Supreme Court of WA|2001-09-05|Before: Dr J, Mr P, Steytler J

Gardner Corporation Pty Ltd v Zed Bears Pty Ltd & Ors [2001] WASC 237 (5 September 2001)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : GARDNER CORPORATION PTY LTD -v- ZED BEARS PTY LTD & ORS [2001] WASC 237

Damages - Assessment - Orders to give effect to assessment

1 MASTER BREDMEYER: I was ordered by the trial Judge herein, Steytler J, to assess certain damages and decide certain questions of interest and I attempted to do that in reasons published by me on 27 April 2001: Gardner Corporation Pty Ltd v Zed Bears Pty Ltd & Ors [2001] WASC 106. After publishing the reasons I was asked to adjourn for counsel to agree on the orders which should flow from my reasons. This was not possible and I have now heard some contested argument on the appropriate orders which should be made. Counsel for the plaintiff has submitted a Minute of Proposed Master's Certificate dated 21 August 2001 ("the Minute") and I quote from par 1 of that minute. (Paragraph 2 and par 3 which I have not quoted deal with interest.)

"1. The First, Second, Fifth and Sixth Defendants are jointly and severally liable to pay to the Plaintiff the following amounts pursuant to the Franchise Agreement dated 14 May 1995 ('the Agreement') as at 9 August 1996:

1.1 In relation to goods sold and delivered (including telephone levies payable), $66,291.91 in respect of outstanding principal and $6,093.01 in respect of interest;

1.2 In relation to franchise fees, $9,818.07 in respect of outstanding principal and $724.14 in respect of interest;

1.3 In relation to advertising levies, $15,606.16 in respect of outstanding principal and $1,104.94 in respect of interest.

2 The plaintiff has filed three affidavits in support of the Minute; one by Mr Charles Gardner sworn 20 August 2001, and two by Mr Anthony Maclean dated 14 August and 20 August respectively. Mr Maclean is an accountant and his affidavits deal with calculations of interest etcetera.

3 At par 24 of my reasons on page 17 I set out certain findings which I

4 The plaintiff contends that the first two figures in that table are wrong and consequently the net balance which is obtained by subtraction is also wrong. The plaintiff does not dispute the figure of $38,520.43 for the disputed invoices or the figure of $9,050.86 for the 13 disputed invoices allowed by me. in that column. The plaintiff says the first two figures are wrong because at the outset of the trial the plaintiff's counsel handed up a document "C Gardner, Evidence in Calculation of Outstanding Moneys Owed" dated 21 December 2000 which I marked Exhibit "P3" and which I will refer to herein as "P3". The plaintiff's counsel handed up this document as a handy selection of annexures from Mr Gardner's various statements, but updated as to some figures. The plaintiff's counsel said that these documents had been distilled from many documents in this case and they were all I would need to look at for the purposes of this assessment. Annexure "C" to "P3" contains corrected totals of purchases and payment/credits. I reproduce them here together with my calculation of the net balance:

Purchases $354,525.63

Payments/Credits 264,637.03

Balance $ 89,888.60

5 Exhibit "P3" was tendered without objection. Many of the documents in it were documents before the court anyway, just collated in this one volume for my convenience, but in respect of these updated figures I consider they were tendered as updated figures without objection and that both parties should now be held to them. It will be noted that the total purchases of the franchisee increased by $2,341.95 and the total payments/credits also increased by $2,491.09. A comparison of the net sum owing, as per the pleadings and as set out at page 17 of my reasons, of $90,037.74 and as per Annexure "C" of "P3", $89,888.60, is a reduction of $149.14 . The difference is slightly in favour of the defendants. I imagine that the defendants' counsel did not object to these corrected figures because the net result was in favour of his clients. I accept that the corrected figures being tendered at the outset of the assessment without objection, and, not being the subject of evidence or dispute during the assessment, should now stand. I regret my error in relying on the earlier figures as set out in the pleadings in my earlier judgment.

6 The corrected figures added into my table on page 17 give the following result:

The plaintiff claimed invoices

for goods supplied and delivered $354,525.63

Less payments/credits 264,637.03

Net 89,888.60

Less 20 disputed invoices

(Annexure "G" on "P3") 38,520.43

Undisputed sum owed 51,368.17

Plus 13 disputed invoices allowed by me 9,050.86

Balance due $ 60,419.03

7 The plaintiff, however, is not content to accept that balance for goods supplied and delivered. In the Minute the figure given is $66,291.91. That increase is explained by the plaintiff in two ways. The first concerns the accountant's method of calculating interest and the second involves an increase due to three amended or corrected invoices. On the first point, Mr Maclean explains in his affidavits that I simply took the total of goods sold as per the invoices (making allowance for some disputed invoices) and then deducted from that total, the total of the payments made or credits given. I carried out that subtraction exercise without making any allowance for interest. However, interest ran on the debts 30 days after the issue of each invoice. Mr Maclean has calculated the interest running on each invoice, which involved many calculations, and when a payment was made (or a credit received) that payment was applied firstly against any interest accrued and thereafter against the invoice. Dr Schoombee, for the plaintiff, gave me a hypothetical example which explains how this works. Suppose an invoice was issued for $20 and was paid some considerable months later by a cheque for $20. Suppose, at the time of payment, $2 interest had accrued on that invoice, then the $20 payment should be applied first towards interest, (i.e. $2 towards interest) and then $18 towards the invoice, leaving a sum of $2 still owing on the invoice. I accept that as a proper practice. Also all payments made or credits given have been credited against the earliest invoices. I accept that both those practices are proper. The figure of $66,291.91 in the Minute of Proposed Orders is partially explained by these practices.

8 The other explanation for the increase is that the plaintiff is relying on the invoices as stated in Annexures "C" and "E" to "P3" and not as shown in attachments "A" and "B" to the plaintiffs schedule of damages in the amended book of pleadings. As already noted, the total of the invoices in "P3" is $354,525.63 compared to $352,183.68 in the schedule of damages, an increase of $2,341.95. Mr Gardner, in his most recent affidavit of 20 August 2001, states that there are three corrected invoices which have been relied on by the accountant in preparing these figures. I set out those invoices in their old and corrected form in the following table:

9 Counsel for the defendants objects to the plaintiff relying on these invoices. All three invoices in their original form were admitted on the pleadings and were not tendered in evidence before the trial Judge or before me. Counsel for the defendants says it is far too late to permit an amendment. Also, there is the almost insurmountable difficulty for the plaintiff of getting an amendment to a particular pleaded which was admitted by the defendants. I point out, too, that the schedule of damages was prepared in 1996. Despite those weighty objections, I consider it fair to allow the plaintiff to rely on two of those invoices. I have said in the earlier part of these reasons that the plaintiff tendered Exhibit "P3" without objection and the effect of that is that the total invoices and the total payments/credits have each increased, as stated above. I consider the defendants did not object to that and, as stated above, there was no particular reason why they would object as the net result was a slight reduction in the net sum owing by the defendants. If, as I have held, the total goods sold under the invoices has increased from $352,183.68 to $354,525.63, an increase of $2,341.95, it follows, as night follows day, that one or more of the invoices in the schedule of total invoices will have increased to explain the total increase. A perusal of the table above will shown the source of the increase. The first two invoices, Nos 24881 and 175064, in their corrected form, when added, produce an increase of $2,341.95. I therefore consider that the accountant in calculating his figures of principal and interest owing is entitled to rely on those two invoices as they appear in "P3".

10 I consider the legal position is otherwise in relation to the third invoice. In its original form it was, like the others, admitted by the defendants in their par 9 of their reamended defence and counterclaim and has been a non-issue for many years. It was not tendered to, and evidence was not heard on it by, Steytler J, nor by me on the assessment of damages when a number of contested invoices were considered in some detail. I consider it far too late now for the plaintiff to re-open its case and put this invoice in its "corrected" form before the court to justify an increase in the sum owing by the defendants. Reference to this corrected third invoice No 175071 of 24 May 1996 for $1,056.62 will need to be deleted in the calculations.

11 Some recalculations will need to be made because of the deletion of this third invoice. I will ask the parties to do the recalculations but my own tentative view, which I express in an obiter way but which may be of some assistance to the parties, is as follows. This invoice is mentioned at 16 of Mr Maclean's affidavit of 14 August 2001. The sum of $1,056.62 will need to be deducted from the sum of $66,291.91 in par 1.1 of the Minute and $22.11 will need to be deducted from the figure of $6,093.01 in respect of interest in the same paragraph. In par 2 of the Minute, the sum of $1,056.62 will need to be deducted from the principal sum of $91,716.14 which will have an effect on the 15 interest calculations which appear thereafter. The figure of $99,638.23 stated in par 3 of the Minute will need to be reduced by $1,056.62 and $22.11.

Gardner Corporation Pty Ltd v Zed Bears Pty Ltd & Ors [2001] WASC 237

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Judgment (19 paragraphs)

Gardner Corporation Pty Ltd v Zed Bears Pty Ltd & Ors [2001] WASC 237 (5 September 2001)

Parties