Cummins Generator Technologies Germany GmbH v Johnson Controls Australia Pty Limited - [2015] NSWCA 264 - NSWCA 2014 case summary — Zoe

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Cummins Generator Technologies Germany GmbH v Johnson Controls Australia Pty Limited

[2015] NSWCA 264

Court of Appeal (NSW)|2014-10-15|Before: Beazley P, Gleeson JA, Leeming JA, McDougall J

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At a glance

Source facts

Court

Court of Appeal (NSW)

Decision date

2014-10-15

Before

Beazley P, Gleeson JA, Leeming JA, McDougall J

Source

Original judgment source is linked above.

Judgment (26 paragraphs)

[1]

Introduction

These proceedings relate to the supply and installation of a generator set (the additional generator set) to augment the existing emergency power supply of a Data Processing Centre (DPC) operated by IBM Australia (IBM) at Baulkham Hills. A generator set comprises a diesel engine, an alternator, a cooling system and a control system. The additional generator set was unsuitable for its purpose as the alternator was not capable of working safely in parallel with the existing generators. The fault was rectified at a cost, net of GST, of approximately $988,000. The central question in issue is who is liable to bear that cost.
The appellant, Cummins Generator Technologies Germany GmbH (Cummins), is a German company which, under German law, is the successor to and responsible for the acts, omissions and liabilities of AVK Deutschland GmbH & Co, a company referred to in the proceedings below as "AVK". AVK was the manufacturer and supplier of the alternators in the existing emergency power supply standby generators at the Baulkham Hills DPC. It provided a quotation for an alternator to the second respondent, Energy Power Systems Australia Pty Limited (EPSA). In doing so, AVK was alleged to have made representations as to the compatibility of the alternator in the additional generator set with the alternator for which it quoted and, specifically, as to the winding pitch ratio of the alternator in the existing generator.
The first respondent, Johnson Controls Australia Pty Limited (Johnson Controls) was the project manager and head contractor for the supply to IBM of the additional generator set and for its installation. Its obligation was to deliver the completed project to IBM. Johnson Controls engaged Webb Australia Group (NSW) Pty Limited (Webb), the first defendant in the proceedings below, as a consultant to prepare a specification for the works and to advise Johnson Controls on the tenders submitted for the work. Webb is not a party to this appeal.
The second respondent, EPSA, was the successful tenderer for the project. EPSA was a licenced dealer for Caterpillar Inc (Caterpillar), a competitor of AVK in the market for the supply of alternators, although the evidence did not disclose whether AVK was aware of that.

[3]

The appeal

Cummins appealed against the judgment in favour of Johnson Controls and against the judgment on the cross-claim in favour of EPSA. The issues raised on the appeal were as follows: (a) Whether his Honour erred in finding that AVK had made representations as to the winding pitch of the existing alternators and thereby engaged in misleading and deceptive conduct: grounds 10 and 11; (b) Whether Johnson Control's loss was caused by AVK's conduct: grounds 1-5; (c) Whether his Honour erred in determining that Johnson Controls had suffered loss and damage: grounds 6 and 7; (d) Whether his Honour erred in rejecting certain of the expert evidence including part of the joint expert reports: grounds 8 and 9; (d) Whether his Honour erred in his finding of apportionment: ground 12. Cummins did not appeal against the quantification of damages.
By notice of contention, Johnson Controls contended that the primary judge ought to have held that it had established its case of third party reliance or indirect causation against AVK and was entitled to judgment in the sum of $1,427,753.83 against Cummins as successor to and responsible for the acts, omissions and liabilities of AVK. The trial judge did not decide this issue on the basis that, as Johnson Controls had established a case of direct reliance, the question was moot.
Cummins initially identified causation as the principal issue on the appeal, but in its oral submissions indicated that the "first main issue in this appeal … is whether AVK engaged in misleading or deceptive conduct". Cummins conceded that AVK made the third representation above at 12, that the alternator that it offered to supply to EPSA was "suitable for parallel operation with" the existing alternators. It contended that this misrepresentation was "immaterial", as it never sold the alternator to EPSA. It remained in issue whether it made the first and second representations. Cummins contended that if the first and second representations were not made, the other issues fall away.
Johnson Controls based its case on both direct and third party reliance. The direct reliance case was that AVK should have known that EPSA would pass the representations on, as they did by supplying the Technical Data Sheet to Johnson Controls. Johnson Controls contended that the relevant representations which they relied on in deciding to accept the non-conforming tender were contained in the Technical Data Sheet.
Johnson Controls' third party reliance case, pleaded in the alternative, was that it was entitled to succeed because AVK's misleading or deceptive conduct, directed to EPSA, caused EPSA to tender to supply an alternator which purportedly could, but in fact could not, operate in parallel with existing alternators. Johnson Controls thus contended that it suffered loss as a result of EPSA's reliance on the representations made by AVK.
The trial judge held in Johnson Controls' favour that the case was one of direct reliance. His Honour, at [294], chose not to speculate on the outcome of an indirect reliance case as the question was "entirely moot".

[4]

The evidence

Apart from the expert evidence, the evidence before his Honour was mostly documentary. There were certain matters which were uncontroversial. These were identified in the submissions of Johnson Controls (and not challenged by Cummins) as follows: "(a) AVK was the manufacturer of the two existing standby, or emergency backup, [alternators] at the DPC; (b) Continuity of electrical power supply was essential to the DPC; (c) The two existing standby generators operated in parallel; (d) Each standby generator contained an alternator; (e) IBM wanted to increase the capacity of the emergency power supply at the DPC by adding a third generator set to the two existing standby generator sets; (f) It was common ground at trial that: (i) Alternators have been required to work in parallel for over one hundred years; (ii) To operate in parallel the winding pitch ratio for each alternator had to be the same - a fact described by the primary judge as 'notorious among electrical engineers and suppliers of electrical generating equipment'; (iii) Manufacturers of generating sets, such as AVK, retain records that would enable the technical characteristics of generating sets they had manufactured to be identified (including the winding pitch ratio of alternators); (iv) It was common and good practice to refer to the manufacturer of generating sets if technical details were required; and (v) A common and appropriate way for a contractor to ascertain the winding pitch of an existing alternator was to ask the manufacturer; (g) AVK: (i) As the manufacturer, was the ultimate reliable source of information as to the technical characteristics of the alternators, including their winding pitch ratio, in the two existing standby generators; (ii) Was requested to provide a quotation for the supply of the third standby generator set to operate in parallel with the two existing standby generator sets; (iii) Was provided with the declared manufacturing serial number, 68 17 182 A004, for one of the existing standby generator sets; (iv) Asked whether the new standby generator should be the same as the existing alternator with the declared manufacturing serial number; (v) Was provided with the draft specification for the supply and installation of the [additional alternator] to operate in parallel with the two existing standby generators; (vi) Made an offer for the supply of the [additional alternator] on 28 February 2006 (quotation no: P-06.20259/AUS) which: • referred to the declared manufacturing serial number of the existing standby generator of 68 17 182 A004; • attached a detailed technical specification which stated 'Parallel operation: Alternator suitable for parallel operation with other alternators'; and (vii) Provided a Technical Data Sheet on [14] March 2006 (which referred to quotation no: P-06.20259/AUS) and which stated, among other things, that the alternator proposed to be supplied had a '[w]inding pitch: 2/3'; … (i) Following installation of the [additional generator set] in December 2006, testing of the three standby generators operating in parallel on 18 December 2006 identified dangerously high temperatures being generated inside the control panel, and that the winding pitch of the [additional alternator] must be different to the two existing standby generators; (j) Within a day of that discovery, and upon further enquiry being made, on 19 December 2006 AVK advised that the winding pitch of the two existing standby generators was 13/15 and not 2/3; (k) The two existing standby generator sets at Side 1 at DPC each included an alternator with a 13/15 winding pitch; and (l) The additional generator set that was installed was completely unsuitable for its task, because the alternator was not capable of working safely in parallel with the existing generators."
Dr Grantham, Johnson Controls' electrical engineering expert gave evidence, which was not challenged, that there were three ways the necessary technical information as to the winding pitch of the alternator in the existing generator sets could be obtained: (1) from the technical data supplied by the manufacturer at the time of the original purchase; (2) from the manufacturer directly; or (3) by visual inspection, although this last option was often not feasible, as the end windings were usually covered with insulating tape. In the present case, the technical data could not be found and the winding pitch could not be ascertained on visual inspection. That left AVK as the only feasible source of the technical information required to ensure that the additional generator set could work in parallel with the existing machines. There was no dispute about these matters, although Cummins pointed out that there was no evidence that it was aware that that the technical data in respect of the existing generator sets could not be found.
His Honour held, at 277, that as the manufacturer of the original alternators, AVK was the "ultimate and reliable source of information as to the technical characteristics of those alternators, including their winding pitch ratios". His Honour also found that anyone who wanted to access that information was likely to contact AVK for that purpose. AVK did not challenge the correctness of these findings.

[5]

The email correspondence

There were a number of critical email exchanges between EPSA and AVK. The first was on 23 January 2006 from Derek Morley, an EPSA Sales Representative, stating: "I need an updated cost on a unit to run in parallel with existing units … existing serial number 6817182A004 ETAL REFERS … THESE WERE 1875 KVA UNITS I THINK Looking for unit to be here in August this year … any problem"
Mr Morley's email was answered by Maja Spies, an AVK Sales Engineer, on 24 January 2006, as follows: "… many thanks for your inquiry. should the new unit be the same as existing alternator with d.m. series number?" The "d.m. series number" referred to in this email was the declared manufacturer's serial number on the existing generator sets at IBM's DPC.
Mr Morley responded to Ms Spies on 25 January 2006, stating: "[They] want to stay with AVK. What are the options The important point is the new unit will run in parallel with two of the existing ones … Do we need to match pitch Here is a scan or the draft spec for the job: webb brief spec.pdf."
At the time that EPSA sought this information from AVK and provided it with a copy of the draft specifications, it did not inform AVK that it was proposing to put in two tenders for the additional generator set, one using the AVK alternator and one using Caterpillar's alternator.
EPSA sent two more emails to AVK before receiving a response. In the second of these, on 27 February 2006, Mr Morley asked AVK what the problem was in obtaining the information he was seeking and informed AVK that "[t]he consultant is about to issue the spec and we need to know what the options are and what you suggest is the best approach".
Ms Spies replied to Mr Morley on 28 February 2006 attaching AVK's offer. The subject line of the email stated "Repeat of our previous order-no. 68 17 182 A004". The body of the email referred to "offer-no. P-06.20259/AUS" and stated that the offer was attached.
The attached offer was headed "Project: Repeat of our previous order-no. 68 17 182 A004 Quotation P-06.20259/AUS" and contained a quote for the supply of "1 each 'AvK'-synchronous threephase alternators, acc. to detailed technical specification attached". A unit price of €44,500 was quoted, with delivery in "week 13, 2007", provided AVK received "techn. and commercially clear order latest till 13.3.06". A document headed "Technical Specification" was attached to the email. In that document under the sub-heading "Electrical data and characteristics", the following appeared: "Alternator suitable for parallel operation with other alternators".
On 9 March 2006, Mr Morley emailed Ms Spies requesting that she send "the tech data sheet with pitch/reactances etc and times etc for the schedules we need to complete". The reference to "schedules" was to the schedules in EPSA's tender documents.
On 14 March 2006, Ms Spies responded by email as follows: "Repeat of our previous order-no.668 17 182 A004 Our offer-no. P-06.20259/AUS … pls find attached the requested technical data sheet."
The winding pitch specified in the attached Technical Data Sheet was 2/3.
On 6 April 2006, following the submission of the two tenders, Mr Murphy, EPSA's sales manager, again communicated with AVK, informing it that the proposed client was insistent on "having three alternators from the same manufacturer" (that is, that the alternator in the additional generator set was to be an AVK alternator) and asked whether there could be an "improvement in the delivery time of a technically identical machine". Mr Murphy advised that "our client is wishing to make a decision in the very near future" and requested that the inquiry be treated as promptly as possible.
Mr Morley also emailed AVK on 6 April 2006, emphasising that EPSA needed an answer overnight "if at all possible", or alternatively, advice as to when they could "supply an answer". Theo Dragonas, AVK's representative in Australia and who worked out of AVK's Singapore office, replied on 7 April 2006, stating that he did not know the exact requirements and asked whether it was possible to quote a "Stamford equivalent or AVK K model" out of Singapore. Mr Morley responded on 9 April 2006 advising that EPSA's "definite preference" was for "another AVK unit, not a Stamford or a Cat or a LS ETC". The email continued: "IF YOU CAN ASSURE US THE 'K' will operated in aparallel and share KVARS WITH [THE] OLD UNITS WHO KNOWS? But you never know unless you try so if you have something that will run in parallel send me the details and the offer. Hopefully from the AVK offer you can get the tech details but from memory its 2/3 pitch and X"D LESS THAN 12 … WILL A 'K' RUN IN PARALLEL WITH THE OLD UNITS I have an engine, subject to prior sale, available here about Oct if I move fast."
On 12 April 2006, Mr Morley forwarded another email to AVK asking what the options were for machines that would be guaranteed to run in parallel with the existing generator sets.
On 13 April 2006, Mr Dragonas advised that there was a machine in Singapore that might be suitable. He attached the technical data for DSG86K1-4. However, he cautioned that he did "not know the exact specs for this job … so careful analyses must be conducted to see if this unit is capable".
On 20 April 2006, Mr Morley, in response to an email from AVK asking whether EPSA still wanted the alternator in Singapore, as another customer had shown interest, informed AVK that the client was still asking questions to which they hoped to respond the following day. He said, "If [the alternator in Singapore] goes to someone else it goes and that is all there is to it". He said that they would advise the client that someone else was interested in the machine and pointed out that they still had no reply from Germany as to the available options.

[6]

Mr Morley's evidence

In his affidavit evidence, Mr Morley stated that in December 2005 he was approached by Rod Hoddinett of Webb in relation to the IBM DPC project. Mr Hoddinett emphasised to Mr Morley that Webb wished "to stay with CAT/AVK package". Mr Hoddinett informed Mr Morley that they were checking the pitch with AVK. Some time later, Mr Hoddinett informed Mr Morley that the pitch was 2/3.
Mr Morley gave evidence that an alternator's pitch is not discoverable on inspection. He said that in a project such as the IBM project, where an additional machine was to be run in parallel with existing machines, his first action would be to obtain a quote from the original manufacturer. AVK's offer did not state the pitch. Mr Morley said "that [was] not unusual as manufacturers want to keep that confidential at the quoting stage for commercial reasons". He said that after he received the quotation from AVK, which clearly referred to a repeat of the previous order, he sought technical data schedules from AVK. He stated that the inclusion of the previous order number meant that AVK was offering a suitable machine as it was a repeat of the previous machine.
Mr Morley also gave evidence that in his experience: "… it was not unusual that the new machinery was to be matched with existing machinery. As the winding pitch was not nominated in the Webb specifications my approach was to seek this information from the manufacturer. In my view, this was the most reliable means of obtaining this information as well as being the only source open to me. [Webb] may well have that data [on the pre-existing generator sets] but had decided not to nominate it in the tender documents. This was my usual practice and one I had adopted previously on other jobs where new equipment was to run in parallel with existing."
Mr Morley explained that the reason for submitting the non-conforming tender was due to the long lead time in obtaining delivery of the AVK alternator both from AVK and elsewhere. He commented that "[a]t that time, there was a upsurge of business in China and it was buying just about all generators available worldwide".
Mr Morley explained in his affidavit evidence that as the information he had obtained from AVK indicated that the winding pitch of the existing machines was 2/3 either he or John Murphy, EPSA's sales engineer, obtained quotes and technical data from CAT for an alternator with a pitch of 2/3.
In cross-examination, Mr Morley said that in his email communications with AVK, he was seeking a quotation for a new piece of equipment to run in parallel with the existing generator sets. Mr Morley said that it was his responsibility to find out from the original alternator manufacturer the pitch of the existing alternators and to obtain suitable machinery to match. He said, however, that he would not order a new alternator without undertaking an independent check as to the specifications of the existing alternators. When asked if he thought that Webb were undertaking the task of an independent check of the specifications, Mr Morley respondent, "No … I was undertaking my task of checking, of seeking from the original alternator manufacturer what the pitch was". This would appear to be a reference to having requested and obtained the technical data sheet from AVK which identified the pitch to be 2/3. He also gave the following evidence in cross-examination: "Q. Do you accept the proposition that it would be necessary to clearly express the question, 'Could you please inform us of the winding pitch of this specific genset?'?' … A. No. HIS HONOUR Q. And that, you say, is because you were asking for a price for an additional machine to run in parallel with it? A. An identical machine. Q. Which of necessity, being identical, would have the same winding pitch ratio? A. Correct."

[9]

Trial judge's reasons

The trial judge found that, having regard to the pre-contractual dealings between EPSA and AVK and the context in which those dealings occurred, AVK made the first and second representations either expressly or impliedly. His Honour's reasons for so finding were as follows: (1) Everyone in the industry, including AVK, knew that for an alternator to work in parallel with another alternator each had to have the same winding pitch ratio. This finding was not challenged. (2) As to the first representation, AVK knew that the new alternator was required to operate in parallel with the existing alternators supplied by it some years previously. It offered to supply a new alternator with a 2/3 winding pitch ratio. His Honour found that inherent in that offer was the proposition that the winding pitch ratio of the new alternator was that which was required to match the existing alternators. (3) As to the second representation, it was also inherent in AVK's offer that the winding pitch ratio of the existing alternators was 2/3. Otherwise, there was no point in offering to supply a new alternator having a 2/3 winding pitch ratio to operate in parallel with the existing alternators.
His Honour, at [241], stated that: "… [Johnson Controls] must show that AVK made its representations knowing, intending or expecting that they would be passed [on to] a third party principal; or in circumstances where, objectively, a reasonable person in its position and with its knowledge must have understood that this was likely."
His Honour, at [242], identified the information available to AVK at the time it made the offer to EPSA to supply the alternator as follows: "(1) it knew that a consultant, Webb, was preparing a specification on behalf of an unnamed principal for the supply and installation of an additional generator set to be operated as part of an end user's emergency power supply system for a [DPC] (all that comes from the draft specification which was provided to AVK, but assumes - I think reasonably - that the draft specification was substantially in the form of the final version); (2) EPSA wanted to submit a tender, or tenders, for supply of the new generator set; (3) the new generator set would be required to work in parallel with the existing generator sets; (4) AVK had supplied the existing alternators (and, it is clear, had kept records of that supply); and (5) EPSA needed to ensure that what it offered would operate in parallel with the existing generator sets; thus, EPSA needed to know, among other things, that the winding pitch ratios of the existing and new alternators would be the same."
The trial judge found, at [249], that having regard to industry practice, AVK "must have understood that one of the purposes of EPSA's inquiry was to ascertain the winding pitch of the existing alternators". His Honour considered that this was so because it was the unanimous view of the experts that a common and appropriate way for a contractor to ascertain the winding pitch of an existing alternator was to ask the supplier.
His Honour considered, at [250], that AVK could not have been so naïve as to think that its quotation might not be beaten by a competitor on either or both of price or delivery time, even though EPSA's preference was for an AVK alternator.
His Honour accordingly, at [251], inferred that AVK should reasonably have understood, if it did not in fact understand, that EPSA required information as to the winding pitch, not only for the purpose of deciding whether to purchase from AVK but, more generally for the purpose of deciding how to structure its tender. However, his Honour observed, at [252], that that observation was "something of a diversion", although not "entirely beside the point", reiterating what he had said at [252], namely, that the "question is, in effect, how far should AVK have understood the information provided by it to EPSA was likely to go".
His Honour answered that question at [253], in the following terms: "… if AVK did not expressly know or understand it, nonetheless it ought reasonably to have expected that the information would be relied upon by EPSA for the purpose of preparing a tender, and that this reliance might extend to preparing a tender that did not specify equipment supplied by AVK."
His Honour then concluded, at [258], that it was probable that AVK in fact understood that the information supplied by it and the representations made by it would be passed by EPSA to the consultant and on to the principal. His Honour also held, at [259], that even if AVK did not have that actual understanding, had it turned its mind to the question it must have understood or appreciated that the information provided and the representations made relevant to EPSA's tender would be passed on up the line to Webb and the principal.
His Honour considered, at [264], that the inescapable inference from the information provided by AVK was that the existing alternators had a winding pitch ratio of 2/3. His Honour concluded, at [266], that EPSA prepared and Webb and Mr Johnson assessed, the non-conforming tender on their understanding gained from the information supplied and representations made by AVK that the new alternator must have a winding pitch ratio of 2/3.
His Honour held, at [268], that the representations were incorrect. The winding pitch ratio required to match the existing alternators was 13/15, not 2/3. It followed, his Honour observed at [269], that the representations were misleading or deceptive.

[10]

Submissions

Cummins accepted that if the first and second representations were made, the test as articulated by his Honour at [241] (set out above at [48]), would be made out. Its contention however, was that the representations contained in its quotation had been taken out of context and that in determining whether there was misleading and deceptive conduct it was necessary "to examine the relevant course of conduct as a whole": Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; 238 CLR 304 at [102]. Cummins sought to rely on the proposition cited in Campbell v Backoffice Investments that it is to: "… [invite] error to look at isolated parts of the … conduct … where the alleged contravention of s 52 relates primarily to a document, the effect of the document must be examined in the context of the evidence as a whole": Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; 218 CLR 592 at [109] per McHugh J."
Cummins accepted that the statement in the quotation that the alternator would run in parallel with the existing alternators was misleading and deceptive and for that reason, it had conceded that the third representation had been made. Nonetheless, Cummins submitted that his Honour's reasoning at [238] (see above at [47]) involved an artificial characterisation of what AVK had stated in its quotation as to what it proposed to sell. It submitted that the effect of its quotation to EPSA was a representation that it would supply goods, which would be compatible with the existing equipment, at the price quoted. The misleading statement was that the equipment to be supplied was compatible. It was not a representation about the existing equipment being operated by IBM.
EPSA submitted that it was clear from Mr Morley's evidence that in requesting the Technical Data Sheet he was seeking the winding pitch of the existing IBM alternators. EPSA also submitted that AVK understood that in responding to that request, the information it provided would "go up the line", that is, that the information would be available to the persons involved in the tender approval process. EPSA contended, therefore, that it was open to them, as a licensed dealer of Caterpillar, to use the information to internally source an alternative Caterpillar alternator. They submitted that, having requested information from AVK for the purposes of completing the tender documents, there was no limitation upon the use that EPSA could make of that information. They pointed out that AVK did not enquire into or seek to impose limitations on the uses to which the information would be put.
Although Johnson Controls accepted that Mr Morley had given evidence that the technical data was usually kept confidential by the manufacturer at the point in time when a quotation was provided, it contended that any confidentiality was lost when, responding to its request, AVK provided it with the Technical Data Sheet on 14 March 2006 and placed no limitation upon its use.
Integral to this argument was the fact that AVK had been provided with the draft specifications prior to forwarding the Technical Data Sheet to EPSA, which expressly stated that tenderers were encouraged to offer other manufacturers' equipment, as quoted above at [45]. In addition, the draft specification nominated different brands of equipment that were suitable. There were then the added factors submitted by Johnson Controls as significant: that the manufacturer was a reliable source of technical information; that EPSA was a licensed Caterpillar dealer; that it was apparent from the specification that any information in a tender would be seen and considered by a variety of personnel, including the head contractor, the project manager, and contractor for the supply of the generator set; that, as conceded by Cummins, AVK at all times knew that the information would be communicated "up the line" to Johnson Controls and others as part of the tender process; and finally, that AVK placed no restriction on the use of the information when it provided the Technical Data Sheet to EPSA.
Johnson Controls also submitted that it was apparent from the email communications, particularly in April, that AVK knew that other manufacturers were being approached to provide the alternator. Johnson also pointed out that his Honour's finding at [258], that AVK knew that the information supplied by it would be passed on by EPSA, was not the subject of challenge.
EPSA's submissions were to like effect. It pointed out additionally that Cummins had not challenged his Honour's observations at [250] as to the likelihood that AVK would have understood that competitive quotes might be sought.

[11]

Consideration

In my opinion, Cummins has not established that his Honour erred in finding that the first and second representations were made. In the first place, there are the findings made by his Honour at [238] (set out above at [47]) that are not the subject of an express challenge by Cummins.
Secondly, Cummins' submission that his Honour's characterisation of the AVK quotation was "artificial" and that the quotation was "prospective" only, failed to grapple with the evidence relating to the information that was provided to AVK. Almost at the outset of the communications between EPSA and AVK, Mr Morley was concerned to know whether it was necessary "to match pitch" (see 25 January 2006 email at [25] above). When AVK then provided its quotation on 28 February 2006, it stated that the alternator to be supplied was "suitable for parallel operation with other alternators". Subsequently, on 9 March 2006, Mr Morley asked "for the tech data sheet with pitch/reactances". He also asked for "times etc for the schedules we need to complete".
In response to that email, AVK forwarded the Technical Data Sheet to EPSA on 14 March 2006. Leaving aside the question as to whether AVK was, or ought to have been, aware that this information would be used by others, it had expressly represented in the Technical Data Sheet that the winding pitch ratio of the alternator for which it had quoted in the 28 February 2006 offer was 2/3.
The misleading representations for which Johnson Controls contended were contained in various statements made by AVK. AVK relevantly made two statements to EPSA in the course of their communications. One statement was that it would supply an alternator with the characteristic that it would operate in parallel with the alternators in the existing generator set. Another statement made was that the alternator for which it had quoted had a winding pitch ratio of 2/3.
Cummins sought to confine its argument to the former statement and the fact that this statement was a representation made about the product it was offering to, but did not in fact, supply. Cummins submitted that AVK's conduct was to be assessed in the context of the dealings between the parties: Campbell v Backoffice Investments: see above at [57]. Although Campbell v Backoffice Investments supports this submission, the contextual approach espoused by Cummins does not detract from the ultimate undertaking required of this Court: to look to what statements were made and to then ask, stated in terms of the statute, whether the conduct, that is, in this case, the statements made, was misleading and deceptive.
The dealings between EPSA and AVK were not as purposeful or directed as Cummins contended. Although in its email of 25 January 2006 (above at [25]), EPSA stated that the ultimate client wanted to stay with AVK, it also asked what the options were, whether it was necessary to match the winding pitch ratio and included the draft specification for AVK's consideration. This correspondence did not convey that AVK was to be the supplier as opposed to the preferred supplier. This was stated expressly in the email of 9 April 2006 (above at [34]).
It was also apparent from the communication between EPSA and AVK that different brand alternators were being canvassed, even from within AVK. That was proved in evidence and was not at any time in dispute. There was then the underlying common fact that the alternator to be supplied was to have the same winding pitch ratio as that in the existing generator set.
Given these factors, his Honour correctly reasoned that it was inherent, or it might be said, implicit, that the first and second representations had been made. Indeed, it is unarguable that the first representation was made: Cummins had offered to supply an alternator, that was a repeat of its previous order, with a winding pitch ratio of 2/3, and which AVK said would operate in parallel with the existing equipment. That had to mean, on AVK's own documents, that was the winding pitch ratio required to match the existing alternators. The engineering evidence made this indisputable. On the engineering evidence, the second representation was the flip side of the first. If the winding pitch ratio required to match the existing alternators was 2/3, the winding pitch of the existing alternators was 2/3.
In my opinion, it was apparent by the end of the argument on this question that the real matter in contention was causation, as Cummins had signalled in its written submissions.

[12]

Causation

The trial judge, at [262], held that the information supplied and representations made by AVK were relied upon: by EPSA for the preparation of what it said was a conforming tender; by Webb when it assessed the tender as conforming, including because it contained a proposal to supply an alternator with a winding pitch ratio of 2/3; and ultimately by Johnson Controls when it assessed the tenders.
At trial, Cummins' case on causation was that to the extent that AVK had supplied information or made representations, it had done so only for the purpose of inducing EPSA to purchase the alternator that AVK offered to supply. It had not supplied the information for EPSA to rely on in deciding to purchase an alternator supplied by a competitor of AVK: see Henville v Walker [2001] HCA 52; 206 CLR 459 at [98]-[100] per McHugh J; Allianz Australia Insurance Ltd v GSF Australia Pty Ltd [2005] HCA 26; 221 CLR 568 at [96], [99] and [100] per Gummow, Hayne and Heydon JJ.
In seeking to make that case, Cummins accepted, as did Johnson Controls, that for the direct reliance case to succeed, Johnson Controls had to establish that the representations were made in circumstances calculated to lead to them being transmitted through EPSA, to others, including Johnson Controls, even though AVK never dealt with Johnson Controls: see Azzi v Volvo Car Australia Pty Ltd [2007] NSWSC 319.
The trial judge rejected Cummins' submission that Johnson had not established a causal connection between AVK's representations and the loss it claimed it had suffered. His Honour found, at [277], that : "… AVK either knew in fact, or must have understood had it turned its mind to the question, that: (1) as the manufacturer of the original alternators, it was the ultimate and reliable source of information as to the technical characteristics of those alternators, including their winding pitch ratio; (2) anyone who wanted access to that information was likely to contact AVK for that purpose; (3) EPSA wanted a quotation for a new alternator to work in parallel with the existing ones; (4) it was important that the new alternator have the same winding pitch ratio as the existing ones, and that it be compatible (for want of a better word) in all other material respects; (5) by offering to supply a new alternator with a winding pitch ratio of 2/3, AVK was effectively representing (because it was required to work in parallel with the existing ones) that the existing alternators had the same winding pitch ratio; (6) EPSA would be likely to rely on this and other information supplied, and other representations made, by AVK, for the purpose of formulating its tender; (7) in the event that, for whatever reason, AVK's offer was unacceptable, it was likely that EPSA would look to a competitor; (8) in doing so, it was likely (indeed, I would have thought, inevitable) that EPSA would continue to rely on the information supplied, and representations made, by AVK."
His Honour, at [278], rejected AVK's argument that it had only supplied the information to EPSA for the purposes of inducing it to purchase the alternator from it. His Honour commented that the circumstances went far beyond the simple example of limited advice postulated by McHugh J in Henville v Walker. His Honour had found earlier, at [48], that everyone involved in the project, including the AVK representatives who dealt with the matter, knew that if the additional generator set was to operate in parallel with the existing sets it was essential to "match the pitch" of the alternators. His Honour had also observed, at [150], in relation to the claim against Webb, that Webb could have made a formal inquiry of AVK as to the winding pitch ratio of the existing alternators.
His Honour concluded, at [280], that AVK was liable for the consequences of its misleading or deceptive conduct. His Honour reiterated, at [329], that EPSA made plain to AVK in Mr Morley's emails and in sending the draft specifications, both its purpose in seeking the quotation and the performance requirements that the new alternator had to meet. His Honour considered that it was too late for AVK to complain that EPSA could have made things clearer to enable it to respond more accurately.

[13]

Legal principles

In Henville v Walker at [103], McHugh J, in considering the situation in which "a person has acted to his or her detriment by reason of or following some conduct of the defendant", stated: "[The conduct] will not be regarded as causally connected with the detriment if it provides no more than the reason why the person acted to his or her detriment. If the defendant intended the person suffering a detriment to act in the general way that he or she did, the common law will invariably hold that a causal connection existed between the conduct and the detriment. But if the conduct merely provides the reason why the person acted, it will not be sufficient to establish a causal connection unless the purpose of the legal norm that the defendant has breached is to prevent persons suffering detriment in circumstances of the kind that occurred.
McHugh J went on, at [103], to provide the following example of the principle: "If a broker negligently advises a client to retain shares because they are a good investment, the broker will be liable for the loss sustained in retaining those shares. But if, having received that advice, the client decides to buy more shares, the broker will not be liable for the further losses unless the terms of the original retainer imposed a duty on the broker to advise in respect of further purchases."
The decision of Brereton J in Street v Luna Park Sydney Pty Ltd [2009] NSWSC 1; 223 FLR 245 provides a further illustration. That case involved, relevantly, a claim by owners of premises nearby to Luna Park that, by the lodgment of two development applications, which were subsequently displayed to the public, the developers of Luna Park had engaged in misleading and deceptive conduct contrary to the Trade Practices Act 1974 (Cth), s 52. At [226], Brereton J considered the submission that: "[Section 52 was] directed at providing a remedy only in respect of conduct directed at individuals or a section of the public, including the plaintiffs, intended to be acted on by them, in a manner consistent with the purpose for which the representations were made to them, and that the statements in the 2001 DA and the 2002 DA were not directed at the plaintiffs. This is sometimes referred to as legal - as distinct from factual - causation." (original emphasis)
In applying that principle, Brereton J held, at [231] that: "The purpose of the development applications was to obtain permission for the conduct of certain activity at the Luna Park site. Insofar as it was foreseeable that the DAs would be placed on public exhibition and might be read by members of the public, the purpose of such public exhibition was to inform neighbours of the proposed development, so that if they wished they might exercise their rights under the planning legislation to object. It was not to inform potential purchasers and developers of future uses of the subject land … Any loss suffered by the plaintiffs as potential purchasers, investors or developers was unrelated to the capacity in which they were intended to receive - if at all - the information contained in or conveyed by the DAs ... No plaintiff communicated to [the developer of Luna Park] his, her or its intention to purchase or redevelop property based on the contents of the 2001 DA or the 2002 DA, nor that they intended to use the information contained in those DAs not just for the purposes for which it was lodged with the consent authority (to obtain planning approval), but for the wider purpose of informing their decisions to purchase or redevelop properties ..."
That statement was quoted by Giles JA in Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd [2008] NSWCA 206; (2009) 73 NSWLR 653, in a passage considering the misleading and deceptive conduct provisions of the Corporations Law 1991 (Cth). Giles JA observed, at [19], that "[c]onduct which merely provides the opportunity for the plaintiff to enter into the transaction will not suffice".
In Travel Compensation Fund v Robert Tambree [2005] HCA 69; 224 CLR 627, the respondents prepared and audited the financial statements of a travel agent in a way that was false and misleading, knowing that the financial statements would be submitted to the appellant for the purpose of determining the travel agent's eligibility to continue to participate in the fund. The travel agent continued to trade illegally for approximately two months until the Department of Fair Trading closed the business. The Travel Compensation Fund paid compensation of $143,050 to persons who had dealt with the agent, of which all but $13,320 related to the period in which the agent was trading illegally. It brought a claim against the respondents for damage suffered by their misleading and deceptive conduct in the full amount of compensation it had paid out.
The Court (Gleeson CJ, Gummow, Hayne, Kirby and Callinan JJ) held, in four separate judgments, that the full amount paid out was recoverable. A central issue was whether the illegality of the conduct of the agent, by trading without a licence, was sufficient to break the chain of causation with respect to losses incurred relating to that period. Gleeson CJ, with whom Callinan J agreed, found that causation in respect of the full amount was made out as the risk of the travel agent continuing to trade illegally was one of the risks against which the applicant sought protection by requiring audited financial statements. His Honour discussed the normative aspects of causation as they related to claims for misleading and deceptive conduct as follows: "28 It is not in doubt that issues of causation commonly involve normative considerations, sometimes referred to by reference to 'values' or 'policy'. However, as Stephen J pointed out in Caltex Oil (Australia) Pty Ltd v The Dredge Willemstad [[1976] HCA 65; (1976) 136 CLR 529 at 567], the object is to formulate principles from policy, and to apply those principles to the case in hand. In the context of considering an issue of causation under the Fair Trading Act, the statutory purpose is the primary source of the relevant legal norms: I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41; (2002) 210 CLR 109 at 119 [25]-[26] … … 30 … In recent cases, this Court has pointed out that, in deciding whether loss or damage is 'by' misleading or deceptive conduct, and assessing the amount of the loss that is to be so characterised, it is in the purpose of the statute, as related to the circumstances of a particular case, that the answer to the question of causation is to be found: Henville v Walker [2001] HCA 52; (2001) 206 CLR 459 at [18], [96], [164]-[165]; I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41; (2002) 210 CLR 109 at [26], [50], [84]. See also, more generally, Allianz Australia Insurance Ltd v GSF Australia Pty Ltd [2005] HCA 26; (2005) 79 ALJR 1079. ... 35 The answer to the problem of causation in the present case is to be found, not in a value judgment, but in an accurate identification of the nature of the risk against which the appellant sought protection and of the loss it suffered, considered in the light of the kind of wrongful conduct in which the first and second respondents engaged."
Gummow and Hayne JJ agreed, at [40], that what had eventuated was the occurrence of the very risk against which the appellant had sought to protect itself. Their Honours explained at [49]: "In the present case, where one of the claims made … was a statutory claim [for misleading and deceptive conduct], 'notions of 'cause' as involved in [that] statutory regime are to be understood by reference to the statutory subject, scope and purpose': Allianz Australia Insurance Ltd v GSF Australia Pty Ltd [2005] HCA 26; (2005) 79 ALJR 1079 at [99] per Gummow, Hayne and Heydon JJ. In particular, the question presented by s 68 of the Fair Trading Act was whether the conduct of each respondent, that constituted a contravention of that Act, was a cause of the loss or damage sustained: I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41; (2002) 210 CLR 109 at [26] per Gleeson CJ, [57] per Gaudron, Gummow and Hayne JJ. The characterisation of [the travel agent's] conduct as unlawful was not relevant to that inquiry."
Kirby J, at [74] and Callinan J, at [79], relevantly agreed with Gleeson CJ as to the proper approach to the determination of causation under the Act.
In Allianz Australia Insurance v GSF Australia at [99]-[100], Gummow, Hayne and Heydon JJ stated: "99 … the case law construing s 82 of the Trade Practices Act 1974 (Cth) ('the TP Act') illustrates and emphasises that notions of 'cause' as involved in a particular statutory regime are to be understood by reference to the statutory subject, scope and purpose. Section 2 of the TP Act states: 'The object of this Act is to enhance the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection.' Section 82 entitles a person to recover the amount of the loss or damage suffered by conduct done in contravention of a large number and range of provisions designed to further the stated object in s 2. 100 In I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41; (2002) 210 CLR 109 at [26], Gleeson CJ said of the construction of s 82: 'When a court assesses an amount of loss or damage for the purpose of making an order under s 82, it is not merely engaged in the factual, or historical, exercise of explaining, and calculating the financial consequences of, a sequence of events, of which the contravention forms part. It is attributing legal responsibility; blame. This is not done in a conceptual vacuum. It is done in order to give effect to a statute with a discernible purpose; and that purpose provides a guide as to the requirements of justice and equity in the case. Those requirements are not determined by a visceral response on the part of the judge assessing damages, but by the judge's concept of principle and of the statutory purpose.' The upshot in I & L Securities was the holding stated by Gaudron, Gummow and Hayne JJ [at [57]]: '[T]he question presented by s 82 of [the TP Act] is not what was the (sole) cause of the loss or damage which has allegedly been sustained. It is enough to demonstrate that contravention of a relevant provision of [that] Act was a cause of the loss or damage sustained.' (original emphasis)"
Most recently, in Williams v Pisano [2015] NSWCA 177 Emmett JA, at [100], confirmed that the purpose of the Trade Practices Act was: "… to establish a standard of behaviour in trade or commerce by proscribing certain conduct and by providing a remedy in damages for contravention of the proscription."

[14]

Submissions

Cummins submitted that the trial judge erred in his finding at [251]. It relied, inter alia, upon Luna Park v Street in support of its argument that the purpose of providing the information to EPSA was for it to use to purchase the alternator from AVK. Underlying this submission was its concern that Johnson Controls was seeking to make it liable in circumstances where it had had no contact with Johnson Controls and had not provided the information for any purpose of Johnson Controls.
Cummins accepted that his Honour's findings at 277-(4) (set out above at [20]) were correct, or sufficiently so as not to warrant challenge, but submitted that those findings did not impinge upon its contention that the information it provided to EPSA as to the alternator was confined in its purpose to the offer with respect to the alternator. Cummins submitted that, if contrary to its argument the representation recorded in 277 was made, it did not support his Honour's characterisation of the purpose of the quotation.
Cummins next submitted that, in circumstances where AVK was told that the client was insistent on an AVK product, the evidence did not support the findings in 277-(8). Further, it contended that even if AVK should have known that EPSA would approach competitors for the same product, it was not AVK's purpose in supplying the information that it be used in that way.
Cummins argued that it had not provided information to EPSA to be used to make another offer not involving the supply of an AVK alternator. It was submitted that there was no sense in which AVK would have anticipated that the information it provided to EPSA would be used other than for the purpose for which it supplied it and, in particular, would not be used for the purposes of sourcing a competitor product. Cummins contended, therefore, that his Honour erred in finding, at [278], that the purpose for which AVK provided the information and made the representations was wider than the limited one for which it contended.
Notwithstanding its submission that AVK provided information to EPSA, including the winding pitch ratio of the alternator it offered to sell, solely for the purpose of supplying its alternator if its quotation was accepted, Cummins did not challenge the findings made by his Honour, including, at [48] and 277, that everyone in the industry knew that the winding pitch ratios of the alternators needed to match if the additional generator set was to operate in parallel. For that reason, it was not to the point to quibble, as Cummins did, that Webb, or even Mr Morley, could have made a direct inquiry of AVK as to the winding pitch ratio of the existing alternator. In light of his Honour's finding, such an inquiry would not have been necessary. Cummins did contend, however, that there was no evidence to support his Honour's finding at [249] that AVK must have understood that one of the purposes of EPSA's inquiry was to ascertain the winding pitch of the existing alternators. Cummins also submitted that his Honour's finding at [248] did not follow from the finding at [48] and 277.
Johnson Controls submitted that the question to be determined on causation is what would have happened if AVK had disclosed the true position. It submitted that if the true position had been disclosed, that is, that the winding pitch ratio of the existing alternator was 13/15, it would not have purchased a generator set with an alternator with a 2/3 winding pitch ratio. Johnson Controls also contended that by focussing on the 'purpose' of making the representations, Cummins had conflated causation in fact and legal causation and, further, had failed to distinguish between damage and damages.
In direct response to Cummins' submissions on causation, Johnson Controls, pointed out that Cummins had in fact only challenged three factual findings none of which were the trial judge's ultimate findings of fact on causation. The challenged findings, as indicated above, were those at [249], [251] and [329], set out above at [50], [52] and [78]. Johnson Controls submitted that for that reason alone, the challenge to causation must fail. Johnson Controls also pointed out that Cummins did not challenge the relevant anterior findings of fact, including those set out at [20] above, that underpinned the ultimate factual findings on causation.
Johnson Controls submitted, therefore, that having regard to the unchallenged anterior factual findings of his Honour, Cummins could not succeed on causation, even if it was successful in its challenge to the findings at [249], [251] and [329]. It submitted that on the anterior factual findings it was apparent that AVK's conduct was directed to a class of person which included Johnson Controls. Johnson Controls submitted that having regard to those unchallenged factual findings, Luna Park v Street was clearly distinguishable.
For its part, EPSA criticised Cummins' case on causation as conflating four issues: (1) the purpose for which the quotation was requested by EPSA; (2) whether any relevant purpose was communicated by EPSA; (3) the purpose for which AVK provided information in answer to that request; and (4) whether AVK communicated such a purpose, including any limitation on use of the information. It also relied upon the absence of evidence from AVK as to its understanding of EPSA's purpose in seeking the information. EPSA submitted that it was significant that no AVK employee had been called to suggest that the request by EPSA was understood as anything other than a request for technical information, including as to winding pitch ratio, so as to complete a tender in accordance with the draft specification provided to AVK. EPSA further pointed out that, in its various responses, AVK did not indicate that the information it provided was confidential or could only be used for the purposes of accepting the quotation for the supply of the AVK alternator. EPSA further pointed out that in addition to the unchallenged factual findings to which Johnson Controls had drawn attention, Cummins had not challenged his Honour's finding at [253], set out at [53] above.
EPSA submitted that its reliance on the information provided was not only reasonable, AVK had in fact acted similarly in suggesting that a different manufacturer's product might be an appropriate alternative.

[15]

Consideration

It was not seriously in issue that factual causation had been made out. Were it not for the fact ("but for") that AVK had stated to EPSA that the alternator to be supplied to run in parallel with the alternator in the existing generator sets had a winding pitch ratio of 2/3, Johnson Controls would not have accepted EPSA's non-conforming tender for an additional generator set incorporating an alternator with that winding pitch ratio.
The question in issue is whether Johnson Controls has established legal causation. As the authorities discussed above demonstrate, the answer to that question is to be found in the purpose of the statute, as related to the circumstances of a particular case. The purpose of the consumer protection provisions of the statute, the provisions here in question, has also been well articulated: it is "to enhance the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection": Trade Practices Act, s 2. See also Allianz Australia Insurance v GSF Australia. It is to the circumstances of this case that that purpose is to be applied.
Cummins' central complaint was that AVK provided a quotation to supply an alternator to EPSA, for the sale by EPSA to Johnson Controls of an alternator for an additional generator set. That quotation was not accepted and yet a different entity, Johnson Controls, had sought to make AVK responsible for the loss that Johnson Controls had suffered. Cummins' submission was that, having provided information for a particular purpose, not intending for its information to be relied on for any other purpose, and not knowing that it would be relied upon for a different purpose and by different parties, there was no basis for finding it liable for Johnson Controls' loss in accordance with the principles stated in Henville v Walker and Street v Luna Park (above at [79] ff).
However, those arguments do not correspond with the evidence. As the factual background recited above and the submissions of Johnson Controls and EPSA reveal, the representations were not made within the silo of a two party transaction between AVK and EPSA, as AVK well knew. AVK knew that EPSA was engaged in a tender process. Nor did AVK challenge on the appeal the finding that it knew and intended that the information would be passed to others for use in the tender process, or that it had no intention that the information would not be passed on. Indeed, it called no evidence at trial to establish its absence of knowledge or understanding, or any evidence of an intention or purpose that the information not be passed on: see judgment at [241], [258]-[259]. Contrary to Cummins' submission, it was clear from the evidence that although the client had a preference for an AVK product, it was willing to look elsewhere, and AVK knew that: see above at [69]-[70].
Further, it was unchallenged that the manufacturer of the alternator, in this case, AVK, was a source, and at times the only source, of the technical specifications of the alternator. There was also evidence that although EPSA accepted that whilst at the quoting stage a manufacturer may keep technical information confidential, Mr Morley, in evidence that was unchallenged on the appeal, said that he would not order a new alternator without undertaking an independent check as to the specifications of the existing alternator and that he had done that. As I have indicated above at [43], that appeared to be a reference to his request for the technical data sheet.
In addition, there are the factors to which I have referred above at [68] ff which are also relevant to causation.
Having regard to the unchallenged findings of fact canvassed above, it was open to his Honour to conclude that AVK must have understood that one of the purposes of EPSA's inquiry was to ascertain the winding pitch ratio of the existing alternators and that parties other that EPSA would rely on the information AVK provided in response to that inquiry. In so finding, his Honour correctly appreciated the circumstances of the case and the purpose of the Trade Practices Act.
It was also open to his Honour to conclude that Johnson Controls relied on the information in accepting a tender for an alternator with a winding pitch ratio of 2/3. Likewise, it was open to his Honour to find that EPSA had established that it relied on the representations made. Consequently, his Honour was correct to attribute the loss suffered by Johnson Controls to Cummins as a result of its reliance upon Cummins' representations. In other words, the misrepresentation as to the winding pitch was the cause of the loss that Johnson Controls suffered.
A further comment needs to be made as to Cummins' submissions on causation. In both its written and oral submissions, Cummins challenged his Honour's finding at [329] that EPSA had made it plain to AVK the purpose for seeking the quotation and the performance requirements that the new alternator had to meet. Cummins contended that there was no evidence that EPSA had done so.
However, his Honour's finding was based on his understanding of the email communications between EPSA and AVK, and on the fact of EPSA sending the draft specification to AVK in which it was made clear that equipment other than AVK's equipment was acceptable for tender purposes. It is incorrect, therefore, to say there was no evidence to support his Honour's finding.
But in any event, not only was his Honour's finding at [329] made in the context of his finding on apportionment and not causation, Cummins' failure to challenge the finding at [241], [258] and [259] meant that its written submissions, in which it contended that EPSA did not make it plain that that it sought the information for any reason other than the purpose of deciding whether to accept the offer, were effectively abandoned. The submission also failed to grapple with the other uncontested fact that AVK was at all times the source of the technical information required and that at no time did it provide this technical information on a confidential basis. This aspect of its challenge to causation is accordingly also rejected.

[17]

Submissions

Cummins did not take issue with the trial judge's quantification of damages. Rather, it submitted that, as a matter of law, Johnson Controls had not made out its claim as it had not suffered any loss or damage. Cummins submitted that Johnson Controls did not allege, in its pleadings or otherwise, nor seek to establish by evidence, what it would have done if the misrepresentations had not been made. In particular, Cummins submitted that Johnson Controls did not advance a case that but for the misleading and deceptive conduct it would not have purchased an alternator with a winding pitch ratio of 2/3 (the no transaction case).
Neither, on Cummins' submission, did Johnson Controls establish a different transaction case, as it had not established what different transaction it would have entered into had the misrepresentation not been made so as to enable a comparison with the position it was in as a result of its reliance on the misrepresentation, a matter upon which Johnson Controls bore the onus: Leadenhall Australia Limited v Peptech Ltd [2001] NSWCA 272 at [56].
According to Cummins there was nothing in the judgment of McHugh J in Henville v Walker that contradicted or qualified the fundamental principle stated in Marks v GIO and in Gates v City Mutual Life. It submitted that the principle was correctly stated in Heydon, Trade Practices Law: Competition and Consumer Law at [140.4310], namely, that establishing the loss or damage "requires consideration in comparison with the events that actually happened with what would have happened had there been no contravening conduct". See also PT Ltd v Spuds Surf Chatswood Pty Ltd [2013] NSWCA 446 at [167].
Cummins further submitted that the statement in Abigroup Contractors v Sydney Catchment Authority at [114] to which his Honour had referred was made in the context of, and was confined to, cases where there was a negative representation: see Heydon, Trade Practices Law: Competition and Consumer Law [140. 4310]; Lockhart, The Law of Misleading and Deceptive Conduct (3rd ed, 2011) p 347 n81. Cummins submitted that so understood, Abigroup did not detract from the fundamental principles expressed by the High Court in Marks v GIO and Gates v City Mutual Life.
It followed, on Cummins' submission, that Johnson Control's case for damages had no legal basis.
In response to Cummins' submission that it had not pleaded or otherwise alleged a case that but for the misleading and deceptive conduct, it would not have purchased a winding pitch ratio of 2/3, Johnson Controls referred to its pleading in its Third Further Amended Technology and Construction List Statement in which it pleaded: 1. that EPSA provided an alternator to it that: (a) did not comply with the Technical Specification that Webb provided to EPSA; (b) that had a winding pitch ratio of 2/3 which was not compatible with and could not operate in parallel with the two existing generators, which had a winding pitch ratio of 13/15; and (c) which was supplied in breach of contract: "A: Nature of Dispute", para (4); 2. that the additional generator with the winding pitch of 2/3 failed immediately after installation insofar as it exhibited signs of incompatibility with the existing generator sets: "C: Plaintiff's Contentions", para (26); 3. and that in order to discharge its obligations to IBM under its contract, Johnson Controls suffered loss and damage in having to replace the two existing generator sets with two generator sets which had alternators with a winding pitch ratio of 2/3: "C: Plaintiff's Contentions", para (28).
Johnson Controls pointed out that the fundamental premise of its claim was that, but for AVK's misleading conduct, it would not have purchased an alternator set with a 2/3 winding pitch ratio. Had AVK informed EPSA that the winding pitch of the existing alternator was 13/15, Johnson Controls would not have ordered an alternator with a 2/3 winding pitch ratio. To do so would have put it in breach of its contract with IBM which required it to supply and install an additional generator set that would work in parallel with the existing generator sets. Having acted on AVK's misleading information, it became necessary for it to remedy the situation so as to provide IBM with a 3,000 kw electrical load, as it was contractually bound to do. That was due to occur by December 2006. During that time, IBM had borne the cost of having additional electrical load by hiring additional generators.
Johnson Controls pointed out that Mr Morley (EPSA), Mr Bowers (Webb) and Mr Buttifant (Johnson Controls) each gave unchallenged evidence that he had relied upon the information supplied and representations made by AVK. Johnson Controls further pointed out that Cummins had not challenged the trial judge's findings at [266] that the tender had been prepared and assessed by the relevant parties on the basis of the information provided by AVK (see above at [55]). Johnson Controls submitted that it had clearly suffered damage or loss because it could not use what it had bought. When the problem with the alternator was discovered, the most feasible engineering and economic solution was to hire additional generators until the problem could be sorted. However, unlike the position during the contract period, Johnson Controls was required to bear that cost. It submitted that that was a cost it otherwise would not have incurred but for AVK's misleading conduct.
Johnson Controls submitted therefore that it incurred direct costs by reason of AVK's misleading conduct in providing incorrect information as to the winding pitch of the alternator. It also pointed out that Cummins had not challenged his Honour's finding at [287] as to the damage suffered.
EPSA supported these submissions relying upon the observation of Gleeson CJ in Travel Compensation Fund v Robert Tambree at [30]: "… in deciding whether loss or damage is 'by' misleading or deceptive conduct, and assessing the amount of the loss that is to be so characterised, it is in the purpose of the statute, as related to the circumstances of a particular case, that the answer to the question of causation is to be found." (citation omitted)
As it pointed out, Johnson Controls found itself with a generator set with an incompatible alternator. The most efficient and economical solution to that problem was to do what Johnson Controls did, so that IBM was provided with sufficient generating capacity through having generators that were able to synchronise and load share.

[18]

Legal principles

In Gates v City Mutual Life the Court was concerned with the measure of damages for a representation made contrary to s 52 of the Trade Practices Act. The plurality observed, at 11, that the Act did not prescribe the measure of damages recoverable for a contravention of, relevantly, Pt V and it was thus for the Court to determine the appropriate measure of damages recoverable for the particular contravention, although that which applied in tort was the appropriate measure in most if not all cases.
These observations were explained in Marks v GIO. That was a case where the providers of a loan facility made representations as to the terms of the loan facility that were held to contravene s 52. At trial, no borrower said that if the true terms were known they would not have entered into the loan facility at all, or would have entered into a different facility. The plurality observed, at [38], that, relevantly, where there had been a contravention of s 52, s 82 required an examination of whether a person had suffered loss or damage by that conduct. That inquiry was directed to establishing a causal connection between the loss or damage suffered and the contravening conduct. Their Honours continued: "But once that causal connection is established, there is nothing in s 82 … which suggests either that the amount that may be recovered under s 82(1) … should be limited by drawing some analogy with the law of contract, tort or equitable remedies. Indeed, the very fact that [s 82] may be applied to widely differing contraventions of the Act, some of which can be seen as inviting analogies with torts such as deceit (eg, s 52) or with equity (eg, s 51AA) but others of which find no ready analogies in the common law or equity, shows that it is wrong to limit the apparently clear words of the Act by reference to one or other of these analogies."
Their Honours, at [39], stated that Gates did not hold to the contrary. They accepted, at [42], that the loss or damage caused by a contravention of s 52 would coincide with what would have been allowed in an action for deceit because in each case the inquiry is as to the damage that flowed from the deceit or the contravention. Their Honours concluded, at [42], in a passage upon which Cummins relied that: "It follows, then, that a comparison must be made between the position in which the party that allegedly has suffered loss or damage is and the position in which that party would have been but for the contravening conduct."
However, that passage continued: "And even this inquiry may not conclude the question. Analysing the question of causation only be reference to what is, in essence, a 'but for' test has been found wanting in other contexts and it may well be that it is not an exclusive test of causation in this area either. But that is not a question which we need to consider in this case. For the moment it is enough to say that s 82 requires identification of a causal link between loss or damage and conduct done in contravention of the Act." (citations omitted)
This approach was most recently applied by this Court in Williams v Pisano at [100].

[19]

Consideration: difference between damage and measure of damages

Cummins relied upon Leadenhall Australia Limited v Peptech at [56] and PT Ltd v Spuds Surf Chatswood in support of its proposition that the appellant had not proved its case on damage. Those cases each involved the application of principle to the particular facts of the case and in each the court considered whether, on the facts, the case was, or critically was not, a different transaction or no transaction case. Thus, Giles JA in Leadenhall observed, at [56], that the trial judge had correctly identified the case, on the facts he had found, as a different transaction case. On that case, the trial judge had held that the appellants had failed to prove loss or damage. The Court of Appeal upheld the trial judge's decision. The observation of Sackville AJA in PT Ltd v Spuds Surf Chatswood at [167] to the effect that Henville v Walker was a 'no transaction' case was made in the context of where the onus lay in the case of a breach of a lease, to disentangle the losses that the respondent claimed from other causes of those losses.
Neither case is of assistance in determining the two essential questions here: whether Johnson Controls suffered loss and if so, the measure of that loss. As is apparent from Cummins' selective reliance on the passage from Marks v GIO reproduced at [128] above, its argument on loss was that it was necessary for Johnson Controls to establish either that it would not have entered into the transaction, that is, it was required to prove a 'no transaction' case, or that it would have entered into a 'different transaction'. However, as the complete passage of their Honour's comments (reproduced at [129] above) reveals, the Court was there dealing with the question of whether loss or damage flowed from the contravening conduct. There is then a separate question as to the measure of damages.
In my opinion, the trial judge was correct in stating that there was no strict requirement to prove a 'no transaction' or 'different transaction' case. Rather, it is necessary for a party to prove that in reliance on the misrepresentation it acted in a particular way that caused it loss and to then prove the quantum of that loss. That involves a consideration of the particular circumstances in which the conduct that caused the loss occurred. This was demonstrated in the recent decision of the Queensland Court of Appeal in Westpac Banking Corporation v Jamieson [2015] QCA 50. In that case, the respondent was given investment advice that was held, inter alia, to be misleading or deceptive.
The respondent in Westpac Banking Corporation v Jamieson argued that having established that he had entered into the investments in reliance on the misleading or deceptive conduct of the Bank and had incurred losses in doing so, it was irrelevant to enquire what he would or might have done instead, as to do so would be speculative: see Downs v Chappell [1997] 1 WLR 426 at 441. That proposition was rejected. As Applegarth J observed at [143]-[144]: "[143] For the reasons which follow I do not accept the unqualified proposition that it is irrelevant to inquire into what a claimant in a case such as this would have done if the negligent and misleading advice had not been given and the claimant had not entered into the loss-making transaction in reliance upon it. A claimant is not necessarily required to plead and prove an alternative transaction in order to establish loss. A defendant may seek to demonstrate that a different, loss-making transaction probably would have been undertaken. In a particular case a court may determine that an award of compensation should take into account a hypothetical, alternative transaction which probably would have resulted in a loss. In doing so the court is not engaging in impermissible speculation. [144] If it is apparent that the claimant would have entered into a different, loss-making transaction, then this fact can hardly be irrelevant. Its relevance follows from the basic compensatory principle that the object of compensation is to place the claimant in the position he or she would have been in if the contract had been performed, the defendant not been negligent or the relevant statute not been contravened. The present case does not concern differences between compensation for breach of contract based upon disappointed expectations and the usual measure of damages in tort. Proper performance of the contract required the bank to exercise reasonable care. Both Mr Jamieson's contract claim and his negligence claim involve an inquiry into the position he would have been in if reasonable care had been taken. Also, in this case one is not concerned with different approaches to compensation in respect of intentional wrongdoers and merely careless defendants, including the policy considerations which may apply in cases of deceit. However, even in deceit cases, 'it is a question of determining how much worse off the plaintiff is as a result of entering into the transaction which the representation induced him to enter than he would have been had the transaction not taken place'." (citations omitted)
Applegarth J further observed, at [146], that it was not necessary in a no transaction case that a claimant prove what alternative transaction would have been entered into. Rather, "[i]t may be sufficient for the plaintiff to prove that he or she would not have entered into the subject transaction".
The evidence revealed that if the correct information had been provided by AVK, Johnson Controls would have supplied an alternator with a winding pitch ratio of 13/15 at the same cost as an alternator with a 2/3 winding pitch ratio. In those circumstances, it was sufficient for Johnson Controls to prove that it relied upon the wrong information from AVK and installed equipment that did not satisfy its contractual arrangements with IBM. In order to fulfil its contractual obligation, it was faced with at least two options, either of which resulted in it incurring costs. It had thereby proved that it had a suffered a loss as a result of its reliance on the wrong information provided by AVK.
There was then the separate question of the assessment of the damages to compensate for that loss, about which there was no issue on the appeal.

[20]

Rejection of expert evidence: grounds of appeal 8 and 9

The parties to the proceedings each engaged experts. Their reports related relevantly to matters such as industry practice, what the experts would have understood from the relevant tender and specification documents and the communications the parties should reasonably have had with each other. They also expressed opinions as to the reasonable steps available when it was ascertained that the additional generator set did not operate in parallel because of the disconformity between the alternators in the existing and additional generator sets.
A joint expert report was also prepared.
At trial, Johnson Controls, with the agreement of Webb and EPSA, did not tender certain passages of the principal report of its expert, Dr Grantham, or corresponding passages in the joint expert report. Webb and EPSA agreed in turn not to tender the expert reports they had commissioned. However, Cummins wished to rely on those parts of the report of Dr Grantham which Johnson Controls did not read. When it was pointed out to Cummins that it had not served that report in accordance with the rules, Cummins responded by seeking to tender the joint report.
The tender of the balance of Dr Grantham's report and the joint report were both rejected by the trial judge (unreported, 29 August 2013). His Honour held that Cummins was, in substance, seeking to adduce evidence from an expert in respect of which it had not served a report as required by the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 31.28. His Honour also held that that r 31.28 applied to joint expert reports. As Cummins had served neither Dr Grantham's report nor the joint expert report, his Honour held that leave was required pursuant to r 31.28(3)(a) for them to be admitted. His Honour refused leave as there were no "exceptional circumstances" as required by r 31.28(4)(a). His Honour also considered that the evidence sought to be tendered was irrelevant. His Honour could have, but appears was not asked to, exercise the powers conferred by the Civil Procedure Act 2005 (NSW), s 14, nor was reference made to that provision in this Court. For that reason, and given there was no challenge to his Honour's finding that the evidence sought to be tendered was not relevant, I do not propose to consider whether this was an appropriate case for the exercise of that power.

[21]

Rules as to service of experts reports

The purposes of the rules relating to expert evidence are set out in UCPR, r 31.17, as follows: "31.17 Main purposes of Division The main purposes of this Division are as follows: (a) to ensure that the court has control over the giving of expert evidence, (b) to restrict expert evidence in proceedings to that which is reasonably required to resolve the proceedings, (c) to avoid unnecessary costs associated with parties to proceedings retaining different experts, (d) if it is practicable to do so without compromising the interests of justice, to enable expert evidence to be given on an issue in proceedings by a single expert engaged by the parties or appointed by the court, (e) if it is necessary to do so to ensure a fair trial of proceedings, to allow for more than one expert (but no more than are necessary) to give evidence on an issue in the proceedings, (f) to declare the duty of an expert witness in relation to the court and the parties to proceedings."
Rules 31.24-31.26, which appear in Subdiv 2 of Div 2 of the UCPR, relate specifically to joint expert reports. Of those provisions, only r 31.26 addresses the question of admissibility. It provides as follows: "(1) This rule applies if expert witnesses prepare a joint report as referred to in rule 31.24(1)(c). (2) The joint report must specify matters agreed and matters not agreed and the reasons for any disagreement. (3) The joint report may be tendered at the trial as evidence of any matters agreed. (4) In relation to any matters not agreed, the joint report may be used or tendered at the trial only in accordance with the rules of evidence and the practices of the court. (5) Except by leave of the court, a party affected may not adduce evidence from any other expert witness on the issues dealt with in the joint report." (emphasis added)
Rule 31.28 appears in Subdiv 3, "Experts' reports and expert evidence", of Div 2 of the UCPR. It provides, relevantly, as follows: "(1) Each party must serve experts' reports … on each other active party: (a) in accordance with any order of the court, or (b) if no such order is in force, in accordance with any relevant practice note, or (c) if no such order or practice note is in force, not later than 28 days before the date of the hearing at which the report is to be used. … (3) Except by leave of the court, or by consent of the parties: (a) an expert's report … is not admissible unless it has been served in accordance with this rule, and (b) without limiting paragraph (a), an expert's report … when tendered under section 63, 64 or 69 of the Evidence Act 1995, is not admissible unless it has been served in accordance with this rule … … (4) Leave is not to be given as referred to in subrule (3) unless the court is satisfied: (a) that there are exceptional circumstances that warrant the granting of leave …"
UCPR, r 31.29 provides for the admissibility of expert's report as follows: "31.29 Admissibility of expert's report (1) If an expert's report is served in accordance with rule 31.28 or in accordance with an order of the court, the report is admissible: (a) as evidence of the expert's opinion … … (2) Unless the court otherwise orders, a party may require the attendance for cross-examination of the expert by whom the report was prepared by notice served on the party by whom the report was served. … (5) If the expert's attendance for cross-examination is required under subrule (2), the report may not be tendered under section 63, 64 or 69 of the Evidence Act 1995 or otherwise used unless the expert attends or is dead or the court grants leave to use it."
Cummins contended that his Honour was in error in rejecting the tender of the reports. It submitted that it would be "absurd" if r 31.28 applied to joint expert reports, as joint reports were covered by their own regime in UCPR, rr 31.24-31.26.
In relation to the individual expert reports, Cummins submitted that leave was not required, in circumstances where the reports had been served in accordance with r 31.28 by parties other than Cummins. It contended that there was no requirement in the rules that the recipient of a report "back serve" it if it intended to rely upon it. On Cummins' construction, the rule was complied with provided the report had been served, and leave is required pursuant to r 31.28(3)(a) only where a report has not been served at all.
Cummins submitted that this construction of the rule promoted efficiency, and was consistent with the purposes of the provisions relating to expert evidence in the UCPR as identified by r 31.17, and with the overriding purpose of s 56 of the Civil Procedure Act. It also relied on comments in Yacoub v Pilkington (Australia) Ltd [2007] NSWCA 290 relating to the inefficiency of "back-serving" documents on the original serving party.
Cummins further submitted that if leave were required, the circumstances were "exceptional" such that his Honour erred in refusing to grant it. It relied on the statement in Yacoub v Pilkington at [66] that exceptional circumstances are "out of the ordinary course or unusual or special, or uncommon. They need not be unique or unprecedented". The appellant contended that the circumstance that the first respondent abandoned one of the two major bases of its case, being its negligence claim, thereby abandoning reliance on the joint experts report, was exceptional, and that in any case a party's refusal to tender expert evidence after the publication of a joint expert's report was exceptional. Further, it contended that if the joint report were admissible, leave should be granted to admit the underlying individual reports as it would an anomalous and exceptional circumstance for them to be excluded.
Cummins contended that if it made out these grounds but not the grounds relating to causation or misleading and deceptive conduct, the matter would need to be remitted to the trial judge for redetermination.
The respondents' submissions on these points covered similar ground and may be considered together. Their overall contention was that Cummins had demonstrated no House v The King [1936] HCA 40; 55 CLR 499 error in the trial judge's refusal to admit the evidence.
In response to Cummins' contention that joint expert reports, being subject to their own rules, were not governed by r 31.28, the respondents contended that rr 31.24-31.26 are not exhaustive, and did not include any provision governing the situation that arose here. Johnson Controls further submitted that the heading to Subdiv 3 of Div 2 of the UCPR, when read with the heading to Subdiv 4, "Parties' single experts", supports the construction that Subdiv 3, including r 31.28, applies to all expert evidence, including joint expert reports.
Johnson Controls submitted that the reference to service "in accordance with this rule" in r 31.28(3)(a) must refer to the requirement of service by "each party" in r 31.28(1), which they contended militated for a requirement of service by any party intending to tender the evidence. Both respondents noted that Yacoub v Pilkington (Australia) Ltd had not been cited before the primary judge, did not decide the question whether the rules required "back-serving" and indeed, at [64], recognised a policy rationale to "back-serving" in giving notice to opposing parties of the intended use of the evidence.
The respondents also contended that there was no House v The King error in his Honour's finding that there were no "exceptional circumstances" for the purposes of r 31.28(4)(a). They submitted that the determination of "exceptional circumstances" was necessarily highly subjective and discretionary: Nikac v Minister for Immigration and Ethnic Affairs [1988] FCA 400; 20 FCR 65 at 81; Hicks v Aboriginal & Torres Strait Islander Commission [2001] FCA 586; 110 FCR 582 at [21]. Further, they submitted that there was nothing unusual in commercial litigation for parties to choose not to tender some of the evidence they have prepared, and that there was nothing in the specific circumstances of the case, including that Cummins was caught by surprise by the decisions of the other parties not to tender the evidence, to give rise to "exceptional circumstances".
The respondents submitted that, in any event, the evidence sought to be tendered would not have assisted Cummins' case such that no substantial wrong occurred by reason of the refusal of the trial judge, in his discretion, to grant leave. In particular, it contended that evidence as to how the parties should have communicated would not have altered the outcome of the case in the context that, first, the trial judge made findings to the effect that Cummins must have known that the alternators had to have a matching winding pitch to run in parallel and secondly, Cummins called no evidence of the state of mind of its employees such as could have demonstrated that a different result would have occurred if the parties had communicated in different ways.

[22]

Consideration

At its most basic level, these grounds of appeal can be dealt with by reference to his Honour's finding that the material was irrelevant. That finding was not the subject of challenge. Nor could it be. A review of the joint report indicates that the questions asked related in large measure to the characterisation and content of the specifications provided by Webb and what information EPSA should have sought from Webb and others in relation to the specifications. Those matters may have been relevant to the negligence case that was not pursued and the contract claim against Webb, but were not relevant to the misleading and deceptive case that was run before the trial judge and which is the claim in issue on the appeal.
However, in deference to the arguments advanced as to the proper construction of the rules, it is appropriate to deal with those arguments.
It is convenient to commence with the rules governing the joint report and, in particular, UCPR, rr 31.26(3) and (4). The effect of UCPR, r 31.26(3) is that any party may tender the joint report insofar as matters are agreed by the experts. In this case, Cummins wished to tender sections 1-6 and 7.1-7.3 of the joint report. Section 7.4 of the joint report responded to issues raised in respect of Cummins and was tendered by Johnson Controls.
Sections 1-6 identified the issues and questions that pertained to each of the parties. Section 7 of the report contained the experts' responses to the issues and questions raised in sections 1-6. The relevance and therefore admissibility of sections 1-6 was therefore dependent upon whether the answers to the issues and questions so raised were agreed by all experts: see UCPR, r 31.26(3). Except perhaps for section 7.3.5, no matters were agreed in sections 7.1-7.3 of the joint report. There was either disagreement amongst the experts, or aspects of agreement but with qualifications or in some instances, a statement that the expert's opinion was as stated in that expert's affidavit, to which the expert report was annexed. As part of the agreement between the parties other than Cummins, the relevant affidavit was not read, nor the annexed report otherwise tendered in evidence by those parties.
Section 7.3.5 aside, therefore, the joint report was not admissible pursuant to UCPR, r 31.26(3). To be admissible it was necessary for the material in the report to comply, relevantly, with the practices of the court. The practice of the court includes the rules of court and its Practice Notes. The rules provide for the service of expert reports. The joint report was not served by any party but was in the possession of each of the parties. I do not consider that the rules required it to be separately served. However, for the reasons given, it was not admissible. The position is different with the underlying expert reports.
Practice Note No SC Eq 5 provides, relevantly, as follows: "12. Under [UCPR, r 31.19], a party considering or intending to adduce expert evidence at trial must promptly seek directions from the court in that regard. A party must seek those directions in accordance with paragraphs 13, 14 and 15 of this Practice Note."
The parties did not favour the Court with any information as to what directions were made in this matter. All that is known is that Cummins determined, as it was entitled to do, not to adduce expert evidence (except in respect of a matter not presently in issue). In the absence of knowing what directions if any, were given, the question becomes what Cummins' entitlement was, under the rules, to rely on the expert reports of the other parties when it had not 'served' those reports back on those parties. There is then the further question whether the trial judge erred in rejecting the tender of the balance of Dr Grantham's report and the joint report.
UCPR, r 31.28 does not expressly provide that a receiving party, if it intends to rely on another party's report must "serve it back" on the other parties to the proceedings. However, the rules as a whole and UCPR, r 31.29 in particular indicate that that is their intended operation. UCPR, r 31.29 cannot operate sensibly unless the report has been served by the party intending to rely upon it.
Accordingly, Cummins was reliant pursuant to UCPR, r 31.28(3) on the grant of leave to tender the individual expert reports upon which it sought to rely and was thus required to demonstrate that there were "exceptional circumstances" for the purposes of UCPR, r 31.28(4)(a). His Honour was not satisfied that it was "exceptional" for a party to abandon part of its case at trial or to decide, during the course of the trial, not to call certain evidence. His Honour considered that was what had happened in this case and the position Cummins found itself in was of its own making, having decided not to adduce expert evidence on the questions that remained in issue.
What constitutes exceptional circumstances for the purposes of the rule was considered by the Court in Yacoub v Pilkington at [66], as follows: "Another question of construction concerned 'exceptional circumstances' in rule 31.18(4). In San v Rumble (No 2) [2007] NSWCA 259 at [59]-[69], I gave consideration to the expression 'exceptional circumstances' in a different statutory context to the present. Without repeating that discussion in full, I shall state such of the conclusions as seem to me applicable in the construction of rule 31.18(4). (a) Exceptional circumstances are out of the ordinary course or unusual, or special, or uncommon. They need not be unique, or unprecedented, or very rare, but they cannot be circumstances that are regularly, routinely or normally encountered: R v Kelly (Edward) [2000] 1 QB 198 (at 208). (b) Exceptional circumstances can exist not only by reference to quantitative matters concerning relative frequency of occurrence, but also by reference to qualitative factors: R v Buckland [2000] 1 WLR 1262; [2000] 1 All ER 907 (at 1268; 912-913). (c) Exceptional circumstances can include a single exceptional matter, a combination of exceptional factors, or a combination of ordinary factors which, although individually of no particular significance, when taken together are seen as exceptional: Ho v Professional Services Review Committee No 295 [2007] FCA 388 (at [26]). (d) In deciding whether circumstances are exceptional within the meaning of a particular statutory provision, one must keep in mind the rationale of that particular statutory provision: R v Buckland (at 1268; 912-913). (e) Beyond these general guidelines, whether exceptional circumstances exist depends upon a careful consideration of the facts of the individual case: Awa v Independent News Auckland [1996] 2 NZLR 184 (at 186)."
Johnson Controls and EPSA both submitted that the court's determination under UCPR, r 31.28(4) was a discretionary determination and no House v The King error had been demonstrated. Appellate review of a determination under UCPR, r 31.28(4)(a) may not strictly be the basis of the principle stated in House v The King. Where the question whether a court is satisfied of a particular matter which involves the application of a standard, the appropriate review mechanism is in accordance with the principles in Warren v Coombes [1979] HCA 9; 142 CLR 531; Singer v Berghouse [1994] HCA 40; 181 CLR 201; Port Stephens Council v Samson [2007] NSWCA 299; Community Association DP270253 v Woollahra Municipal Council (No 2) [2014] NSWLEC 8. UCPR, r 31.28(4)(a) provided that there must be "exceptional circumstances" for the grant of leave and thus specifies the standard in respect of which there must be satisfaction. However, regardless of the standard of appellate review, Cummins has not shown error in the trial judge's determination.
Cummins, in any event, is faced with a further difficulty. Apart from the attempt to tender the balance of Dr Grantham's report, Cummins did not seek to read the relevant affidavit or tender the expert reports of the other experts upon which the joint report was based, even on a formal basis before the trial judge.
Senior Counsel informed the Court that no attempt to do so was made, given his Honour's rejection of the tender of that part of Dr Grantham's report that was not read by Johnston Controls. However, if it wished to preserve its position should it decide to appeal, Cummins ought to have at least formally tendered the evidence upon which it wished to rely, acknowledging that the tender would be covered by the ruling already given. That is a commonplace forensic response to a ruling such as was made by the trial judge here.
There is another and even more fundamental problem that Cummins faces in respect of these grounds of appeal. Webb was not a party to the appeal. Nonetheless, much, if not most, of the material in sections 7.1-7.3 of the joint report it sought to tender related to the conduct of Webb. For example, in section 7.1.1, under the issues relating to Johnson Controls, the first question was: "Should the winding pitch of the existing alternators have been specified by Webb in the specification?" This was a question relating to liability.
Section 7.2 dealt with the questions asked and issues which arose in respect of Webb, all of which related to Webb's liability or raised questions which were directed, inter alia, to ascertaining whether Webb was liable, either solely or in conjunction with one or other of the other defendants. The position was the same in respect of section 7.3, directed to EPSA. For example, the first question posed in section 7.3.1 was directed to what information Webb ought to have included in the specifications.
The circumstances in which a retrial may be ordered are addressed by UCPR, r 51.53, which provides, relevantly, that the Court must not order a new trial on the ground of improper rejection of evidence "unless it appears to the Court that some substantial wrong or miscarriage has been thereby occasioned": r 51.53(1). In circumstances where Webb was not a party to the appeal, and given that the material sought to be tendered in any event appears to have been at substantially irrelevant to the issue on the appeal, this Court would not order a new trial.

Parties

Applicant/Plaintiff:

Cummins Generator Technologies Germany GmbH

Respondent/Defendant:

Johnson Controls Australia Pty Limited

Legislation Cited (3)

Trade Practices Act 1974(Cth)

Civil Procedure Act 2005(NSW)

Uniform Civil Procedure Rules 2005(NSW)

Cases Cited (33)

Solicitors: Harris & Company Solicitors (Appellant) Carneys Lawyers (First Respondent) Winter Hilditch & Fotheringham Lawyers (Second Respondent) File Number(s): 2013/384955 Decision under appeal Court or tribunal: Supreme Court Citation: [2013] NSWSC 1511 Date of Decision: 19 October 2013 Before: McDougall J File Number(s): 2009/298865

Held by the Court, in dismissing the appeal: (1) Misleading and deceptive conduct should be assessed in the context of the dealings between the relevant parties. However, a contextual approach does not detract from the ultimate undertaking required by the court: to look to what statements were made and to then ask, stated in terms of the statute, whether the conduct was misleading and deceptive. [68] Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; 238 CLR 304. (2) The dealings between EPSA and AVK were not as purposeful or directed as Cummins contended. There was an underlying common fact that the alternator to be supplied was to have the same winding pitch ratio as the existing alternator. His Honour therefore did not err in finding that the first and second representations were made. [69]-[71] (3) Whether legal causation has been established depends on the purpose of the statute as related to the circumstances of a particular case. The purpose of the consumer protection provisions of the Trade Practices Act 1974 (Cth) are "to enhance the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection." [101] Allianz Australia Insurance Ltd v GSF Australia Pty Ltd [2005] HCA 26; Azzi v Volvo Car Australia Pty Ltd [2007] NSWSC 319; 221 CLR 568; Henville v Walker [2001] HCA 52; 206 CLR 459; Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd [2008] NSWCA 206; (2009) 73 NSWLR 653; Street v Luna Park Sydney Pty Ltd [2009] NSWSC 1; 223 FLR 245; Travel Compensation Fund v Robert Tambree [2005] HCA 69; 224 CLR 627; Williams v Pisano [2015] NSWCA 177; Trade Practices Act, s 2. (4) Based on the unchallenged findings of fact, it was open to his Honour to conclude that AVK must have understood that one of the purposes of EPSA's inquiry was to ascertain the winding pitch ratio of the existing alternators and that parties other that EPSA would rely on the information AVK provided in response to that inquiry. In so finding, his Honour correctly appreciated the circumstances of the case and the purpose of the Trade Practices Act. It was also open to his Honour to conclude that Johnson Controls relied on the information in accepting a tender for an alternator with a winding pitch ratio of 2/3. [102]-[107] (5) In making a claim for misleading and deceptive conduct, it is necessary for a party to prove that in reliance on the misrepresentation it acted in a particular way that caused it loss and to then prove the quantum of that loss. There is no strict requirement to prove a "no transaction" or "different transaction" case. It is sufficient for Johnson Controls to prove that it has suffered a loss as a result of its reliance on the wrong information provided by AVK. [131]-[136] Abigroup Contractors Pty Ltd v Sydney Catchment Authority (No 3) [2006] NSWCA 282; 67 NSWLR 341; Gates v City Mutual Life Assurance Society Ltd [1986] HCA 3; 160 CLR 1; Henville v Walker [2001] HCA 52; 206 CLR 459; Leadenhall Australia Limited v Peptech Ltd [2001] NSWCA 272; Marks v GIO Australia Holdings Ltd [1998] HCA 69; 196 CLR 494; PT Ltd v Spuds Surf Chatswood Pty Ltd [2013] NSWCA 446; Westpac Banking Corporation v Jamieson [2015] QCA 50 (6) Uniform Civil Procedure Rules (UCPR), r 31.28 requires each party to comply with the practices of the court when seeking to rely on expert reports. If a party intends to rely on another party's expert report, it must "serve it back" on the other parties to the proceedings unless the court grants leave: UCPR, rr 31.28(3) and (4). [160]-[163] (7) Accordingly, subject to the reports being relevant, Cummins was reliant pursuant to UCPR, r 31.28(3) on the grant of leave to tender the expert report and was thus required to demonstrate "exceptional circumstances": UCPR, r 31.28(4)(a). No House v The King error was established in his Honour failing to find exceptional circumstances in favour of Cummins. [164]-[166] Community Association DP270253 v Woollahra Municipal Council (No 2) [2014] NSWLEC 8; House v The King [1936] HCA 40; 55 CLR 499; Singer v Berghouse [1994] HCA 40; 181 CLR 201; Port Stephens Council v Samson [2007] NSWCA 299; Yacoub v Pilkington (Australia) Ltd [2007] NSWCA 290; Warren v Coombes [1979] HCA 9; 142 CLR 531; UCPR, r 31.28.

[1986] HCA 3

[1994] HCA 40

[2015] QCA 50

[1976] HCA 65

(2009) 73 NSWLR 653

(1976) 136 CLR 529

(2002) 210 CLR 109

(2001) 206 CLR 459

(2005) 79 ALJR 1079

[2006] NSWCA 282

[2007] NSWSC 319

[1936] HCA 40