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Federal Court of Australia - Full Court Decisions |
Last Updated: 7 June 2002
Best & Less Pty Ltd v Divergent Technologies Pty Ltd [2002] FCAFC 171
COSTS - complex commercial litigation involving four cross-claims - appeal on contractual issue previously upheld upon footing that no contractual relationship relevantly existed - whether proceedings on statement of claim on cause of action for misleading and deceptive conduct should continue in relation to assessment of damages notwithstanding failure of proceedings on the same statement of claim for breach of contract - appropriate orders to be made as to costs of proceedings on statement of claim and the four cross-claims.
Trade Practices Act 1974 (Cth) ss 51A and 52
Fair Trading Act 1987 (NSW) ss 41 and 42
Federal Court of Australia Act 1976 (Cth) subs 43(2)
Federal Court Rules O 6 r 8
Winterton Constructions Pty Ltd v Hambros Australia Ltd [1992] FCA 582; (1992) 39 FCR 97 cited
Lam v Ausintel Investments Australia Pty Ltd (1989) 97 FLR 458 referred to
Lackersteen v Jones (1988) 93 FLR 442 referred to
Hughes v Western Australian Cricket Association (Inc) & Ors (1986) 8 ATPR 48,134 referred to
BEST & LESS PTY LTD v DIVERGENT TECHNOLOGIES PTY LTD
N 375 OF 2001
HILL, WHITLAM and CONTI JJ
7 JUNE 2002
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA |
|
NEW SOUTH WALES DISTRICT REGISTRY |
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1. Set aside the orders made by Einfeld J and substitute the following orders:
(1) The proceedings on the application be dismissed.
(2) The applicant pay 80 per cent of the costs of the first, third and fourth respondents.
(3) The applicant pay the costs of the second respondent.
(4) The first, second and fourth cross-claims be dismissed with no order as to costs.
(5) The third cross-claim be dismissed with costs.
2. The first respondent pay 80 per cent of the appellants' costs of the appeal and of the first respondent's cross-appeal.
3. The appellants pay the second and third respondents' costs of the appeal and of the second and third respondents' cross-appeal.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA |
|
NEW SOUTH WALES DISTRICT REGISTRY |
|
JUDGES: |
HILL, WHITLAM and CONTI JJ |
DATE: |
7 JUNE 2002 |
PLACE: |
SYDNEY |
The Court
The proceedings to date
1 The parties to the appeal proceedings and to the earlier proceedings at first instance, the basis upon which each is or was a party thereto (as the case may be), and their respective abbreviations adopted in these reasons for judgment of the Court, are set out below:
Best & Less Pty Limited (First Appellant to appeal)
("Best & Less") (First Respondent in main proceedings below)
(First Cross Claimant to First Cross-Claim below)
(First Cross Respondent to Second Cross-Claim below)
(Second Cross Claimant to Third Cross-Claim below)
Pepkor Ltd (Second Appellant to appeal)
("Pepkor") (Second Cross Respondent to Second Cross-Claim below)
(First Cross Claimant to Third Cross-Claim below)
(Fourth Cross Claimant to Fourth Cross-Claim below)
Carel Stassen (Third Appellant to appeal)
("Stassen") (Third Respondent in main proceedings below)
Iain David MacDonald (Fourth Appellant)
("MacDonald") (Fourth Respondent in main proceedings below)
Divergent Technologies Pty Ltd (First Respondent to appeal)
("Divergent") (Applicant in main proceedings below)
(now named SVI Systems Pty (First Cross Respondent to Fourth Cross-Claim below)
Ltd)
Ginger Max (Australia) Pty Ltd (Second Respondent to Appeal)
("Ginger Max") (Second Respondent in main proceedings below)
(First Cross Respondent to First Cross-Claim below)
(Cross Claimant to Second Cross-Claim below)
(First Cross Respondent to Third Cross-Claim below)
Ginger Holdings Pty Limited (Third Respondent to Appeal)
("Ginges Holdings") (Second Cross Respondent to First Cross-Claim below)
(Second Cross Respondent to Third Cross-Claim below)
Shaun Rosen (Second Cross Respondent to Fourth Cross-Claim below)
("Rosen")
Malcolm Thomas (Third Cross Respondent to Fourth Cross-Claim below)
("Thomas")
2 The proceedings below were concluded by the following orders made by Einfeld J:
(i) Divergent's application against Ginger Max in the main proceedings below dismissed with costs to be paid by Divergent (in the first instance);
(ii) Divergent's application against Best & Less, Stassen and MacDonald in the main proceedings below allowed in the sum of $1,120,281.90 with costs (including costs payable (as in (i) above) by Divergent to Ginger Max) to be paid by Best & Less, Stassen and MacDonald;
(iii) First Cross Claim by Best & Less against Ginger Max and Ginges Holdings dismissed with no order as to costs;
(iv) Second Cross-Claim of Ginger Max against Best & Less and Pepkor dismissed;
(v) Third Cross-Claim of Pepkor and Best & Less dismissed with Best & Less, Stassen and MacDonald to pay the costs of Ginger Max of the Third Cross-Claim; and
(vi) Fourth Cross-Claim of Best & Less and Pepkor against Divergent, Rosen and Thomas dismissed.
3 In consequence of the reasons for judgment of the members of the Full Court delivered on 5 February 2002 in the present appeal proceedings, there were debated on 13 March 2002 the consequential orders to be made, and in that context comprehensive oral and written submissions were provided by the parties. Abbreviations used in those reasons for judgment of the Full Court will be repeated in the present reasons for judgment.
4 The first order to be made, in the light of those reasons for judgment, must be that the appeal of Best & Less be allowed in part, and the judgment entered at first instance in favour of Divergent in the sum of $1,120,281.90, and for its costs of the main proceedings at first instance, must be vacated. The costs orders to be substituted for those costs orders made at first instance, and costs orders to be made in relation to the cross-claims and the appeal, will later be considered. The Court should observe, at this stage of the reasons for judgment, that Ginger Max made the written submission that "[i]t is to be observed that there is no ground of appeal submitting that the agreement was a master agreement; rather the grounds of appeal were based on submissions that the agreement was void for uncertainty". That observation, which appears to have been based upon grounds 15 and 16 of the notice of appeal, does not take account of grounds 11, 12 and 14 of the notice of appeal, which addressed at least the findings of the Primary Judge in [116] that "[t]heir conduct made clear that their contract was not a `master contract'". A "master agreement" characterisation reflected the essence of the submissions of Senior Counsel for the Appellants on the appeal, which were made without objection from Counsel for the Respondents to the appeal, and the observations of the Primary Judge just cited suggest that the same was true as to the essence of the submissions of the Appellants below.
5 The main area of controversy at the adjourned hearing before the Full Court on 13 March 2002, which followed delivery of the reasons for judgment on the appeal concerning the cause of action for breach of contract, related to the further causes of action brought by Divergent against Best & Less and Ginger Max, and also against Stassen and MacDonald, pursuant to ss 51A and 52 of the Trade Practices Act 1974 (Cth) and ss 41 and 42 of the Fair Trading Act 1987 (NSW), and consideration must first be given to the implications of those causes of action in consequence of the reasons for judgment on appeal relating to the cause of action for breach of contract. Divergent sought the remission of the proceedings the subject of those causes of action for misleading and deceptive conduct for determination by a single judge of the Court, in the light of the evidentiary material before the Court at first instance, albeit on the footing of course that Divergent's cause of action for breach of contract has been dismissed by the Full Court. Alternatively, in the light of the retirement of the Primary Judge, and the familiarity of the Full Court with the issues involved at first instance, it was suggested that the Full Court might well be able to resolve those causes of action without the need for a further hearing at first instance.
6 The Primary Judge made the following findings in relation to the several causes of action for misleading and deceptive conduct pursued at first instance, inclusive of that referred to in [5] above, those causes of action being of course the subject of the statement of claim and cross-claims:
"Divergent claimed that it was misled or deceived by both Ginger Max and Pepkor about their intentions regarding completion of the installation of the POS system in accordance with the Divergent contract. Pepkor claimed that it was misled or deceived by both Ginger Max and Divergent about the binding nature of that contract. In view of my findings on the contract, it is not necessary to consider Divergent's claim against Pepkor in any detail. I have no doubt that Pepkor did mislead Divergent about its intentions for the Divergent contract. Clearly Divergent did not mislead Pepkor. Likewise, I am quite convinced that Ginger Max did not mislead or deceive Divergent. It did what it said it would do and performed even better than it thought it could. Neither did Ginger Max deceive Pepkor, which in any event made its own decisions about the Divergent contract and was not influenced by anything said or done by Ginger Max. I accept the evidence of Mr Ginges that he did not make or authorise anyone else to make any representations to Pepkor suggesting that the Divergent contract was not binding."
7 As was confirmed in [53] of the reasons for judgment of Conti J in the appeal proceedings based on the above cited passage from the judgment at first instance, in so far as Divergent sued Ginger Max in the main proceedings below for misleading and deceptive conduct related to "intentions regarding completion of the installation of the POS system" (to adopt his Honour's foregoing cited description), the same were dismissed by the Primary Judge, but in so far as Divergent sued Best & Less in the main proceedings below for misleading and deceptive conduct, being Best & Less as it was structured after its takeover by Pepkor (referred to by his Honour in the first sentence extracted above as "Pepkor"), "about its intentions for the Divergent contract" (to further adopt his Honour's description in the passage extracted above), and Divergent also sued Stassen and MacDonald in those main proceedings, his Honour found in favour of Divergent. The particulars furnished by Divergent's statement of claim in relation to that latter cause of action for misleading and deceptive conduct on the part of Best & Less, and also of Stassen or MacDonald, for what his Honour described (in the passage extracted in [6] above) as their represented "intentions regarding completion of the installation of the POS system", was summarised in [53] of the reasons for judgment of Conti J on the appeal.
8 Those representations were described by the statement of claim to have been made by named representatives of Pepkor, and of Best & Less, after completion of the takeover of Best & Less by Pepkor, and in particular on 27 May 1998 and 30 July 1998. Completion of the Takeover Agreement had taken place on 31 March or 1 April 1998, the same having been entered into on 4 February 1998. The particulars also alleged the representations to similar effect as having been made on behalf of Pepkor and Best & Less between November 1997 and May 1998.
9 As pointed out in [54] of the reasons for judgment of Conti J on the appeal, Divergent pleaded by its statement of claim, in so far as the same was made referable to its misleading and deceptive causes of action, that Divergent continued to place orders for hardware and software, and otherwise to incur expenditure and to implement the pricing structure of the Installation Contract, upon the assurance that the store roll out would continue to occur within the contemplated time limits in respect of all of the remaining 70 stores.
10 In the reasons for judgment of Conti J on the appeal at [54-55], his Honour indicated that it was not possible at that stage to make findings concerning any loss and damage sustained by Divergent pursuant to its cause of action for misleading and deceptive conduct against Best & Less, Stassen and MacDonald. That was because his Honour the Primary Judge did not, in the course of his findings in relation to and his calculation of damages generally, distinguish between the implications as to damages flowing from Divergent's cause of action for breach of contract, and as to any damages caused by the contraventions of the Trade Practices Act and the Fair Trading Act. In his assessment of damages referrable to what he described as "Divergent's basic claim for loss of profits caused by Pepkor's breach of contract", the Primary Judge identified three components, first the loss of "installations", secondly, the loss of provision of maintenance of "installations", and thirdly, the loss of additional services to "installations". The Primary Judge did not separately quantify the amount of damages flowing from detrimental reliance of Divergent upon the false and misleading conduct which he imputed to Best & Less, Stassen and MacDonald in the circumstances outlined in [8] above. Conti J pointed out in his reasons for judgment of 5 February 2002 at [55] that Divergent could not have rightly in principle claimed for further or ongoing damage flowing from the representations as to the Installation Contract continuing on foot, once Pepkor (as the new parent of Best & Less) had made it clear, with lawful justification of course in the light of the findings of the Full Court, that the Installation Contract was not to be treated as contractually binding on an ongoing basis. A similar conceptual obstacle would have laid in the path of a successful claim for loss and damage based upon relevant misleading and deceptive conduct on the part of Pepkor's representatives Stassen and MacDonald, and also Hein Marais and Ethel Webb (see par 24 of the statement of claim), since Divergent's approval was not required to the disposition of the issued capital of Best & Less in favour of Pepkor and also there was no suggestion of any default on the part of Best & Less under the Installation Contract, of which Divergent could have taken relevant advantage.
11 It was further reiterated by Conti J in [56] of his reasons for judgment on appeal that once Best & Less had repudiated (after completion of the takeover) any contractual obligation to continue with store roll-outs, Divergent could no longer also have been misled and deceived as to the future intentions thenceforth of Best & Less in relation to the matters the subject of Divergent's further claimed heads of damage for breach of contract, namely the future provision by Divergent to Best & Less of maintenance services and of so-called additional services. Such damages found by the Primary Judge were calculated upon the basis of an alleged contractual entitlement of Divergent to the entire roll out of the 82 stores during the period of time ending on 31 October 2006, which of course his Honour had found to exist in Divergent's favour, contrary to the subsequent conclusion of the Full Court. Moreover in that regard, no recognition appeared to have been given in any event, for what it may now matter, by his Honour's assessment of damages, to the significance of the early termination provisions of the Software License (ie forthwith at the instance of the Licensee), and of the Product Maintenance Services Agreement) (ie upon 6 months' notice), which could presumably have been availed of in any event by Best & Less at the time it conveyed its decision to Divergent not to proceed further with the store roll-out. No issue was seemingly raised on the appeal as to the requirement of six months' notice of determination provided for in the Software License, which instrument was made the subject of the Deed of Novation.
12 In the result, Conti J expressed the tentative opinion in [58] of his reasons for judgment on the appeal that the causes of action of Divergent against Best & Less, as first respondent to Divergent's statement of claim, for misleading and deceptive conduct based upon the Trade Practices Act and Fair Trading Act, should not be remitted for re-trial in the absence of Divergent being able to identify a viable head or heads of damage flowing from the evidence at the trial. A contracting party cannot normally and in principle be misled by the other contracting party as to the ongoing performance of a contract for the remainder of the contractual term, once the contract has been terminated by the other contracting party, whether or not unlawfully so terminated. Nevertheless at the resumed hearing of the appeal proceedings by the Full Court for the purpose of receiving submissions from the parties as to the terms of the final orders to be made in the light of the reasons for judgment of the Full Court, Senior Counsel for Divergent advanced detailed contentions as to why Divergent's causes of action for damages for misleading and deceptive conduct against Best & Less, Stassen and MacDonald should be returned to a judge at first instance for assessment of damages, given the findings of the Primary Judge as to liability on those causes of action, and it is those contentions which the Court will now address.
13 Divergent submitted that notwithstanding the opinion which Conti J expressed tentatively at [58] of his reasons for judgment on the appeal, Divergent did establish at first instance the existence of loss and damage caused by the misleading and deceptive conduct of Best & Less, Stassen and MacDonald, as framed by the statement of claim, such to justify the remission of the proceedings to a judge for hearing at first instance for the purpose of assessing that loss and damage, or else the further hearing by the Full Court if that course was considered to be acceptable.
14 Divergent first asserted that "[t]he contravening conduct before the takeover caused Divergent to agree to novation of the Installation Contract to Best & Less and to execute the Deed [of Novation] that gave Best & Less the use and benefit of the system software in its stores after takeover", pointing thereby to par 2 of the affidavit of Shaun Rosen sworn 31 August 2000 reading as follows:
"2. Had it been represented to me that [Best & Less] could cancel the contract at any time I would not have agreed to transfer the contract to [Best & Less] nor would I have permitted [Best & Less] to have the benefit of [Divergent's] software licenses and maintenance at rates referred to in the contract."
In the Court's opinion, the absence of disclosure on the part of Stassen and MacDonald to Divergent of the effect or conclusions of the legal advice Pepkor had received, prior to completion of the takeover, concerning the ongoing contractual efficacy of the store roll-out provisions of the Installation Contract, could not be characterised as misleading and deceptive conduct in the circumstances postulated. Divergent had no good reason to believe that whatever legal advice Pepkor may have received on that subject, whether before or after the takeover, would be communicated to Divergent (see for instance Winterton Constructions Pty Ltd v Hambros Australia Ltd [1992] FCA 582; (1992) 39 FCR 97 at 114 (Hill J)). The inference to be drawn, from the account of the complex circumstances of the takeover arrangements which Conti J gave in [17-25] in his reasons for judgment of 5 February 2002, is that it could not be characterised as dishonest or "sharp practice" (Lam v Ausintel Investments Australia Pty Ltd (1989) 97 FLR 458 at 475 (Gleeson CJ with whom Samuels AJA and Meagher JA agreed)), without more, for Stassen and MacDonald to have withheld from communicating to Divergent at any material time the legal advice which Pepkor had received concerning the contractual character, or otherwise, of those store roll out provisions. In that regard, the Court observes that the only contractual arrangement formally entered into by Pepkor with Divergent, in the context of the Takeover Agreement, was of course the Deed of Novation, which was confined in scope to the Software License, and that License was terminable in any event on six months notice (see [24] of the reasons for judgment of Conti J of 5 February 2002). For completeness the Court should also refer to the significantly limited terms of Clause 12.1 of the Takeover Agreement and Schedule 4 thereto (extracted in [20] of the said earlier reasons for judgment of Conti J), an important factor in our opinion which was discussed in [45] of those reasons for judgment.
15 Divergent next pointed out that "[t]he evidence further was that both Ginger Max and Divergent regarded the Installation Contract as binding for a roll-out of 82 stores, the only qualification on Ginger Max's obligation to use its best endeavours to that end being that it was not obliged to fund the roll-out by borrowing", and in that regard, Divergent referred to paras 22 and 24 of the further affidavit of Shaun Rosen sworn 4 March 2000 reading as follows:
"I was involved in numerous dealings and negotiations with [Ginger Max] through Barry McCann and Berel Ginges of Ginger Max. From on or about July 1996 to 21 October 1996 I endeavoured to negotiate best prices of third party software as well as contractual terms for this deal. In all my discussions with Barry McCann and Berel Ginges they told me in words to the following effect:McCann: "We need your system for all of our stores, that is 82 stores and your pricing must reflect a favourable price as you will be supplying all our stores and further stores we open."
Ginges: "We will need Divergent to supply all of our stores. We will do this over time, say three years. We will do it but we cannot be bound to a specific date as we pay out of cash flow. We will order from you quicker or slower depending on trading."
...
On the next day being 22 October 1996 I attended a meeting at the offices of [Ginger Max]. I represented the Applicant and Berel Ginges and Barry McCann represented [Ginger Max]. Berel Ginges signed the contract on behalf of [Ginger Max]. At this meeting Berel Ginges again assured me in words to the following effect:
Ginges: "If the pilot is successful, we will want to roll out quicker or slower depending on how we are trading. But we will complete the roll out. It is only a matter of timing. We will be acquiring from Divergent all of our computer technology requirements for all of our stores under our contract.""
In the context of that testimony as to the negotiations in 1996 between Ginger Max and Divergent, in which of course Pepkor representatives were not participants, Divergent further submitted that "[the] Pepkor representatives knew that this was Ginger Max's and Divergent's interpretation of the Installation Contract" and further that "their contravening conduct took place with that knowledge and concealment of their contrary view formed part of it", and Divergent referred to the following testimony of Mr Stassen:
"So in all events, after you had your assistants look at the terms of the contracts referred to in part 2, schedule 4, you knew that there were contracts with Divergent which would be novated from the old Best & Less to the new Best & Less?--- No, the guys that assisted me confirmed, what Mr Ginges and Mr Marais told me before, that in their view there were no contracts, it was not a contract....
And you took the view because of the advice that you had got in the due diligence report a few days before the contract for the acquisition was signed that there was no enforceable contract with Divergent?--- That's right.
Did you say yes?--- Yes.
Well now surely it struck you that the proper thing to do was to tell the old Best & Less and the solicitors for the old Best and Less that they were under a misapprehension about the existence of a contract [with] Divergent, did it not?--- No.
Did you think that was proper conduct Mr Stassen?--- Yes."
Similar observations in principle are open to be made here as those which the Court has made in the preceding paragraph [14] above. We would add that the vagary of the Ginger Max qualification as to future availability of "cash flow" would be a further obstacle to attributing any decisive significance to that evidence.
16 In the result, the Court does not think that Divergent can maintain the proposition, based on the evidence before the Primary Judge, that by reason of the misleading and deceptive conduct of Pepkor's representatives complained of, Divergent was deprived of income it would have otherwise obtained from the carrying out of the Installation Contract, being income which Divergent claims would have been substantial, even allowing discounts for contingencies or vicissitudes.
17 Further to the theme of what was submitted on behalf of Divergent in [13-15] above, the Full Court's attention was drawn by Senior Counsel for Divergent to the circumstances that the prices the subject of Divergent's "Sales Quotation", the text whereof appears in [11] of the reasons for judgment of Conti J of 5 February 2002, were said by Mr Rosen to have been calculated on the basis of 82 stores, and further that Divergent's obligation to maintain the original prices was conditional on the roll-out to all stores, referring thereby to what appears under the sub-heading "Holding of Costs" set out also in [11] of those reasons for judgment. Reference was next made on behalf of Divergent to the ensuing paragraphs of Mr Rosen's affidavit of 31 August 2000, which followed upon the paragraph thereof already extracted in [14] above:
"3. I crave leave to refer to paragraph 5 of my earlier affidavit and to Exhibit marked SR1. I say that the standard Divergent sell (sic) price per store amounted to $79,897.00 as opposed to the discounted price of $57,704.00 per store pursuant to the contract representing a discount of $22,193.00 per store on the basis that there would be roll out to 82 stores. In addition I say that the standard Divergent Head Office cost was $50,195.00 but as a result of the contract to roll out to 82 stores was reduced to $30,645.00. This discount of $19,550.00 would not have been given and maintained had I known that the contract would not be honoured.4. I say that the Applicant had in reliance upon the contract acquired and paid third party licenses for all 82 stores and upon reliance upon the representations made by the Third and Fourth Respondents secured stock in 1998 to the value of about $71,000 which was specifically acquired for the Best & Less contract and could not be used for other purposes.
5. The standard Divergent maintenance rate was about $275.00 per month per store based upon the rate of 15% of the standard cost of software which was $22,000 and amount to $275.00 per month per store as opposed to the discounted rate of $120.00 per month per store under the Best & Less contract. I say that had I known that there would not have been a roll out to all 82 stores, I would not have given this discount."
The shortcomings which confront the theme of paragraphs 3 and 5 above are similar to those which confront paragraph 2 of the same affidavit extracted in [14] above, each referring to higher charges which Divergent would have imposed under and pursuant to the Installation Contract had there not been a roll out in relation to all 82 stores. This testimony is tantamount to Mr Rosen saying that Divergent would not have entered into the Installation Contract in 1996 upon the price structures therein stipulated, if Mr Rosen had known that 2 years later or thereabouts, a successor in store ownership to Ginger Max would establish that upon its true construction, the Installation Contract operated as a form of master contract, with all of the implications thereby involved.
18 We appreciate that Divergent submitted to the Full Court in this context that it could have held Best & Less for the time being to ransom, in terms of charges exacted, if Best & Less had been frank from the outset in its intentions as to future avoidance of the Installation Contract, unless and until Best & Less had obtained a cheaper substitute supplier. In that context, Senior Counsel for Divergent made the following submission:
"...It may be assumed for present purposes, however, that Best & Less would not willingly have agreed to higher prices when Divergent demanded them. The likelihood is, however, that Best & Less would have had no alternative for some months after the takeover but to pay the increased prices until it could make arrangements with another supplier. The evidence was that it did not make alternative arrangements until about 7 months after the takeover. Even if the negotiations with alternative suppliers had been accelerated, however, the likelihood is that Best & Less would have had to pay the increased prices for all, or most, of the 17 stores that it required Divergent roll out after the takeover. It would also have had to pay increased prices for software licenses and maintenance for all stores from the date of the takeover until it could find an alternative system and supplier."
That prognosis however is too speculative for the Court to appraise, at least at this stage of the proceedings. It is therefore unnecessary to speculate whether evidence of that kind could have been admitted, or in any event answered, if it had been raised at the trial. It is too late for the Court to entertain the same.
19 Additionally or alternatively, Senior Counsel for Divergent advanced the proposition that the contravening conduct (ie the misleading and deceptive conduct of Best & Less, Stassen and MacDonald) after the takeover caused Divergent to make long term arrangements for staffing, to turn away other business opportunities, to lose its valuable relationship with NCR, and to place advance orders for stock that could not in the event be used. That theme picked up what had been advanced by paragraph 4 of Mr Rosen's affidavit of 31 August 2000 extracted in [17] above, and the subsequent evidence therein contained concerning the loss of its previously strong relationship with NCR Australia Pty Limited, which was as follows:
"7. I also recall several conversations with both Sam Karatasas and Ily Dean of NCR during 1998 in the course of which either Sam Karatasas or Ily Dean said to me words to the following effect:KARATASAS
OR DEAN: "You are messing us around. You and Best & Less are making unreasonable demands trying to lower prices and arguing about maintenance. We want an amicable resolution to continue to supply Best & Less. Best & Less want the pricing reduced for their roll out and we will lose the business if NCR cannot do the business directly with them. We want you to give your costs prices to Best & Less. Best & Less say that if NCR is not prepared to give the pricing then they will buy IBM or through another manufacturer through the Divergent Contract."
I: "NCR cannot do this because of our contract with Best & Less and our teaming agreement with NCR but we can change equipment under our contract. To get the business for NCR I need you to come back to us with better pricing and then we will pass on the information to Best & Less."
8. Friction resulted between Divergent and NCR as after the provision of NCR pricing by NCR to Best & Less, Best & Less did not purchase equipment through NCR. NCR has since the termination of the Best & Less contract not referred one customer to Divergent. The Divergent business had been based upon its strong relationship with NCR."
However as appears from what the Court has extracted in [20] below from the submissions of Divergent's previous Senior Counsel, Divergent's case for damages based upon loss of the NCR relationship was not apparently pursued at the trial. The concluding Divergent submission to the Full Court was that "[a]t the very least, Divergent is likely to be awarded the loss relating to the stock that could not be used, plus interest", which is specifically answered by the Appellants' submissions to which the Court will now turn. In any event, the vagaries of the submissions addressed in this present paragraph are such as to provide no sufficient evidentiary basis for an assessment of damages at this late stage.
Submissions of Best & Less, Stassen and MacDonald on proceedings brought by Divergent against Best & Less, Stassen and MacDonald for misleading and deceptive conduct
20 Counsel for Best & Less, Stassen and MacDonald (who was also of course Counsel for Pepkor) provided comprehensive responses to the submissions of Divergent for the remission of the proceedings for misleading and deceptive conduct to a judge of this Court at first instance for the assessment of damages (the Primary Judge having of course retired), or else for requiring this Full Court itself to make that assessment. The two main submissions of Best & Less, Stassen and MacDonald, to whom the Court shall hereafter refer in this segment of our reasons for judgment as "the Pepkor parties", as to what should hereafter take place in relation to this cause of action, were as follows:
(i) The misleading and deceptive conduct claim brought by Divergent against the Pepkor parties was pleaded by Divergent from the outset, and the statement of claim was not subsequently amended; Divergent had ample opportunity at the lengthy hearing at first instance to place before the Court all of its evidence relating to that cause of action, including any evidence of damage occasioned by any detrimental reliance on the part of Divergent; only if there had been adduced viable evidence in support of Divergent's misleading and deceptive cause of action, and in particular as to the damage said to have resulted by reason of Divergent having acted to its detriment by reason of the alleged misleading and deceptive conduct, should the Full Court now remit to a judge at first instance that damages claim for quantification.
(ii) In the opening of Divergent's case at the trial below, the then Senior Counsel for Divergent, Mr Gee QC, described Divergent's damages claim in terms of an "expectation loss", and he asserted reliance in that regard on Mr Gower's reports, which however made no mention of any "reliance" loss, the latter being appropriate rather than the former in the circumstances of an action for false and misleading conduct. The Full Court was referred in this context to the following final submissions made by Mr Gee QC on behalf of Divergent:
"The damages are fairly easy to state. It is the profit that Divergent should have made on the stores which it was not allowed to install plus the profits that would be expected on the maintenance contracts over the probable life of a maintenance contract less a discount for present value receipt of moneys that would have otherwise have been received over a period as the progressive roll out occurred and as future maintenance took place. Those matters, your Honour, are the subject of a damages expert report filed pursuant to the court directions of a Mr Gower of 25 August 2000 where he sets out how he has arrived at a discount and how he comes to the figure which is now the claim.In the application before your Honour and in the statement of claim there was another component of damages which was loss of business caused by the souring of relationships with NCR as a result of all of this. That aspect of damages is not pursued and so the report confines itself to the elements that I have spoken of and that advice has been given some time ago. So the bottom line is that the damages are claimed at - the damages are, on an 82 stores basis, are claimed as $1.168 million for loss of earnings under the contract and $193,000 in round numbers for additional revenues and profits.
There was, of course, the theoretical possibility that there might eventually be more stores than 82 because Best & Less was an expanding business, still is as far as we know. So there are some alternative figures put forward on the basis of 100 stores where the figures go up somewhat in each part. Now, we haven't received any report challenging Mr Gower's report. There is another expert report on by Mr Horton's client but it is to do with issues arising as between the cross-claimant and cross-respondent."
Moreover in the final written submissions made by Mr Gee QC and Mr Kaye of Counsel jointly on behalf of Divergent, so the Pepkor parties submitted, Divergent was said to have approached the issue of damages on the basis of Mr Gower's reports, which contained no reference to "reliance damages". Thus it was asserted on behalf of the Pepkor parties to the Full Court that "In short, Divergent's case was focused only on expectation loss. Pepkor prepared its case, including its own expert evidence, on that basis". Therefore, so Pepkor's submissions proceeded, there is no evidence available from the hearing at first instance to support an award of damages in relation to the Divergent cause of action for misleading and deceptive conduct.
21 It was further submitted on behalf of the Pepkor parties that the findings of the Primary Judge, which the Court has extracted in [52] of the reasons for judgment of Conti J of 5 February 2002, were "very limited", and were much narrower or truncated in scope than the pleadings and particulars provided by Divergent at first instance, which are recounted in [53] of Conti J's said reasons for judgment. The so-called "very limited" nature of the Primary Judge's findings in that regard, apart from what Conti J extracted in [52] of his reasons for judgment of 5 February 2002, were submitted to be those set out in [123] of the judgment of the Primary Judge below, reading as follows:
"Both Mr Rosen and Mr Thomas were convincing and credible witnesses. I accept their evidence that they were several times told by the Pepkor representatives that Pepkor would proceed and was proceeding with the installation of the Divergent POS system, even when and after Pepkor had determined to go elsewhere for a POS system. Pepkor deliberately concealed this intention from Divergent. This conduct breached and brought to an end the novated Divergent contract and caused Divergent to suffer loss. Ginger Max cannot be held liable for Pepkor's breach of contract as Pepkor in large measure conceded. Divergent's claim must succeed against Pepkor, but must fail against Ginger Max."
The Primary Judge did not expand upon the nature and extent of the "loss" which Pepkor's conduct caused Divergent to suffer in the circumstances which his Honour was there addressing. In the following paragraph of the judgment of the Primary Judge, his Honour made the findings concerning misleading and deceptive conduct which the Court has already extracted in [6] above.
22 The Court should here interrupt our summary of Pepkor's submissions to record that the date of formation of the Takeover Agreement was 4 February 1998, and completion of the Takeover Agreement took place on or about 31 March 1998. Those dates need to be kept in mind in relation to the evidentiary material which will shortly follow. The narrative of the Primary Judge as to the next following events, in [16] of his reasons for judgment, was as follows:
"16. When Pepkor took over Best & Less, the Divergent POS system had been installed in about half the stores. It then asked Divergent to install the system in a further six stores and there was discussion about a possible rapid installation at a reduced cost by which the system would go into the stores more quickly and cheaply. Divergent would then get paid less but more quickly. There was no agreement on these matters but while the installations were proceeding, Pepkor started to look for a new fully integrated merchandising hardware and software system to include POS. Among others, Divergent was asked to put forward a proposal but at the end of August 1998, Pepkor went into negotiations with a firm called JDA Software Group Inc (JDA) whose system was apparently available at very low cost. Divergent was then told that it would not be continuing to install its POS system and that JDA would be installing a different system. At that moment, the Best & Less POS system was a mixture of what Divergent had installed into approximately 40 stores and the old technology in the remainder."
Thereafter in [18(h)] of his reasons for judgment, his Honour recorded Divergent's claim that "Pepkor breached the sale contract by refusing to allow installation of Divergent's system after 31 August 1998". In fact it was on 24 September 1998, when Divergent's Mr Rosen was in South Africa, that Mr Stassen first informed Mr Rosen that Pepkor had decided to implement the system of JDA Software Group Inc, instead of Divergent's existing POS system (see [16] and [43] of the reasons for judgment of the Primary Judge), though it appears that discussions between Mr Rosen and Mr MacDonald nevertheless carried over into the following month of October 1998 (see [44] of his Honour's reasons for judgment). Hence the submission of the Pepkor parties to the Full Court that "[i]t follows that the only time at which Divergent could have relied on a deliberately misleading representation by Pepkor was during the very short period (about 24 hours) between the time that Pepkor decided to go with JDA and the time it informed Divergent of that decision". Prior to that time, Pepkor had been complaining about Divergent's hardware pricing, as the Primary Judge recorded in [30], [32-36] and [39-41] of his reasons for judgment.
23 Counsel for the Pepkor parties therefore submitted that there was no evidence that Divergent suffered any reliance loss, as distinct from expectation loss, prior to 23 and 24 September 1998, being the occasions referred to in [43-44] of the reasons for judgment of the Primary Judge below, and further that even if the trial judge's findings were to the effect that Divergent was innocently misled at a point in time earlier than 23 September 1998, there still did not exist any viable head of reliance damage suffered before that time in September 1998, and that was said to be because Divergent could no longer have relied on any representations after that time. Moreover, so the submissions of the Pepkor parties continued, it was difficult to conceive of any reliance loss suffered by Divergent before 23 or 24 September 1998, since Divergent had been fully paid by Pepkor for all store roll-outs up to that time.
24 As to Divergent's claim for reliance damage relating to "...stock... to the value of about $71,000 which was specifically acquired for the Best & Less contract [which] could not be used for any other purposes" (see par 4 of the Rosen affidavit of 31 August 2000 extracted in [17] above), Counsel for the Pepkor parties drew attention to the invoice relating to that stock, comprising so-called multi-user licenses of third party software, namely the invoice bearing date 28 February 1997 from M V Systems (Pty) Limited of Switzerland to Divergent in the sum of $89,430, and submitted that such stock could not have been purchased in reliance upon representations not in reality made until the following year, in anticipation of Best & Less rolling-out more stores after the material events of disclosure on the part of the Pepkor parties in September 1998 to which reference has already been made.
25 The response of the Pepkor parties in relation to Divergent's claim for reliance damage relating to abovementioned trading stock on hand in the sum of about $71,000 is beset with difficulty. It was apparently not until mid-September 1997 that Mr Ginges of Ginger Max informed Mr Rosen of Divergent that Best & Less "...was being sold to South African interests and that Mr Marais [of Pepkor] attended at Divergent's offices either in late September or early October 1997 as part of Pepkor's due diligence operations". Moreover by early November 1997, so the Primary Judge recorded, Mr Ginges had told Mr Rosen that the sale of Best & Less to Pepkor was not proceeding (see [29-30] of the reasons for judgment at first instance). It is true that in May and June 1998, Pepkor "asked for cost savings" from Divergent on two occasions, and referred to the possibility of gaining costs savings by changing hardware suppliers from NCR to IBM, but that conduct did not amount to notice of intention not to proceed with the roll-out. In those circumstances, and in the light of the implications of the closing address of Senior Counsel for Divergent extracted in [21], time had advanced too far ahead to justify Divergent's endeavour to establish this claim relating to loss sustained on unused trading stock. It is readily apparent that the case in damages conducted on behalf of Divergent at the trial, in relation to the cause of action for breach of contract and for misleading and deceptive conduct in combination, was "for loss of earnings under the contract and $193,000 in round numbers for additional revenues and profits" (see transcript of the proceedings reproduced in [20(ii)] above), and that no distinction was drawn between "reliance" loss and "expectation" loss, such as to allow room for a discrete assessment of damages reflecting the former.
Conclusion on Divergent's cause of action for misleading and deceptive conduct against Best & Less, Stassen and Macdonald
26 The Court's conclusion is that Divergent conducted its case at first instance upon the footing that the same measure of damages applied to the cause of action for misleading and deceptive conduct as to the cause of action for breach of contract. That may be the reason why the Primary Judge did not turn his mind to the difference in principle between an award of damages for breach of contract, and an award of damages for misleading and deceptive conduct, in the circumstances of this case. The Full Court would not be justified in endeavouring to determine that issue upon the basis of the material contained in the appeal books, or in remitting that cause of action to a single judge for a further hearing to enable Divergent to investigate and quantify any supposed loss and damage for the misleading and deceptive conduct complained of, not merely because Divergent did not present the requisite evidence at the trial at first instance to demonstrate the sustaining of loss and damage on its part arising out of the misleading and deceptive conduct, and should not be afforded a second opportunity of so doing, and also because there appears to have been no evidentiary basis in any event to sustain that cause of action.
27 Having regard to the conclusion we have earlier reached upon Divergent's cause of action against Best & Less for breach of contract, it follows that the entirety of the causes of action framed by the statement of claim of Divergent against Best & Less, Stassen and MacDonald (ie the "Pepkor parties") should have been dismissed.
Costs issues consequent upon the outcome of the appeal
28 Ginger Max and Ginges Holdings, and Divergent's representatives Mr Rosen and Mr Thomas, were parties to the main proceedings and cross-claims to the extent detailed in [1] above, and were affected by orders of the Primary Judge to the extent recorded in [2] above. The findings of his Honour are reproduced below from [125] of his reasons for judgment:
"125. For these reasons, I find that(a) the Divergent contract was legally enforceable against Ginger Max for the installation of the Divergent POS system in at least 82 Best & Less stores;
(b) the contract was novated by Ginger Max to Pepkor on the sale of Best & Less, Pepkor thereby assuming the obligations of Ginger Max under it;
(c) Pepkor failed to complete the contract and caused loss to Divergent;
(d) Ginger Max did not mislead or deceive Divergent or Pepkor;
(e) Pepkor misled Divergent but Divergent did not mislead Pepkor;
(f) Pepkor is not entitled to indemnity from Ginger Max for any liability to Divergent."
29 The written submissions made on behalf of Ginger Max and Ginges Holdings acknowledged at the outset that the order at first instance as to the costs of the third cross-claim, in so far as it was directed against Stassen and MacDonald, was an error or slip, and must be rectified accordingly, but that the order should have been made instead against Pepkor, as well as of course against Best & Less, both having been the cross-claimants to that cross-claim. That submission must be correct.
30 Senior Counsel for Ginger Max and Ginges Holdings provided not only written submissions in support of the rectification of the "slip" in the formulation of the orders as to costs made on the third cross-claim, but also advanced oral submissions in the course of the hearing of the appeal, and at the subsequent hearing convened to receive submissions as to costs of the appeal and at first instance. Senior Counsel gave the following reasons why Ginger Max found itself obliged to play the active role that it did, both at first instance and on appeal:
(i) Ginger Max was joined by Divergent in the main proceedings below as second respondent to the cause of action for misleading and deceptive conduct; that application was however dismissed with costs, though in the context of a Bullock order in favour of Ginger Max;
(ii) The notice of appeal to the Full Court presented by Pepkor, Stassen and MacDonald asserted in "numerous paragraphs in the notice of appeal" that they had a right to contractual indemnities from Ginger Max and Ginges Holdings, and the contention was subsequently made by Senior Counsel for the Pepkor parties to that effect near the close of his address; that was apparently the reason why Ginger Max and Ginges Holdings were respectively joined as second and third respondents to the appeal; and
(iii) Ginger Max and Ginges Holdings found it necessary to agitate the novation issue adversely to the Pepkor parties, because (to cite from the transcript) "that was necessary for us not to be blowing hot and cold before his Honour and then putting a different case to your Honours on appeal".
No notice of appeal, or notice of contention, or cross-appeal was filed on behalf of Ginger Max or Ginges Holdings.
31 Senior Counsel for Divergent submitted that "Best & Less has succeeded thus far on one issue only, namely the construction of the Installation Contract", and that the costs of the appeal should be reserved "until after final determination of Divergent's contravening conduct case". Since however the Court has reached the view that the "contravening conduct case" should not be re-opened on the issue of damages, Divergent already having had ample opportunity to conduct that case in the course of the lengthy trial at first instance, all controversial issues as to costs should proceed to resolution in the context of the appeal proceedings. In those circumstances, Divergent's submission is that the costs of the appeal and cross-appeals should be apportioned according to the issues on which the respective parties succeeded or failed.
32 The submissions of the Pepkor parties as to the orders which should now be made were as follows:
(i) Divergent should pay the costs of the Pepkor parties of the appeal and in the court below, since Pepkor has been successful, as against Divergent, on all issues except the fourth cross-claim; and
(ii) The time involved in relation to the fourth cross-claim has been insignificant, and did not justify a separate costs order; alternatively there should be no order for the costs of the appeal in relation to the fourth cross claim.
33 As to the costs of the trial at first instance, the Pepkor parties submitted as follows:
(i) The "Bullock" order that Pepkor should pay the costs of Ginger Max of the proceedings the subject of the application below should be set aside; and
(ii) Divergent should also be ordered to pay the costs of Ginger Max of the application below, and of the combined costs of the Pepkor parties, and Ginger Max and Ginges Holdings, of the cross-claims.
34 In the context of the submissions as to the orders which should be made at first instance, the Pepkor parties drew attention to Lackersteen v Jones (1988) 93 FLR 442 at 449, where Asche CJ isolated the following principles from a number of authorities concerning "Bullock" order considerations:
"1. It must be seen to have been reasonable and proper for the plaintiff to have sued the successful defendant.2. The causes of action against two or more defendants need not be the same but they must be substantially connected or dependent the one on the other.
3. While it is essential to find that the plaintiff has acted reasonably and properly that alone is not sufficient. The court must find something in the conduct of the unsuccessful defendant which makes it a proper exercise of discretion.
4. Finally, in considering whether to make such an order, the court should, in the exercise of its discretion balance overall two considerations of policy: the first, that an unnecessary multiplicity of actions should not be forced on litigants, so that a plaintiff who acts reasonably in joining two or more defendants should not be penalised or lose the fruits of his victory in costs on the basis that he should have either elected or taken separate actions; secondly, that an unsuccessful defendant should not have to pay more than one set of costs merely because he is unsuccessful."
35 Counsel for the Pepkor parties sought to apply certain of those principles to the circumstances of this case, mainly by way of the following submissions:
(i) It was reasonable and proper for Pepkor to cross-claim against Ginger Max. Ginger Max was not joined to the main proceedings by Pepkor, Divergent having already done so.
(ii) Ginger Max cross-claimed against Pepkor.
(iii) A central issue in the case was the construction and effect of the Sale Agreement between Ginger Max and Divergent which was raised by Divergent in the Statement of Claim, and in both of the cross-claims between Ginger Max and Pepkor.
(iv) The causes of action the subject of the statement of claim and the cross-claims were thus substantially connected, unlike the cases where the cross-claim in question raises different issues to the principal claim, albeit as part of the same controversy.
(v) Once raised, all issues arising from the Installation Contract, including matters of indemnity between the Respondents needed to be raised in order to avoid a multiplicity of proceedings (O 6 r 8 Federal Court Rules). Had Pepkor taken separate proceedings, the same would inevitably have been combined with the main proceedings.
36 The submissions made on behalf of Ginger Max and Ginges Holdings as to costs were mainly as follows:
"Ginger Max succeeded before the trial judge both in the case brought against it by Divergent and in the case brought against it by Pepkor. Divergent did not, of course, appeal against the finding in favour of Ginger Max against it but Pepkor did. However, only a small amount of the submissions by Ginger Max related to the support of Divergent on the novation point as mentioned above. Pepkor failed in its attempt on the appeal to reverse the judge's findings on the credit of the witnesses for Pepkor and those for Ginger Max and credit was essential to the case put by Pepkor against Ginger Max and its attempted appeal from the dismissal of that case. Pepkor has failed against Ginger Max on the appeal on the question of credit and has also failed on the novation point. It is submitted that Ginger Max should get the whole of its costs of the appeal and that the order for costs made in the Court below should not be disturbed except to remedy the commonly agreed error in relation to the costs of the third cross-claim which should take the form suggested in paragraph C3 on page 18 of Ginger Max's original submissions on the appeal."
As in the case of Divergent, reliance was placed both by Ginger Max and Ginges Holdings upon the so-called failure of Best & Less on the "novation point", without articulating precisely what is intended by the generality of that description. The thrust of the reasons for judgment of Conti J of 5 February 2002, in so far as they addressed the Deed of Novation, was the significance of the subject matters to which the Deed was explicitly confined, against the context of the Installation Contract, as a tripartite instrument the contents of which were settled between the legal representatives of the parties. The observations made by Hill J on the subject of novation were as follows:
"Had it been necessary to consider the question of novation, I think there is much to be said for the conclusion that the circumstances were such that there was an implied novation... I think it was open to the learned Primary Judge to find that in the circumstances there was an implied novation assuming that there was an obligation which was able to be novated. Accordingly I do not join in that part of the reasons for decision of Conti J as relates to the novation issues."
Whitlam J expressed no view on the question of novation.
37 The Court's reading of the submissions of Divergent, Ginger Max and Ginges Holdings does not reveal the making of contentions explicitly in support of a case as to novation to be implied by conduct, nor as to the making of any findings of the Primary Judge to such effect. In any event, the observations of the Court referred to in [36] above should not be read as concluded findings upon the matters addressed, no evidentiary matters having been referred to.
38 By virtue of subs 43(2) of the Federal Court of Australia Act 1976 (Cth), the award of costs is in the discretion of the Court or Judge. The Full Court was referred to Hughes v Western Australian Cricket Association (Inc) & Ors (1986) 8 ATPR 48,134 at 48,136, where Toohey J summarised the outcome of the authorities relating to the exercise of judicial discretion in relation to costs orders in the following often cited terms:
"1. Ordinarily, costs follow the event and a successful litigant receives his costs in the absence of special circumstances justifying some other order.2. Where a litigant has succeeded only upon a portion of his claim, the circumstances may make it reasonable that he bear the expense of litigating that portion upon which he has failed.
3. A successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the other party's costs of them. In this sense, "issue" does not mean a precise issue in the technical pleading sense but any disputed question of fact or of law."
His Honour then made the following observations:
"It is relevant, but not conclusive, to consider how much time of the hearing was taken up with evidence and submissions relating to those issues on which the applicant failed. This is not an easy task because much of the evidence bore upon more than one cause of action." (48,136)"I approach the matter on the basis that the applicant succeeded substantially in what he set out to achieve through his application. He failed on some issues in circumstances where, not only should he not have the costs of those issues, but there should be some compensation to the respondents for the time taken in meeting those issues both prior to and at the hearing." (48,137).
These observations were made by his Honour Justice Toohey at the culmination of proceedings at first instance. More complex considerations may arise, as here, at the conclusion of an appeal. Moreover in the present case, there is the added complication of a number of parties, two causes of action the subject of the statement of claim having different elements and involving different principles as to assessment of damages, and four cross-claims.
39 The task of determining a fair and equitable division of what costs should be borne by which parties, and in what proportions, in the light of the reasons for judgment of the Full Court given on 5 February 2002, presents some difficulty.
40 The Court has framed below, by way of summary, the issues which have arisen on the appeal, and how the same have been already resolved or should hereafter be resolved (as the case may be):
(i) Whether the roll-out provisions of the Installation Contract became contractually binding upon Best & Less pursuant to the Takeover Agreement and the Deed of Novation, as asserted by the statement of claim; that issue raised by the statement of claim has been resolved by the Full Court in the negative in favour of Best & Less, and adversely to Divergent.
(ii) Whether Best & Less, Stassen and MacDonald engaged in the misleading and deceptive conduct pleaded by the statement of claim, and if so, whether damage was sustained by Divergent as a consequence thereof; although the finding at first instance as to misleading and deceptive conduct on the part of Best & Less, Stassen and MacDonald has not been disturbed, damage to Divergent was not established at first instance as a consequence of that conduct, as distinct from the damage alleged for breach of contract, nor was damage in either cause of action established on appeal, and the issue arising on appeal as to whether damage might have been sustained as a consequence of the misleading and deceptive conduct should not be returned to a judge at first instance for determination, nor be further considered by the Full Court.
(iii) Whether the proceedings the subject of the third cross claim by Pepkor and Best & Less against Ginger Max and Ginges Holdings should be remitted for re-trial at first instance on issues as to liability and damage; this issue has been answered in the negative.
(iv) Whether the proceedings the subject of the fourth cross claim of Pepkor and Best & Less against Divergent, Rosen and Thomas should be remitted for re-trial at first instance on issues as to liability and damage; this issue has been answered in the negative.
(v) Whether errors in the assessment of damages were made by the Primary Judge; none of the alleged errors require adjudication by the Full Court, because of the conclusions reached by the Full Court in (i) and (ii) above.
41 The orders appropriate to be made, pursuant to the reasons for judgment of Conti J on the appeal, apart from the extent to which the orders for costs at first instance should be reversed or varied as a consequence thereof, are as follows:
(i) The appeal of the Appellants Best & Less, Stassen and MacDonald against the award of damages in the sum of $1,120,281.90 entered against them in the proceedings at first instance the subject of the statement of claim be allowed, and the judgment entered at first instance in favour of Divergent against Best & Less, Stassen and MacDonald be vacated.
(ii) The appeal of Pepkor and Best & Less against the dismissal at first instance of the third cross claim proceedings against Ginger Max and Ginges Holdings be dismissed.
(iii) Divergent to pay eighty per centum (80%) of the Appellants' costs of the appeal and Divergent's cross appeal.
(iv) Pepkor and Best & Less to pay the costs of Ginger Max and Ginges Holdings of the proceedings on appeal and of their cross appeal.
The main reason why the Court has estimated the percentage figure of 80% in sub-paragraph (iii) above is because it was not established by Best & Less, Stassen and MacDonald on appeal that the finding of the Primary Judge as to misleading and deceptive conduct, as distinct from any damage flowing therefrom, was wrong. The Court has adopted a corresponding approach to the costs at first instance of the proceedings the subject of the statement of claim.
42 The further orders of the Full Court required to be made in relation to the proceedings below present some difficulty, in that notwithstanding the findings of the Primary Judge set out in [28] above, the orders made by his Honour as set out in [2] above do not appear to have accommodated the unsuccessful outcomes below of two of the cross-claims, namely the first cross-claim of Best & Less against Ginger Max and Ginges Holdings, and the second cross-claim by Ginger Max against Best & Less and Pepkor. The Court makes the following orders so as to dispose of the proceedings at first instance, and on the appeal:
1. Set aside the orders made by Einfeld J and substitute the following orders:
(1) The proceedings on the application be dismissed.
(2) The applicant pay 80 per cent of the costs of the first, third and fourth respondents.
(3) The applicant pay the costs of the second respondent.
(4) The first, second and fourth cross-claims be dismissed with no order as to costs.
(5) The third cross-claim be dismissed with costs.
2. The first respondent pay 80 per cent of the appellants' costs of the appeal and of the first respondent's cross-appeal.
3. The appellants pay the second and third respondents' costs of the appeal and of the second and third respondents' cross-appeal.
I certify that the preceding forty-two (42) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Court. |
Associate:
Dated: 7 June 2002
Counsel for the Appellants: |
T.J. Hancock |
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Solicitor for the Appellants: |
Abbott Tout |
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Counsel for the First Respondent: |
R. Margo QC and A. McAvoy |
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Solicitor for the First Respondent: |
Derek Zabow & Co |
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Counsel for the Second and Third Respondent: |
D.E. Horton QC |
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Solicitor for the Second and Third Respondent: |
Denes Ebner |
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Date of Hearing: |
13 March 2002 |
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Date of Judgment: |
7 June 2002 |
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URL: http://www.austlii.edu.au/au/cases/cth/FCAFC/2002/171.html