Civiltrak Sydney Pty Ltd v Orange Equipment Pty Ltd trading as Orange Hire

1. [1]

   ADAMSON JA: The plaintiffs, Civiltrak Sydney Pty Ltd (Civiltrak) and Elias Azzi, appeal, and, to the extent required, seek leave to appeal against a judgment entered against them in favour of the defendant, Orange Equipment Pty Ltd, trading as Orange Hire (Orange) on 1 May 2025 in the Local Court (the Court below) by Atkinson LCM (the primary judge) in the sum of $24,487.54 (the judgment). It was, ultimately, common ground at the hearing in this Court that this figure, if the finding of liability is correct, ought be $18,023.51.

2. [2]

   As Orange was the plaintiff in the Court below and is the defendant in this Court and Civiltrak was the first defendant in the Court below and is the first plaintiff in this Court and Mr Azzi was the second defendant in the Court below and is the second plaintiff in this Court, the parties will be referred to by name. The Local Court is the second defendant and has filed a submitting appearance.

3. [3]

   This Court’s jurisdiction under the Local Court Act 2007 (NSW) is limited to appeals on a question of law (s 39(1)) or, by leave, appeals on a question of mixed law and fact (s 40(1)). This Court may determine an appeal by varying the judgment, setting it aside, remitting the matter to the Local Court or dismissing the appeal: s 41(1).

The proceedings in the Court below

1. [4]

   In the proceedings in the Court below, Orange claimed that Civiltrak had hired a diamond saw, H23, which belonged to Reitara Pty Ltd, trading as Ground Tek Equipment (Ground Tek), from Orange for the period from 2 March 2023 to 8 March 2023. On 8 March 2023, Civiltrak alleged that H23 was damaged and asked for it to be repaired. As Orange could not repair H23 on site, it arranged to pick up H23 and to provide another diamond saw, H85, to Civiltrak. A few days later, Civiltrak notified Orange that H85, too, was damaged. Orange collected H85. Both diamond saws were returned to Ground Tek, which repaired them and invoiced Orange for the cost of repair. Orange then commenced proceedings in the Court below to recover this amount from Civiltrak and, pursuant to a guarantee, from Mr Azzi.

2. [5]

   At the hearing in the Court below, Orange alleged that its contract with Civiltrak contained General Terms of Hire (GTH).

3. [6]

   In paragraph 5 of its statement of claim, Orange pleaded:

4. [7]

   Civiltrak and Mr Azzi did not admit this paragraph in their defence.

5. [8]

   Orange claimed, in paragraphs 12-16 of the statement of claim, that Mr Azzi was liable for the amount for which Civiltrak was liable because of the guarantee he had given. These paragraphs were either not admitted or denied.

6. [9]

   Civiltrak admitted in its defence that it hired a diamond saw, and was provided with another replacement saw. It alleged that the first diamond saw was “faulty”.

7. [10]

   Civiltrak defended the claim on the basis that the GTH did not form part of the contract for the provision of the diamond saws for hire. This defence was rejected in the Court below and not pressed in this Court. Accordingly, it was common ground in this Court that the GTH formed part of the contract.

8. [11]

   Clause 1 of the GTH contains definitions. The GTH defined “Owner” as meaning Orange. It defined “Equipment” as meaning the items listed in the “Hire Schedule”. “Hire Schedule” was defined to mean “the document provided by the Owner to the Customer which includes details of the Equipment hired, the Fees, the Hire Period, and other administrative details”. “Hire Contract” was defined to mean “the Terms together with the Hire Schedule, the credit account application, and any Special Conditions.”

9. [12]

   Pursuant to cl 2.3, the GTH overrides and supersedes any other agreement between the parties. The “Hire Period” is defined by cl 1 to mean the period described in cl 3. Clause 3 relevantly provides that the Hire Period commences when the Customer (in this case, Civiltrak) collects or takes possession of the Equipment or when the Owner (Orange) delivers the Equipment. It ends when the Equipment is in the Owner’s possession.

10. [13]

    Pursuant to cl 7.5, the Customer is deemed to be satisfied as to the suitability, condition and fitness for purpose of the Equipment unless the Owner is otherwise notified within 24 hours of the commencement of the Hire Period.

11. [14]

    Clause 10 relevantly provides:

12. [15]

    Clauses 11 and 12 of the GTH require the Customer to take out insurance for “loss, theft or damage to the Equipment during the Hire Period for the full replacement value of the Equipment.”

13. [16]

    Clause 14.6 provides:

14. [17]

    The document pursuant to which Mr Azzi was alleged to be liable was contained in Civiltrak’s application to Orange for “30 day Commercial Credit”. The Guarantee and Indemnity provided, in part:

15. [18]

    Ms Fishburn, who appeared for Orange in the Court below and in this Court, said in opening in the Court below that Orange’s case was that the first diamond saw (a round blade which is attached to an excavator and rotates at speed to cut hard objects such as stone) which was provided was damaged while it was in Civiltrak’s possession, following which a second diamond saw was provided, which was also damaged during the Hire Period. She also indicated that Civiltrak’s case was that both diamond saws were faulty when they were provided.

16. [19]

    After she had opened the case for Orange, Mr Smartt, who appeared for Civiltrak and Mr Azzi in the Court below and in this Court, acknowledged that Ms Fishburn’s opening was “fair” and said that, in order to succeed, Orange would have to prove three things: first, that there was a contract between Orange and Civiltrak that included the terms pleaded in the statement of claim; second, that the equipment was not defective when it was provided to Civiltrak; and, third, whether Mr Azzi was liable under the guarantee. As referred to above, the first issue is no longer an issue, it being accepted by Mr Smartt in this Court that the contract between the parties included the GTH.

17. [20]

    At the hearing, Orange read affidavits from three witnesses: Garth Morrah, the NSW Sales and Hire Manager for Ground Tek; Joanne Walsh, the Credit Manager at Orange; and Jacob Young, the Business Development Manager at Orange. Ms Walsh was cross-examined briefly. The other two witnesses were not required for cross-examination. Civiltrak and Mr Azzi called no evidence.

18. [21]

    In final submissions, Mr Smartt contended that Orange had not discharged its onus of proving the terms of the contract or that the contract had been breached. He also submitted (although it was not pleaded) that Mr Azzi was not liable because the guarantee document which he had signed was with the “Owner” and the evidence established that Orange did not in fact own the diamond saws, which were owned by Ground Tek.

19. [22]

    In the course of Ms Fishburn’s submissions in reply, the primary judge asked Ms Fishburn whether the term “Equipment” was defined. Ms Fishburn answered:

20. [23]

    Ms Fishburn identified a document as the hire schedule, which was the tax invoice dated 31 March 2023 issued by Orange to Civiltrak which claimed the hiring fee for a “rock saw” and the associated delivery charge. This was a different document than the one which had been identified by Mr Young in his affidavit, which was the front page of the hire contract between Ground Tek and Orange for H23.

21. [24]

    After Ms Fishburn had completed her reply, Mr Smartt asked to be heard on the “issue about the hire schedule”, which he identified as “important”. He submitted that the hire schedule could not be an invoice dated 31 March 2023 since this post-dated the hire period and it could not be the document attached to Mr Young’s affidavit, which he identified as a hire schedule. He then submitted:

22. [25]

    Ms Fishburn responded:

23. [26]

    Mr Smartt responded by denying the proposition and inviting the primary judge to “look at the pleadings.”

The reasons of the primary judge

1. [27]

   The primary judge set out the factual background at [1] of the reasons, as follows:

2. [28]

   The primary judge identified the issue raised by Orange as being when the saw was damaged. Her Honour identified the issues raised by Civiltrak and Mr Azzi as being whether Orange had proved that:

   1. (1)

      there was a contract between Orange and Civiltrak which included the terms alleged in the statement of claim;

   2. (2)

      Civiltrak breached the contract or caused the damage that fell within the scope of the claimed indemnity;

   3. (3)

      Civiltrak’s alleged breaches caused the damage to Orange; and

   4. (4)

      Mr Azzi’s guarantee extended to any liability of Civiltrak to Orange.

3. [29]

   The primary judge drew a Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 inference (that nothing he could have said would have assisted Civiltrak’s case) against Civiltrak for failing to call Mr Azzi or any other witness, in the absence of any satisfactory explanation. The primary judge, under the heading, “Background” set out the relevant terms of the GTH and of the guarantee and indemnity.

4. [30]

   The primary judge referred to the circumstance that the reverse page was not included with the hire contract between Orange and Ground Tek (which Mr Young had identified was the hire schedule) and found that could not make any difference as the relevant contract was between Orange and Civiltrak.

5. [31]

   The primary judge summarised Mr Morrah’s evidence as follows:

6. [32]

   The primary judge also set out an email from Mr Morrah to Orange dated 12 April 2023 in which he said, at [25]:

7. [33]

   The primary judge also referred to invoices from Ground Tek to Orange which showed that the hire period was from 2 March 2023 until 8 March 2023 and that on 8 March 2023, H23 (which was damaged) was replaced by H85. Orange then sent an invoice to Civiltrak in an amount of $22,197.45. Orange paid the amount claimed by Ground Tek but Civiltrak and Mr Azzi refused to pay the amount claimed by Orange from them.

8. [34]

   The primary judge found that the GTH formed part of the contract between the parties. Her Honour rejected the argument that the GTH only applied to equipment actually owned by Orange and noted that cl 1 of the GTH defined Orange as “Owner”. Her Honour also noted that cl 4.4 of the GTH expressly contemplated that a cross-hire might occur. Her Honour found at [36]:

9. [35]

   When addressing the issue whether Orange had proved breach of contract, her Honour said at [37]:

10. [36]

    The primary judge did not accept the allegations in emails from Civiltrak that both saws were faulty as no witness was called by Civiltrak to give evidence. Her Honour concluded:

11. [37]

    Her Honour found that the invoice identified by Ms Fishburn in final submissions was a hire schedule as it included details of the items which had been hired, the fees, the hire period and other administrative details. The primary judge, accordingly, found that breach of contract and causation had been established.

12. [38]

    As the primary judge had found that the equipment was damaged while it was in Civiltrak’s possession, her Honour applied cl 10 of the GTH. As to quantum, her Honour said that the damage could be quantified “by reference to the invoices that were issued by Ground Tek and paid by Orange (subject to clarification about whether the GST has to be adjusted).” This rider was reflected in her Honour’s orders. Her Honour ordered judgment for Orange against Civiltrak and Mr Azzi in the sum of $24,487.54 but granted liberty to apply on 3 days’ notice to allow for any adjustment to that figure to accord with her Honour’s reasons and the concern regarding GST.

The grounds of appeal

1. [39]

   The grounds of appeal were framed in terms of questions of law so as to attract the right of appeal under s 39 of the Local Court Act. In substance, in respect of the challenged findings, Mr Smartt submitted that it was not legally open to the primary judge to make the findings which her Honour made. Grounds 1 and 3 were not pressed. The balance are addressed below.

2. [40]

   In support of ground 2, Mr Smartt argued that Orange was unable to identify any document in the evidence which constituted a “Hire Schedule” within the meaning of the GTH and that therefore the GTH and, in particular, cl 10 did not apply. He submitted that the document originally identified as a hire schedule could not be one since it was the first page of a contract between Ground Tek and Orange and the document ultimately identified by Ms Fishburn in her submissions in reply could not be one because it was issued after the contract had been performed and the equipment returned.

3. [41]

   I am not persuaded that this argument is open. Section 56(1) of the Civil Procedure Act 2005 (NSW) provides that “[t]he overriding purpose of this Act and of rules of court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings.” Parties to proceedings have a duty to further that overriding purpose: s 56(3). The parties’ legal representatives are prohibited from causing a party to civil proceedings to be in breach of that duty: s 56(4).

4. [42]

   The pleadings defined the issues in the case. The parties also prepared a document, which was signed by their respective solicitors, entitled “Statement of agreed facts and issues”. This document recorded the various facts which the parties agreed, including:

5. [43]

   Until Mr Smartt rose to his feet after Ms Fishburn had finished her reply submissions, there was not the slightest indication that there was any issue about the equipment which had been hired or whether, if the GTH formed part of the contract, the diamond saws constituted “Equipment”. The submission he made to the primary judge was entirely new and, it would appear, an opportunistic response to the exchange between Ms Fishburn and the primary judge set out above. Ms Fishburn’s immediate response, that the matter had not been pleaded, was correct as well as sufficient to indicate that Orange did not acquiesce in any departure from the pleadings: cf. Dare v Pulham (1982) 148 CLR 658 at 664; [1982] HCA 70.

6. [44]

   For this reason, ground 2 fails.

7. [45]

   Mr Smartt submitted in support of this ground that cl 10 could not apply unless Orange proved that the diamond saws were damaged as a result of misuse by Civiltrak and not as a result of a latent defect, which manifested during the period of hire.

8. [46]

   The question of construction of a contract raises a question of law within the meaning of s 39 of the Local Court Act. Accordingly, Civiltrak has a right of appeal in respect of this ground. It involves a challenge to [42] of the primary judge’s reasons set out above.

9. [47]

   Mr Smartt submitted that the primary judge’s construction was commercially unreasonable as it was “not reasonable that a person hiring equipment should bear liability for repairing damage that only becomes noticeable during the hire period, if the cause of the damage is a pre-existing defect.” I reject this submission. The GTH expressly provides for the allocation of risk as to damaged Equipment as between the Owner and the Customer. If a Customer does not notify the Owner of any problem with the Equipment hired within 24 hours of the commencement of the Hire Period, cl 7.5 deems the Customer to be satisfied as to the suitability, condition and fitness for purpose of the Equipment. The insurance clauses (cll 11 and 12) also fortify the conclusion that the risk is to be borne by the Customer and not by the Owner. For these reasons, ground 4 has not been made out.

10. [48]

    Ground 5 does not arise, since ground 4 has not been made out. However, it can be addressed briefly. Mr Smartt submitted that, as no technician had been called regarding the particular saws, a Jones v Dunkel inference ought be drawn against Orange that nothing such a technician could have said would have assisted its case. Further, he submitted that Orange had not discharged its onus of proving that the damage was caused by Civiltrak’s use of the saw as distinct from a pre-existing defect.

11. [49]

    There was considerable direct and circumstantial evidence to support her Honour’s finding, which was legally open to be made, including the following:

    1. (1)

       the evidence of Mr Morrah as to his experience with diamond saws and his diagnosis of how these saws had been damaged;

    2. (2)

       evidence as to the processes of Ground Tek with respect to maintenance and servicing of its equipment, which was probative of its usual practice and could be used as the basis for an inference that neither of the diamond saws was faulty when provided to Civiltrak: Connor v Blacktown District Hospital [1971] 1 NSWLR 713 at 721 (Asprey JA);

    3. (3)

       the fact that not one but two diamond saws had been damaged while in the possession of Civiltrak from which it could be inferred (as the primary judge did) that it was improbable that the events occurred coincidentally (no objection having been taken to the use of this evidence for that purpose under s 98 of the Evidence Act 1995 (NSW)); and

    4. (4)

       the terms of the invoices rendered by Ground Tek to Orange which recorded the timeline and the flaws in the saws when each was collected from Civiltrak (which, as business records, were admissible to prove the truth of their contents under s 69 of the Evidence Act and could form the basis for inferences reasonably arising from them (s 183 of the Evidence Act)).

12. [50]

    It is difficult to discern what the evidence of a technician could have added to what was recorded in the invoices in any event. Further, the technician could not have been present when the saw was damaged (since the damage preceded the contact to Orange) and therefore could not have been in a position to observe what the saw was being used for when it became unworkable. I am not persuaded that a Jones v Dunkel inference is available or would assist Civiltrak in these circumstances. It was not necessary for the primary judge to address this issue.

13. [51]

    Ground 5 has not been made out.

14. [52]

    Mr Smartt submitted that it was illogical and legally unreasonable for the primary judge to assess Orange’s damages by reference to what it had to pay Ground Tek for repairing the damaged diamond saws. He submitted that, for the invoices to be used for this purpose, it would have been necessary to call someone from Ground Tek or Orange to explain how each item in the invoices was calculated. While he accepted that a claim for damage to a motor vehicle could, in certain circumstances, be established by tendering an invoice from the repairer, he submitted that this was not the case when the invoices were inflated. He submitted that the invoices rendered by Orange to Civiltrak were inflated and did not represent the cost of repair. Accordingly, he submitted that Orange had failed to prove its loss.

15. [53]

    I do not accept this argument. There was no suggestion that these invoices were inflated. The tender of repair invoices is an orthodox and effective way of proving loss, particularly for relatively small amounts in the Local Court. Ground 6(a) has not been made out. I note that Mr Smartt’s alternative position was that damages could be calculated by reference to the invoices rendered by Ground Tek to Orange.

16. [54]

    Mr Smartt submitted that, if Orange were successful, its damages ought be limited to the sum of the invoices rendered by Ground Tek to Orange, which amounted to $18,023.51. The transcript recorded that Ms Fishburn agreed that the total was “about $18,000”. Ground 6 is a criticism of the primary judge for not accepting or rejecting that submission but rather granting liberty to the parties to apply if there was any difficulty with the figure included in the order.

17. [55]

    I am not persuaded that this ground has been made out.

18. [56]

    Section 60 of the Civil Procedure Act provides:

19. [57]

    The primary judge, at various junctures in the course of the hearing, remarked on the relatively small amount in dispute and the need to complete the matter in a day if possible. Her Honour was plainly concerned that any issue with respect to quantum would take valuable time in the hearing, in circumstances where it ought to have been able to be agreed by the parties (as it ultimately was, in this Court). It is not uncommon, at least in this Court, for judges to ask the parties to provide short minutes of order to reflect the reasons of the Court. While it would not generally be appropriate for that course to be adopted in the Local Court (where the range of orders which may be made is relatively limited), the primary judge was entitled to provide the parties with an opportunity to agree on the figure in circumstances where the invoices provided the only real basis for assessment of damages and were sufficiently probative for that purpose.

20. [58]

    Mr Smartt submitted that the guarantee did not apply in the present case as Orange did not own either of the two diamond saws which Civiltrak hired from it and that the guarantee was limited to situations where Orange was actually the owner of the equipment supplied. He submitted that the parties, by using the word “Owner” to describe Orange in the guarantee and indemnity must be taken to have used the word advisedly and that there were consequences of their choice.

21. [59]

    Mr Smartt also submitted that the primary judge had not addressed this argument. However, he accepted that his argument was either good or not and that I could determine whether it was correct as a matter of law because it was a question of construction in respect of which Mr Azzi had a right of appeal under s 39 of the Local Court Act.

22. [60]

    Although the primary judge did not squarely deal with this argument, her Honour addressed a related argument to the same effect, which is referred to in [34] above. Her Honour’s construction of “Owner” as meaning, as expressly provided, “Orange” was, in my view, correct. Significantly, “Owner” was not defined as the person who owned the equipment but rather it was defined as meaning Orange and its successors and assigns.

23. [61]

    Mr Smartt eschewed the proposition that the construction for which he contended required words to be inserted into the guarantee and said that the word “owner” should be given its plain meaning. He submitted that it would be commercially unreasonable for Mr Azzi to guarantee Civiltrak’s liability with respect to equipment which Orange did not own because he could not be confident of where the equipment was coming from. I reject this submission. I am not persuaded that there is any objective basis for Mr Azzi or Civiltrak to care or mind whether the legal title to the equipment which they hire from Orange is Orange’s or someone from whom Orange itself hires the equipment.

24. [62]

    The primary judge dealt expressly with the argument about “Owner” in connection with the GTH. By parity of reasoning, her Honour’s construction applied also to the guarantee. Reasons are to be read fairly and as a whole. Local Court judges have significant time pressures which leads to most reasons being given ex tempore. Although this decision was reserved and a transcript obtained before the reasons were delivered, it is likely that the primary judge prepared the reasons either before or after a demanding day in court. It was not necessary in these circumstances for her Honour to separately address what amounted to the same submission but with respect to different documents. Her Honour’s reasons were adequate to address the point, notwithstanding that her Honour did not separately refer to the guarantee. The other bases for arguing that Mr Azzi was not bound by the guarantee derived from submissions that Civiltrak was not liable under the GTH. Those matters were more than adequately dealt with by the primary judge, whose reasons explained her reasoning and conclusions in a clear and concise way.

25. [63]

    This ground has not been made out.

The quantum of the judgment

1. [64]

   While none of the grounds has been made out, there is still the outstanding issue of the quantum of the judgment. As I have not found error, I do not, on reflection, consider that I ought vary the judgment to insert the agreed figure of $18,023.51. However, as the figure is agreed, the parties ought communicate the agreed position to the primary judge so that her Honour can vary the judgment sum by consent to that figure. It is desirable that this be done as soon as possible by joint written approach to the primary judge. I appreciate that Civiltrak’s legal representatives sought that this occur but that Orange’s legal representatives did not agree to this course due to the pendency of the appeal to this Court. Orange’s approach was not unreasonable in the circumstances. However, now that the appeal has been determined, I do not discern any remaining impediment to this course.

Alternative relief claimed

1. [65]

   The summons also claims, in the alternative, relief under s 69 of the Supreme Court Act 1970 (NSW) for orders in the nature of certiorari and mandamus quashing the primary judge’s orders and remitting the matter to the Court below to be determined in accordance with law. It is generally inappropriate and unnecessary to bring proceeding pursuant to s 69 of the Supreme Court Act where there is a right of appeal: Meagher v Stephenson (1993) 30 NSWLR 736 at 738-739 and Landsman v Director of Public Prosecutions [2013] NSWCA 369 at [33] (Leeming JA). In any event, this Court’s jurisdiction under the Local Court Act is broader than its jurisdiction under s 69 of the Supreme Court Act. There is no prospect that Civiltrak and Mr Azzi could have obtained a better result under s 69 of the Supreme Court Act than under the Local Court Act.

Costs

1. [66]

   As far as I am aware, there is no reason why costs ought not follow the event in accordance with the general rule: r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW).

Orders

1. [67]

   For the reasons given above, I make the following orders:

   1. (1)

      Dismiss the summons.

   2. (2)

      Order the plaintiffs to pay the first defendant’s costs of the proceedings.