Aussie Home Security Pty Ltd v Sales Systems Australia Pty Ltd

REASONS FOR JUDGMENT 1 Pending in the Court is a proceeding involving five parties. 2 The proceeding began with the making of a number of claims by Aussie Home Security Pty Limited ("AHS") and Australian Home Loans Limited ("AHL") (together, "the Aussie parties"), each claim being made by either one or both of the Aussie parties against either one or more of the three respondents to the proceeding. The first two of the three respondents to the proceeding are Sales Systems Australia Pty Limited ("SSA") and Australia Holdings Pty Limited. (Counsel for all five of the parties used before me the phrase "the Ball parties" when referring to both of the first two of the three respondents to the proceeding together; I will do likewise herein). The third of the three respondents to the proceeding is Philips Electronics Australia Limited ("Philips"). 3 Later in the proceeding, the Ball parties made, by way of cross-claim, a number of claims against Philips, each claim being made by either one or both of them. 4 (Still later in the proceeding, Philips made, also by way of cross-claim, a number of claims, but it is unnecessary for present purposes to refer again in these reasons for judgment to those claims.) 5 Philips has now moved the Court for certain summary relief in respect of claims made against it, either in the Aussie parties' statement of claim or in the Ball parties' cross-claim. 6 It is convenient to begin my consideration of the summary relief sought by Philips in respect of those claims by considering one of the claims made against it by both of the Aussie parties in their statement of claim. (That claim was made, incidentally, not only against Philips, but also against SSA. However, for reasons which will become apparent later in these reasons for judgment, SSA, unlike Philips, has not sought summary relief in respect of it.) The claim was in essence one of breach of subs 52(1) of the Trade Practices Act 1974 (Cth) ("the Act"), with resulting damage. In order to make explicable the summary relief sought by Philips in respect of that claim, I will refer first to pars 6 to 9 of the statement of claim, paragraphs which deal with that specific claim, and to certain particulars given by the Aussie parties of the last three of those four paragraphs. 7 The Aussie parties alleged in par 6 of the statement of claim that, in or about July 1997, SSA had proposed to AHS an arrangement pursuant to which SSA would supply to AHS a home security system, to be manufactured by Philips, for retail sale by AHS. That system (called in the statement of claim "the System") was to be based on a system already being manufactured elsewhere by Philips, modified for Australian conditions. (Although the statement of claim did allege that the system was being manufactured elsewhere by Philips itself, it may be (I do not know) that what was intended was not Philips, but some other company related to Philips.) 8 The Aussie parties further alleged in par 7 of the statement of claim that, "[i]n or about August 1997", Philips (together with SSA) made seven representations to the Aussie parties relating to the System. Relevant for present purposes are the following six alleged representations (called in the statement of claim "the Representations"), listed as subpars 7(b) to (g) in the statement of claim: "(b) that the System would be successfully modified for Australian conditions, to include, amongst others, a digital dialling function and smoke detection function; (c) that the modifications to the System would not affect its performance and reliability; (d) that the System, in its modified form, would function efficiently; (e) that the System, in its modified form, would represent state of the art technology; (f) that the System, in its modified form, would operate as successfully and reliably as it was, in its unmodified form, operating throughout Europe and North America; [and] (g) that AHL and AHS would enhance their own reputation by marketing and distributing the System due to its association with the Philips brand name[.]" 9 Particulars of the Representations were given in the statement of claim itself. Those particulars were that the Representations had been made "orally and in a slide presentation" at a meeting by two named individuals on behalf of Philips and by one named individual on behalf of SSA to four named individuals on behalf of the Aussie parties. 10 The Aussie parties later gave further particulars of the Representations. In those further particulars, they said first that they continued to rely on the particulars of par 7 which had appeared in the statement of claim itself. Next, they said that the Representations had been made "during the course of several meetings held between" the Aussie parties, Philips and SSA, "including as set out as follows". Then followed a reference to four meetings. As the first of the four meetings referred to was not said to involve Philips in any way, I ignore it for present purposes. As to the last three of the four meetings, times, dates, names of participants and venues were given. The second of the meetings appears to have been that which had already been referred to in the particulars of par 7 included in the statement of claim itself. The third and fourth meetings were ones to which reference had not been made before. As to each of the second, third and fourth meetings, it was said that, at it, a representative or representatives of Philips had either "represented" or "stated" certain things, which things were then set out. None of the things said to have been either represented or stated, not even the things said to have been represented at the second meeting, was set out in terms identical to those of any of the Representations or, alternatively, was a quotation of the words allegedly used. 11 Returning now to the statement of claim, the Aussie parties further alleged (relevantly) in par 8 thereof that the Representations had been misleading or deceptive or likely to mislead or deceive, "… in that: (a) … the System was not successfully modified for Australian conditions, to include, amongst others, a digital dialling function and smoke detection function; (b) the System, in its modified form, did not perform adequately and reliably; (c) the System, in its modified form, failed to function efficiently; (d) the System, in its modified form, did not represent state of the art technology; (e) … the System, in its modified form, failed to operate either as successfully and reliably as it was, in its unmodified form, operating throughout Europe and North America, or indeed at all; [and] (f) … AHL and AHS injured their own reputation by marketing and distributing the System." 12 The Aussie parties later gave particulars of par 8 of the statement of claim. It is sufficient for present purposes to set out their particulars of the alleged defects in the System, which were as follows: "Significant defects were apparent within days of delivery in part due to a failure to co-ordinate set frequency calibrations between components manufactured by different subcontractors of Philips. Amongst other things: (i) the digital dialler was unable to communicate with the back to base monitoring station; (ii) the remote controls performed inconsistently; (iii) the alarm would reset for no apparent reason; (iv) the system would signal false alarms; (v) the outdoor siren would continue to sound when the system was reset; (vi) power supply problems were encountered on central control units and outdoor sirens; (vii) alarms would be triggered locally but would not report back to the alarm central monitoring station." They also said that further particulars (presumably, of such defects) would be provided after inspection of Philips' discovered documents. 13 Returning now to the statement of claim again, the Aussie parties further alleged in par 9 thereof that, "[i]nsofar as" the Representations "were representations with respect to future matters", Philips (and SSA) "did not have reasonable grounds for making them". 14 I interpolate here that it was accepted by Philips before me that par 9 had found its way into the statement of claim by reason of the presence in the Act of subs 51A(1), which provides relevantly that, for the purposes of subs 52(1) of the Act, if a corporation makes a representation with respect to any future matter without reasonable grounds for doing so, "the representation shall be taken to be misleading". I mention also now that subs 51A(2) of the Act provides, "For the purposes of the application of subsection (1) in relation to a proceeding concerning a representation made by a corporation with respect to a future matter, the corporation shall, unless it adduces evidence to the contrary, be deemed not to have had reasonable grounds for making the representation." 15 The Aussie parties later gave particulars of par 9 of the statement of claim, stating relevantly that those representations listed as subpars (b) to (f) of par 7 of the statement of claim were ones "with respect to future matters". (Thus, of the Representations, (only) the representation in subpar 7(g), namely, that, due to the System's association with the Philips brand name, the Aussie parties would enhance their own reputation by marketing and distributing the System, was not particularised by them as having been a representation "with respect to [a] future matter[ ]". I take the omission of subpar 7(g) to have been intended to convey that s 51A of the Act was not being relied on in respect of that subparagraph (only), rather than having been intended to mean literally that subpar 7(g) was not a representation with respect to a future matter, since it manifestly was such a representation.) 16 Part of the summary relief which Philips has sought before me relates to subpars 7(b) to (g) and pars 8 and 9 of the Aussie parties' statement of claim and to the particulars given thereof. In substance, Philips has submitted that the Aussie parties' claim in their statement of claim of breach by Philips of subs 52(1) of the Act was inadequate, in that it would not be open to the Aussie parties on that claim, as pleaded, to prove facts at the trial of that claim which would establish such alleged breach. Additionally, Philips has submitted that the particulars which have been given of certain of the pleaded facts in connection with that claim were themselves inadequate. Although the relief nominally sought from me by Philips, should I accept either of the submissions which I have just mentioned, included the summary dismissal of the Aussie parties' relevant claim against it, Philips' counsel recognised during oral argument that an alternative course might be the making of appropriate curative orders with respect to the relevant part of the statement of claim or the particulars or both. 17 It is appropriate to deal first with Philips' submissions as to the inability of the Aussie parties, on their present pleading, to prove facts essential to establishing the alleged breach. 18 In substance, Philips' submissions, which focused on pars 8 and 9 of the statement of claim, were as follows: each of the six representations comprising the Representations was, on its face, a representation as to a future matter (note the use of the word "would" in each). Leaving aside for the moment the effect of s 51A of the Act, a representation that a future matter either would or would not come to pass is not shown to have been, at the time at which it was made, misleading or deceptive or likely to mislead or deceive within the meaning of subs 52(1) of the Act, merely because the contrary of the representation came to pass. Something more than that is required. The Aussie parties did not plead that something more, but merely pleaded in par 8 of the statement of claim that the contrary of each representation had come to pass. Paragraph 8 was thus embarrassing. Further, par 9 of the statement of claim, relying on s 51A of the Act, did not overcome the absence of a plea of the something more required, because par 9 was also embarrassing. It was embarrassing because of its opening words, "[i]nsofar as". Philips was left to speculate, as a result of those words, to what extent the Aussie parties were relying on s 51A of the Act in connection with each of the six Representations. 19 Dealing first with par 8 of the statement of claim, I accept that it was embarrassing and, by way of justification in authority for my conclusion as to its embarrassing nature, it is convenient to repeat a passage from the reasons for judgment of Goldberg J in Phoenix Court Pty Ltd v Melbourne Central Pty Ltd (1997) ATPR 46-179 (FCA): see at 54,431-32. His Honour said, "Prior to the enactment of s 51A it was well settled that an applicant could not adequately plead misleading and deceptive conduct invoking s 52 simply by asserting a representation as to future conduct or as to a future event and then asserting that the subject‑matter had not come to pass: Bill Acceptance Corporation Ltd v GWA Ltd (ATPR 44,761; ALR 250); Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (ATPR 45,344; FCR, 88). Although the mere fact that a representation as to future conduct or the happening of a future event does not occur does not make the representation misleading or deceptive, such a representation can ripen into misleading or deceptive conduct for the purposes of s 52 in a number of circumstances; namely, if there is an implied statement in the representation as to a present or past fact; if the representation represents impliedly that the representor has a present intention to make good the promise or has the means or ability to do so; if the representation involves a representation that the representor has a present state of mind; or if a representation is made, which having regard to relevant circumstances at the time, requires a qualification because of the possibility of its non‑fulfilment (see James v Australia and New Zealand Banking Group Ltd (supra); Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (supra); Wheeler Grace & Pierucci Pty Ltd v Wright (1989) ATPR ¶40‑940). In any of these circumstances it is necessary to plead more than simply the fact of the representation as to the future matter and the fact that it does not occur. One has to plead material facts in relation to the implication in the statement of the present or past fact, the present intention and the means to carry it out, the relevant state of mind and the fact that there was no basis for it, and the relevant circumstance giving rise to the qualification. Without pleading such matters all the material facts necessary to complete the cause of action have not been stated and the respondent does not know what case it has to meet." (For a further statement to similar effect, see McKellar v Container Terminal Management Services Ltd (1999) 165 ALR 409 at 419, [25], referring with approval to Pioneer Electronics Australia Pty Ltd v Edge Technology Pty Ltd [1999] FCA 142 (Kenny J; unreported; 24 February 1999). 20 Dealing next with par 9 of the statement of claim, I accept that, viewed without reference to the particulars subsequently given of it, it was also embarrassing. In Hunt Contracting Co Pty Ltd v Roebuck Resources NL (1992) 110 ALR 183 (FCA; French J), a statement of claim, after having pleaded the making of certain representations by a respondent, continued relevantly, "… in so far as the representations pleaded above constitute representations as to future matters, the Applicant relies upon section 51A of the Trade Practices Act…." Dealing with the quoted words, French J said (at 190), "The plea in para 21 which invokes s 51A of the Trade Practices Act does so in a way that is embarrassing for failure to adequately disclose the applicant's case. As I said in Turner v Kinian Pty Ltd (Federal Court, 19 August 1992, unreported), a party invoking s 51A of the Trade Practices Act 1974 does not discharge the duty of informing the court and the respondent of its case by resorting to an ambit claim for the application of the section in respect of any representation which might turn out to be a representation as to future matter. If the section is to be invoked then the representations to which it is sought to be applied must be identified. The general approach to pleading a s 51A case was outlined in Western Australia v. Bond Corp Holdings Ltd (1991) 99 ALR 125; (1991) ATPR 41-081 at 52,279. A party invoking s 51A in respect of a representation as to a future matter should make clear that it is doing so. In this way the respondent will know that, if the representation was made, it has the burden of showing and must plead that there were reasonable grounds for making it. The proposition that the specific representations relied upon must be identified is a corollary of that statement. There are obvious evidentiary implications for a respondent's case if the section is applicable to a particular representation. The respondents are entitled to know which of the representations pleaded are alleged to constitute representations as to future matters in respect of which s 51A is invoked. In its present form para 21 is embarrassing." (Similar reasoning was afterwards applied to similar words by Kenny J in the Pioneer Electronics Case at [9].) 21 However, the question with which I am now faced is whether it is appropriate that I should view par 9 without reference to the particulars subsequently given of it, those particulars having done what should have been done in the statement of claim itself. I have decided that I should not take that approach: compare, for example, Beach Petroleum NL v Johnson (1991) 105 ALR 456 at 466 (FCA; von Doussa J) and Bartlett v Swan Television & Radio Broadcasters Pty Ltd (1995) ATPR 41-434 at 40,889 (FCA; Carr J). Reading par 9 together with the particulars subsequently given of it, I am satisfied that it was not embarrassing. 22 Having accepted Philips' submissions as to the embarrassing nature of par 8 of the Aussie parties' statement of claim, the question arises as to the relief which I should grant as a result. As I have already mentioned, Philips in effect acknowledged before me that any attempt to obtain summary dismissal of the Aussie parties' relevant claim against it on the basis of any pleading inadequacies was likely to be too ambitious. I agree. In the circumstances, I will merely order the striking out of par 8 of the statement of claim. Of course, it is a necessary corollary both of my doing so and of my reading par 9 together with the particulars subsequently given of it that the Aussie parties' claim of breach by Philips (and SSA) of subs 52(1) of the Act as presently framed is one based solely upon s 51A of the Act. That being so, I will also order that subpar 7(g) of the statement of claim, as to which no reliance on s 51A of the Act has been placed, be struck out. 23 I turn now to Philips' submissions that the particulars which the Aussie parties have given of certain of the pleaded facts in connection with their subs 52(1) claim were themselves inadequate. Philips there focused on the particulars given of subpars 7(b) to (g) and par 8. However, I will not deal with Philips' complaint about the particulars given of subpar 7(g) and par 8, since, as I have already said above, I propose to order the striking out of that subparagraph and paragraph from the statement of claim. (I should also add here that, as framed, Philips' notice of motion sought summary relief in respect, not only of the particulars given of subpars 7(b) to (f), but also in respect those subparagraphs themselves. However, the matter was argued before me only by reference to the inadequacy of the particulars given of those subparagraphs.) 24 As to Philips' complaint about the particulars given of subpars 7(b) to (f), its argument in substance, as summarised in written submissions which it made and which it repeated orally, was that some of the Representations "are capable of several distinct meanings, and the particulars do not allow Philips to know which they are expected to meet". Illustrations of that alleged defect in the particulars were given. Philips submitted that, at the least, the Aussie parties ought to be required to give particulars as to that meaning or meanings of the Representations on which they rely. 25 In order to deal with that submission, I begin by referring to O 11, r 4, of the Federal Court Rules. That rule provides that, "Where any document or spoken words are referred to in a pleading, it is permissible to state the effect of the document or spoken words without setting out the precise terms thereof". It follows from that rule that, where a party making a claim under subs 52(1) of the Act chooses to plead only the effect of any alleged written or oral representation made to that party, rather than pleading the precise terms of that alleged representation, such a pleading is an adequate one for the purpose of the Federal Court Rules. 26 I accept that, in some cases at least, fairness may dictate that the opposing party be entitled to particulars of such a plea, like the time and place of the making of the alleged representation, the identity of the alleged participants in the communication and the medium by which the alleged representation was communicated. However, I am unable to accept, given the existence of O 11, r 4, that the particulars to which the opposing party may be entitled would include the precise terms of the alleged representation and yet it appears to me that that is in substance what it is that Philips is seeking in the present instance. If the prospect of obtaining particulars of that sort had been in contemplation, I am in no doubt that those responsible for the making of O 11, r 4, would not have framed the rule as they did. If it be the case in the present matter that the Representations as alleged are capable of several distinct meanings, I have no reason to think that that is other than because the precise terms of what was allegedly spoken or said by Philips were likewise capable of several distinct meanings. 27 I therefore reject the argument made by Philips about the inadequacy of the particulars of subpars 7(b) to (f). Of course, my rejection of that argument will in no way preclude Philips from arguing on the trial of the claim, after all the evidence is before the Court, that that evidence, although it establishes the making of certain representations by Philips, does not establish the making by it of representations to the effect alleged in subpars 7(b) to (f). The Aussie parties, having chosen to plead what they claim to be the effect of the alleged representations, rather than pleading their precise terms, will have to bear whatever adverse consequences might flow from the acceptance by the Court of such an argument. 28 Although Philips raised complaints about other aspects of the Aussie parties' statement of claim and particulars than those with which I have dealt above, it is convenient, before dealing with them, to turn to its complaints about the Ball parties' cross-claim and particulars. By way of introduction to those complaints, I will first refer to subpars 4(c) to (g) and pars 6 and 7 of the Ball parties' cross-claim and to particulars given of the last of those paragraphs. 29 In par 4 of their cross-claim, the Ball parties alleged that, in or about August 1997, Philips made certain representations to them, including, "(c) that the said system [that is to say, 'the 'Phillips [sic] Sentinel' security system'] could be successfully modified for Australian conditions to include, amongst others, a digital dialling function and smoke detection function; (d) that the modifications to the system would not affect its performance and reliability; (e) that the said system, in its modified form, could function efficiently; (f) that the said system, in its modified form, would represent state of the art technology; [and] (g) that the said system, in its modified form, would operate as successfully and reliably as it was, in its unmodified form, operating throughout Europe and North America." 30 In par 6 of their cross-claim, the Ball parties relevantly alleged that the representations were misleading or deceptive or likely to mislead or deceive, "in that:- (a) the system could not be successfully modified for Australian conditions to include, amongst others, a digital dialling function and smoke detection function; (b) the system could not, in modified form, perform adequately and reliably; (c) the system[,] in modified form, could not function efficiently; (d) the system, in modified form, did not represent state of the art technology; [and] (e) the system, in modified form, could not operate either as successfully and reliably as it was, in its unmodified form, operating throughout Europe and North America or indeed at all." 31 In par 7 of their cross-claim, the Ball parties alleged that "[i]n so far as the representations were representations with respect to future matters," Philips did not have reasonable grounds for making them. 32 The Ball parties later gave particulars of par 7 of their cross-claim, stating that the representations in subpars 4(c) to (g) of the cross-claim were all ones with respect to future matters. 33 It will be seen that the Ball parties' claim against Philips presently under discussion is similar to the claim made by the Aussie parties against Philips (and SSA) and, accordingly, in effect Philips makes the same complaints about pars 6 and 7 of the Ball parties' cross-claim as it makes about pars 8 and 9 of the Aussie parties' statement of claim. It is true that there is a difference between, on the one hand, the relevant representations alleged by the Aussie parties to have been made by Philips (and SSA) and, on the other hand, the relevant representations alleged by the Ball parties to have been made by Philips. Specifically, subpars 4(c) and (e) of the Ball parties' cross-claim differ from subpars 7(b) and (d) of the Aussie parties' statement of claim by using the language of "could", rather than the language of "would". However, I do not consider that that difference affects the character of the alleged representations for present purposes and therefore consider that the same defect as exists in par 8 of the Aussie parties' statement of claim also exists in par 6 of the Ball parties' cross-claim. I will therefore order the striking out of par 6 of the Ball parties' cross-claim. On the other hand, reading the Ball parties' par 7 with the particulars subsequently given of that paragraph, I do not consider that paragraph to be embarrassing, for the same reason that I did not consider par 9 of the Aussie parties' statement of claim to be embarrassing. 34 As with the particulars given by the Aussie parties of subpars 7(b) to (f) of their statement of claim, Philips complains, and on a similar basis, of the particulars given by the Ball parties of subpars 4(c) to (g) of their cross-claim. I dispose of that complaint in the same way as I disposed of the complaint about the Aussie parties' particulars. 35 I return now to Philips' complaints about the Aussie parties' statement of claim and particulars. 36 Paragraphs 22 and 23 of the statement of claim were as follows, "22. At all material times Philips owed to AHS and to AHL a duty of care, being to take all reasonable steps to ensure that the System supplied by it was not defective and not negligently to fail to do so. … 23. In breach of the duty and negligently, Philips supplied the System and in doing so negligently failed to take all reasonable steps to ensure that the System supplied by it was not defective." 37 As to par 23, Philips submitted that its alleged breaches of the alleged duty had not been pleaded in that paragraph. The paragraph, it was said, merely stated as a conclusion that the duty had been breached, but pleaded no material facts which, if proved, could establish a negligence claim. Philips was entitled to know, it was said, the content of the alleged duty and each of its acts or failures to act which was said to have constituted a breach of that duty. 38 It is appropriate to mention immediately that, subsequent to the statement of claim, the Aussie parties gave particulars of par 23 thereof and it was submitted before me by the Aussie parties that those particulars were sufficient to cure any deficiency in par 23. 39 However, those particulars were merely a repetition of those given of the alleged defects in the System in response to Philips' request for particulars of par 8 of the statement of claim (see par 12 of these reasons for judgment). Even treating those particulars as if they had been part of the pleading (see par 21 of these reasons for judgment), to allege the existence of certain defects in the System is in no way to allege the respects in which Philips failed to fulfil an alleged duty in it not to supply a system which was defective in those respects, something which the Aussie parties are obviously obliged to do. In the circumstances, I will direct the Aussie parties to supply to Philips within fourteen days particulars of the respects in which they allege that Philips failed to fulfil any duty in it not to supply a system which was defective in the respects already particularised. 40 (I should add here that, in its submissions before me, Philips sought to complain, not only about par 23 of the Aussie parties' statement of claim, but also about par 24, which was related to par 23. However, I do not consider that, on a fair reading of Philips' notice of motion, it was seeking any relief specifically in respect of par 24 and so I do not deal in these reasons for judgment with its submissions in that respect.) 41 I turn now to the final respect in which Philips has complained about the Aussie parties' statement of claim and particulars. That complaint relates to the Aussie parties' particularisation of their alleged loss and damage. 42 In order the better to deal with that complaint, it is convenient now to list all of the claims made against Philips in the Aussie parties' statement of claim. There was first the claim (already discussed) of breach by Philips of subs 52(1) of the Act, which claim was made by both of the Aussie parties. Secondly, there was a claim of breach by Philips of s 53 of the Act, which claim was also made by both of the Aussie parties. Thirdly, there was a claim of breach by Philips of a deed entered into by AHS and Philips, which claim was made by AHS alone. Fourthly, there was the claim (already discussed) of breach by Philips of a common law duty of care, which claim was made by both of the Aussie parties. 43 As to the first, second and fourth of those claims, all of them made by both of the Aussie parties, the statement of claim contained identical particulars of alleged loss and damage, as follows: "(a) AHL procured AHS to enter into formal arrangements for the purpose of supplying the System to its customers and commenced so to market and supply, thereby incurring costs and expenses which were wasted; (b) AHL desisted, and procured AHS to desist, from continuing with negotiations with other potential suppliers of alternative systems; (c) AHS lost custom as a consequence of having supplied a defective system; [and] (d) AHL and AHS suffered damage to their reputation by being associated with a defective system." 44 As to the third of those claims, the one made by AHS alone, materially identical particulars of alleged loss and damage were given, merely omitting reference to AHL. 45 The Aussie parties later gave particulars of the quantum of the loss and damage alleged, saying, "The Applicants' best estimate of the quantum of their loss and damage is that it is in the order of $19 million. This figure is comprised of: (i) start-up expenses incurred of approximately $2.1 million; (ii) rectification expenses incurred for the deinstallation and, in some cases, reinstallation of either the Philips System or a different home security system of approximately $290,000; and (iii) loss of profits from the loss of customers including profits which would have been derived from monitoring services in the order of $16.5 million. These are the best particulars presently available to the Applicants. Further particulars will be provided after review of subpoenaed documents." 46 Still later (in fact, apparently on the day before the hearing of Philips' motion), the Aussie parties served on Philips an affidavit affirmed by an accountant, which affidavit annexed a report quantifying the Aussie parties' alleged economic loss. Philips conceded before me that that report amounted to a "big advance", as so far particularising the Aussie parties' alleged economic loss, but drew attention to two particular features of the report which showed that it was "not a sufficient advance yet". 47 One feature was that, in a section of the report headed "Background", the accountant characterised the Aussie parties' statement of claim as "claiming that the Philips System was not fit for the purpose for which it was intended and was not of merchantable quality". Of course, as is already apparent from my recitation of the various claims made in the statement of claim, such a "sale of goods" claim had not been made against Philips by the Aussie parties, but I am unable, in the circumstances, to see how that particular error affects the utility of the accountant's report as a particularisation of the Aussie parties' alleged economic loss. The report identified three components of that loss, start-up expenses ($1,697,136), rectification expenses ($266,076) and loss of profits ($16,573,304) and went into very considerable detail as to the quantification of each. 48 The second feature of the accountant's report about to which Philips drew attention was an apparent failure in it to distinguish as between loss and damage said to have been suffered by AHS and loss and damage said to have been suffered by AHL. That was an important distinction, it was said, at least because one of the claims made against Philips in the statement of claim had been made by AHS alone. 49 For the purpose of dealing with that aspect of the matter and given the way in which both Philips, on the one hand, and the Aussie parties, on the other, were content to treat the accountant's report as a purported particularisation of the Aussie parties' alleged loss and damage, I have read the report. 50 Having done so, I am satisfied that the report did provide adequate information to Philips for present purposes about the division of alleged loss and damage as between AHS and AHL. The report was prepared on the basis that the total claimed loss and damage ($18,536,516) had been and was being suffered by AHS, although it was recognised that some of the expenses involved had actually been and were being incurred by AHL. That matter was dealt with by notionally allocating to AHS some part of expenses actually incurred by AHL, the allocation occurring on a basis explained in the report. I am unable to see how that method of quantification prejudices Philips. 51 Accordingly, on the basis that the accountant's report is treated as a purported particularisation of the Aussie parties' alleged loss and damage, a basis on which, as I have said, the parties proceeded before me, I am not prepared to grant Philips any summary relief in respect of the accountant's report, not considering either of Philips' complaints about it justified. I certify that the preceding fifty-one (51) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Katz.

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Judgment (10 paragraphs)

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Legislation Cited (1)

Cases Cited (5)

Cited By (10)