Chint Australasia Pty Limited v Cosmoluce Pty Limited [2008] NSWSC 635 | Case summary

Chint Australasia Pty Limited v Cosmoluce Pty Limited [2008] NSWSC 635 | Case summary | Zoe

[6]

Ajit v Sammy [1967] 1 AC 255 Adler v Australian Securities and Investments Commission [2003] NSWCA 131 Akron Securities Ltd v Iliffe (1997) 41 NSWLR 353 Alati v Kruger (1955) 94 CLR 216 Aneve Pty Limited v Bank of Western Australia Ltd [2005] NSWCA 441 Arnot v Hill-Douglas [2006] NSWSC 429 Australian Co-operative Foods Ltd v Norco Co-operative Ltd (1999) 46 NSWLR 267 Australian Steel & Mining Corporation Pty Limited v Corben [1974] 2 NSWLR 202 Australis Media Holdings Pty Limited v Telstra Corporation Limited (1998) 43 NSWLR 104 Balog v Crestani [1975] HCA 16; (1975) 132 CLR 289 Bank of New Zealand v Spedley Securities Ltd (in Liq) (1992) 27 NSWLR 91 Batson v De Carvalho (1948) 48 SR (NSW) 417 Bitannia v Parkline Constructions Pty Limited (2006) 67 NSWLR 9 Boston Deep Sea Fishing and Ice Co v Ansell (1888) 39 Ch D 339 Branir Pty Limited v Owston Nominees (No 2) Pty Limited (2001) 117 FCR 424 Burger King Corporation v Hungry Jack's Pty Limited [2001] NSWCA 187 Campbell v BackOffice Investments Pty Ltd [2008] NSWCA 95 Canning v Temby [1905] HCA 45; (1905) 3 CLR 419 Carr v JA Berriman Pty Ltd [1953] HCA 31 CG Mal Pty Limited v Sanyo Office Machines Pty Limited [2001] NSWSC 445 Cornwall v Henson (1899) 2 Ch 710 Demagogue Pty Limited v Ramensky (1992) 39 FCR 31 Digi-Tech (Australia) Ltd v Brand (2004) 62 IPR 184 Dilosa v Latec Finance Pty Ltd (1966) 84 WN (Pt 1) (NSW) 557 Drabsch v Switzerland General Insurance Co Ltd (1996) 130 FLR 127 Etna v Arif [1999] 2 VR 353 Ford Motor Company of Australia Limited v Arrowcrest Group Pty Limited (2003) 134 FCR 522 Franklins Pty Limited v Metcash Trading Ltd [2007] NSWSC 242 Green v Sevin (1879) 13 Ch D 589 Henjo Investments Pty Limited v Collins Marrickville Pty Limited (No 1) (1988) 39 FCR 546 Hirji Mulji v Cheong Yue Steamship Co Ltd [1926] AC 497 Holland v Wiltshire [1954] HCA 42; (1954) 90 CLR 409 Hope v RCA Photophone of Australia Pty Limited (1937) 59 CLR 348 Idameneo (No 123) Pty Limited v Ticco Pty Limited [2004] NSWCA 329 CASES CITED : Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) (1993) 182 CLR 26 Ingot Capital Investments Pty Limited & Ors v Macquarie Equity Capital Markets Ltd & Ors (No 6) (2007) 63 ACSR 1 Johnson Matthey Ltd v AC Rochester Overseas Corp (1990) 23 NSWLR 190 Johnson v Perez (1988) 166 CLR 351 Jones v Dunkel (1959) 101 CLR 298 Koompahtoo Local Aboriginal Land Council v Sanpine Pty Limited (2007) 82 ALJR 345 Krywood v Drinkwater [2000] NSWCA 126 Lantry v Tomule Pty Limited (2007) ANZ Conv R 187; [2007] NSWSC 81 Larking v Great Western (Nepean) Gravel Ltd (In liq) [1940] HCA 37 Laurinda Pty Limited v Capalaba Park Shopping Centre Pty Limited (1989) 166 CLR 623 Leda Holdings Pty Limited v Oraka Pty Limited (1998) ATPR 41-601 Legione v Hateley (1983) 152 CLR 406 Lenneberg v McGirr (1919) 19 SR (NSW) 83 Macquarie Generation v Peabody Resources Ltd [2000] NSWCA 361 Mangrove Mountain Quarries Pty Limited v Barlow [2007] NSWSC 492 McDonald v Denny Lascelles (1933) 48 CLR 457 Moukhayber v Camden Timber & Hardware Co Pty Limited [2002] NSWCA 58 Ogle v Comboyuro Investments Pty Limited (1976) 136 CLR 444 Perry v Sherlock (1888) 14 VLR 492 Photo Production Ltd v Securicor Transport Ltd [1980] AC 827 Poulet Frais Pty Limited & Anor v The Silver Fox Company Pty Limited (as trustee for the Baker Family Trust) & Ors (2005) 220 ALR 221 Reg Russell & Sons Pty Limited v Buxton Meats Pty Limited (1994) ATPR (Digest) 46-127 Roadshow Entertainment Pty Limited v ACN 053 006 269 Pty Limited (Receiver and Manager appointed) (formerly CEL Home Video Pty Limited (1997) 42 NSWLR 462 Ryledar Pty Limited v Euphoric Pty Limited [2007] NSWCA 65 Schellenberg v Tunnel Holdings Pty Ltd (2000) 170 ALR 594 Skywest Aviation Pty Limited v Commonwealth of Australia (1995) 126 FLR 61 Spence v Crawford [1939] 3 All ER 271 State Rail Authority of New South Wales v Heath Outdoor Pty Limited (1986) 7 NSWLR 170 Stickney v Keeble [1915] AC 386 Taylor v Brown (1839) 2 Beav 180 The Millstream Pty Limited v Schultz [1980] 1 NSWLR 555 Tricontinental Corporation Ltd v HDFI Ltd (1990) 21 NSWLR 689 Waters Lane Pty Limited v Sweeney [2006] NSWSC 222 Watson v Foxman (1995) 49 NSWLR 315 Wendt v Bruce [1931] HCA 9; (1931) 45 CLR 245 Whittet v State Bank of New South Wales (1991) 24 NSWLR 146

[118]

Q. Please try and answer the question. I note it has been another minute . You have difficulty answering the question, don't you, Mr Graoroski? A. I'm just trying to define during that time when I say that, what did I mean. Did I mean just in normal terms or was I trying to be more specific about the Chint product or all is good with the group. I am just trying to - you are asking if it's true or not but when I wrote it - obviously I've written it, yes, so what did I mean by "all is good". 17 It was quite plain that Mr Graoroski, faced with a matter adverse to Cosmoluce's case, was simply not prepared to answer the question. At other times during the cross-examination, his answers were not responsive or hedged with qualifications which were not called for. 18 It is appropriate to observe that Mr Graoroski accepted under cross-examination that he knew right from the outset that there would be pressure from Clipsal and HPM once Cosmoluce started selling Chint product. Mr Robinson 19 There were no issues as to Mr Robinson's credit. The reasons below deal with the question of whether or not the evidence which he gave under the voire dire are to be allowed into evidence. The voir dire issue 20 Cosmoluce called Mr Robinson to give evidence on its behalf. He was before the court on a subpoena to give evidence. Before he ascended into the witness box, a question arose as to whether or not he was being called as an expert witness, in which case it was significant that he had not signed to the experts code of conduct. It was said by counsel appearing for Cosmoluce that his evidence would be 'lay evidence'. 21 Because of the possible difficulties in the admissibility of evidence to be given by the witness, a direction was given that the evidence would be taken on a voir dire basis. During final address, Counsel were given the opportunity to make submissions as to whether or not all or some of the evidence should be admitted as evidence in the proceeding. 22 In the event, Mr Leeming consented to that evidence which was referred to by the defendant in its written and oral submissions being admitted. The remainder, he objected to on the grounds of relevance. 23 Mr Robinson's evidence related to the nature of the Australian electrical goods market in mid-2005. Specifically, he gave evidence that the electrical goods market at the time was dominated by two major players who strenuously fought to exclude other smaller manufacturers, including brands such as Chint which sold Chinese bakelite, from the market. Various commercial tactics were used by Clipsal and HPM to maintain their market share, and to prevent electrical wholesalers from agreeing to purchase Chinese bakelite. 24 Mr Robinson at first gave evidence that Clipsal and HPM controlled somewhere around 90% of the Australian market, however on cross examination he admitted that this did not take into account those products which were sold by wholesalers who were not affiliated with any buying group [non-aligned wholesalers]. 25 Mr Robinson was not a witness who answered questions responsively. Time and time again his answers extended across many many many minutes and he seemed content to express opinions on all manner of subjects, interspersing those opinions with hearsay material. In consequence the evidence which he gave could only be of limited value, if permitted to be adduced at all. 26 Ultimately I have determined to allow the evidence and to treat with the difficulties involved in accepting the evidence as a matter of weight. In that regard the readiness of Mr Robinson to venture opinions outside of the questions asked of him very severely limits the ability of the Court to accept the evidence save where it was corroborated by contemporaneous documents already in evidence or by the evidence given by other witnesses whose credit was unassailable. 27 Ultimately, Mr Robinson's evidence was not of any great utility to the Court. All he was able to establish was that the electrical goods market was dominated by two major players - HPM and Clipsal, and that these large manufacturers used various commercial tactics against their competitors in the market. Neither of these facts was in dispute. In addition, Mr Robinson's evidence regarding the nature of the market was primarily relevant to the question of whether the market share and sales representations allegedly made by the plaintiff were misleading and deceptive. For reasons set out below, the finding is that the pleaded market share and sales misrepresentations were not made out. The evidence given by Mr Adam Thomas 28 Mr Thomas commenced working for Cosmoluce in May 2006, some time after the agreement was entered into. Prior to this, he was employed as a sales representative by HPM. As with Mr Robinson, a large part of Mr Thomas' evidence went to the nature of the electrical goods market. He also gave evidence as to the difficulties he experienced while trying to sell Chint products as an employee of Cosmoluce. 29 The plaintiff did not successfully raise any issues as to Mr Thomas' credit. Ultimately, the main area of dispute with regards to Mr Thomas' evidence did not concern his evidence per se, but rather the inferences which the defendant sought to draw from this evidence regarding the allegedly misleading and deceptive nature of the various representations allegedly made by the plaintiff. To the extent it was necessary for the Court to decide these issues, they are discussed further below.

[131]

"It is clear that Lord Reid envisaged in Schuler that there may be cases in which it is obvious that a breach is incurable. He gave the example of a breach of confidentiality. If the breach involved disclosure in public it would be clearly impossible to put matters right, but one can envisage a situation where a limited breach of the obligation could be put right (for example where the party in breach retrieves the document containing the information and obtains a binding and effective undertaking by the recipient of the confidential information, not to produce the product the subject of the confidential information). The advantage of notice to a party in default is that it at least gives that party an opportunity to see what is can do to "put matters right", even in circumstances where it might appear to the innocent party that there is nothing that can be done." [emphasis added] 37 In short, the fact that the temporal period in which the obligation had to be performed had expired does not prevent the breach from being a breach which is "capable of being remedied:" see Batson v De Carvalho (1948) 48 SR (NSW) 417 at 427 ("[a] breach may be remedied even … though the time for doing the thing under the contract may have passed"), Tricontinental Corporation Ltd v HDFI Ltd (1990) 21 NSWLR 689 at 702 and 722 - 723, Burger King Corporation v Hungry Jacks Pty Limited [2001] NSWCA 187 at [113] - [124], Mangrove Mountain Quarries Pty Limited v Barlow [2007] NSWSC 492 at [22]. The present case is in contradistinction with decisions holding that such clauses apply even if in fact the obligation cannot readily, if at all, be cured: cf: Waters Lane Pty Limited v Sweeney [2006] NSWSC 222 at [67] - [95]. Conclusion 38 As a result of propositions one and two, Chint Australasia had no entitlement to exercise its clause 16.2(a) contractual right of termination by reason of Cosmoluce's breach of clause 11.3 until it issued a written notice requiring the remedy of that breach and that breach was not remedied within 30 days after the receipt of the notice. Chint Australasia issued a notice under clause 16.2(a) on 6 November 2006. Thus, Chint Australasia's entitlement to terminate the Distribution Agreement by reason of the breach of clause 11.3 arose no earlier that 7 December 2006. 39 The acts, matters and circumstances relied on by Cosmoluce as being actions "unequivocally … inconsistent with the [Chint Australasia's] exercise of the right to terminate" all occurred prior to 7 December 2006 (see paragraph 37, amended defence). However, because no right to terminate had arisen prior to 7 December 2006, those matters cannot be actions "inconsistent with the exercise of … [Chint Australasia's] right to terminate" and cannot constitute an "election to affirm the Distribution Agreement". 40 It is axiomatic that no waiver of the right to terminate could be effected by Chint Australasia prior to the right to terminate arising. Prior to that right arising there can be no confrontation between mutually exclusive courses, which is the essence of waiver or election: Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) (1993) 182 CLR 26 at 41. 41 There is no substance in Cosmoluce's proposition that in commencing these proceedings seeking specific performance, Chint Australasia is seen to have affirmed the Distribution Agreement. Ogle v Comboyuro Investments Pty Limited (1978) 136 CLR 444 involved a vendor who was entitled to rescind a contract for the sale of land because of the purchaser's failure to complete on time, despite the fact that he had elected to sue for specific performance. It was found that the vendor was not precluded from later rescinding the contract and claiming damages for the continued refusal by the purchaser to complete if the purchaser's conduct evinced an intention no longer to be bound by the contract. 42 The following observations were made by Gibbs, Mason and Jacobs JJ [at 457-459]:

[132]

The commencement of the action for specific performance did not waive the breach of contract. It waived reliance by the vendor on the breach of contract as the breach of a fundamental term thereof entitling the vendor to rescind. It has been submitted that events thereafter up to 18th November were no more than a continuation of a preceding breach, reliance upon which as a ground for rescission had been waived. We do not agree. By the time of the repudiation and rescission alleged in the current statement of claim, it had become clear that the purchaser had no intention of completing within a reasonable time, or probably at all. Much reliance was placed by the purchaser on the decision of this Court in Carr v JA Berriman Pty Ltd [1953] HCA 31; (1953) 89 CLR 327 in support of the proposition that continuance of a breach which the other party had not elected to treat as a ground for rescission could not thereafter be a ground for such rescission unless a further breach amounting to repudiation of the contract was proved. See also Larking v Great Western (Nepean) Gravel Ltd (In liq.) , per Dixon J [1940] HCA 37; (1940) 64 CLR 221, at p 237. But in Carr v JA Berriman Pty Ltd Fullagar J. enunciated the further principle that "a failure to remedy the breach might continue so long and in such circumstances as to evince an intention ... no longer to be bound by the contract". Fullagar J continued (1953) 89 CLR, at p 349: "In other words, the only legitimate inference might be that he is saying: 'Not only have I broken my contract by not doing the thing on the due day, but I am not going to do the thing at all', or 'I am not going to do the thing at all unless and until I find it convenient to do it'. In this way a right to rescind might arise which is not based on breach of the particular promise as such. That promise, even if essential to begin with, has become non-essential by reason of the election of the promisee, but the promisee may nevertheless be able to establish that the conduct of the promisor with respect to his promise amounts to a refusal to be bound by the contract." When this principle is particularly applied to contracts for the sale or purchase of land and where the breach is a failure to complete on the due date, a party who has waived a right to treat that failure to complete on the due date as the breach of an essential term may nevertheless thereafter call on the other party to complete and a failure on the part of the latter to complete on or by a further named day fixed reasonably ahead or even a continued long failure to complete will amount to a refusal to be bound by the contract ( Holland v Wiltshire , per Kitto J [1954] HCA 42; (1954) 90 CLR 409, at p 420 ) and a repudiation thereof entitling the other party to rescind and to claim damages for loss of the bargain. In this particular context there is no different in consequence between regarding the conduct subsequent to the actual breach as a further breach of the contract and regarding it as a refusal to be bound by the contract and consequently a repudiation thereof. Or it may perhaps better be said that the first breach is a failure to complete on the due date and the later breach is a failure to complete at all. (at p459)

[137]

"Where time is not made of the essence of a contract by the contract itself, although a day for performance is named, of course neither party can strictly make it so after the contract; but if either party is guilty of delay, a distinct written notice by the other, that he shall consider the contract at an end if it be not completed within a reasonable time to be named , would be treated in equity as binding on the party to whom it is given." Similar words appear in many cases, and it is usual to describe a notice given for this purpose as a notice limiting the time at the expiration of which the party giving it "will treat the contract as at an end" if the notice has not been complied with: see, e.g., Taylor v Brown (1839) 2 Beav 180, at p 183 (48 ER 1149, at p 1150) ; Green v Sevin (1879) 13 Ch D 589, at pp 599-600 ; Stickney v Keeble (1915) AC 386, at pp 418, 423 ; Ajit v Sammy [1967] 1 AC 255, at p 258 ; Perry v Sherlock (1888) 14 VLR 492, at pp 507-508 ; and Lenneberg v McGirr (1919) 19 SR (NSW) 83, at p 86 . Of course it is not necessary that the notice should use any particular form of words; it is the substance of what it conveys that matters. For example, it will obviously be sufficient to state that if the notice is not complied with, the party giving the notice will treat the contract as abandoned ( Stickney v Keeble (1915) AC 386) or will rescind it ( Canning v Temby [1905] HCA 45; (1905) 3 CLR 419, at p 431) or will put an end to it ( Wendt v Bruce [1931] HCA 9; (1931) 45 CLR 245, at p 257 ), and there is no reason to doubt that it will be sufficient for a vendor, under a contract similar in form to that in the present case, to give notice that upon non-compliance he will terminate the agreement and either sue the purchaser for breach of contract or resell the property as owner and recover the deficiency, if any, arising on such resale… [Emphasis added] The repudiation of the Distribution Agreement by Cosmoluce on 28 November 2006 45 Whilst it is unnecessary to go further it may be observed that even had Chint Australasia lost its right to terminate the Distribution Agreement by reason of Cosmoluce's failure to comply with its minimum purchase obligations in clause 11.3, Chint Australasia's termination of the Distribution Agreement on 11 December 2006 also relied upon and is supported by Cosmoluce's repudiation of the Distribution Agreement in the letter of its solicitors of 28 November 2006. 46 A party who waives the right to terminate following an essential breach of contract by the other party may, nonetheless, terminate the contract if the subsequent conduct of the guilty party [including a persistence by the guilty party in their breach] manifests a repudiation of the contract: see Ogle v Comboyuro Investments Pty Limited (1978) 136 CLR 444 at 461 - 462, The Millstream Pty Limited v Schultz [1980] 1 NSWLR 555 C - G, per McLelland J. 47 In Koompahtoo Local Aboriginal Land Council v Sanpine Pty Limited (2007) 82 ALJR 345, the majority decision dealt with the different senses in which the term repudiation falls to be used. The first was identified as a reference to conduct which evinces an unwillingness or inability to render substantial performance of the contract. Their Honours observed that this is sometimes described as conduct of a party which evinces an intention no longer to be bound by the contract or to fulfil it only in a manner substantially inconsistent with the party's obligations. That form of conduct may be determined renunciation:

[190]

ii. that HPM and Clipsal (the two major manufacturers of bakerlite products) would not 'take favourably' to the entry of Chint products into the market [T 296.25-296.35], and that there would be likely to be opposition from these major players [T293.1-293.11]. 98 With regards to the quality issues, Mr Fred Frangi gave evidence that he told Cosmoluce that there had been some problems with quality in the early stages, which had since been rectified [T67.12]. He admitted that he had never informed Cosmoluce of the extent of those problems [T66.39]. However, as noted above, the defendant did not plead a case of misrepresentation with regards allegedly defective Chint products. In any event, issues with quality would only be relevant if the defendant could establish that the allegedly defective products caused damage to Chint's reputation in the Australian market. Had this been found to be the case, then the fact that some products may have been defective may have constituted indirect evidence that the representation that "Chint is a well recognised and well accepted brand, with a good name, in the Australian Market" was untrue. Finding of fact - brand awareness representation 99 Ultimately, the defendant fails on this point because it has not effectively demonstrated the causal link between the quality issues in the early Chint batches and the misleading and deceptive nature of the alleged representations. It has not shown that that the problems with defective goods, which arose prior to the distribution agreement, had caused such significant damage to the Chint brand that the representations which were made in July 2005 regarding the strength of the Chint brand in the market were misleading and deceptive. 100 Mr Tony Frangi gave evidence, which was not substantially refuted by the defendant, that the problems experienced with the early batches of Chint products involved only a small percentage of the total volume of Chint products, and that the return of small numbers of goods was considered normal within the industry [T147]. 101 Mr Fred Frangi's evidence, which is accepted as reliable, is that, in the wake of the early batches of defective goods, Chint Australasia "did a lot of work to regain confidence in the market place and we were quite successful in doing so" [T83.48]. 102 It is true that the Frangi brothers had claimed, in their approach to Chint China for compensation, that "the Chint brand is starting to be affected" by the defective stock [Ex P6]. Nonetheless, these kind of statements are not sufficient to establish that Chint was no longer, in July 2005 a "well recognised and well accepted brand, with a good name, in the Australian Market", as this representation would have been understood by Cosmoluce in the circumstances. 103 Similarly, Mr Thomas' evidence that he personally, as a representative of competitor brand, had not come across the Chint brand prior to mid-late 2005 is insufficient to establish that the alleged representation was false. This is true especially where Cosmoluce would have been interpreting the representation in light of its own knowledge that Chint was a start up brand in Australia, and with regard to their own knowledge of the dominance of HPM and Clipsal in the relevant market.

[199]

"We have a customer base of about 60 customers. Some of these are wholesale customers, and some are electricians. Once you sign the agreement, we will give you the names of the wholesale customers. We will continue to service the electricians, by transferring them over to Holroyd." [Affidavit Fred Frangi at 109] 112 Mr Tony Frangi gives evidence that he recalls his brother making a statement to that effect [Affidavit Tony Frangi at 37]. 113 Mr Fred Frangi also gives evidence that he did, in fact, provide the names of the 27 wholesale customers to Cosmoluce on or about 11 October 2005. He claims that he was never approached by anyone from Cosmoluce complaining about the customer list not containing 60 names [Affidavit Fred Frangi at 118-120]. Finding of fact - the customer base representation 114 While there was no express qualification of the statement made in the two PowerPoint presentations, that "(a)fter signing, Lumbalite customers will deal directly with Cosmoluce", it appears that, in the context in which the parties were negotiating, it was clear to both parties that Cosmoluce, as a distributor, would be dealing with wholesale, and not retail customers. The word 'customers' in this context therefore has a narrower meaning, and is confined to wholesale customers of Lumbalite. 115 Under cross examination, Mr Graoroski acknowledged that the only customers to whom Cosmoluce was selling Chint products were wholesalers and lighting retailers. He also accepted that Cosmoluce only expected to have the wholesale customers transferred, and not any electrical contractor customers. He was aware that these electrical contractors would continue to go through Holroyd [T302.43 and T326.23-326.29]. 116 Taking this mutual understanding of the parties into account, and accepting that the names of the wholesale customers were given to Cosmoluce in October 2005, the finding is that there was no relevant misrepresentation by Chint Australasia. The resumption representation 117 Mr Graoroski gives evidence that the following conversation [which is in part repetitive of the conversation already set out in the market share and sales representations section above] took place on 10 October 2005, when the parties were preparing to sign the Distribution Agreement:

[225]

viii. Cosmoluce's conduct following the termination of the Distribution Agreement is inconsistent with its purported rescission of the Distribution Agreement on 28 November 2006. After its purported rescission of the Distribution Agreement, on 18 December 2006 Cosmoluce performed the terms of the Distribution Agreement relating to the re-purchase by Chint Australasia of Chint products held in stock by Cosmoluce following termination. 133 For these reasons, even if the defendant had succeeding in any of its misrepresentation cases, no order rescinding or validating the purported rescission of the Distribution Agreement or clause 11.3 of that Agreement would have been made. The estoppel issue 134 Cosmoluce attempts to establish, in answer to Chint Australasia's claim for breach of contract, a promissory estoppel based on the final alleged misrepresentation (the Resumption Representation). This, it is claimed, bars Chint Australasia from asserting an entitlement to damages against Cosmoluce for a breach of clause 11.3 of the Distribution Agreement (see paragraph 34, Further Amended Defence). 135 Cosmoluce's estoppel case fails on the facts. No representation to the effect of the Resumption Representation was made by Chint Australasia. 136 In any event, the conduct of Mr Fred Frangi, which is alleged and relied on to form the foundation of the estoppel (being a nod of the head or other apparent indication of agreement when Mr Emirian put the substance of the Resumption Representation to Mr Fred Frangi), is not sufficiently clear and unambiguous to form the foundation of an estoppel: see Legione v Hateley (1983) 152 CLR 406 at 435 - 436. 137 Further, the attempt by Cosmoluce to establish an estoppel on the basis of the Resumption Representation is excluded by the entire agreement clause 19.10 of the Distribution Agreement. 138 The capacity of an "entire agreement" clause in the nature of clause 19.10 of the Distribution Agreement to exclude an estoppel arising from pre-contractual conduct has been the subject of a division in the authorities. It is supported by the judgment of McLelland J in Johnson Matthey Ltd v AC Rochester Overseas Corp (1990) 23 NSWLR 190 at 195G - 196D, the judgment of Miles CJ in Skywest Aviation Pty Limited v Commonwealth of Australia (1995) 126 FLR 61 at 102 - 106, the judgment of Bryson J in Australian Co-operative Foods Ltd v Norco Co-operative Ltd (1999) 46 NSWLR 267 at 279, [51] - [52], the judgments of Young CJ in Eq in CG Mal Pty Limited v Sanyo Office Machines Pty Limited [2001] NSWSC 445 at [49] - [54], and Arnot v Hill-Douglas [2006] NSWSC 429 at [80] - [87] and Palmer J in Franklins Pty Limited v Metcash Trading Ltd [2007] NSWSC 242 at [94] - [97]. 139 In State Rail Authority of NSW v Heath Outdoor Pty Limited (1986) 7 NSWLR 170 McHugh JA (at 193) rejected the ability of the parties to exclude, by contract, an estoppel based on pre-contractual conduct (see, to the contrary, Kirby P at 195 - 196). McHugh JA's view was followed by Rolfe J in Whittet v State Bank of New South Wales (1991) 24 NSWLR 146 at 153D - 154D. The authorities were discussed by Allsop J in Branir Pty Limited v Owston Nominees (No 2) Pty Limited (2001) 117 FCR 424 at 543, [444] - 544, [447], where the view of McHugh JA in State Rail Authority of NSW v Heath Outdoor Pty Limited was (in obiter) preferred. 140 In Ryledar Pty Limited v Euphoric Pty Limited [2007] NSWCA 65 at [204] - [214] Tobias JA discussed the authorities but expressly left the question open. 141 In my view the plaintiff is correct in its submission that, notwithstanding the division in the authorities, the balance of the authorities in the Equity Division of the Supreme Court of New South Wales favours the view that no estoppel based on pre-contractual conduct can be established in the light of an "entire agreement" clause of the kind contained in clause 19.10 of the Distribution Agreement. Clause 16.3(p) 142 Clause 16.3(p) of the Distribution Agreement was in the following terms:

[229]

When a party to a simple contract, upon a breach by the other contracting party of a condition of the contract, elects to treat the contract as no longer binding upon him, the contract is not rescinded as from the beginning. Both parties are discharged from the further performance of the contract, but rights are not divested or discharged which have already been unconditionally acquired . Rights and obligations which arise from the partial execution of the contract and causes of action which have accrued from its breach alike continue unaffected. When a contract is rescinded because of matters which affect its formation, as in the case of fraud, the parties are to be rehabilitated and restored, so far as may be, to the position they occupied before the contract was made. But when a contract, which is not void or voidable at law, or liable to be set aside in equity, is dissolved at the election of one party because the other has not observed an essential condition or has committed a breach going to its root, the contract is determined so far as it is executory only and the party in default is liable for damages for its breach. (See Boston Deep Sea Fishing and Ice Co v Ansell [(1988) 39 Ch D 339]; Hirji Mulji v Cheong Yue Steamship Co. [[1926] AC 497]; Cornwall v. Henson [(1989) 2 Ch 710]; Salmond and Winfield , Law of Contracts , (1927), pp. 284-289; Morison , Principles of Rescission of Contracts (1916), pp. 179, 180.) 146 The words in 16.3(p) "subject as otherwise provided in this document and to any right or obligations which have accrued prior to termination or expiration" make it clear that the construction for which Cosmoluce contends it is misconceived. The foreign exchange issue 147 During the hearing the parties resolved the currency conversion issues which had previously separated them. The Rule in Jones v Dunkel (1959) 101 CLR 298 148 Mr Leeming SC submitted that there was special significance in the failure of Cosmoluce to call Mr Emirian to give evidence. 149 In dealing with this contention it is to be noted that there is before the Court evidence given by Mr Swayn, a director of Cosmoluce, seeking to explain Mr Emirian's unwillingness to give evidence on behalf of Cosmoluce. That evidence amounted to the following:

Chint Australasia Pty Limited v Cosmoluce Pty Limited

At a glance

Court

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Before

Source

Judgment (235 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (61)

Cited By (4)