take the tank to GAE Electrical the next day; is that correct?---Yes.

And you told him that you wanted to do it because you wanted to get an emergency stop fitted?---Yes.

And you needed GAE Electrical to fit that emergency stop because Lobux didn’t have anyone qualified to fit it; is that correct?---Yes.

And just to clarify, the installation of that emergency stop, that wasn’t to rectify the oil drip, was it?---No.

So it was something entirely different?---Yes.

Okay. Now, the emergency stop was not something that you had initially asked Lobux to perform, was it?---It’s a standard item on machinery.

My question was did you ask them to perform – to install an emergency – an electrical stop?---No.

And it was on that basis that Michael told you that you could take it to – or could – by “it” I mean the vacuum tank to GAE to get it fitted; you agree with that?---Yes.

And he said that you could take it the next morning, which was 23 March 2019; do you agree with that?---Yes.

And he told you you could take it there, but it needed to be returned later that day?---I don’t recall him telling me to return it. That’s incorrect.

But you knew you needed to return it to Lobux once the stop had been finished?---Yes.

And you knew that the vacuum tank wasn’t finished at that time, didn’t you?---Yes.

So Mr Crawford agreed to let you take the vacuum tank to GAE on 23 March to install the electrical stop; is that correct?---Yes.

And that once that had been installed, there was agreement that you would bring it back to Lobux; is that correct?---Yes.

And that Lobux would then finish the production of the vacuum tank?---Yes.

And that that – you agree that that was to have been finished by the end of March?---Yes.

175    When asked about the reason why he did not return the tank, Mr Walsh alluded to litigation being threatened by Mr Crawford in a letter. However, the date of this letter was not provided. It is possible that this was a reference to the email of 5 April 2019 although that email does not refer to litigation. Regardless, the fact that Mr Crawford wrote a letter which threatened litigation does not explain why the tank was not returned to Lobux to enable the construction to be completed as had been agreed.

176    I infer from these matters, and from the fact that the tank was taken shortly after the final invoice was issued by Lobux, that, in fact, Willshaun either took the tank with the intention of never returning it to Lobux or, after having removed it, it decided not to return it in order to avoid having to pay for it. Either way, Mr Walsh did not do what he said he would do, and when he was asked about the reason for that, he gave an implausible explanation.

177    Having regard to Mr Crawford’s evidence, which I accept, Willshaun (by Mr Walsh) requested that changes be made to the design of the tank and these changes caused delays to the construction of the tank.

178    Further, I accept Mr Crawford’s evidence that, prior to the conversation in March 2019 when he told Mr Walsh to stop making changes, he advised Mr Walsh to the effect that Lobux could fulfil the requested variations but it would incur further costs and Willshaun would bear the cost of the variations as the scope of the work had now been changed at their request. This evidence is corroborated by the email dated 5 October 2018. It is also corroborated by the email dated 5 April 2019 which responded to an apparent request by Mr Walsh for information about the additional costs.

179    I also accept Mr Crawford’s evidence that he informed Mr Walsh that, as a result of the numerous variations, the delivery of the tank would take longer than originally estimated. Notwithstanding this, Willshaun (by Mr Walsh) continued to request changes until March 2019.

180    In conclusion and for these reasons, Willshaun has failed to establish that Lobux did not use every endeavour to enable the tank to be delivered to Willshaun within the eight week delivery period referred to in the September 2018 quotation. This has the consequence that Willshaun has failed to establish that Lobux breached clause 6.4.

181    Further, it is evident from Mr Crawford’s evidence that Lobux accommodated the requests for changes by Willshaun, but that, in circumstances where Lobux had agreed to deliver the finished tank by the end of March 2019, it got to the stage where Mr Crawford had to tell Mr Walsh to stop making changes.

182    For these reasons, the failure by Lobux to deliver the tank within the eight week delivery period (or, indeed, on any date prior to 23 March 2019) did not constitute repudiatory conduct which entitled Willshaun to terminate the agreement by removing the tank on 23 March 2019 and not returning it.

Whether tank met required contractual standard

183    Consideration as to whether the tank met the required contractual standard is, to some extent, a false issue as Lobux did not purport to finish manufacture of the tank or deliver it pursuant to the agreement, and, pursuant to clause 10.1 of the terms and conditions, ownership of the tank did not pass to Willshaun as it had not paid the final invoice. This has the consequence that Willshaun is claiming the costs of rectifying a tank which it does not own.

184    Further, Willshaun agreed that Lobux would have until the end of March 2019 to finish construction of the tank, but took it at least a week early in an incomplete state. By its conduct, it intervened and (at least to some extent) prevented Lobux from performing its contractual obligations, being to deliver a tank by the end of March 2019 which met the required contractual standard. Willshaun did not adduce evidence of or provide any adequate legal justification for this conduct.

185    That Lobux was prevented by Willshaun from finishing the construction of the tank is supported by the evidence of Mr Crawford who, when confronted with photographs of the tank taken on 26 April 2019 by Willshaun’s expert witness, gave evidence as follows:

That’s work for which you were responsible?---It’s unfinished work. It has been welded from one side only. You can see the dags of the welds creeping – creeping through. That would have to have been ground back and rewelded underneath. That’s part of – one of the changes he made. He wanted the floor cut out of the tank, which we did, and it was never finished.

You hadn’t dealt with remedying that work at any point between December 2018 and March 2019?---That’s the one there to be finished – to be fixed. The tank had to be elevated. When there was two or three people working on top of it, you can’t elevate the tank.

Could have been fixed at any point - - -?---It’s an unfinished – unfinished project. I don’t see how you don’t understand that.

It could have been fixed at any point between December 2018 and March 2019, couldn’t it?---Not – not without delaying the other work being done. If one man could have been welding that up, three men would have been standing around reading a newspaper.

…

Well, you hadn’t dealt with repairing it at any point between December 2018 and March 2019, had you?---We hadn’t stopped working on it. There’s priorities of what had to be done. As I said, the main priority was to get it working, which we did, and then we do the other work as we go along. You can see the – the photo next to it. You see the bolts are missing. The unit is not finished.

Can the witness be shown page 107 of the exhibits.

The top right photo with the words “Pinch point” underneath: can you see that, Mr Crawford?---I can.

You didn’t intend to reconfigure that part of the vacuum tank prior to delivering it to Wilshaun?---How do you figure that one out? You reckon the customer would have accepted that? I wouldn’t. And the only stuff had to be put in so it didn’t come up against the ladder. So the unit to the left is the stainless steel hose reel, which was on a pivot that slews probably about 180 degrees. So all that needed to be done there was to put a stay so it didn’t come all the way against the ladder. It hadn’t been finished.

It was defective and not incompletely, wasn’t it, Mr Crawford?---Not at all.

You hadn’t put a stay on, as you say, at any point between December 2018 and March 2019?---Well, that was a fairly late inclusion in the job, but, no, it hadn’t been finished.

…

The answer to all of the issues is that the work is merely not incomplete instead of defective, isn’t it? That’s your evidence?---Correct. I wouldn’t sell a $140,000 tank with problems like that. No one would buy it. I’ve sold 1000 tanks in 41 years and no one has ever complained.

There’s a significant amount of work which you say is incomplete, isn’t there?---Correct.

The work - - -?---That’s why I said to Mr Wilshaun to make no more changes. Mr – sorry – Mr Liam – anyway – that there was to be no more changes because it kept dragging the job on, tying our people and resources up. I had other work to do. It was costing me probably $67,000 a week to keep the place open and he kept making changes. I just – we had to put a stop to it.

…

Your evidence was that in October, November and December of 2018 is the period in which the changes were requested. Do you recall giving that evidence?---Not at all. That’s when they started to be requested. They didn’t stop till March, till I put a stop to them. He brought his truck in to have an extra diesel pump, motor and reel fitted to it. That was in, I think, March itself. The changes didn’t stop.

You haven’t previously – there’s no reference in your affidavit to a conversation in March in which you insisted that the changes had to stop?---It’s not in evidence, but it’s – in practice it was. I try and satisfy the customers as best I can, but there’s a limit to what you can do. He’s the one who has got to use it, not me. So I try and do as much as I can to make it to what he wants, but within reason.

186    In any event and for the following reasons, I do not accept the expert evidence adduced by Willshaun relating to the alleged defects in the tank.

187    On 26 April 2019, Willshaun caused Mr Fry of Technoweld to inspect the tank and prepare a report. That is, the engagement was made directly by Willshaun.

188    Mr Fry prepared two expert reports, being a report dated 26 April 2019 and a report dated 14 October 2021. Neither report of Mr Fry refers to his independence or lack of relationship with Willshaun or Mr Walsh, which is common practice. In his second report, Mr Fry agrees to be bound by the Harmonised Expert Witness Code of Conduct; however, the Code makes no reference to any requirement to be independent. These matters indicate that Mr Fry might not be independent.

189    Mr Fry produced his first report at the request of Willshaun, which is the party in this proceeding. There is no letter of instruction in connection with the first report. The first report refers to “Discussions as to the items (sic) intended service”. I therefore infer from these facts that Mr Fry received oral instructions, likely from Mr Walsh. The content of those instructions is not in evidence. It is not known what Mr Walsh told him.

190    Mr Crawford suggested during cross-examination that the first report of Mr Fry was intended to convey that the tank was worse than it actually was, when he gave this evidence:

There’s quite a number of photos as part of this document?---Sometimes there’s 10 photos of the same weld, but, yes, there is quite – there’s 100 – yes, there’s 100 photos, I think there were.

…

Well, there are 100-odd photos in here, aren’t there, Mr - - -?---Yes, 10 of the same item. Very dramatic, but not realistic.

(emphasis added)

191    This evidence increases my concern that Mr Fry is not an independent expert.

192    As well as not knowing what Mr Fry’s instructions were, the documents which he relied upon to prepare his first report are not in evidence. As his second report relies upon the first report, both reports are affected by this. Mr Fry refers in his first report to having been supplied with “various email correspondence” between Lobux and Willshaun, which correspondence is not identified and is not in evidence. He also refers to being supplied with “overview drawings as supplied by [Lobux]”, which are also not in evidence.

193    In his first report, Mr Fry refers to assessing the “supplied product”, which was an 81658TDBS Hooklift Backdoor Vacuum Tank with Suction Boom (being the product which was the subject of the September 2018 quote). No reference is made by Mr Fry to the fact that Willshaun removed the tank in an unfinished state, and that Lobux was unable to finish its construction. This has the consequence that an important fact was omitted from Mr Fry’s instructions. He therefore acted on a false premise.

194    Many of the conclusions in the first report are just that – bare conclusions, with inadequate reasons provided for the stated conclusions. For example, Mr Fry provides a conclusion as to whether the tank complied with AS 1210 in these terms, “Inadequate support of hydraulic hoses this will cause excessive wear” and “Poor routing of hoses this will cause excessive wear”. No reasons are provided for these conclusions or why (presumably) there is non-compliance with an unidentified aspect of AS 1210. There are numerous photographs which form part of the report but no context is given to them. The report then concludes, “Cost to get the Plant to a serviceable and compliant condition to WHS regulations” includes, for example, $5,000 for “Re-Routing of hoses and wiring” without any more explanation or detail.

195    Notably, there is no pleaded case by Willshaun that the tank needed to comply with any particular version of “WHS regulations” in any event.

196    For the purposes of his second report dated 14 October 2021, Mr Fry was briefed by Willshaun’s solicitors by letters dated 23 September 2021 and 8 October 2021. In paragraph 6 of his second report, he was asked to assume ten facts. However, all of these facts were not proven by Willshaun. Ordinarily, this would affect the admissibility of the report; however, no objection was taken. It does, however, affect the weight which is attached to the opinions in the second report.

197    For the purposes of his second report, Mr Fry does not appear to have inspected the tank again after 26 April 2019. Instead, he makes his own assumption that:

…on the premise the vessel is in the same state now that it was at the time of inspection, the vessel is not safe to operate and therefore not fit for intended use.

198    However, there was no evidence to establish the premise, being that the tank is in the same state now that it was on 26 April 2019. Indeed, to the contrary, Willshaun has had work performed on the tank in October and November 2019, and the invoices for that work form part of the evidence adduced by Willshaun.

199    Finally and critically, Mr Fry was not informed that the tank has been in commercial use since around September 2019 (according to Mr Walsh). Having regard to Mr Fry’s opinion that the tank was not fit for its intended use (and his oral evidence that he did not accept that it could be used to provide vacuum excavation services), this is a significant omission in his instructions.

200    For these reasons, I attach no weight to the opinions contained in the expert reports of Mr Fry.

201    For this reason, I reject the case advanced by Willshaun that Lobux breached the agreement by not manufacturing a tank which was “compliant and/or would be capable of complying with [AS 1210] without significant remedial works” and which was or “would be capable of being fit for purpose of use as a vacuum tank in the provision of vacuum excavation services”.

202    As breach has not been established, there was no repudiation by Lobux which entitled Willshaun to terminate the agreement by removing the tank on 23 March 2019 and not returning it.

Did Willshaun suffer any loss and damage by reason of any breach of the agreement by Lobux?

The claim for estimated costs to rectify defects in the tank

203    The evidence relied upon to support this claim is that of Mr Fry whose expert evidence has not been accepted.

204    This claim is rejected for this reason.

The claim for lost profits

205    This part of the reasons addresses whether Willshaun has established its pleaded entitlement to damages based on the alleged breach by Lobux of clause 6.4 by failing to deliver the tank within the eight week delivery period (had such a breach been established, which it was not).

The pleaded case

206    By its cross-claim, Willshaun pleads that it “has suffered loss and damages comprising” (amongst other things):

(b)    loss of profits as a consequence of Lobux's failure to supply and/or deliver the Vacuum Tank to Willshaun by 19 November 2018, in accordance with the terms of the Agreement, by reason of Willshaun’s inability to provide services in respect of the following projects (the Lost Work):

(i)    projects undertaken by Gremalco Pty Ltd (Gremalco), a company that operates a business in New South Wales delivering electrical sub-transmission infrastructure on greenfield projects, which would have been partially subcontracted to Wilshaun;

    Particulars

(A)    In the following months, Gremalco paid the following subcontractors the following sums, which amounts would have been paid to Willshaun had the Vacuum Tank been delivered on time:

(ii)    projects undertaken by Sierra Utilities Pty Ltd (Sierra), a company that operates a construction and utility services business in New South Wales with a focus on utility locating, which would have been partially subcontracted to Willshaun;

    Particulars

    Between November 2018 and April 2019, Sierra would have engaged Wilshaun in relation to projects which they described as:

•    Various Ausgrid projects throughout Sydney and the NSW Central Coast;

•    M5 project at St Peters

•    Various Ford Civil projects

(iii)    Projects undertaken by Road and Rail Excavations Pty Ltd (Road and Rail), a company that operates a constructions services business in New South Wales with a focus on road and rail construction work, which would have been partially subcontracted to Wilshaun.

    Particulars

    Between November 2018 and April 2019, Sierra would have engaged Wilshaun in relation to projects which they described as:

•    Oran Park Project - Endeavour Energy ASP1 for Road and Rail's client, Doyle Construction;

•    Box Hill Project - Sydney Water Connections for Road and Rail's client, Doyle Construction;

•    Cherrybrook LV CONSAC Cable replacement project between December 2018 and March 2019 for Road and Rail's client, Ultegra;

•    Bondi LV CONSAC Cable Replacement between March and November 2019 for Road and Rail's client, Ultegra; and

•    Kirribilli HV feeder for Ausgrid Network between July and November 2019

(c)    had Willshaun been engaged to provide the Lost Work, it would have:

(i)    used the Vacuum Truck for approximately 50 hours per week between November 2018 and April 2019;

(ii)    charged its clients approximately $220 per hour for the hire of the Vacuum Truck, including the supply of a driver; and

(iii)    incurred fuel expenses of approximately $10 per hour, as well as labour costs of approximately $50 per hour.

207    By its closing submissions, Willshaun seeks damages for “lost profits” of $167,200 (including GST).

Analysis

208    Clause 6.4 of the agreement provides that Lobux “will not be liable for any loss or damage incurred by [Willshaun] as a result of Delivery being late.”

209    Having regard to my finding that clause 6.4 is not an unfair contract term, this provides a complete defence for Lobux to Willshaun’s claim for lost profits caused by the failure to deliver the tank within the eight week delivery period as alleged.

210    That is not, however, the only reason for rejecting the claim for loss of profits.

211    At trial, Willshaun sought to tender through Mr Walsh:

(a)    a schedule which Mr Walsh deposed had been provided by Gremalco, being a schedule of the work subcontracted to alternative vacuum tank operators;

(b)    a letter from Sierra;

(c)    a letter from Road & Rail.

212    Even had these documents been admitted into evidence, which they were not, they would not have established all of the facts pleaded by Willshaun in relation to the “Lost Work”.

213    Counsel for Willshaun accepted that these documents were hearsay. This had the consequence that s 59 Evidence Act 1995 (Cth) applied and they were not admissible to prove the existence of the facts contained in them. To meet this objection, counsel for Willshaun proposed that a direction be made under s 136 Evidence Act:

limiting the use to which those documents could be put. That is, they can’t be used as evidence of the truth of their contents. But, nevertheless, that they are documents which inform Mr [Walsh’s] estimate...he estimates on the basis of the things that his clients had told him that [he] would have been busy for 50 hours a week.

(emphasis added)

214    Counsel for Willshaun also submitted that:

the highest I can put the submission, your Honour, is that, as the director of the company, Mr Walsh is entitled to make an estimate of the work that would have happened. Now, proof of loss of opportunity and proof of loss of profits can be a difficult thing, because necessarily we’re dealing in hypotheticals.

…

Mr Walsh is entitled to give evidence about the way he thinks the hypothetical would have worked out. Now, he says that his estimate is informed by these clients saying, “We would have given you work.” Now, that may or may not be true, and we accept that the documents from the – the letters from the clients can’t be used to prove that they are true, but his estimate is nevertheless admissible and the attacks on the bases are really attacks on the weight that’s to be given to his estimate.

(emphasis added)

215    Paragraphs 45 to 47 of Mr Walsh’s first affidavit (and the schedule and letters referred to in those paragraphs) were not admitted into evidence as they were inadmissible hearsay (and Willshaun did not submit otherwise). Further, the opening words up to the comma in the first sentences of each of paragraph 44 and 48 were also struck out as they referred to this inadmissible evidence.

216    No direction was made as sought under s 136 Evidence Act. There was no utility in admitting otherwise inadmissible hearsay evidence for the limited purpose of proving the factual basis for the opinion evidence of Mr Walsh, being a purpose which this evidence was incapable of performing. Even with the limitation, the admission of such evidence would have been unfairly prejudicial to Lobux, which would not have had the ability to test its contents through cross-examination of the authors.

217    The admitted evidence which was adduced by Willshaun in relation to its “proof of loss of opportunity” was to have Mr Walsh depose that:

Between November 2018 and April 2019, Willshaun was providing excavation and cable laying services predominantly to Gremalco Ply Ltd (Gremalco), however the services it was able to provide were limited because it did not have the use of the Vacuum Tank.

218    No detail was provided by Mr Walsh (or anyone called from Gremalco) to identify that, had the tank been available to be used, then it would have been contracted by Gremalco to do identified work, the volume of that work, or the amount which Gremalco would have paid for that work.

219    Mr Walsh then deposed that:

Before purchasing the Scania Truck and the Vacuum Tank, I learnt that Gremalco had won contracts for works throughout Sydney. I believed that I could hire the Vacuum Tank out to Gremalco, which is why I caused Willshaun to purchase that equipment.

220    The works which Gremalco had “won” are not identified and nor is there any identification of when the works would be performed or why those works would require the use of the services of the tank. Mr Walsh does not explain the facts relied upon for his belief that the tank could be hired out to Gremalco and so no weight can be attached to his “belief”.

221    Mr Walsh then deposed that:

I believe it is likely that Gremalco, Sierra Utilities Pty Ltd (Sierra) and Road and Rail Excavations Pty Ltd (Road & Rail), would have sub-contracted work to Willshaun between November 2018 and April 2019, had the Vacuum Tank been operational.

222    The facts relied upon as the basis for this opinion evidence were not established by admissible evidence. No weight can be attached to this evidence for that reason.

223    Further, no detail was provided by Mr Walsh (or anyone called from these three companies) to identify that, had the tank been available to be used, then it would have been contracted by it to do identified work, the volume of that work, or the amount which that company would have paid Willshaun for that work.

224    Mr Walsh deposed that, for the period from November 2018 to April 2019, he estimated the tank would have been hired out for approximately 50 hours per week. However, the evidence does not establish the basis for Mr Walsh’s estimate that the tank would have been hired out for 50 hours per week or demonstrate that, as a matter of fact, it would have been able to be hired out every week for 50 hours per week for the period from November 2018 to April 2019. No weight can be attached to Mr Walsh’s opinions for this reason.

225    Having regard to poor quality of its evidence, Willshaun failed to establish its pleaded case in relation to the “Lost Work”. Further, Willshaun failed to establish that there has been a lost opportunity on the balance of probabilities, which it is required to do: see Barnes v Forty Two International Pty Ltd (2014) 316 ALR 408; [2014] FCAFC 152 at [190] (Beach J, with whom Siopis and Flick JJ agreed in relation to this issue).

226    For these reasons, even if Willshaun had been able to claim damages (and had established that there was a breach of the agreement because of the failure to supply the tank by 19 November 2018), its evidence did not establish its pleaded claim for loss of profits alleged to have been suffered by it. That claim would have failed in any event.

What, if any, relief should be granted to any party?

227    Having regard to the findings above and the concessions by Lobux, Willshaun has succeeded in its claim that clauses 5.2(a), 5.2(b), 12, 13.4, 13.7, 16.3 and 21.3 of the terms and conditions are unfair and that the agreement is a standard form contract within the meaning of s 23(1) Australian Consumer Law, which means that these terms are void.

228    Willshaun seeks a declaration that these terms are void ab initio pursuant to s 250 of the Australian Consumer Law. However, s 250 provides that a declaration may be made that these terms are an unfair term. A modified form of declaration will be made.

229    My present view is that no additional order is warranted in relation to these unfair terms, having regard to the evidence which was adduced at the trial and the other findings which have been made. However, the parties will be invited to make submissions as to the necessity for any further relief being granted in relation to clauses 5.2(a), 5.2(b), 12, 13.4, 13.7, 16.3 and 21.3 of the terms and conditions of the agreement, which submissions should take into account the findings in these reasons, the evidence adduced at the trial and whether there is utility in making any further orders.

230    Having regard to its closing submissions and as its case for damages for breach of contract has failed, no order will be made as sought by Willshaun that Lobux pay it damages in the amount of $191,136.22.

231    Further and having regard to the findings which I have made, no order will be made as sought by Willshaun in its closing submissions that “nothing further is owing under the contract and ownership of the [tank] has passed to [Willshaun]”. That is because Willshaun has not paid Lobux all amounts owing under the agreement (including, even on its own case, the amount owed pursuant to the final invoice). Because of this and pursuant to clause 10.1 of the terms and conditions, ownership of the tank did not pass to Willshaun when it removed the tank from Lobux’s premises in March 2019.

232    Pursuant to clause 10.3(a) of the terms and conditions, and as ownership of the tank has not passed, Willshaun is only a bailee of the tank and must return it to Lobux on request.

233    By email dated 5 April 2019, Lobux requested that Willshaun return the tank to it.

234    Paragraph 2 of the amended originating application seeks an order requiring Willshaun to deliver the tank (and any keys) to Lobux or its agent at such time and at an address nominated by Lobux. This relief appears to be founded upon clause 10.3(a) of the terms and conditions, and no challenge is made to this form of relief in Willshaun’s submissions.

235    An alternative form of relief which is sought by Lobux is that it or its agent be permitted to enter and remain on any premises where it reasonably believes the tank is kept and recover possession of the tank, which relief appears to be founded upon the contractual right contained in clause 10.3(e) of the terms and conditions. Associated declaratory relief is also sought in connection with this relief.

236    However, it will expedite the return of the tank and its keys, at Willshaun’s cost (which it should bear), if Willshaun is ordered to deliver up the tank and keys to Lobux. This will also minimise disputes, including about the precise location of the tank and whether, if it is not located on property owned or controlled by Willshaun, an order that Willshaun permit entry onto the premises where the tank is located will have any utility. For the same reasons, the declaration which is sought by Lobux will also not be made.

CONCLUSION

237    Lobux is entitled to an order requiring Willshaun to deliver the tank (and any keys) to it. The order sought will be modified such that the tank is forthwith delivered back to Lobux at its business premises during business hours with Willshaun bearing the cost of its delivery. I will also grant the parties liberty to apply.

238    Willshaun is entitled to a declaration that clauses 5.2(a), 5.2(b), 12, 13.4, 13.7, 16.3 and 21.3 of the terms and conditions of the agreement are unfair contract terms within the meaning of s 24 of the Australian Consumer Law (being Schedule 2 to the Competition and Consumer Act) and are void by operation of s 23 of the Australian Consumer Law.

239    The parties will be invited to make submissions as to the necessity for any further relief being granted in relation to clauses 5.2(a), 5.2(b), 12, 13.4, 13.7, 16.3 and 21.3 of the terms and conditions of the agreement, which submissions should take into account the findings in these reasons, the evidence adduced at the trial and whether there is utility in making any further orders.

240    The parties will also be invited to make submissions about costs.

Associate:

Dated:    11 March 2022