A recent case before the New South Wales Court of Appeal
illustrates the possible pitfalls when entering into an agreement
for the sale of a 'vehicle with work'.
What issues need to be considered when drafting an
agreement for the sale of a 'vehicle with
Agreements for the sale of 'vehicles with work' need to
be carefully drafted. Consideration must be given to a multitude of
Is any term of the agreement 'unfair' or
'harsh' under the Independent Contractors Act 2006
(Cth) or the unfair contract provisions of the Australian
Is the purchaser engaged as a genuine independent contractor or
is the arrangement a sham?
Has the vendor made any representations that are potentially
misleading or deceptive?
Is the vendor guaranteeing the availability or volume of
Does the agreement involve the hire of the vehicle and, if so,
have PPS issues been considered?
Is the purchaser covered by state owner driver legislation? The
owner driver legislation in some states restricts the vendor's
ability to make deductions (including for equipment hire charges)
from amounts due to the owner driver.
What happened in B & R Stevens Transport Pty Ltd
v Burkitt  NSWCA 259?
Mr Burkitt drove a truck for his own company, Cement Express.
Cement Express had hauled products for Independent Cement &
Lime since around 2000. Cement Express was subcontracted other
hauliers to do the same work.
Cement Express wished to sell a prime mover and Stevens
Transport wished to purchase it. After oral negotiations, the
parties reached agreement in April 2009. There was no deposit and
no formal contract for sale was signed.
By letter dated 2 April 2009, Cement Express confirmed the offer
in the following terms:
This letter is to confirm an offer to yourself to
purchase a 2008 K108 Kenworth Prime Mover and job from [Cement
Express] and to tow a company owned fully maintained bulk pressure
tanker hauling for [Cement Express] on a full time basis. As you
would be aware [Cement Express] are unable to guarantee your
business because we are governed by market demand. Our full
intention is to support you whilst Independent Cement & Lime
are supporting us and have been doing so for the last ten years
Stevens Transport paid $350,000 to Cement Express in June 2009.
Stevens Transport then began using the prime mover to haul cement
for Cement Express in July 2009.
Sometime in 2011, Independent Cement & Lime notified Cement
Express that it would not be renewing its existing contract with
Cement Express and that the contract would cease on the last day of
February 2012. On the same day, Cement Express wrote to all of its
subcontractors advising them of Independent Cement & Lime's
In February 2012, Stevens Transport issued invoices to Cement
Express for about $50,000, said to be short paid under previous
invoices issued between July 2009 and August 2010.
Stevens Transport brought proceedings against Mr Burkitt and
Cement Express in the New South Wales District Court seeking
damages for breach of contract in the amount of $110,000 and
$50,000 in short paid invoices.
Stevens Transport contended that the purchase price was
$350,000, comprising $240,000 for the prime mover and $110,000 for
goodwill. Stevens Transport argued that had not received what it
bargained for, in that it had received a truck but no other
business rights, contrary to references in some of the documents
and discussions to the sale including 'goodwill'.
Mr Burkitt contended that the price was $400,000 for the truck
'with work', and with no component for goodwill. He
asserted there was a side-deal for deductions of approximately
$2,000 a fortnight to be made from payments otherwise due to
Stevens Transport for haulage services.
The New South Wales District Court agreed with Mr Burkitt,
finding that the term of the contract was $400,000 for a
'vehicle with work' and that there was no component for
goodwill. The District Court described the side-deal as effectively
an interest free loan to Stevens Transport, which was only able to
obtain finance for $350,000.
Stevens Transport appealed to the Court of Appeal, which
ultimately upheld the District Court's decision.
Lessons to be learned
The protracted and expensive litigation that eventuated between
Stevens Transport and Cement Express may have been avoided if the
parties had documented their agreement and clearly set out what
rights and assets were being transferred and how the purchase price
was to be apportioned.
Winner – EOWA Employer of Choice for Women Citation 2009,
2010, 2011 and 2012
Winner – ALB Gold Employer of Choice 2011 and 2012
Finalist – ALB Australasian Law Awards 2008, 2010, 2011 and
2012 (Best Brisbane Firm)
Winner – BRW Client Choice Awards 2009 and 2010 - Best
Australian Law Firm (revenue less than $50m)
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
This article looks at HVNL and how to follow the 'big 5' process to achieve CoR compliance within your organisation.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).