Court of Appeal Supreme Court New South Wales Medium Neutral Citation: United Resource Management Pty Ltd v Par Recycling Services Pty Ltd [2023] NSWCA 236 Hearing dates: 13-14 April 2023 Date of orders: 05 October 2023 Decision date: 05 October 2023 Before: Ward P at [1]; Meagher JA at [2]; Gleeson JA at [109] Decision: See [105]-[108] Direct that the parties confer and if possible agree as to the form of the final orders to be made to give effect to these reasons. Having done so, they are to provide to the Associate to the President within 7 days of the making of this direction either the agreed final form of orders or their respective versions of those orders together with written submissions (not to exceed 2 pages) in support of the orders sought. Catchwords: CONTRACTS — Implied contract — Where agreement automatically terminates upon termination of another contract — Where party fails to notify that first contract has terminated and parties continue acting as if agreement in force — Where parties agree there was an implied agreement which continued after termination — Whether implied agreement terminable on reasonable notice CONSUMER LAW — Misleading or deceptive conduct — Where agreement automatically terminates upon termination of another contract — Whether party engaged in misleading or deceptive conduct by failing to notify other party that other contract had terminated and by representing that agreement was "binding" and remained in force — Whether but for this conduct other party would not thereafter have taken a specific course by entering into a particular agreement Legislation Cited: Competition and Consumer Act 2010 (Cth), Sch 2 –Australian Consumer Law, ss 236, 237 Waste Avoidance and Resource Recovery Act 2001 (NSW), Pt 5 Waste Avoidance and Resource Recovery (Container Deposit Scheme) Regulation 2017 (NSW), Pt 2, Div 3, cl 18 Cases Cited: Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640; [2013] HCA 54 Crawford Fittings Co v Sydney Valve & Fittings Pty Ltd (1988) 14 NSWLR 438 Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471; [2004] HCA 55 Ferguson v John Dawson & Partners (Contractors) Ltd [1976] 1 WLR 1213 Forrest v Australian Securities and Investments Commission (2012) 247 CLR 486; [2012] HCA 39 Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82 Ireland v WG Riverview Pty Ltd (2019) 101 NSWLR 658; [2019] NSWCA 307 Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 Masterton Homes Pty Ltd v Palm Assets Pty Ltd [2009] NSWCA 234; (2009) 261 ALR 382 Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Limited (2010) 241 CLR 357; [2010] HCA 31 Par Recycling Services Pty Ltd v United Resource Management Pty Ltd (No 2) [2022] NSWSC 1405 Regreen Asset Holdings Pty Ltd v Castricum Brothers Australia Pty Ltd [2015] VSCA 286 Tripple A Pty Limited v WIN Television Qld Pty Ltd [2018] QCA 246 Texts Cited: JD Heydon, Heydon on Contract: The General Part (2019, Lawbook Co) Category: Principal judgment Parties: United Resource Management Pty Ltd (First appellant) Anthony Charles Johnston (Second appellant) URM Environmental Services Pty Ltd (Third appellant) Par Recycling Services Pty Ltd (Respondent) Representation: Counsel: J Giles SC and J McLeod (Appellants) C Birch SC and J Gooley (Respondent) Solicitors: Harris & Harris Solicitors (Appellants) RHR Legal (Respondent) File Number(s): 2022/336144 Publication restriction: Nil Decision under appeal Court or tribunal: Supreme Court Jurisdiction: Common Law Citation: [2022] NSWSC 1269 Date of Decision: 20 September 2022 Before: Schmidt AJ File Number(s): 2019/256104 [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] HEADNOTE [This headnote is not to be read as part of the judgment] The first appellant, URM, delivered bulked-up recyclable container waste to a material recovery facility in Somersby operated by the respondent, Par. The terms on which URM did so were governed by a contract between it and Par (the Somersby agreement). The contract specified the gate fees that Par could charge URM per tonne of waste received in that facility. It also provided that it terminated in the event that an earlier agreement between URM and a third party (the KES agreement) terminated. On 13 October 2014, the KES agreement was replaced with another agreement (the KEE agreement) between the third party and URME, the third appellant and an entity related to URM. URM did not inform Par that the KES agreement had terminated, and that the result was that the Somersby agreement had also ended. The parties, not appreciating that was the position, continued to deal with each other until 30 June 2018 as if the Somersby agreement remained on foot. On 9 January 2018, after the introduction of the NSW Government's Container Deposit Scheme (CDS), URM and Par entered into another agreement (the CDS Agreement), which provided that URM and Par would receive 40% and 60% of the CDS refunds received respectively, and that the gate fees payable by URM would increase from $70 to $100 per tonne from 1 December 2018. In the underlying proceedings, Par claimed unpaid gate fees due under seven invoices covering the periods from July to September 2018 and March to June 2019. It also claimed repayment of the CDS refund share amounts paid to URM. By its cross-claim, URM sought damages for breach of contract and what it argued were amounts due under the CDS Agreement. Par made a second cross-claim, alleging that, but for the appellants' misleading or deceptive conduct in relation to the termination of the KES and Somersby agreements, it would have charged URM higher gate fees and would not have entered into the CDS Agreement. It claimed damages compensating for its losses in not being in that position. The primary judge upheld Par's claim to the amounts due under the seven invoices and the second cross-claim insofar as it alleged Par would not have entered into the CDS Agreement and shared CDS revenue it would otherwise have kept for itself. Her Honour dismissed URM's cross-claim and rejected Par's cross-claim to the extent it claimed as damages higher gate fees which it alleged it would have charged URM if it had known that the Somersby agreement had terminated. The appellants challenge the primary judge's conclusions, arguing that her Honour erred in finding that the implied agreement between URM and Par which arose after the termination of the Somersby agreement was terminable on reasonable notice; that the appellants engaged in misleading or deceptive conduct; and that, but for that misleading or deceptive conduct, Par would not have entered into the CDS Agreement. By its cross-appeal, Par argues that the primary judge erred in finding that under the CDS Agreement URM was entitled to a 40% share of the CDS revenue received between 1 December 2017 and 30 June 2019 rather than between 1 February 2018 and 30 November 2018. The principal issues in the appeal and cross-appeal are: (i) whether the implied agreement between URM and Par was terminable on reasonable notice; (ii) whether the URM parties had engaged in misleading or deceptive conduct; (iii) if so, whether, but for that conduct, Par would not have entered into the CDS Agreement; and (iv) whether under the CDS Agreement URM was only entitled to a 40% share of the CDS revenue on recyclable waste received between 1 February 2018 and 30 November 2018. The Court (Meagher JA, Ward P and Gleeson JA agreeing) upheld the appeal and cross-appeal, holding: As to issue (i) 1. The conduct of URM and Par after 13 October 2014, reasonably understood, conveyed that their implied agreement was terminable on reasonable notice. Such a term would operate consistently with respect to each of the parties and was not likely to advantage one over the other. To impute to the parties a common intention that their implied agreement was to terminate on the termination of an agreement of which one party was not aware (the KEE Agreement) would be effectively to allow a unilateral amendment to the arrangement recorded in the Somersby agreement to the advantage of URM and in circumstances where the other party had no opportunity to consider whether such an amendment should be made: Ward P at [1]; Meagher JA at [37]-[44]; Gleeson JA at [109]. Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471; [2004] HCA 55; Crawford Fittings Co v Sydney Valve & Fittings Pty Ltd (1988) 14 NSWLR 438, referred to. As to issue (ii) 2. URM's failure to inform Par of the termination of the KES agreement and Somersby agreement, and URM's ongoing representation that the Somersby agreement was binding and remained in force, amounted to misleading or deceptive conduct. Par's failure to make enquiries about the KES agreement was not determinative. The disclosure by URM's managing director to Par that a fresh agreement had been reached did not in terms contradict the basis on which the parties were proceeding. In any event, it was followed by URM's subsequent assertions that the Somersby agreement continued to bind the parties, and accordingly was the reference point for the resolution of their differences: Ward P at [1]; Meagher JA at [45]-[61]; Gleeson JA at [109]. Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Limited (2010) 241 CLR 357; [2010] HCA 31; Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640; [2013] HCA 54, referred to. 3. URM's comments did not merely convey that it was URM's reasonably held view that the Somersby agreement continued to bind the parties. Its comments were unqualified statements about the parties' legal rights and obligations and were not expressed in terms of an opinion or qualified as a matter only believed to be true: Ward P at [1]; Meagher JA at [51], [54]-[61]; Gleeson JA at [109]. Forrest v Australian Securities and Investments Commission (2012) 247 CLR 486; [2012] HCA 39; Ireland v WG Riverview Pty Ltd (2019) 101 NSWLR 658; [2019] NSWCA 307; Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82, referred to. As to issue (iii) 4. The primary judge erred in finding that, but for URM's misleading or deceptive conduct, Par would not have entered into the CDS Agreement. At the relevant time, the availability and sharing of CDS refunds would alter the amounts of the gate fees which URM would be willing to pay to Par and which Par would be willing to accept, and the opportunity to share in those refunds would continue to be available to Par only if it entered into a sharing agreement with the relevant local councils. In this context, the factual narrative and objective probabilities did not support her Honour's conclusion that Par only entered into the CDS Agreement to secure higher gate fees which Par did not think it could negotiate for itself whilst the Somersby agreement continued to apply. Rather, Par's immediate objective was to secure higher gate fees and a CDS sharing agreement with the councils so that it could benefit from the CDS, which Par could only achieve by entering into a CDS agreement with the councils. That the Somersby agreement had in fact terminated introduced no good reason for Par's departing from the terms proposed in the negotiations leading to the CDS Agreement: Ward P at [1]; Meagher JA at [62]-[89]; Gleeson JA at [109]. As to issue (iv) 5. The primary judge erred in finding that the period during which URM was entitled to a 40% share of the CDS refund payments under the CDS Agreement was from 1 December 2017 to 30 June 2019 instead of 1 February 2018 to 30 November 2018. This finding was based upon an answer given by Par's principal director at the time of the relevant events. That answer was given in cross-examination at a time when he was not a director and had no authority to make any admission on Par's behalf. In any event, his answer did not convey that there had been any oral variation to the terms of the CDS Agreement as recorded in a letter which provided that the sharing period was from 1 February 2018 to 30 November 2018. The director's affidavit evidence, which was not challenged or brought to his attention during cross-examination, also denied that there was an oral variation to the "deal" as recorded in the letter. Subsequent email communications between that director and URM were also consistent with the argument that the sharing period was never varied from that provided in the letter: Ward P at [1]; Meagher JA at [97]-[104]; Gleeson JA at [109]. JUDGMENT 1. WARD P: I agree with Meagher JA. 2. MEAGHER JA: At the heart of this appeal and cross-appeal are contractual arrangements for the kerbside collection, processing and recycling or disposal of residential waste in the Northern Beaches region of Sydney. For the most part, the primary judge upheld the claims brought by the respondent and cross-appellant, Par (Par Recycling Services Pty Ltd v United Resource Management Pty Ltd [2022] NSWSC 1269 and Par Recycling Services Pty Ltd v United Resource Management Pty Ltd (No 2) [2022] NSWSC 1405). The parties and their contractual arrangements 1. Between 2011 and June 2019, the first appellant (URM) delivered recyclable commingled container waste (including glass, aluminium and plastic containers) to a material recovery facility operated by Par at Somersby on the Central Coast. That recyclable waste was collected by URM kerbside in the Pittwater, Manly, Mosman and Warringah local government areas and, with the agreement of those councils, first delivered to the Kimbriki Resource Recovery Centre (Kimbriki) at Terrey Hills for aggregation or bulking-up before delivery to Par's separating and processing recyclables facility at Somersby. 2. The Kimbriki facility was owned by Kimbriki Environmental Enterprises Pty Ltd (KEE), which in turn was owned by the four councils, collectively known as "the SHOROC Councils". In mid-2016, those councils, other than Mosman, amalgamated to form the Northern Beaches Council. URM's collection of this waste and its delivery to Kimbriki was initially governed by an agreement between it and KEE dated 19 February 2010 (the KES agreement). 3. The terms on which, from March 2011, URM delivered bulked-up commingled container waste to Par at its Somersby facility were governed by a contract dated 23 March 2011 (the Somersby Supply Agreement or Somersby agreement). The second appellant (Anthony Johnston) guaranteed URM's payment obligations under that agreement, which provided that it terminated in the event that the KES agreement was terminated. The KES agreement was replaced with a waste processing agreement between URM Environmental Services Pty Ltd (URME) and KEE dated 13 October 2014 (the KEE agreement). As its name suggests, URME was owned and operated by the same interests as owned and operated URM. 4. During the whole of the relevant period, Mr Johnston was the managing director of the URM group of companies. The group general manager of Par through that same period was Mr Graham Knowles. Mr Daniel Waddington was the principal director of Par from June 2010 to February 2018. By May 2017, he and another investor in Par were in the process of selling their interests to entities controlled by Mr Danial Gallagher, who became a director of Par in May 2017 and its sole director in February 2018 when that sale was completed. 5. In December 2017, the New South Wales Container Deposit Scheme (CDS) was introduced. That scheme provided for the payment of refund amounts to persons depositing empty beverage containers that were subject to the scheme at nominated collection points. It entitled a material recovery facility operator, such as Par, to receive refund amounts arising from kerbside waste recycling. From 1 December 2018, processing refunds were not payable to a material recovery facility operator in respect of containers collected in a local council area in the course of domestic waste management services unless there was a refund sharing agreement in force between the operator and that council. If there was no such agreement in place, the operator was not entitled to refund amounts in respect of those containers (Waste Avoidance and Resource Recovery Act 2001 (NSW), Pt 5; Waste Avoidance and Resource Recovery (Container Deposit Scheme) Regulation 2017 (NSW), Pt 2, Div 3, cl 18). The disputes between the parties 1. As noted above, the Somersby agreement provided that it "automatically" terminated upon the termination of the KES agreement. Par did not become aware that the Somersby agreement had terminated until after the underlying proceedings were commenced in August 2019. Mr Johnston's unchallenged evidence was that he did not appreciate the Somersby agreement had terminated until 2020, when he was involved in the preparation of URM's defence to Par's claim (J[85]). 2. Accordingly, from 13 October 2014 until 30 June 2019, when the parties ceased to do business, URM, Mr Johnston, and Messrs Waddington and Gallagher of Par dealt with each other as if the Somersby agreement remained on foot. 3. Under the Somersby agreement, URM was required to pay a processing or "gate fee" per tonne of container waste material delivered to Par for processing. The amounts of those processing fees were fixed for the periods to 31 October 2013, and thereafter subject only to consumer price index (CPI) adjustments. During the same period from 2013 to 2016, Par was charging ad hoc commercial customers a commingled waste processing fee of between $80 and $150 per tonne (this and all other references in this judgment to processing fees are exclusive of GST). However, the evidence did not suggest that those rates were charged by Par or other waste facility operators to producers of commingled container waste such as URM. Under the Somersby agreement the container waste expected to be delivered by URM to Par was "in the order of 1100 to 1400 tonnes per month" (cl 3.3). 4. In the period between 1 March 2011 and 31 October 2013, the processing rate Par charged URM had increased from $30 to $32 per tonne. Thereafter it increased, initially by annual CPI adjustments and subsequently by two ad hoc increases, the first in October 2016 to $50 per tonne, and the second in June 2017 to $70 per tonne. As at December 2017, it was $70 per tonne. 5. On 9 January 2018, URM and Par entered into what is referred to in the primary judgment as the "CDS Agreement". That agreement dealt with two related subjects. First, it provided for the sharing between URM and Par of refund amounts from the CDS in the proportions 40% (URM) and 60% (Par) for a period after 1 December 2017 when that scheme commenced. Secondly, it increased the gate fee payable by URM from $70 to $100 per tonne from 1 December 2018. There is an issue as to the period during which this revenue sharing was to occur. The letter agreement of 9 January 2018 states that it was from 1 February 2018 to 30 November 2018. The primary judge held it was from 1 December 2017 to 30 June 2019 (J[244], [253]). 6. Early in the term of the CDS Agreement, there was a dispute as to how URM's share of the CDS revenue was to be calculated. In June 2018, Par paid URM $503,665 (omitting cents), being 40% of the CDS refunds reserved for waste processed in the "quarter ending 31 March 2018" (between 1 December 2017 and 31 March 2018). The payment for the months of December 2017 and January 2018 totalled $239,844. There is an issue as to whether that payment was an advance by Par to URM which was to be deducted from the refund shares due to it for the months from February 2018 (J[22]). No further refund share payments were made by Par. 7. In January 2019, URM ceased making processing or gate fee payments to Par. Negotiations ensued, resulting in URM and Par agreeing to set off some payments due to Par for gate fees against CDS revenue share due to URM. A refund share entitlement of $185,376 was set off against processing payments due to Par for the period from July to September 2018. The balance of the amounts due to Par for those months ($198,691) was paid. The dispute as to the manner of calculation of the CDS revenue to be shared was not resolved and led to URM ceasing all deliveries to Par's Somersby facility by 30 June 2019. The claims in the underlying proceedings 1. Par's statement of claim claimed $687,352 for unpaid gate fees due under seven invoices covering the periods from July to September 2018 and March to June 2019. The invoices for the four months in 2019 claim the $100 per tonne gate fee provided for by the CDS Agreement. The earlier 2018 invoices had been treated as paid in part by a set off of $185,376 due to URM as a CDS refund share. That set off has been reversed (on the basis that URM was not entitled to any CDS refund share), leaving $185,376 due in respect of those three invoices. The remaining four 2019 invoices total $501,976. Par's claim in respect of the seven invoices was upheld. Judgment for that amount was entered and is not the subject of any ground of appeal. 2. Par also claimed repayment of the refund share amount of $503,665 on the basis that URM had received that amount as agent for the SHOROC Councils. As URM had not paid that amount to those councils, it was said to be liable to repay it to Par. The primary judge did not deal with this claim as pleaded. However, her Honour did deal with it in the context of Par's amended second cross-claim as a claim for moneys paid under a mistake and alternatively as damages due for URM's misleading or deceptive conduct. 3. URM's cross-claim and Par's amended second cross-claim were pleaded taking account of the fact that the Somersby agreement had terminated in October 2014. In that circumstance the parties accepted that there was an implied agreement between them after that time governing Par's supply of waste processing and recycling services. 4. URM's cross-claim was to amounts due under the CDS Agreement and for damages for breach of an implied term of that agreement. The claim to a 40% share of the refunds was made for the periods from 1 December 2017 to 30 November 2018 ("at least" an amount of $1,302,650) and from 26 February 2019 to 30 June 2019 ("at least" an amount of $391,230). With respect to the period from 1 December 2018 to 26 February 2019, $401,475 was claimed as damages for breach of Par's implied obligation to take reasonable steps to satisfy the condition of the Container Deposit Scheme that by December 2018 there be a refund sharing agreement with the SHOROC Councils. Each of these claims was made by URM and, alternatively, by URME. The total amount "finally pressed" was $1,824,431 plus interest (J[17]). 5. Par's amended second cross-claim alleged that URM, URME and Mr Johnston engaged in misleading or deceptive conduct in relation to the termination of the KES agreement and the Somersby agreement, and as to whether the latter agreement remained "binding". But for that conduct, which continued between October 2014 and June 2019, Par contended that it would have acted differently at two points in time. First, from October 2014, it would have negotiated and charged higher processing fees for taking URM's container waste. The amount it would have received in excess of what it actually received, $8,164,472, was claimed under the Australian Consumer Law, s 236(1) as loss or damage. Secondly, it would not have entered into the CDS Agreement in January 2018, and consequently would not have paid $503,665 to URM. 6. Thus, the claims made under the second cross-claim were claims in debt under the implied agreement agreed to have come into existence when the Somersby agreement terminated ($687,352) and a claim in damages for URM's misleading or deceptive conduct. There were two parts to the latter claim. First, it was said that but for the misleading conduct Par would have negotiated and charged higher gate fees to URM ($8,164,472). Secondly, it was said that Par would not have paid any CDS revenue share to URM ($503,665). The decision of the primary judge 1. The primary judge upheld Par's claim to recover the amounts due under the seven invoices totalling $687,352 and its claim to recover the $503,665 by way of damages for misleading or deceptive conduct (No 2 judgment at [8]). Judgments in those amounts together with interest were entered in respect of the claims made by the statement of claim and the amended second cross-claim. Those judgments were entered against URM and Mr Johnston. 2. The cross-claim of URM, URME and Mr Johnston was dismissed. The primary judge held that, but for URM's misleading conduct, Par would not have entered into the CDS Agreement and become liable to pay a 40% share of the refund income to URM (J[285]). In dismissing URM's cross-claim to moneys due under the CDS Agreement, the primary judge proceeded on the basis that the order dismissing URM's cross-claim in relation to the money otherwise due under the CDS Agreement would prevent the loss or damage which Par would otherwise suffer by the entry and enforcement of judgment for that amount (Australian Consumer Law, s 237(2)) (see J[160]). 3. No order was made setting aside the CDS Agreement, in part because doing so might have affected Par's right to receive a processing fee of $100 per tonne as claimed by its 2019 invoices (J2[5]-[12]). Nor was a declaration made under the Australian Consumer Law, s 237(1) that the CDS Agreement was void ab initio. 4. Whilst the primary judge upheld Par's claim that it would not have entered into the CDS Agreement but for URM's misleading conduct, her Honour rejected Par's claim that it had suffered loss or damage because it would have negotiated and charged higher gate fees during the period from 2014 to 2018 (see [19] above). Par's case was that it would have received from URM its "commercial commingled rate", the rate charged to ad hoc commercial clients who did not have any ongoing contract (J[145], [146]). The primary judge held that the evidence did not establish that Par would have required URM to pay those rates, even in 2018 (J[156]). The evidence also showed that in 2014 there were other processing operators, including "Visy", whose processing charges were less than those of Par (J[154], [157], [158]). Grounds of appeal and cross-appeal URM's grounds of appeal 1. The amended notice of appeal contains seven substantive grounds which are pressed (ground 8 having been abandoned and ground 9 being directed to the drawing of a Jones v Dunkel inference in respect of the absence of any evidence from Michael Harris, URM's company secretary and a lawyer). Ultimately, ground 9 does not arise because ground 2 can be decided without reliance on any such inference. Ground 1 1. The parties accepted, and the primary judge held, that, after the termination of the Somersby agreement on 13 October 2014 when the KES agreement came to an end, Par and URM were bound by an agreement to be inferred from their subsequent conduct and, except for its termination provisions, on the same terms as the Somersby agreement (J[76]). The parties also accepted that Mr Johnston was a party to that implied agreement as guarantor of URM's payment obligations (J[89]). 2. There remained an issue as to whether that implied agreement included the same terms as to its duration and termination as the Somersby agreement. URM contended that the implied agreement did contain such terms, whereas Par submitted that as the implied agreement had no express duration a term should be implied that it was terminable on reasonable notice. The primary judge accepted Par's argument (J[112]-[118]). Ground 1 challenges that conclusion, URM contending that the primary judge erred in not holding that the duration of the implied agreement was until the termination of the KEE agreement (which replaced the KES agreement in October 2014). 3. URM contends that, if ground 1 is upheld, there was no relevant difference between the terms of the Somersby agreement and those of the implied agreement. The significance of that is said to be that there was no material misleading or deceptive conduct and the fact that the Somersby agreement had terminated and been replaced by an implied agreement in the same terms could be of no "causal significance" with respect to Par's entry into the CDS Agreement. Grounds 2, 3 and 4 1. The primary judge found that URM and Mr Johnston engaged in misleading or deceptive conduct, including by representing to Par that the Somersby agreement remained "binding" and by not giving Par notice of the termination of the KES agreement (J[300], [303]). That conclusion is challenged by ground 2. 2. Her Honour held that, but for that conduct, Par would not have made the offer contained in its letter dated 9 January 2018, and would not have entered into the CDS Agreement (J[285]-[286]). That finding is challenged by ground 3. 3. Her Honour also found that, had Par not entered into the CDS Agreement, it would nevertheless have continued to receive CDS refunds from waste collected and delivered by URM to Somersby, but without any liability to share those refunds with URM (J[314], [316], [324], [325]). It was also entitled to receive the higher processing fee of $100 per tonne, notwithstanding that higher fee was agreed as part of the CDS Agreement (J[322]-[326]). This entitlement is challenged by ground 7 (see [34] below). 4. Ground 4 contends that the primary judge should have found that Par had not established that, but for URM's misleading conduct, it would have entered into an agreement with URM on different and more favourable terms than the CDS Agreement. Grounds 5, 6 and 7 1. The primary judge found that URM and Par entered into the CDS Agreement under a common mistake as to the continuing existence of the Somersby agreement, and that, but for that mistake, Par would not have entered into that agreement. On that basis, her Honour held that Par was entitled to recover moneys paid to URM under the CDS Agreement as paid under an operative mistake in circumstances where URM would otherwise be "unjustly enriched" (J[311]-[316], [320]-[321]). These holdings are challenged by grounds 5(a) and (b), and 6. 2. Ground 7 is that the primary judge erred in holding that Par was entitled to $501,976 from URM for outstanding processing fees due for the months of March to June 2019 at the rate of $100 per tonne. URM contends that if the CDS Agreement had not been made, Par would not have been entitled to fees at this rate (cf J[326]). Par's grounds of cross-appeal 1. Her Honour found that under the CDS Agreement URM was entitled to a 40% share of the scheme refunds during the period 1 December 2017 to 30 June 2019 (J[244], [246], [253]). 2. By grounds 1 and 2 of its cross-appeal, Par contends that her Honour erred in not holding that this sharing period was from 1 February 2018 to 30 November 2018. Her Honour is said to have erred in so concluding in reliance on the evidence of Mr Waddington (J[244]) in circumstances where he was not shown the 9 January 2018 letter and did not have any authority to make an admission or concession on behalf of Par. Disposition of appeal Ground 1 (implied agreement terminable on reasonable notice) 1. From October 2014, there was no operative written agreement governing the processing of commingled material delivered to Par by URM. 2. The Somersby agreement recited: D. … URM and [Par] have agreed to conduct their business on the terms recorded below, which include URM procuring the delivery of Containers from the Kimbriki Facility to the Somersby Facilities for the duration of the Term… 1. "Term" was defined in cl 2 as commencing on 2 April 2011 and ending in accordance with cl 2.2. That subclause provided that the agreement would end upon the earlier of three events, one of which was the expiry of the KES agreement, and another of which was the termination of the KES agreement. The execution of the waste processing agreement between KEE and URME dated 13 October 2014 had the consequence that the interim arrangement in place in 2014, which continued the KES agreement, would expire on that date. 2. The definition of the KES agreement in the Somersby agreement did not include any replacement or other agreement such as the KEE agreement. That meant that, in the event the Somersby agreement did continue in existence despite the expiration of the KES agreement, two of the three events in cl 2.2 that might otherwise bring the Somersby agreement to an end no longer applied. In addition, one of the circumstances under cl 9.1 entitling URM to terminate the Somersby agreement (that "the KES Agreement terminates") could no longer apply. 3. It was common ground before the primary judge that, when the Somersby agreement terminated in October 2014, there was an agreement implied from the parties' conduct in performing their ongoing obligations by reference to the terms of that terminated agreement and on the basis that it continued to apply (J[8]). That conduct, viewed objectively and assuming the parties to have been aware that their earlier express agreement had terminated, was wholly consistent with them having adopted as governing their ongoing relationship at least the terms of that written agreement that were capable of continuing to apply without modification. Those terms would not include cll 2 and 9.1(c), and their exclusion would have the consequence that the duration of the agreement would be indefinite in the sense that the agreement was silent as to the manner in which it might be terminated. That gave rise to a question whether as a matter of construction there would be implied into their commercial agreement a term that it was terminable on reasonable notice (see Crawford Fittings Co v Sydney Valve & Fittings Pty Ltd (1988) 14 NSWLR 438 at 443-444). 4. URM submits there was no reason for the implication of such a term because the expectation of the reasonable businessperson in those circumstances would be that the implied arrangement should terminate when the contract providing for the supply of containers from Kimbriki to URM came to an end, as the Somersby agreement had provided. There are two reasons why this submission should be rejected. First, its effect is to allow a unilateral amendment to the arrangement recorded in the Somersby agreement in circumstances where that agreement has terminated and where one of the parties, Par, had no opportunity to consider whether the new arrangement should be subject to such a term. In those circumstances, the conduct of the parties "would be reasonably understood to convey", in the absence of agreement otherwise, that their agreement was terminable on reasonable notice (Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471; [2004] HCA 55 at [34]). Such a term would operate consistently with respect to each of the parties and would not be likely to advantage one over the other. 5. Secondly, URM also submits that the primary judge's reliance on the conduct of the parties before June 2018 as being in accord with an implied agreement containing such a term was flawed, including because it had regard to post-contractual conduct. That submission does not recognise that subsequent conduct may be relied on to identify the subject matter of a contract, and to identify necessary terms which are not the subject of express provision in a contract not reduced to writing. See, for example, Ferguson v John Dawson & Partners (Contractors) Ltd [1976] 1 WLR 1213 at 1229; Masterton Homes Pty Ltd v Palm Assets Pty Ltd [2009] NSWCA 234; (2009) 261 ALR 382 at [114]; Regreen Asset Holdings Pty Ltd v Castricum Brothers Australia Pty Ltd [2015] VSCA 286 at [133]-[134]; Tripple A Pty Limited v WIN Television Qld Pty Ltd [2018] QCA 246 at [59]; and JD Heydon, Heydon on Contract: The General Part (2019, Lawbook Co) at [9.1560], where the following statement of Browne LJ in Ferguson v John Dawson is cited: … [the issue] is not one of the construction of the contract, but of what were the terms of an oral and only partly expressed contract… the court can… take into account what was done later as a basis for inferring what was agreed when the contract was made, or as establishing later additions or variations. 1. For these reasons, ground 1 should be dismissed. Ground 2 (misleading or deceptive conduct) 1. Par's pleaded claim included that, by its conduct in the period from October 2014 to 2020, URM (it is sufficient to address the position of URM without regard to URME) represented that the KES and Somersby agreements had not terminated and that the latter was still "operational". The conduct relied on included URM's continuing acts purportedly in performance of the Somersby agreement and its assertions that the agreement remained "binding" on the parties. That conduct also included that Mr Johnston and URM had not informed Par that the KES agreement had terminated. 2. The primary judge's conclusions as to the alleged misleading or deceptive conduct are principally at J[284], [285] and [287]-[307]. The "conduct" is identified as URM's failure to inform Par of the termination of the KES agreement and the resulting termination of the Somersby agreement (the latter referred to in her Honour's reasons as the "2011 agreement"), and as URM's "ongoing representations" that the Somersby agreement remained in force (J[295], [303], [305], [307]). 3. There is no controversy as to the relevant principles. Conduct will be misleading or deceptive if, viewed as a whole, it leads or is likely to lead into error (Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Limited (2010) 241 CLR 357; [2010] HCA 31 (Miller) at [15]; Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640; [2013] HCA 54 at [39]). The required analysis is objective in the sense that it looks to what the conduct would reasonably have conveyed to the person or audience to which it was directed. 4. As to the characterisation of conduct in a commercial context, French CJ and Kiefel J said in Miller at [20]: In commercial dealings between individuals or individual entities, characterisation of conduct will be undertaken by reference to its circumstances and context. Silence may be a circumstance to be considered. The knowledge of the person to whom the conduct is directed may be relevant. Also relevant, as in the present case, may be the existence of common assumptions and practices established between the parties or prevailing in the particular profession, trade or industry in which they carry on business. The judgment which looks to a reasonable expectation of disclosure as an aid to characterising non-disclosure as misleading or deceptive is objective. It is a practical approach to the application of the prohibition in s 52 [of the Trade Practices Act 1974 (Cth), the equivalent here being s 18 of the Australian Consumer Law]. (Footnotes omitted.) 1. In this passage, their Honours make clear that references to "a reasonable expectation of disclosure" should be understood as a mere "aid to characterising non-disclosure as misleading or deceptive", and noted at [21]: To invoke the existence of a reasonable expectation that if a fact exists it will be disclosed is to do no more than direct attention to the effect or likely effect of non-disclosure unmediated by antecedent erroneous assumptions or beliefs or high moral expectations held by one person of another which exceed the requirements of the general law and the prohibition imposed by the statute. 1. URM submits that the primary judge erred in concluding that its conduct in its commercial dealings with Par in relation to whether the Somersby agreement remained binding and applicable was misleading or deceptive. First, Par never made any enquiry or sought a copy of the KES agreement. Whilst that may be so, its failure to make such an enquiry was not determinative. It was a relevant circumstance, at least in determining whether URM's failure to disclose the termination of that agreement and its consequences was in the circumstances misleading (see Miller per Heydon, Crennan and Bell JJ at [91]). Secondly, the evidence of Mr Waddington was that he was told by Mr Johnston in about October 2014 that "a fresh agreement" had been reached between his business and KEE in relation to Kimbriki (J[88]). Mr Johnston did not say that the KES agreement had been terminated, but this fresh agreement may have had the consequence that the Somersby agreement was at an end. That disclosure was said to be inconsistent with a finding of misleading or deceptive conduct. However, it did not in terms contradict the correctness of the basis on which the parties were proceeding, and in 2015 and 2016 it was swept aside by URM's express descriptions of the Somersby agreement as continuing to bind the parties. Thirdly, it was said that once the KEE agreement (to which URME was a party) had been entered into, there was no reason or occasion for URM to communicate that fact. It is not obvious why this was so having regard to the terms of the Somersby agreement, which provided for its termination on such an event, and to the significance of this for Par's ongoing negotiating position concerning processing fees. 2. Fourthly, URM proceeded on the basis that the Somersby agreement continued and did so on an understanding that was reasonably based. It was not misleading to assert a position which was consistent with URM's reasonably held view. This submission treats URM's conduct as conveying only that URM believed that the Somersby agreement continued in existence and to bind the parties, in which case that conduct alone might not be misleading if Par had a reasonable basis for the belief and it was honestly held (see Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82 at 88; Forrest v Australian Securities and Investments Commission (2012) 247 CLR 486; [2012] HCA 39 (Forrest) at [38], [43]; Ireland v WG Riverview Pty Ltd (2019) 101 NSWLR 658; [2019] NSWCA 307 at [22]-[35]). Whether that was what was conveyed by URM's conduct in 2015 and 2016 is considered below. 3. Fifthly, it is said that the parties did not act in a manner consistent with there being a strict reliance on contractual rights. In that context a failure by one to disclose the contractual effect of an earlier event to the other may not have been misleading. Here, the contractual effect of such an event was that the agreement governing the parties' commercial relationship was no longer in effect. Sixthly, it is said that her Honour's conclusion as to there having been misleading or deceptive conduct does not accord with the type of "robust commercial behaviour" in which these parties engaged. The significant features of that behaviour are said to have included that one party dealt with the other "as if a contract is on foot and without enquiry" in circumstances where the other has been told of the fact of the entry into a new agreement and made no inquiry about its consequences. This submission does not take account of her Honour's finding at J[88] that what Mr Waddington was told in late 2014 did not convey that the KES agreement had been terminated or replaced. Nor does it fully and sufficiently characterise URM's conduct as described by the primary judge. 4. Finally, it is suggested that in her comment at J[285] that URM's "ongoing conduct" was to its "advantage" the primary judge unnecessarily attributed intent to URM in engaging in misleading or deceptive conduct. This paragraph is not reasonably understood as a finding that URM's misleading or deceptive conduct was intended. Rather, it was an observation that the Somersby agreement gave URM the benefit of a contract that was not terminable on reasonable notice. 5. None of these submissions takes account of the comments and assertions made by URM to Par in the course of their forthright commercial negotiations in 2015 and 2016: see J[291]-[293]. 6. By 2014, the market for recovered glass had declined significantly, the result being that material recovery facility operators had to negotiate higher gate fees to offset that adverse position. In December 2015, Par was charging a gate fee of $34.90 per tonne, and seeking a gate fee of $105 per tonne. The former had been fixed under the terms of the Somersby agreement. The latter called for a negotiated outcome well beyond the terms of that agreement. At a meeting with Mr Johnston on 16 December 2015, Par's "need" to increase the gate fees from January 2016 was discussed. In supporting its position that it was losing money, Par, having conducted audits of waste material received for processing, gave URM a default notice on the basis that the glass material being delivered was contaminated well in excess of the 3% limit provided for in the Somersby agreement. 7. On 1 September 2016, solicitors acting for Par wrote requesting that URM comply with its obligations under the Somersby agreement with respect to the delivery of waste material with excessive contamination levels. That letter concluded that a refusal or failure of URM to negotiate in good faith to resolve this matter might entitle Par to terminate the agreement. There followed URM's letter of 14 September 2016 to Mr Waddington as principal director of Par. It was signed by Mr Johnston as managing director of URM and included the following introductory statement: The Agreement between the Parties is reasonable and binding on the Parties. The resolution must be within the four corners of the Agreement… However, URM is aware that PAR has requested assistance until it can implement practices that adequately address the issues claimed in the [letter from Par's solicitors]. 1. From 1 July 2016, the fee charged by Par to its ad hoc commercial customers was $150 per tonne. In September 2016, there were negotiations with URM for an increase in its fee. In October 2016, URM agreed to an increase from $33.84 per tonne to $50 per tonne (J[22]). In June 2017, that fee was increased to $70 per tonne (J[22]), although at first there was a disagreement as to whether the amount agreed was $70 or $75 per tonne (J[292]-[294]). 2. At J[303], her Honour found that "URM's ongoing representations that the [Somersby] agreement remained in force, despite the KES agreement having been terminated, were not true and considerably mislead Par". These representations included those made and relied on in the course of the parties' negotiations and dealings described above. 3. URM's statement in its letter of 14 September 2016 that the Somersby agreement remained "binding" was an affirmation that this agreement remained current and applicable. From the perspective of Par, it was an unqualified statement that Par and URM had an agreement which continued to apply. It was not expressed in terms of an opinion or qualified as a matter only believed to be true. It was stated to be the basis on which the parties must interact. The matter stated as a fact – that their agreement continued to apply and bind – was not correct and for that reason misleading (see Ireland v WG Riverview at [29]). 4. In Forrest, the plurality (French CJ, Gummow, Hayne and Kiefel JJ) accepted that such a statement was capable of founding a claim for misleading or deceptive conduct. At [33], their Honours said: As has already been noted, ASIC's argument in this Court hinged on the proposition that the impugned statements conveyed to their intended audience a view about the legal enforceability of the framework agreements. ASIC sought to describe what was conveyed as a matter of fact, submitting that "the words 'agreement' or 'binding agreement' convey that it is an agreement containing all of the essential elements that would constitute a contract under Australian law". While it is to be doubted that the proposition which ASIC identified is accurately, or at least sufficiently, described as a statement of "fact", it is ultimately unprofitable to attempt to classify the statement according to some taxonomy, no matter whether that taxonomy adopts as its relevant classes fact and opinion, fact and law, or some mixture of these classes. It is necessary instead to examine more closely and identify more precisely what it is that the impugned statements conveyed to their audience. 1. In the circumstances, the primary judge did not err in concluding that URM's "ongoing conduct", including in 2017 and 2018, was misleading or deceptive. Ground 2 should be dismissed. Ground 3 (whether but for misleading conduct Par would have entered into CDS Agreement) The counterfactual 1. Although the primary judge did not spell out all of the characteristics of the counterfactual found to apply but for URM's misleading conduct, Par was awarded damages of $503,665, being CDS revenue that it would not have shared with URM in the counterfactual. That amount was refunds paid in June 2018 for the months from December 2017 to March 2018 (J[22], [166]). Her Honour also dismissed URM's claim to a 40% share of CDS revenue in the period up to 30 June 2019 on the basis that in the counterfactual there would have been no sharing agreement between URM and Par, as distinct from between Par and the SHOROC Councils, which covered this period. 2. Her Honour also upheld Par's claim against URM in respect of processing fees charged at a rate of $100 per tonne for the months of March to June 2019. The terms of the CDS Agreement entitled Par to that rate from 1 December 2018 to 30 June 2019. Par's judgment for processing fees calculated at that rate appears to assume, as does her Honour's reasoning at J2[7] and [12], that in the counterfactual and notwithstanding that there was no CDS Agreement URM and Par would have agreed to increase the processing fees payable from 1 December 2018. 3. Par's claim to damages for URM's misleading conduct was that, if it had been aware the Somersby agreement had terminated, it would not have entered into the CDS Agreement (J[286]). It did not make a case that it would have entered into an agreement, but on terms less favourable to URM. It followed on Par's case that it was entitled to recover all of the refund sharing payments it made to URM because in the counterfactual it would have been entitled to the whole of the CDS payments received, at least until 1 December 2018. From then there had to be a refund sharing agreement in place between Par and the SHOROC Councils, assuming Par was still processing kerbside waste received from those councils. Primary judge's finding, and the evidence 1. Her Honour's finding that, had Mr Waddington known that Par was not bound by the Somersby agreement, Par would not have entered into the CDS Agreement is said to be in accord with the evidence of Mr Waddington, corroborated by that of Mr Gallagher (J[298]). 2. The primary judge explained that finding at J[324]-[325]: Had URM not pursued its misleading and deceptive conduct as it did, Par would not have offered the terms which it did in 2018 in relation to refund sharing, which understandably Mr Johnston accepted, to the very considerable advantage of URM, at a time when there was no statutory requirement for Par to have entered into such an agreement with anyone. The commercial purpose of the agreement, so far as Par was concerned, rested on its continuing understanding that it was bound by the 2011 [Somersby] agreement, which constrained its ability to pursue increased gate fees otherwise. But for this mistaken belief, the result of URM's ongoing misleading and deceptive conduct, the CDS agreement would not have been offered or agreed as it was, both Mr Waddington and Mr Gallagher's evidence about this having to be accepted. 1. There is no evidence of Mr Waddington to the effect that had he known that Par was not bound by the Somersby agreement he would not have entered into the CDS Agreement or any similar agreement. His affidavit evidence relevantly was: 132. At all times I believed that PAR was still bound by the [Somersby] Supply Agreement and that URM was enforcing what it said was the terms of the original Supply Agreement between URM and PAR. 133. I agreed to the new rates in June 2017 and the agreement in the letter of 9 January 2018 because I believed from all of my discussions with URM that the Supply Agreement was still on foot between PAR and URM, and that URM was enforcing the Supply Agreement. 1. Mr Gallagher's affidavit sworn in January 2021 included: 25. By the end of 2017, I was in the process of finalising a buyout of the shares in PAR held by Dan Waddington and Louie Cheng through Stop Waste so I started having more direct input into the direction of PAR. 26. Dan Waddington and I discussed providing URM and SHOROC Councils a share of the CDS income for the period before a CDS sharing agreement started, even though we didn't have to, in return for a higher rate and a sharing agreement by 1 December 2018. That way, URM could use some of the pre-December 2018 CDS income to help negotiate higher gate fees and a CDS sharing agreement with SHOROC Council[s] and PAR. 27. PAR was in a really tight place at the time, so we discussed keeping all of the first few months of CDS income to ourselves to help soften the losses. I don't remember who said what, but I did say words to the effect "we're in a tight place and we really shouldn't be sharing anything until we get our higher gate fee." 28. But we agreed that as long as we kept the first few months to ourselves, we could share some of the CDS income to get the higher gate fee and a CDS sharing agreement we need. … 35. I never would have signed this letter and agreed to the things in it if I thought the Supply Agreement was not binding on PAR, or if Anthony Johnston had not promised that PAR would receive an uplift in gate fees to offset the negative revenue. 36. If I had known that the Supply Agreement had terminated, I would have been looking to charge PAR's commercial rates at that time and would have had no hesitation in negotiating a sharing agreement directly with SHOROC Councils, as I later did. 1. Mr Gallagher was not cross-examined about paragraphs 35 and 36, which on analysis do not necessarily support the primary judge's conclusion. First, paragraphs 26 and 27 indicate that Mr Gallagher and Mr Waddington had agreed to the sharing of CDS income in return for "our higher gate fee", recognising the need at the same time to negotiate a CDS sharing agreement with the SHOROC Councils. Secondly, the statement in paragraph 35 is directed to the letter of 9 January 2018 and the "things in it". Read disjunctively, that paragraph contemplates that Mr Gallagher would have signed that letter if Mr Johnston had promised "an uplift in gate fees to offset the negative revenue". Thirdly, in paragraph 36 Mr Gallagher says that he would have been looking to charge "PAR's commercial rates" at the time the CDS Agreement was negotiated. That asserted possible course of action falls to be considered in the light of the primary judge's rejection of Par's claim that in 2018, and free of the Somersby agreement, it would have charged URM the rates charged to its one-off commercial customers. Her Honour described the evidence as not "even" establishing that in 2018 when the CDS Agreement was being negotiated "Par would have required URM to pay the rates it charged its ad hoc commercial customers" (J[156]). Finally, as for Mr Gallagher's statement that Par could negotiate a CDS share agreement directly with the SHOROC Councils, the firm understanding of Messrs Waddington and Gallagher in late 2017 and early 2018 was that URM was negotiating on behalf of those councils, and with their knowledge. 2. In cross-examination, both Mr Waddington and Mr Gallagher gave evidence about their understanding of the relationship between URM and the SHOROC Councils at that time. Mr Waddington's evidence was: … URM managed the SHOROC council group. They had the relationship with the council group and it was pretty strict that we weren't to speak with the SHOROC council group. So, they were negotiating with the council group and then that's why they got the 40% split. 1. Mr Gallagher's evidence was that he understood that URM was "managing SHOROC as a contract manager", as the 9 January letter recorded. Disposition of ground 3 1. URM submits that, having regard to this evidence, the objective probabilities and the primary judge's other findings, her Honour erred in holding that more probably than not Par would not have entered into the CDS Agreement in the counterfactual. URM contends by ground of appeal 4 that the most probable counterfactual is one in which Par enters into the CDS Agreement or an agreement the terms of which are no less favourable to it. 2. It is necessary to start with the circumstances in which the counterfactual falls to be considered. 3. The Somersby agreement had terminated and URM and Par either were operating under an implied agreement or had no agreement between themselves at all. The terms of the implied agreement would have included the "Pricing and Payments" provisions of the Somersby agreement (cl 5). It followed, if Par wanted to be free of those constraints, that it had to terminate or vary that implied agreement. 4. Her Honour's analysis at J[324] describes the "commercial purpose" of the CDS Agreement from Par's perspective as being to secure increased gate fees of at least $100 per tonne in circumstances where it believed the continuing Somersby agreement constrained its ability to do so. 5. In 2016, URM had agreed to Par increasing its processing fees beyond the amounts permitted by CPI increases under the Somersby agreement. In October 2016, the fees increased from $33.84 to $50 per tonne. When the next increase, from $50 to $70 per tonne, was agreed in mid-2017, it was on the basis that URM would be repaid $20 per tonne once the container deposit scheme was introduced. 6. As the details of the refund scheme emerged, it became known that the material recovery facility operator would have to reach a sharing agreement with the relevant council or councils. In addition, as between URM and Par, the introduction of the scheme would change the dynamics of the negotiations to be had concerning gate or processing fees. There would be more money available, enabling the councils to pay higher fees and the material recovery facility operator to receive revenue other than in the form of processing fees. However, the higher fees and a share in the income from the scheme were only available if Par continued to have a processing agreement with URM and was able to secure an agreement with the SHOROC Councils. 7. By December 2017, the position was, as described by Mr Waddington, that material recovery facility operators "were looking to the CDS for their revenue". The numbers in Par's letter of 9 January 2018 indicate that the annual CDS revenue available from waste generated by the SHOROC Councils was estimated to be between $3.75 million and $5 million. From Par's perspective, to secure that outcome it required a processing agreement with URM and a sharing agreement with the councils, whose activities in this respect were managed by URM. 8. The processing fees which URM was likely to pay Par depended in part on the amount of the CDS refunds which the SHOROC Councils would share with URM. So too did the processing fees which Par would accept from URM. That these considerations significantly influenced Par's decision to enter into the CDS Agreement is confirmed by the negotiations leading to that agreement. 9. The early negotiations included a meeting in December 2017 between Mr Waddington, Mr Gallagher, Mr Johnston and Mr Johnston's brother. Most of the email communications which followed between Mr Waddington and Mr Johnston were also copied to Mr Gallagher. Mr Waddington and Mr Gallagher's expectation by this time was that Mr Johnston would negotiate a refund sharing agreement between Par and the SHOROC Councils before December 2018 (J[212]). 10. At the December 2017 meeting Mr Waddington put the following proposal to Mr Johnston: "URM had to get a sharing agreement with the SHOROC Councils by 30 November 2018"; "Par will pay 40% of the CDS payments it receives from 1 February 2018 until 30 November 2018 to URM and URM can pay the SHOROC Councils whatever is agreed out of that"; and "Par will wait until 30 November 2018 for a rate increase but we will need at least $100 per tonne plus GST". 11. On 8 January 2018 at 12:16pm, Mr Waddington sent an email to Mr Johnston attaching an unsigned letter proposing a CDS split of 60/40 between Par and URM, with URM's 40% to be split with the councils. That was in return for URM's agreement to Par receiving a "minimum" of $100 per tonne. Mr Waddington's covering email to Mr Johnston included "Need you to work hard on adjusting the rate with council whilst there is an opportunity to renegotiate". The sequence and substance of the communications which followed are set out by the primary judge at J[238]. 12. Mr Johnston's response on 8 January at 12:45pm proposed that the rate be $70 per tonne for the 2018 year, with the increases in 2019 to be negotiated "once [CDS] negotiations have taken place" with the councils. Those negotiations were to be undertaken by Mr Johnston. At 1:55pm, Mr Waddington signed and returned Mr Johnston's amended letter. On the following day, 9 January at 12:05pm, Mr Waddington sent a letter in quite different terms for signature by Mr Johnston. That letter provided for the 60/40 split to apply only from 1 February to 30 November 2018, with Par processing recyclables for $70 per tonne until 1 December 2018. From that date, its fee was to increase to a "minimum" of $100 per tonne. That letter included the estimate of the value of a 40% share of the CDS refunds due to "URM/SHOROC" as being between $1.5 and $2 million. 13. That letter was then signed by Messrs Waddington and Gallagher and is the final form of the CDS Agreement (J[192]): Anthony [Johnston], Par Recycling is delighted to continue working with URM as a contract manager for the SHOROC Councils and extend a share of the revenue from CDL with the basis of a 60/40 split from 1st February 2018 till 30th November 2018. The estimated value to URM/SHOROC is forecasted to be $1.5 and $2 million dollars subject to EPA audit date. **URM/SHOROC will be required to conduct audits at Kimbriki to assist in the quantification and maximise the return from the Container Deposit Scheme (CDS). As per our discussions PAR will honour its commitment to process mixed recyclables for $70 per tonne plus GST up to the 1st December 2018. As indicated the current processing cost is circa $165.00 per tonne. Effective 1st of December 2018, Par Recycling's gate rate will increase to a minimum $100.00/ton plus GST up till June 2019 which is the proposed extension of the contract. As you are fully aware we cannot continue to provide services that are unsustainable moving forward. There is no current market for glass and limited markets for plastics and as you are aware paper has free falled in recent months, we seek URM's support in marketing the fibre material. Kind regards [signed by Messrs Waddington and Gallagher] (Emphasis in original.) 1. As recorded by the primary judge at J[238], there were further email and telephone communications between Mr Johnston and Mr Waddington on 9 January 2018 and an email from Mr Johnston to Mr Gallagher at 12:19pm advising that, "We are agreed". 2. Thus, what was agreed was a 60/40 split of the CDS refunds for waste processed between 1 February 2018 and 30 November 2018. Par agreed to process mixed recyclables from URM in exchange for $70 per tonne up to 1 December 2018. From 1 December 2018 Par's gate fees would increase to a minimum of $100 per tonne up until 30 June 2019, when it was proposed that the "contract" would be extended. The agreement assumes that URM as "contract manager" would continue to negotiate for the councils. 3. This narrative and the objective probabilities do not support her Honour's conclusion that Par had only entered into the CDS Agreement to secure higher gate fees which it did not think it could negotiate if the Somersby agreement continued to apply. Rather, they show that Par's entry into the CDS Agreement was motivated by the considerations discussed between Mr Waddington and Mr Gallagher in December 2017. Par was negotiating with URM for itself and as contract manager for the SHOROC Councils. The subject of the negotiations was the implementation of the Container Deposit Scheme. Par's immediate objective was to secure higher gate fees and a sharing agreement with the councils. Otherwise, it would not receive any scheme payments for waste processed after December 2018. To secure that outcome, Par was prepared to share with URM and the councils some of the CDS income before December 2018 in order to get "a higher gate fee and the sharing arrangement that they needed" (J[201]). 4. At the time these negotiations took place, the constraints on pricing and payments in the Somersby agreement were no longer relevant or operative. The container deposit scheme meant there would be more money available, enabling higher fees to be paid to URM and Par, as well as ensuring their receipt of a share of the refund revenue. Par could only achieve its immediate objective by entering into a CDS agreement, and the fact that the Somersby agreement had terminated introduced no good reason for its departing from the terms proposed in December 2017. Indeed, Par needed a processing agreement with URM to guarantee delivery of the waste recyclables which generated the CDS refunds. 5. The primary judge erred in finding that in the relevant counterfactual Par would not have entered into the or any CDS agreement on less favourable terms. Ground 3 should be upheld. Ground 4 (whether Par would have entered into an agreement more favourable than CDS Agreement) 1. None of the above considerations supports a conclusion that, if Par had been aware that the Somersby agreement had terminated, it would have entered into any container deposit scheme agreement that was on different and more favourable terms than those in the CDS Agreement. Ground 4 also should be upheld. Ground 5 (whether payments made under the CDS Agreement were recoverable as paid under a mistake) 1. This ground does not arise. 2. Par would have entered into the CDS Agreement, notwithstanding that it was mistaken as to the continuing existence of the Somersby agreement. That makes it unnecessary to consider whether her Honour's analysis of Par's recovery of payments made under the CDS Agreement as paid under a mistake is correct. The underlying premise on which that analysis proceeds is not made out. Ground 6 (damages for unjust enrichment) 1. This ground also does not arise in view of URM's success on grounds 3 and 4. The primary judge's reasons included: [314] The results of the common mistake also included the parties' continued commercial dealings with each other under the terms of the 2011 agreement and finally, their entry into the CDS agreement, which Par would not have entered, but for the common mistake. [315] Such a mistake can give rise to a prima facie obligation to make restitution of a resulting payment. This is such a case. To displace such liability the recipient has to point to circumstances which the law recognises would make an order for restitution unjust… [316] In all of the circumstances which arise for consideration, I am satisfied that it cannot be concluded that URM's retention of the payments it received under the CDS agreement is not unjust. … [320] I am also satisfied that what I have explained also provides a basis for the conclusion that as the result of URM's conduct, it has been unjustly enriched. [321] That also provides a basis for damages orders to be made in favour of Par. 1. Again, the underlying premise on which this analysis proceeds is not made out. Ground 7 (remedies) 1. This ground challenges Par's entitlement to gate fees charged at the rate of $100 per tonne as agreed under the CDS Agreement. If Par would not have entered into that agreement, it would not have been entitled to gate fees at that rate. However, the CDS Agreement was not an outcome of URM's misleading or deceptive conduct. Par was bound by its terms and entitled under those terms to charge a gate fee of $100 per tonne for commingled container waste delivered to Somersby between March and June 2019. Grounds 8 and 9 1. As has already been observed, ground 8 is not pressed and ground 9 does not arise. Disposition of cross-appeal Cross-appeal grounds 1 and 2 (period during which CDS Agreement applied) 1. These grounds should be allowed. 2. The 9 January 2018 letter provides in terms that the 60/40 refund sharing applies from 1 February 2018 to 30 November 2018. The primary judge held that this period was from 1 December 2017 to 30 June 2019 (J[244], [253]). That finding is based upon an answer given by Mr Waddington in cross-examination, in the course of questioning about the deal "ultimately agreed on 9 January 2018". 3. The questions were asked on the premise that the terms of that "deal" were contained in the 9 January 2018 letter. There was an objection to a question because what was put was "not apparent from the face of the letter", thus raising an issue as to the interpretation of the letter, which could not be dealt with by the witness. The cross-examiner sought to justify the question on the basis that it was addressed only to "what his understanding was in terms of the subject matter of a business deal". The sequence of questioning continued and included the leading question and answer on which her Honour's finding at J[244] is based. 4. Mr Waddington's answer conveyed his recollection of the terms of the deal in the 9 January 2018 letter. His answer did not suggest that there had been any oral variation of those terms. Indeed, in response to URM's pleaded case that there was such an oral variation made in a conversation with Mr Johnston on 9 January 2018, Mr Waddington's affidavit evidence, having referred to the alleged variation to the period 1 December 2017 to June 2019 instead of 1 February 2018 to 30 November 2018, said that "these things were never discussed or agreed, whether in that conversation or in any other conversation". That evidence was not challenged or brought to his attention in the context of the cross-examination about the terms of the deal. 5. URM's pleaded case that there was a variation made by a conversation between Mr Gallagher and Mr Johnston on or shortly after 9 January 2018 must also be considered. Whilst noting that this case was made, at J[242] her Honour said that she was "satisfied" that the issue raised by it was resolved by Mr Waddington's answer in cross-examination. That observation does not have regard to Mr Waddington's affidavit evidence that no such agreement was made. 6. With respect to the alleged variation, Mr Johnston's evidence was that there was an agreement that the revenue share should start from 1 December 2017. He gave no evidence suggesting agreement to the extension of the period to June 2019. Mr Gallagher denied there was such an agreement and maintained that denial in cross-examination. The primary judge noted this evidence at J[240], but, as I have said, did not resolve this dispute. 7. The other relevant evidence is an email from Mr Johnston to Mr Gallagher dated 23 May 2018. In that email, Mr Johnston asked whether it was "possible to have Dec/Jan CDS volumes paid to URM… and then deducted from the two next quarters if possible". Mr Gallagher treated this as a request for a loan of moneys to which URM was not otherwise entitled. That accorded with Mr Johnston's statement that the advances could then be "deducted" from amounts to which URM was entitled. So understood, the email is consistent with Par's case that the commencement of the sharing period was never varied from 1 February 2018, as the CDS Agreement provided. 8. In the result, URM's variation case should be rejected, and the grounds of cross-appeal upheld. The consequence is that the CDS Agreement continued to record the period during which URM was entitled to a 40% share of the CDS refund payments. Conclusion 1. It remains for the parties to agree on the final orders necessary to give effect to these conclusions. There should be a judgment for URM on its cross-claim, Par's amended second cross-claim should be dismissed and Par should have a judgment on its Statement of Claim. There are two amounts to be calculated. 2. The first is the amount due to URM under the CDS Agreement, which is the subject of URM's cross-claim. URM is entitled to refund share payments for waste material delivered between 1 February and 30 November 2018. To the extent that it received payments in respect of material delivered between 1 December 2017 and 31 January 2018, those payments were moneys advanced by way of loan to URM and must be treated as such. 3. The second is the amount due to Par as processing fees under the implied agreement between URM and Par. If the amount of $185,376, previously treated as paid by a set off, is included in the calculation of the unpaid processing fees, it should also be included in the calculation of URM's claim to moneys due under the CDS Agreement. 4. To enable the parties to formulate and agree on the final orders to be made, I propose the following direction: 1. The parties confer and if possible agree as to the form of the final orders to be made to give effect to these reasons. Having done so, they are to provide to the Associate to the President within 7 days of the making of this direction either the agreed final form of orders or their respective versions of those orders together with written submissions (not to exceed 2 pages) in support of the orders sought. 1. GLEESON JA: I agree with Meagher JA. ********** Amendments 05 February 2024 - [14] Date changed to "2019" DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 05 February 2024