Weston Energy Pty Ltd v National Ceramic Industries Australia Pty Ltd

BELL CJ: This is an appeal and an application for leave to cross appeal from a decision of Harrison AsJ (the primary judge) sitting in the Common Law Division of this Court: Weston Energy Pty Ltd v National Ceramic Industries Pty Ltd [2025] NSWSC 747 (PJ or primary judgment).

The Appellant, Weston Energy Pty Ltd (Weston), was an authorised gas retailer under Part 5 of the National Energy Retail Law (NSW) (NERL) between September 2016 and May 2022 and, in that period, supplied gas on the wholesale gas market.

The Respondent, National Ceramic Industries Australia Pty Ltd (Ceramics), is a tile manufacturer located in the Hunter Valley, NSW, and requires natural gas to fire its kilns. Ceramics purchased retail gas from Weston between January 2018 and May 2022.

On 4 March 2022, following a tender process, Weston and Ceramics entered into the “Internal Meter Gas Supply Agreement” (the GSA) for the retail supply of natural gas. Under the GSA, Ceramics purchased gas from Weston under what was termed a “capped spot price” model, pursuant to which gas was charged at a spot price, up to a maximum of $15.00/GJ (the Price Cap). A ‘premium’ of $0.15/GJ was charged by Weston (the Premium).

Less than two weeks after the GSA was executed, Russia invaded Ukraine. That event, combined with weather-related disruptions to Australia’s domestic coal supply, caused natural gas prices to soar, increasing by over 200% from 20 March 2022 to 17 May 2022. Weston was no longer able to meet its prudential obligations (tied to the value of the gas supplied) to the Australian Energy Market Operator (AEMO).

On 23 May 2022, the AEMO issued a suspension notice to Weston suspending it from the Short-Term Trading Market (STTM), effective from the following day, 24 May 2022, at 6am AEST. Accordingly, on 23 May 2022, Weston wrote to Ceramics terminating the GSA under cl 15.1(c) of the GSA which provided:

As a result of the termination of the GSA, Ceramics was compelled to source its natural gas from different suppliers, and to do so at a “greatly increased price”.

On 23 May 2022, the same day as the termination of the GSA, Weston issued Ceramics with an invoice numbered NCIA230522 for the sum of $664,983.42 (the Unpaid Invoice) for the gas supplied to Ceramics prior to Weston’s suspension, which was due for payment on 3 June 2022. Some $5,425.62 plus GST of that sum was made up of the Premium payable as part of the GSA (see [4] above).

Ceramics did not dispute the amount of the invoice owed under the GSA, save for the inclusion of the Premium. By way of a Statement of Claim filed on 1 September 2022, Weston commenced proceedings alleging that Ceramics owed Weston the value of the Unpaid Invoice plus interest as calculated under the GSA.

By way of an Amended Statement of Cross Claim (ASOCC) filed on 19 September 2024, along with an Amended Defence filed on the same day, Ceramics sought an equitable set-off for an amount exceeding that claimed by Weston on account of the following three cross-claims: (i) damages for breach of the GSA; (ii) damages for misleading or deceptive conduct contrary to s 18 of the Competition and Consumer Act 2010 (Cth), sch 2 – Australian Consumer Law (the ACL); and (iii) payment of $13,339.62 in restitution for the value of the Premium charged in two earlier invoices which were paid on 20 April 2022 and 12 May 2022. The breach of contract claim was abandoned in closing submissions at first instance, leaving only the misleading or deceptive conduct claim (which succeeded) and the restitution claim (which was dismissed and is the subject of the application for leave to cross appeal, leave being required by reason of the exiguous financial value of the claim).

The misleading or deceptive conduct claim succeeded before the primary judge and led to the award of damages of $7,048,728.27 plus interest in the sum of $611,404.76, after setting off Weston’s claim in respect of the Unpaid Invoice: Weston Energy Pty Ltd v National Ceramic Industries Pty Ltd (No 2) [2025] NSWSC 864. The primary judge’s finding that Weston engaged in misleading or deceptive conduct lies at the heart of the present appeal.

In [18] of the ASOCC, Ceramics alleged that, on 2 March 2022, Weston represented by way of an email of that date that it would, and presently intended, as a term of the then proposed GSA, to obtain third-party insurance as a means of ensuring the capped price could be maintained by Weston (Price Capping Insurance), with such insurance commencing from 1 April 2022.

In [19] of the ASOCC, Ceramics alleged that, by the wording of cl 1.8 of sch 1 of what became the GSA, Weston represented to Ceramics that:

It was then pleaded that Weston’s conduct represented to Ceramics that:

A fifth representation alleged that in passing on the Premium for the Price Capping Insurance to Ceramics by charging for it in its invoices at the rate of $0.15/GJ, Weston represented to Ceramics that it had taken out Price Capping Insurance to protect itself against gas commodity price rises on the spot market and was charging Ceramics the agreed Premium.

The failure to obtain Price Capping Insurance was said to have left Weston vulnerable to an increase in the spot price of gas beyond the Price Cap such that it could not maintain its gas retailer authorisation.

Parenthetically, in the course of resolving Ceramics’ cross claim for restitution, the primary judge held that a reasonable businessperson would not have understood cl 1.8 to relate to an insurance policy with a third-party insurer and that, “taking the ordinary and natural meaning of the words”, cl 1.8 addressed how the Price Cap was to operate and not how Price Capping Insurance was proposed to operate: PJ [123]-[124]. There was a degree of tension between this construction and her Honour’s reasoning on the misleading or deceptive conduct claim.

Notwithstanding what her Honour had held in relation to the proper construction of cl 1.8 (and conscious of the tension this finding created: see PJ [164]), the primary judge accepted that the representations pleaded in the context of the misleading or deceptive conduct claim had been made and that that conduct caused, in the sense of “materially contributed” to, Ceramics’ decision to choose to buy gas from Weston under the GSA rather than to enter into a contract with another supplier, namely Shell Energy, which had tendered to supply Ceramics at the same time as Ceramics accepted Weston’s offer. This entailed an acceptance of the evidence of Ceramics’ managing director, Mr Christopher Paul Schneider, that he was in fact misled by the representations said to have arisen.

That finding of factual causation is not challenged on appeal. Rather what is challenged is the finding that the impugned conduct was in fact misleading or deceptive or gave rise to the pleaded representations. Weston also sought to contend that its suspension from the STTM by the AEMO effective from 24 May 2022 broke any chain of causation between its conduct and the loss said to have been suffered by Ceramics. Weston accepted that it had not run this argument at first instance in the context of the misleading or deceptive conduct claim (although it had done so in response to the ultimately abandoned contract claim) but argued that, as it was a pure legal argument, the Court should still entertain it.

Both to understand the primary judge’s reasons and to put the impugned conduct into its proper context, it is necessary to set out the largely uncontroversial background to the entry into the GSA.

As already noted, Mr Schneider was the managing director of Ceramics. He had held this position since 2012, and before then, was employed at Ceramics in the role of finance manager since 2009. He and Ceramics were advised by Mr Ralph Willy of NUS Consulting Group (NUS). NUS was a firm of energy consultants which had previously assisted Weston with an electricity tender and contract. Ceramics acted through Mr Willy in the course of the 2022 tender for the gas supply contracts. Mr Schneider’s evidence was that he was “relying on Ralph [Willy] as an expert energy broker” and that Mr Willy interacted with the retailers and would feed information back to Mr Schneider that was important.

Mr Willy primarily dealt with Mr Schneider from Ceramics, and Dr Amin Gholami from Weston. Dr Gholami was the Executive Manager of Customer Operations at Weston. Other key figures working at Weston were James Simonian (James), a company director, and his father, Garbis Simonian (Garbis), the Managing Director of the company.

The first agreement between the parties was entered into in January 2018 for the 2018 and 2019 calendar years. The primary judge observed that Ceramics was first attracted to Weston in late 2017 “because it provided gas at spot price, which was at that time more favourable to the more widely offered fixed price offerings”.

On 19 December 2019, the parties executed a new agreement for the 2020 and 2021 calendar years. That agreement was renegotiated in December 2020 and extended to cover the 2021 and 2022 calendar years (the 2020 Contract).

Under the 2020 Contract, Weston charged Ceramics at the wholesale market price, or “spot price”, of natural gas, plus a 10% retail margin charge. The relevant parts of the 2020 Contract are extracted below:

The 2020 Contract was due to expire on 31 December 2022. However, due to rising gas prices in February 2022, Mr Schneider instructed Mr Willy to conduct a tender on behalf of Ceramics for new offers for gas supply contracts. Mr Willy sent the following email to Weston and other retailers on 15 February 2022, seeking both a fixed price and a capped spot price offer:

The tender did not seek any form of third-party insurance as part of the offers being sought.

As events transpired, Weston made three differing offers for the sale of gas to Ceramics, the third of which resulted in the GSA.

On 24 February 2022, Dr Gholami responded to the tender with an offer which Mr Willy described to Mr Schneider as “a kind of a hybrid (mixture of fixed price and spot market)” (the First Offer). The covering email accompanying the First Offer is extracted below:

The key parts of the First Offer, namely cll 1.5 and 1.8 of Schedule 1, are extracted below:

It may be noted that cl 1.8 of the First Offer corresponded to the italicised portion of the fourth last paragraph of Dr Gholami’s email set out at [29] above. The price cap was described in cl 1.8 as a form of “price insurance” which, in the context of an otherwise uncapped spot price contract, it undoubtedly was.

Four days after Dr Gholami sent through the First Offer, on 28 February 2024, Mr Willy forwarded it as an attachment to a covering email to Mr Schneider with the subject line “Gas tender analysis”. That email contained a comparison of the “five spot market offers” received in response to the tender, one of which was the First Offer, which Mr Willy described as the “best” of the five spot price offers. The covering email read as follows:

On 1 March 2022, Dr Gholami emailed Mr Willy with a second offer (the Second Offer). This offer adjusted the retail margin charge from the First Offer, and was a “capped spot price offer”, in which the price cap only applied for one month of the year of Ceramics’ choosing. The start date was moved forward from 1 July 2022 to 1 March 2022. The Second Offer was explained in Dr Gholami’s covering email as follows:

The relevant details of the Second Offer were as follows:

Clause 1.8 of the Second Offer corresponded to Dr Gholami’s reference in the first paragraph of his cover email to the fact that the offer was “supported by a $15/GJ cap for an elected month of the year”.

On the morning of 2 March 2022, Dr Gholami called Mr Schneider to obtain feedback on the Second Offer (the First Phone Call). Dr Gholami’s phone records indicated that the call lasted for seven minutes. The content of the First Phone Call was uncontroversial, and the primary judge accepted the evidence of all the witnesses in relation to it.

Mr Schneider gave the following evidence of what was said in the First Phone Call:

Dr Gholami gave the following evidence of the First Phone Call:

The primary judge found at PJ [73] that Dr Gholami’s recollection of the First Phone Call was consistent with Mr Schneider’s. At PJ [154], the primary judge concluded:

Following the First Phone Call, and on the same morning, Dr Gholami called James to discuss the possibility of a 12-month price cap (the Second Phone Call or the Three-Way Phone Call). Dr Gholami’s phone records indicated that the Second Phone Call lasted 17 minutes.

The evidence of the parties at trial differed significantly in respect of the Second Phone Call. Mr Schneider had no recollection at all of the Second Phone Call. No contemporaneous notes were taken of the call. Dr Gholami and James both gave detailed evidence of the Second Phone Call, which began between James and Dr Gholami and turned into a three-way conversation between James, Dr Gholami, and Mr Schneider. Dr Gholami’s and James’ recollections of what was said during the Second Phone Call were largely rejected by the primary judge although her Honour did accept that the call took place and that, during the call, certain statements were made. Thus, her Honour held at PJ [91]-[93] that:

At PJ [158], the primary judge made an adverse finding with regard to the evidence of James and Dr Gholami in relation to the call:

At PJ [156], her Honour made the following findings which were consistent with what she had held at PJ [91]-[93] and [158]:

After the Second Phone Call, at 10:42am on 2 March 2022, Dr Gholami emailed Mr Willy and Mr Schneider a revised contract (the Third Offer) which was ultimately accepted and, following its execution, became the GSA. Dr Gholami’s covering email to the Third Offer read as follows (the Cover Email):

The critical clauses in the GSA were cll 1.5 and 1.8 of Schedule 1. Cl 1.5 of Schedule 1 was headed “Key Contract Details” and provided the following express terms:

Cl 1.8 of Schedule 1 provided as follows:

The five differences between cl 1.8 of the Third Offer and cl 1.8 of the Second Offer were that (i) “gas commodity price” replaced “Effective Price Monthly price”; (ii) the premium rose from the complimentary $0.00/GJ in the Second Offer to $0.15/GJ in the Third Offer, reflecting the fact that (iii) the cap was to be for a 12 month period rather than a one month period at Ceramics’ election; (iv) in the Third Offer, the trigger of the price insurance was calculated on a “monthly weighted average of the Ex Ante price” rather than the “effective price” which was the Ex Ante price adjusted by the fixed price; and (v) the term of the insurance (in the sense of the price capping arrangement governed by cl 1.8) commenced (and concluded) one month later in the Third Offer, reflecting what Dr Gholami had said in his cover email.

The Third Offer was accepted and the GSA was entered into on or about 4 March 2022. The primary judge provided the following explanation of how the cost capping mechanism provided for in cl 1.8 of the GSA operated at PJ [30]-[31]:

Paragraph [31] of the primary judgment is potentially problematic. In it, the primary judge appears to presuppose that Weston would obtain third-party price capping insurance to protect itself against fluctuations in the wholesale gas market but what the source of her understanding was is unclear, especially given her (correct) explanation of the operation of cl 1.8 in PJ [30], and her acknowledgement at PJ [29] that “price capping insurance” is a term that did not appear in any primary (or other) document. This will be considered further below.

Before turning to the grounds of appeal and cross appeal, it is convenient to summarise the primary judge’s reasoning in relation to Ceramics’ restitution and misleading or deceptive conduct claims.

At trial (and by way of the cross appeal), Ceramics claimed that it was entitled to $13,339.62 in restitution because, during the short lifespan of the GSA, it paid the Premium (see [4] above) to Weston on the shared understanding that Weston would obtain Price Capping Insurance to protect itself against rising gas commodity prices on the spot market, which, of course, Weston never did. Ceramics relied for that claim on the wording of cl 1.8 of the GSA, specifically the requirement in the chapeau that “Weston Energy will provide price insurance for the gas commodity price”, combined with what the primary judge described as the collection of “characteristically insurance-related terms” in that clause including “price insurance”, “premium”, “term”, “renewal” and “trigger”: PJ [104].

Weston submitted that a reasonable businessperson would have understood “price insurance” in cl 1.8 to be a reference to the Price Cap itself, which acted as a kind of insurance for Ceramics against gas commodity price rises on the spot market. In support of that position, Weston submitted that it used the terms “price cap” and “price insurance” interchangeably. The primary judge rejected that submission at PJ [159], with reference to the following excerpt from the Cover Email to the Third Offer (see [44] above), which her Honour considered “contemplates that they [‘price cap’ and ‘price insurance’] are separate things”:

Although the primary judge rejected that and other arguments raised by Weston in relation to the construction of cl 1.8, including by attributing no significance to the fact that the clause contemplated that Weston would “provide” rather than “obtain” price insurance (PJ [119]), as noted at [17] above, her Honour ultimately accepted Weston’s contention that a reasonable businessperson would not have understood cl 1.8 to oblige Weston to obtain Price Capping Insurance: PJ [124]. The essence of the primary judge’s reasoning leading to that conclusion was as follows:

Another factor relied upon by the primary judge in reaching that conclusion in favour of Weston was a comparison between the respective references to the term “insurance” in cll 1.5 and 1.8 of the GSA. Her Honour referred to S Christensen and W Duncan, The Construction and Performance of Commercial Contracts (3rd ed, 2023, The Federation Press), where the authors observed at 48:

Thus, her Honour concluded that “[t]he fact that a third-party insurance policy is clearly contemplated by cl 1.5 weighs against the conclusion that the same is contemplated by cl 1.8”: PJ [118].

Turning to the misleading or deceptive conduct claim, the five representations relied on by Ceramics as constituting misleading or deceptive conduct under s 18 of the ACL were outlined at [13]-[15] above. Those pleaded representations were said to have arisen from the following four categories of Weston’s pre and post contractual conduct: PJ [142]

The primary judge concluded that those four categories of conduct gave rise to all five of the pleaded representations so as to amount to misleading or deceptive contrary to s 18 of the ACL: PJ [163]. Her Honour appeared to treat Weston’s conduct as being directed to a class of persons, namely purchasers of wholesale gas under a price cap contract, making reference to Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25 at [24]-[26] in this context: PJ [149]–[150]. Whether this was correct may be doubted but nothing ultimately turns on that.

The primary judge concluded that cl 1.8 was one of “calculated ambiguity” (PJ [189]), and held that the “loose” and “imprecise” language of cl 1.8 was then “exploited” (PJ [158], [189]) by Dr Gholami and James, both in the Cover Email and the Second Phone Call, and by their failure to disabuse Ceramics of that ambiguity. The primary judge summarised her findings at PJ [163] as follows:

The primary judge was also satisfied that the pleaded misleading or deceptive conduct was causative of the loss suffered by Ceramics as required under s 236 of the ACL. The essence of the primary judge’s reasoning on the question of causation at PJ [190] was as follows:

By way of an Amended Notice of Appeal filed on 22 September 2025, Weston raised the following three grounds of appeal:

As Senior Counsel submitted during the hearing of the appeal, these three grounds in fact raised two distinct issues:

Weston sought the following four orders from this Court:

For the reasons that follow, the appeal should be allowed.

At the heart of the primary judge’s reasoning were the references to “insurance” in cl 1.8 of the Third Offer, in the Cover Email and in what her Honour inferred had been discussed in the Three-Way Phone Call. Allied to the references to “insurance” was the use of terminology commonly associated with insurance in cl 1.8, namely the words “premium” and “trigger” coupled with the concept of a “renewal”.

The primary judge characterised the use of this language as giving rise to a “calculated ambiguity” which was “reinforced” or “exploited” by the use of the word “insurance” in the Cover Email and the Three-Way Phone Call. Her Honour also emphasised that in the Three-Way Phone Call, neither James nor Dr Gholami mentioned that there was no third-party insurance: see, for example, at PJ [92].

Whether conduct is misleading or deceptive is to be assessed objectively, having regard to the words spoken and actions taken but also, and very importantly, by reference to context. The relevant standard of review on an appeal of this kind is the “correctness standard” and, in the absence of a challenge to findings or controversy as to what may have been said between the parties, this Court is in as good a position as the primary judge to decide upon the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the primary judge’s findings: Wormald v Maradaca Pty Ltd [2020] NSWCA 289 at [120]-[121] (Wormald). To the extent that Ceramics relied upon CCP Australian Airships Ltd v Primus Telecommunications Pty Ltd [2004] VSCA 232 at [27] to suggest that a more deferential approach should be taken to a finding of misleading or deceptive conduct, requiring the demonstration of glaring error or that a finding was “not open”, such an approach has been overtaken at least in this State by Wormald. Senior counsel for Ceramics accepted in the course of argument that the “correctness” standard applied to Weston’s challenge to the primary judge’s characterisation of Weston’s conduct as misleading or deceptive.

In Self Care IP Holdings Pty Ltd v Allergan Australia Pty Ltd (2023) 277 CLR 186; [2023] HCA 8 at [80], Kiefel CJ, Gageler, Gordon, Edelman, and Gleeson JJ summarised the well-established four steps required to determine whether a person has breached s 18 of the ACL as follows:

Only steps three and four are relevant in the present case. As to those, their Honours observed at [82]:

In Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Limited (2010) 241 CLR 357; [2010] HCA 31 (Miller) at [20]-[21], French CJ and Kiefel J observed:

In the same case, at [91], Heydon, Crennan and Bell JJ observed:

In Wormald at [111], the principles emerging from Miller were summarised as follows:

To that may be added the oft-cited observations of Gleeson CJ in Lam v Ausintel Investments Australia Pty Ltd (1989) 97 FLR 458, 475, with which none of the propositions extracted at [71] above is inconsistent:

An application of these principles has led me to conclude that the primary judge erred in her conclusion that Weston engaged in misleading or deceptive conduct. Viewed in its full context, Weston’s conduct was neither misleading nor deceptive.

The first point that may be noted was the inappropriateness of the primary judge’s characterisation of the impugned conduct as comprising “calculated ambiguity”. Whether conduct is misleading or deceptive is an objective consideration and liability is not dependent on the subjective intent of the party whose conduct is under consideration. True it is that, if intention be established, a conclusion that the person to whom the conduct was directed was in fact misled may be more readily reached (Gould v Vaggelas (1985) 157 CLR 215 at 236; [1985] HCA 75; Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640; [2013] HCA 54 at [55]) but the presence or absence of intention to mislead is not germane to the objective exercise of characterisation.

Further (and as a matter of fairness to Dr Gholami and Weston), it was not put to Weston’s witnesses that they sought intentionally to mislead or deceive Ceramics. If this is what the primary judge meant by her use of the expression “calculated ambiguity”, such a finding should not have been made: Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361; [2011] HCA 11 at [72].

Turning to the context of the parties’ dealings, this was a classic commercial dealing between commercial parties. Ceramics, moreover, had the benefit of an expert external advisor in NUS through the medium of Mr Willy (who was not called to give evidence).

Another important surrounding circumstance was that the concept of insurance was introduced into the parties’ dealings in the explicit context of Ceramics wishing to secure a cap for pricing that would otherwise be a function of the spot market for wholesale gas. From a commercial and functional perspective, a price cap would provide insurance against price volatility in that market. The effect of the Price Cap would be to transfer the risk of price movement above $15.00/GJ from Ceramics to Weston. As noted at [27] above, the tender issued by Ceramics did not seek any form of third-party insurance as part of the offers. Weston’s response to the tender included a component of what was being sought, namely a price cap. That was proffered in the various emanations of cl 1.8 in each of the three offers.

That price capping in this context was a form of insurance being supplied by Weston to Ceramics was supported by the terms of cl 1.8 of the GSA. The heading of the clause was “Price Cap” and it was Weston that “will provide price insurance for the gas commodity price”. There was no ambiguity as to the identity of the provider of the insurance – it was to be Weston – and no part of cl 1.8 suggested that the insurance would be provided by a third-party insurer or that Weston would obtain (as opposed to provide) such insurance. The primary judge did not explain how cl 1.8 suggested that third-party insurance would be obtained and the problematic observation in PJ [31] has already been remarked upon in this regard: see [49] above.

Related to this, no significance should have been ascribed, as the primary judge did, to the failure by Dr Gholami and James in the Three-Way Phone Call to raise the topic of third-party insurance. That was not what was being discussed nor was it the subject of any of the offers made at that time. Moreover, there was no evidence to the effect that Weston or Dr Gholami understood that Mr Willy or Ceramics were under some misapprehension that a form of third-party insurance was contemplated, such that their conduct should be considered in that context. The topic of third-party insurance was not raised either by Weston or Ceramics.

In this context, Weston drew attention to the judgment of Gordon J in Coles Supermarkets Australia Pty Ltd v FKP Limited [2008] FCA 1915. At [72]-[73] of that decision, her Honour observed that:

Nor was there any evidence of questions being raised about the insurance being referred to in cl 1.8. The only evidence of any discussion was as to whether the Price Cap would be available for one month or more. This was answered, on the primary judge’s findings, by James saying in the Three-Way Phone Call “‘[w]e definitely can’t offer a cap for a 24-month retail contract. The best I can do against my book is for a 12-month price cap”: see [43] above. Far from assisting Ceramics’ case, this evidence undermined it. It emphasised that the subject of negotiations was the length of a cap, and that it was Weston that was assuming the risk against movement in the wholesale gas market.

Conspicuously, Ceramics’ pleaded case made reference to “Price Capping Insurance”: see [13]-[15] above. So, too, did the primary judge’s conclusions at PJ [163]: see [58] above. “Price Capping Insurance” was not, however, an expression which appeared in any iteration of cl 1.8 in the three offers that were made either in terms or conceptually; rather, “pricing insurance” was what was referred to, and cl 1.8 expressly set out “the terms” upon which that price insurance would be provided by Weston. The use of the definite article in the expression “the terms” conventionally defined and confined the ambit of the contractual term, and experienced commercial parties would have understood that.

What was described as “pricing insurance” was the means by which price capping would be provided, and the terms of that aspect of the bargain were set out in tolerably clear language: as a quid pro quo for the capping at $15.00/GJ, Ceramics was to pay a fee of $0.15/GJ for a 12 month period commencing on 1 April 2022. The triggering of the price insurance would be when the monthly weighted average of the Ex ante price exceeded $15.00/GJ.

The statement in the Cover Email that “We’re happy to start the capped retail margin from 1/Mar but let the insurance start 1/Apr so you’ll have one extra month coverage in 2023” does not change the analysis. It obviously needs to be read in the context of the proposed cl 1.8 in the Third Offer. The “insurance” being referred to was the pricing insurance being offered on the terms stated in that clause. So, also, any reference to insurance in the Three-way Phone Call did not alter the picture. As noted above, if anything, the very limited finding by the primary judge as to what was said in that call undermined Ceramics’ case.

Ceramics’ contention, upon being tested in oral argument on appeal, disclosed that what it was said was being represented as to be provided was some form of solvency insurance, but such a contention finds no support in the text of cl 1.8 or any of the emails that passed between the parties. Clause 1.8 was not directed towards Weston’s solvency or against the possibility that some time during the term of the GSA it may be suspended from the trading market by the AEMO so that the Price Cap being offered was rendered ineffective. That was not the subject of any consideration or discussion on the evidence before the primary judge and a misleading or deceptive representation that that is what cl 1.8 would deliver to Ceramics cannot be spelt out of that clause, the Cover Email, or the Three-way Phone Call on any objective analysis. Moreover, if “price insurance” referred to something that was in effect a form of solvency insurance which Weston was obliged to obtain from a third party, Weston would be obtaining that policy for its own benefit. It would not be something that was being provided to Ceramics. The notion of “Price Capping Insurance” as opposed to “pricing insurance” originated with the pleader of the Cross Claim and not in any conduct of Weston.

For all of the above reasons, I would uphold Weston’s appeal. Weston did not engage in conduct that could be described as misleading or deceptive. That conclusion renders it unnecessary to deal with the second aspect of the appeal, relating to causation.

As noted earlier in these reasons, Ceramics filed an application for leave to cross appeal from the primary judge’s rejection of its claim for restitution based upon a total failure of consideration, Ceramics’ argument being that the amounts of Premium it had paid prior to contractual termination of the GSA (amounting to $13,339.62) related to a third party insurance policy which Weston never obtained. The primary judge found that, on the proper construction of the GSA, Weston was not obliged to obtain a third-party insurance policy, and that the premium charged was the quid pro quo for the provision of 12 months of pricing insurance in the form of the $15.00/GJ Price Cap.

Ceramics’ sole proposed ground of cross appeal was as follows:

Subject to the grant of leave, Ceramics sought the following five orders from this Court:

The amount at issue in the cross appeal being less than $100,000.00, leave to appeal is required by s 101(2)(r) of the Supreme Court Act 1970 (NSW).

The crux of Ceramics’ complaint was that the primary judge erred at PJ [118] by finding that the express contemplation of a third-party “Insurance Policy” in cl 1.5 militated against the conclusion that the same was also contemplated by the reference to “price insurance” in cl 1.8. Ceramics raised two subsidiary arguments, namely that the primary judge erred in her Honour’s construction of cl 1.8 by failing to have regard to (i) the ordinary meaning of the word “insurance” and (ii) the contracting parties’ subjective states of mind.

In favour of the grant of leave, Ceramics argued that such a complaint raised a question of public importance relating to “the correct application of the principles of contractual interpretation”.

The monetary amount at stake is a key factor in determining whether to grant leave to appeal. In Cheng v Motor Yacht Sales Australia Pty Ltd t/a Boutique Boat Company (2022) 108 NSWLR 342; [2022] NSWCA 118 at [15]-[16], I observed that:

Given the small amount of the cross claim, because I do not think that the proposed cross appeal raises a question of public importance either in relation to the correct application of principles of contractual interpretation or indeed the application of any other principle, and because the proposed ground of cross appeal lacks any prospect of success, I would refuse leave to cross appeal.

The impugned finding at PJ [118] applied an established principle of construction, namely the importance of construing commercial contracts with multiple clauses in a congruent and harmonious way. No challenge was raised as to the validity of that approach nor could it have been in view of a wealth of authority. Plainly it is correct. Whether that principle was correctly applied in construing the GSA in the present case was not a question of public importance.

In any event, the principle was in my view correctly applied, and the cross appeal has no merit. The primary judge was correct to observe the difference in phraseology as between cl 1.8 compared to cl 1.5. The former referred to a (capitalised) “Trade Credit Insurance Policy”. The latter referred to (lowercase) “price insurance”. That the words “price insurance” in cl 1.8 were in fact a reference to a third-party Price Capping Insurance Policy was made less likely by the fact that cl 1.5 referred in terms to an “Insurance Policy” for which Weston was to pay a premium. In addition to this, as discussed in the analysis of cl 1.8 set out earlier in these reasons, cl 1.8 did not impose a contractual obligation on Weston to procure third party insurance at all; rather, the expression “pricing insurance” was functionally equivalent to a price cap in the context of an otherwise uncapped spot price contract.

Furthermore, I agree with the primary judge’s ultimate conclusion that a reasonable businessperson would not have understood cl 1.8 of the GSA to oblige Weston to obtain Price Capping Insurance.

The appeal should be allowed. Leave to cross appeal should be refused.

I propose the following orders:

McHUGH JA: I agree with the Chief Justice.

FREE JA: I agree with Bell CJ.