- Four and a half years ago, on 28 June 1994, modest proceedings
were commenced by the plaintiff, Melbourne Petroleum Pty Ltd, in
the County
Court. The claim was for payment of goods supplied to the first defendant,
Kulnura Investments Pty Ltd, between August
1993 and April 1994 in the sum of
some $137,000 (now $107,191.81) plus interest, and against the second
defendant, Mr Avraham Ginsberg
who was said to have guaranteed payment of the
amount owing. A skeletal defence was filed on 9 August 1994.
- On 13 February 1995 a substantial amended defence and
counter-claim was filed on behalf of the defendants, alleging false and
misleading
representations, misleading and deceptive conduct contrary to s.52
Trade Practices Act 1974 (Commonwealth) and of s.11 Fair Trading
Act 1985 (Victoria) and other like misconduct, joining Mr Anthony Wood,
director of Melbourne Petroleum as a defendant, and seeking damages,
discrete
sums, interest and other alternative relief.
- On 27 February 1995 upon the defendants' Kulnura Investments
and Mr Ginsberg's application, the Deputy Registrar, pursuant to s.27
Courts
(Case Transfer) Act 1991 ordered that the proceeding be transferred to this
court. Since that time a mountain of costs has been generated by this
initially
modest case, essentially by reason of the nature and ambit of the
defence and counter-claim propounded by Kulnura Investments and
Mr
Ginsberg.
- The matter ultimately came on for hearing on 5 October 1998.
It occupied nine sitting days. On the second day, by reason of the
nature,
character and incidents of the counter-claim, I directed, consonant with the
principles latterly enunciated in Protean (Holdings) Ltd (Receivers and
Managers Appointed) & Ors v. American Home Assurance Co. [1985] VicRp 18; (1985) V.R.
187 and earlier in Shaw v. Beck [1853] EngR 105; (1853) 8 Exch 392 (155 E.R. 1401) that
the cases be split and that of Kulnura Investments and of Mr Ginsberg proceed
upon the conclusion of that of the plaintiff.
- When that of Kulnura Investments and Mr Ginsberg commenced, I
directed pursuant to Rule 45.05 that it proceed on liability only
and that the
matter of quantum, if any, on the counter claim be adjourned until the
determination of the antecedent matter of liability.
Else the hearing would
have taken even longer and become even more costly in terms both of preparation
and of hearing than it already
was.
- Essentially the respective cases are not complex. They derive
from conversations between the parties Mr Wood and Mr Ginsberg.
The contest is
what was said.
- Mr Anthony Wood, company director, of Point Lonsdale, gave
evidence that during the relevant period he was the Managing Director
of
Melbourne Petroleum. He had been in the petrol industry for a number of years.
Previously he had been employed by a number of
petroleum companies, including
BP Australia Ltd from 1972 to 1986. During the latter period he met Mr
Ginsberg, possibly around
1982, when Mr Ginsberg was a petroleum reseller and
Mr Wood a retail territory manager (though not directly dealing with Mr
Ginsberg).
Mr Wood left BP in 1986 and thereafter was self employed in certain
fuel distributorships and with Melbourne Petroleum from 1990.
Melbourne
Petroleum was a petroleum wholesaler which bought petrol products from BP
Australia and resold them. Mr Wood personally
was based in Geelong but
Melbourne Petroleum operated first from Newport and then from
Altona.
- In 1992 the price at which Melbourne Petroleum purchased fuel
from BP Australia was determined by BP Australia. That company set
a price
(called a Retail Rack Price). Melbourne Petroleum (and other distributors)
were entitled to purchase fuel from BP at 2.3
cents per litre below the Retail
Rack Price. The latter price was known as the Distributors Rack Price. BP
also allowed rebates
for marketing which were generally 0.9 cents per litre
lower again. Prices and deductions constantly varied.
- Mr Wood relevantly gave evidence as follows. About mid-June
1992 Mr Ginsberg telephoned him and initiated discussion concerning
supply
to a service station he had at 495 Glen Huntly Road, Elsternwick. Mr Ginsberg
requested that Mr Wood attend the site for
discussions. Mr Wood did so on two
or three occasions. They negotiated. Ultimately in late June 1992 they agreed
that Melbourne
Petroleum would supply fuel to Kulnura Investments on
terms:
(a) that the purchase price would be 2.4 cents per litre off
the Retail Rack Price;
(b) that fuel invoices were payable within seven days and that not more than
two loads were to be outstanding at any one time;
(c) that those terms would remain so long as BP's terms to Melbourne Petroleum
remained.
- As to the site, Mr Wood agreed that Melbourne Petroleum would
supply four dual pumps and would paint the inside of the workshop
and adjoining
kitchen/storeroom and also do some exterior painting and steam cleaning and
some other small items (including exterior
sign writing). That was completed
by July 1992. The expensive item was the supply and installation of fuel pumps
(the ownership
of which was retained by Melbourne Petroleum).
- Mr Wood denied that he agreed or stated to
Mr Ginsberg
that the purchase price by Kulnura would be at its lowest board price over the
ensuing seven or 14 day period nor that
the purchase price could be agreed with
Mr Ginsberg on a daily basis to match or better competitors' prices. Mr Wood
gave evidence
that such arrangements would have been wholly uncommercial and
effectively would have given Mr Ginsberg the unilateral capacity to
set the
price at which he purchased fuel from Melbourne Petroleum regardless of the
price at which Melbourne Petroleum had purchased
it from BP.
- Mr Wood's evidence continued that on 26 June 1992 he, together
with an employee of Melbourne Petroleum,
Mr D. Karslake, met Mr Ginsberg at
the Elsternwick site. Mr Wood informed Mr Ginsberg that a Supply Agreement and
Commercial Credit
Application would need to be signed. The form of Supply
Agreement, which was never signed, generally reflected, Mr Wood said, the
discussions between him and Mr Ginsberg except that fuel could be paid for on a
seven day basis rather than COD and no minimum period
of supply was specified.
The Agreement stated that pricing arrangement would remain in place while
Melbourne Petroleum continued
trading with BP Australia under existing
arrangements. It also stated "COD unless otherwise agreed". This was a
standard form which
was never executed between the parties. However, the
Commercial Credit Account Application with Guarantee, Exhibit B before me,
was
of importance. It was that guarantee which founded the seven days' credit
provided to Mr Ginsberg. Mr Ginsberg signed that
document, the Commercial
Credit Account Application with Guarantee, witnessed by Mr Du Cros, on 6 July
1992. More of that later.
- Supply of petroleum thus commenced. There were two major
changes in the pricing system. In August or September 1992 BP Australia
changed its pricing method to Melbourne Petroleum by thereafter billing at the
Distributor Rack Price. Further assistance from BP
(by reducing below the rack
price) was not guaranteed but was sought and sometimes obtained on an ad hoc
basis. Mr Ginsberg was
informed by either Mr Wood or Mr Karslake that
thereafter fuel would be provided on the basis that wherever possible Kulnura
would
be allowed fuel at three cents below its board price at the time of
delivery. Daily conversations, or almost daily, occurred with
Mr Ginsberg
to that end. A standard letter was sent on 20 August 1993 including to Mr
Ginsberg. At no point did Melbourne Petroleum
sell to Kulnura at a loss to
itself from BP.
- Then in January 1994 BP again altered its system of pricing to
Melbourne Petroleum, this time by calculating the average of five
lowest
discount sites and selling to its purchasers at four cents below that figure.
Mr Wood and Mr Karslake met Mr Ginsberg in Williamstown
and informed him that
the pricing system from BP was changing. Thereafter Melbourne Petroleum sold
to Kulnura at three cents below
the BP price, retaining one cent for itself.
However thereafter no extra daily price assistance was
available.
- Mr Ginsberg was in the daily practice of telephoning
Melbourne Petroleum (usually to Mr Karslake or Mr Smith) to ascertain whether
the 3 cent margin was operational.
- Mr Wood stated that at the time of initial discussions at the
Elsternwick site (June 1992) he had no knowledge of or interest in
Mr
Ginsberg's legal status at that site (owner, lessee or otherwise). Mr Ginsberg
was an experienced and knowledgeable business
person and that was a matter for
him. Nor did Mr Wood discuss the supply of fuel to Mr Ginsberg for any
discrete or finite period.
The situation was ongoing and the nature of the
industry volatile.
- Mr Wood knew of Mr Ginsberg's general history in the industry
and Mr Ginsberg told Mr Wood that he wanted to obtain further sites.
In
November 1993 Mr Occhipinti, the owner of a site in Williamstown, contacted Mr
Wood for a tenant. Mr Wood contacted Mr Ginsberg.
After effecting
introductions, Mr Wood left the matter in their hands. The owner, Mr
Occhipinti, had informed Mr Wood that his
bank had suggested that the site be
leased for three years with two further three year options, or be sold. Mr
Wood passed that
on to Mr Ginsberg. Mr Wood did not counsel Mr Ginsberg as to
the terms of the Williamstown lease and did not tell him to obtain
a five year
lease with two further five year options.
- Mr Wood further gave evidence that in late November 1993 Mr
Ginsberg contacted Mr Wood for supply of fuel to the Williamstown site
(83
Ferguson Street, Williamstown) and they agreed to the same terms as the current
terms at Elsternwick. At that point of evolution,
those terms were that
wherever possible three cents per litre off the board price at the time of
delivery would be allowed, payable
within seven days, with no more than two
loads outstanding and continuing so long as the current BP arrangements stood.
Mr Wood met
Mr Ginsberg at the site and agreed to install fuel pumps and an
illuminated price board. That was completed by the end of 1993.
Mr Ginsberg
did not ask for Melbourne Petroleum to pay for any works at the site. Mr
Ginsberg asked Mr Wood his opinion of the
works planned for the site but was
not asked about the viability of the site. Again, Mr Wood said that
Mr Ginsberg was an experienced
and knowledgeable business person in his
own right.
- Then in January 1994 Mr Ginsberg informed Mr Wood that he was
interested in a site in Inkerman Street, St Kilda. Mr Wood drove
past the
site. He agreed to supply fuel on the same terms as the other sites. (In
fact, no fuel was ever supplied because other
events, to which I shall shortly
come, overtook them). Mr Wood agreed to allow Mr Ginsberg to use three petrol
pumps which Melbourne
Petroleum had in stock. Mr Wood did not agree to pay for
any works on this site. With neither Williamstown nor St Kilda, did Kulnura
invoice Melbourne Petroleum for any site works.
- Mr Wood further gave evidence that from mid-1993 nascent
discussions had occurred between BP and Melbourne Petroleum as to Melbourne
Petroleum's future operations. Those discussions were confidential. Various
possibilities were canvassed. The discussions firmed
up by early 1994 and were
finalised by March 1994. Termination letters (including to Kulnura) were sent
to purchasers on 16 March
1994. Over the months Mr Ginsberg had on a couple of
occasions stated to Mr Wood that he had heard rumours that Melbourne Petroleum
may close, to which Mr Wood responded that there were always ongoing
discussions with fuel directorships. Melbourne Petroleum was
fully taken over
BP and ceased operations on 30 April 1994.
- Mr Wood said that of the debt claimed by Melbourne Petroleum
as at 30 April 1994, $101,207.53 cents was owing to it by Kulnura in
relation
to fuel loads delivered on 8, 14, 20, 26 and 27 April to Elsternwick and to
Williamstown on 11, 15, 18 and 26 April and
a balance for accounts short paid
from about February 1994.
- Mr D.F. Karslake of Tullamarine gave evidence that he is
currently operations manager for Endeavour Petroleum Pty Ltd of Seaford
and
that he commenced work with Melbourne Petroleum on 23 September 1991 as sales
manager. He held that position until 30 June 1993
when he became operations
manager and held that position until 13 May 1994.
- Mr Karslake gave evidence that he first met Mr Ginsberg on 26
June 1992 at the Elsternwick site. It was anticipated that as sales
manager Mr
Karslake would have a lot of contact with Mr Ginsberg. At that point no
refurbishment work had started on the site which
was still closed. At that 26
June 1992 meeting, at which attended Mr Karslake, Mr Wood and Mr Ginsberg,
discussions occurred as
to cleaning the shop storage room and workshop interior
room and other items and interior and exterior painting.
- Mr Karslake, according to his diary notes, subsequently met Mr
Ginsberg on 29 and 30 June and 2 and 3 July 1992. Thereafter he
provided to Mr
Ginsberg at site a Commercial Credit Account Application form incorporating a
guarantee, and a Supply Agreement between
Melbourne Petroleum and Kulnura. Mr
Karslake said that he gave both those documents to Mr Ginsberg for
Mr Ginsberg to complete and
sign and to return to Melbourne Petroleum. He
personally advised Mr Ginsberg about the contents of the documents. It
was the policy
of Melbourne Petroleum that all customers were to be informed
about the contents and specifics of the personal guarantee on the account
application form. Mr Karslake acted in accordance with that policy. Mr
Ginsberg, in discussion, acknowledged that the arrangement
for payment for fuel
was for a seven day payment period as discussed with Mr Wood. The Supply
Agreement was not amended or altered
and, as I have stated, was never
executed.
- Mr Karslake gave evidence that he telephoned Mr Ginsberg
on a number of occasions to follow up the signing and collection of the
Supply
Agreement. He was unsuccessful to that end. At one stage Mr Ginsberg said to
him that he and Mr Wood had been mates for
years and he did not see the need
for the Supply Agreement.
- Mr Karslake gave evidence that his understanding was that the
payment arrangement was on a seven day basis with no more than two
fuel loads
to be outstanding. He was never told by Mr Ginsberg or any other person that
Mr Ginsberg was to pay for fuel deliveries
based upon the lowest board
price over the previous 14 day or seven day period, nor that the fuel price was
to be agreed with Mr
Ginsberg on a daily basis subject to his matching the
lowest of his competitors.
- Mr Karslake gave like evidence to Mr Wood as to the evolution
of the pricing arrangements and I do not need to repeat that material.
Mr
Ginsberg had daily communication with Melbourne Petroleum as to the level of
pricing on the day in question, including personally
with Mr Karslake at least
three times per week. When Mr Karslake attended, as he often did at the
Elsternwick premises, Mr Karslake
saw competitors' products for sale, including
Valvoline and Peak Oils.
- The procedure for fuel to be supplied was that by midday the
day before delivery, the order was to be entered by Melbourne Petroleum
on an
order sheet and faxed to BP Australia. With each delivery made there was a
delivery docket which can be seen tendered as Exhibit
A The delivery docket
was generated by Melbourne Petroleum and recorded both the amount delivered and
the price per litre. At the
point of delivery the driver recorded the amount
delivered. The unit price per litre was the price payable at the day of
delivery.
If BP Australia provided price assistance, where possible that was
passed on to Kulnura.
- Mr Karslake gave evidence that late in the piece he often
requested cheques from Mr Ginsberg for short payments and he was prompted
in
that respect by Mr Robilliard. Mr Karslake usually received
promises to pay. Earlier he received cheques but later he did
not.
- Finally, he gave evidence that Mr Ginsberg often spoke of his
plans to expand and acquire more sites and indeed asked Mr Karslake
to look out
for potential sites for him.
- Mr Robilliard, financial analyst with BP Australia Ltd gave
evidence that he commenced employment with Melbourne Petroleum on 8
January
1991 as its internal accountant and held that position until 31 March 1994. Mr
Robilliard gave evidence concerning the sale
and delivery records, Exhibit A
before me. He said that when Melbourne Petroleum was supplying the Elsternwick
site, payment for
fuel products would ordinarily be collected by courier
service which Melbourne Petroleum at that time utilised. Once Mr Ginsberg
increased his petrol requirements, payment for fuel would ordinarily be
collected on the basis that no more than two loads should
be unpaid at any
time. A unit price on the delivery docket was the price payable for the fuel
supplied. Initially Mr Ginsberg paid
the correct amounts being the total
amount due. Petrol was not sold by Melbourne Petroleum to the customer at a
loss.
- Mr Robilliard gave evidence as to the evolution of the pricing
scheme and as to the debt claimed by Melbourne Petroleum being the
short
payments and non payments. He stated the deliveries made to the Elsternwick
site on 8 April, 14 April, 20 April and 26 and
27 April 1994 were not paid for
at all. Deliveries made to the Williamstown site on 11, 15, 18 and 26 April
were not paid for at
all. The total for those non-payments was $101,273.53.
Additionally, between 5 February and 7 April 1994 Kulnura had accumulated
short payments of invoices of the sum of $5997.78. Those short payments
covered 14 separate deliveries to the Elsternwick sites
and are contained at
pp.128 to 143 of the court book. The non-payments and the short payments are
conveniently summarised at pp.154
to 157 of the Court Book. The total amount
outstanding is $107.191.81.
- Mr Robilliard gave evidence that chasing up the shortfalls
from Mr Ginsberg was a difficult task. He said that in none of the
conversations
he had with Mr Ginsberg to collect the short payments, did Mr
Ginsberg suggest that he had 14 days in which to pay the accounts or
that the
charge could be the lowest board price over the previous 14 day period. Nor
did Mr Ginsberg suggest that the price to be
charged for petrol was in some way
connected to the price being charged by competitors to Mr
Ginsberg.
- Mr T.H. Smith of Boronia was the operations manager for
Melbourne Petroleum from 19 March 1990 to 30 June 1993, and now is the
Christian
Science Committee on Publication for Victoria. He gave evidence as
to the procedure for the placing of the orders on a daily basis.
The order was
to be placed by 12 noon one day in advance. He had numerous telephone
conversations with Mr Ginsberg wherein Mr Ginsberg
complained that his site was
about to run dry, but in fact Mr Ginsberg had not placed orders in advance as
was necessary. He reviewed
the two types of price structure in the industry.
Mr Ginsberg frequently telephoned him seeking price reductions beyond the
margin
allowed for his purchases. He would always say that competitors were
undercutting him in the market place and that he needed to
be competitive. At
no stage did Mr Ginsberg say to him, Mr Smith, that he was able to pay for
fuel at the lowest rate available
in a seven or 14 day period. Mr Smith left
the employ of Melbourne Petroleum on 30 June 1993.
- Mr J.G. Griffiths of Seaford, managing director of Endeavour
Petroleum which previously traded as Paul Cootes & Company, gave
evidence
that Paul Cootes & Company ceased trading with Triple M, the trading name
prior to Elsternwick Service Station under
Mr Ginsberg, on 6 May 1992, being
the date of last fuel delivery. Pumps were removed at the end of May 1992. Mr
Griffiths gave
evidence that Mr Ginsberg rang him in relation to supply of fuel
for the Elsternwick site in June 1992, from a hairdressing salon
across the
road from the site at 495 Glenhuntly Road, Elsternwick. He decided not to go
into supply with Mr Ginsberg and suggested
that he ring Mr Wood.
- Mr C. Occhipinti gave evidence that he and his wife at the
relevant period owned the property at 83 to 85 Ferguson Street, Williamstown,
used as a petrol station and mechanical repair shop. He rang around, utilising
the phone book for possible lessees. Ultimately,
he rang Melbourne Petroleum
and spoke to Mr Wood. Mr Wood said he was not interested but he might
have someone who was. He met
Mr Wood once at the site, with Mr Ginsberg. He
did not see Mr Wood again. He dealt thereafter with Mr Ginsberg. The
Occipintis
entered a lease with Mr Ginsberg. Mr Ginsberg paid rent for six
months, said that there was water in the tanks, and left in December
1995,
owing rent.
- Mr G.J. Du Cros, of Glen Iris, now an employee of Project
Pools Pty Ltd but an employee of Mr Ginsberg for many years, gave evidence
that
he worked for Mr Ginsberg at the Elsternwick site. Mr Ginsberg said that he
had seen an advertisement for a lease of a petrol
station in Elsternwick and
asked Mr Du Cros if he knew of a petrol supplier to supply the site and Mr Du
Cros mentioned Mr Wood of
Melbourne Petroleum to Mr Ginsberg. It was
Mr Du Cros who witnessed Mr Ginsberg's signature on Exhibit B, the
Commercial Credit
Account Application and guarantee, on 6 July 1992. Mr Du
Cros, indeed, stated that Mr Ginsberg brought the document out to Mr Du
Cros
and asked Mr Du Cros to witness it. Mr Du Cros assisted Mr Ginsberg in
relation to the Elsternwick site and in November 1993
was transferred by Mr
Grinsberg to the Williamstown site as manager of it. He was to work also on
the St Kilda site later, but ceased
working for Mr Ginsberg in about
September of 1994.
- Mr Du Cros gave evidence that he played no part in the fixing
of the prices which was left to Mr Ginsberg. He was present when
Mr Ginsberg
telephoned Mr Wood on numerous occasions to tell Mr Wood that his nearest
competitor was selling petrol at a price lower
than Mr Ginsberg could
afford and asking Mr Wood for a further reduction of price so that he could
match his competitors. Mr Du
Cros said that on many such occasions when Mr
Ginsberg so telephoned Mr Wood, the competitors had not lowered the price of
their
petrol. In fact, the competitors were usually trying to match Mr
Ginsberg who was selling at lower figures than his competitors.
- Mr Du Cros also gave evidence that he became aware through
Mr Ginsberg that Melbourne Petroleum was going to stop supplying his
sites. He said shortly after that, Mr Ginsberg told him that the only way
to make money was to fill up all of the sites with petrol
and not pay Melbourne
Petroleum. Mr Du Cros said he had a clear recollection of that statement which
was said by Mr Ginsberg when
things were not going too well, and in
desperation.
- There was some controversy during the conduct of the case as
to document number 47, headed "Agreement". Mr Du Cros gave evidence
that the
document was dictated to him by Mr Ginsberg, and that he, Mr Du Cros, had no
knowledge of the relevant events purportedly
contained in the document. Mr
Ginsberg denied that he dictated the document and denied, indeed, that he was
even present when the
document was created.
- Mr Darren Ginsberg, a son of Mr Avraham Ginsberg and service
station proprietor, gave some evidence. Mr Darren Ginsberg impressed
me as a
decent young man and an honest witness, but unfortunately with a very limited
recall of specific events of significance to
this case. Much of his knowledge
was derivative, that is, from statements and information provided by his
father. Unfortunately,
Mr Ginsberg has been unwell, and I do trust that his
medical condition improves.
- Ms Moira Hardy, bookkeeper employed by Mr Ginsberg, provided a
witness statement, but by reason of a medical condition was unable
to attend
court. Again, her evidence in her statement is limited and is substantially
derivative.
- Mr Tom Lowenstein, accountant, gave evidence that his firm
acts and has acted as accountants for the defendants for many years.
He gave
evidence concerning the alleged losses of the defendants.
- Mr Avraham Ginsberg, the second defendant, company director of
Caulfield South, gave evidence that he is a director of Kulnura.
In about
March 1992 he saw an advertisement in The Age concerning the lease of a service
station in Glenhuntly Road, Elsternwick
and that through Mr Du Cros he
contacted Mr Wood. Mr Ginsberg gave evidence that it was in about March 1992
that he met Mr Wood
at the Elsternwick site. Mr Du Cros was also present.
Discussion took place between Mr Ginsberg and Mr Wood concerning the potential
of the site.
- Following that discussion, Mr Ginsberg said that he and Mr
Wood met on or about 17 March 1992 at the George Hotel in St Kilda, and
agreed
as follows: first, that Kunura would, after the first three months of the
agreement, be entitled to retain a minimum of three
cents per litre as a margin
in respect of fuel purchases, and that during the first three months of the
agreement the margin would
be two and a half cents per litre; second, Kulnura
would be entitled to change its retail selling price to match those of its
nearest
surrounding competitors without the need to seek the approval of
Melbourne Petroleum; third, that Kunura would pay Melbourne Petroleum
on a fill
to fill basis within 14 days; fourth, the price to be paid by Kulnura to
Melbourne Petroleum would be determined by the
lowest price during a seven day
period; fifth, that Melbourne Petroleum would attend the painting and
sign-writing of the service
station inside and outside in BP colours or other
colours agreed upon; sixth, that Melbourne Petroleum would supply four dual
petrol
pumps, an oil bar, signs to the service station and a pole sign and
electric power; seventh, that Melbourne Petroleum would steam-clean
the service
station inside and out; eighth, that Melbourne Petroleum would supply and
install bunting; ninth, that Melbourne Petroleum
would rectify fuel storage by
joining two tanks; tenth, that Melbourne Petroleum would maintain all of the
equipment at the service
station in proper working order; eleventh, that Kunura
would be responsible for upgrading painting and electrical work to the workshop
and showroom at its own cost; twelfth, that Kulnura would not purchase any
petroleum products from other suppliers; thirteenth, that
Melbourne Petroleum
would supply fuels to Kulnura within 24 hours of order; and fourteenth, that
Melbourne Petroleum would continue
to supply Kulnura on the terms I have just
stated for the duration of any lease of the Elsternwick site entered into by
Kulnura.
- Mr Ginsberg said the following. During the course of his
discussions with Mr Wood, Mr Wood advised that Kulnura would have to take
a
five year lease of the Elsternwick site, with two further options of five years
each. Mr Wood had said that he was to invest a
large amount of money in
improvements at the site and accordingly it would be more profitable if he
could amortise those costs over
the longer term. This was part of the
agreement entered into between Melbourne Petroleum and Kulnura and between
Mr Wood on the
first behalf and Mr Ginsberg on the second behalf. Mr
Ginsberg relied upon what he had been told by Kulnura and Melbourne Petroleum,
and entered the lease accordingly.
- He commenced business on 1 July 1992. On about 6 July he
was given a supply agreement and Commercial Credit Account Application
by Mr Du
Cros, who, Mr Ginsberg believed, received it from Mr Karslake. He then
telephoned Mr Wood and asked him what those documents
were about, and in
particular regarding the supply agreement, as it referred to 2.4 cents per
litre off BP's listed rack price, and
that that was not what had been agreed
upon. Mr Wood told him not to worry about it. In relation to the Commercial
Credit Account
Application, Mr Wood told Mr Ginsberg what it was, and it was
never explained to Mr Ginsberg that it was a personal guarantee.
- Mr Ginsberg gave evidence concerning the method of pricing of
petrol. The petrol sales were recorded in the daily petrol sales
books. Mr
Ginsberg gave evidence concerning that procedure also.
- In relation to the Williamstown site, he gave evidence that he
asked Mr Wood if Kulnura were able to lease the Williamstown site,
whether
Melbourne Petroleum would agree to supply fuel and petroleum products to
Kulnura on the same terms and conditions as had
been agreed upon in relation to
the Elsternwick site. Mr Wood agreed to this, except that the margin would be
three cents per litre
during the first three months, and Melbourne Petroleum
would supply three dual petrol pumps. In all other respects, Mr Wood said
the
same terms and conditions as had been agreed upon in relation to the
Elsternwick site, would apply to the Williamstown site.
Relying upon that
agreement, Kulnura entered into a five year lease at the Williamstown site,
with two further five year options.
Melbourne Petroleum subsequently supplied
Kulnura with reconditioned petrol pumps and price boards at the Williamstown
site.
- In relation to St Kilda, Mr Ginsberg said a like process was
followed. Mr Wood recommended that Kulnura enter into a five year
lease at the
St Kilda site with two five year options. He agreed that Melbourne Petroleum
would supply petrol products and related
services to Kulnura at St Kilda, on
the same terms and conditions as at Elsternwick and at Williamstown.
Mr Ginsberg and Kulnura
entered the lease of the St Kilda site relying
upon those same representations.
- Unhappily, on 16 March 1994, Mr Ginsberg was handed by Mr Wood
the termination letter tendered before me. Mr Ginsberg deposed that
as a
result of the actions of Melbourne Petroleum in summarily terminating the
agreements to supply petroleum products at the Elsternwick,
Williamstown and St
Kilda sites, Kulnura was unable to operate those businesses and a substantial
loss has been incurred.
- The above is a summary of the evidence of
Mr Ginsberg.
- That brief review demonstrates that essentially this case
devolves upon a judgment as to the credibility of Mr Wood and of Mr
Ginsberg.
- I was most impressed by Mr Wood as a witness. He
impressed me as being truthful and honest. He impressed me as being direct and
frank. He impressed me as being accurate and reliable. Viewing him over time
in the witness box, I also think that the burden of
these proceedings has been
a great strain upon him.
- I regret to say that I do not accept the evidence of Mr
Avraham Ginsberg. That is so for six primary reasons.
- First, there is a substantial body of evidence confirming or
supporting the evidence of Mr Wood. Mr Karslake and Mr Smith gave
clear
and convincing evidence of the pricing procedures, and (particularly by Mr
Karslake) the frequent discussions had with Mr Ginsberg.
The statements,
limited as they are, of Mr Darren Ginsberg and Ms Moira Hardy, do not
support Mr Ginsberg that he did not have pricing
conversations.
- Next, there is a substantial body of evidence contradicting
that of Mr Ginsberg. Mr Occipinti's evidence flatly contradicts that
of Mr
Ginsberg. Mr Du Cros' evidence in relation to the document purporting to
record the Williamstown agreement, (document 47 in
the court book) directly
contradicts Mr Ginsberg. Mr Griffith's evidence as to the date of
commencement of the Ginsberg interest
in the Elsternwick supply (the
hairdressing salon phone call) directly contradicts Mr Ginsberg.
- Next, the documentary material supports the plaintiff and
supports Mr Wood. In particular, I reject the invoices containing handwritten
notations of "sell", "buy" and net calculations, produced to the court by
Mr Ginsberg, Exhibit 1, purporting to support his evidence.
Those
documents were never sent to the plaintiff. I find they were created by Mr
Ginsberg for his own purpose of supporting his
claim, and are not an accurate
or contemporaneous account of events.
- Next, the commercial reality is all the plaintiff's way. It
is wholly unlikely that Mr Wood would enter an arrangement with Mr
Ginsberg
effectively granting Mr Ginsberg the unilateral capacity to set the price
at which Mr Ginsberg purchased fuel from the plaintiff
regardless of the price
at which Melbourne Petroleum purchased it from BP.
- Next, I was particularly unimpressed by the evidence of Mr
Ginsberg in relation to the guarantee. By the amended defence and counterclaim
it was pleaded that Melbourne Petroleum (paragraph 7) and Mr Wood (paragraph
32) had made false and misleading representations to
the defendants concerning
the guarantee and that Mr Ginsberg had a "genuine and honest belief that
he was not incurring any personal
liability" (paragraph 7(b)). In
evidence-in-chief Mr Ginsberg admitted he knew the document was a guarantee but
was misled as to
its ambit, namely that it applied only to non-fuel debts.
Cross-examination (T.437-445 and T.484-488) demonstrated the falsity of
that
(more limited) assertion. Mr Ginsberg pretended that he had not understood it.
He understood it well. He was misled by no-one.
The changing ambit and
character of the defence on this matter only further undermined its
credit.
- Finally, I observed Mr Ginsberg as a witness over time and
under cross-examination. I do not wish to be oppressive personally
upon
Mr Ginsberg. However, I regret that I am obliged to state that the
candour and directness so evident in Mr Wood's evidence
and demeanour, was
unfortunately lacking in that of Mr Ginsberg.
- On the evidence I find that the moneys claimed by the
plaintiff are due and owing - that is, the unpaid and short paid invoices
in
early 1994 - amounting to $107,191.81. They are owing both by Kulnura which
incurred the debt and by Mr Ginsberg who guaranteed
it. The supply agreement,
as established before me, is entirely sufficient to satisfy criteria for
certainty in agreement. The
guarantee comprehends both fuel and non-fuel
products.
- I find there was no deceptive or misleading conduct by the
plaintiff or by Mr Wood as alleged by the defendants, or at all, in relation
to
the sites or supply at Elsternwick, Williamstown or St Kilda. I find that
Mr Ginsberg acted independently and in his own interests
in relation to
those sites, not upon any representations by Melbourne Petroleum or Mr Wood. I
find that the parties dealt with each
other in the developmental, changing and
indeed volatile commercial world of petroleum supply and operation. The
plaintiff and Mr
Wood rightly wished to sell the product. Kulnura and Mr
Ginsberg, he being a knowledgable and experienced business person, rightly
wished to build up their interests and outlets. Mr Wood did not mislead
Mr Ginsberg. Mr Ginsberg, in the end, did not wish to pay
a supplier he
was losing and refused to do so. Thereafter he created a counterclaim which in
my considered view has no credibility,
and it wholly fails.
- Consideration of Futuretronics and other authority,
interesting though that is, does not arise on the plain facts of this
case.
- I grant the claim. I wholly dismiss the counterclaim.
---
AustLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
URL: http://www.austlii.edu.au/au/cases/vic/VSC/1998/208.html
