Mobile Innovations Limited v Vodafone Pacific Limited - [2003] NSWSC 423 - NSWSC 2003 case summary — Zoe

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Mobile Innovations Limited v Vodafone Pacific Limited

[2003] NSWSC 423

Supreme Court of NSW|2003-04-15|Before: Einstein J, Jacobs J

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Source facts

Court

Supreme Court of NSW

Decision date

2003-04-15

Before

Einstein J, Jacobs J

Source

Original judgment source is linked above.

Judgment (48 paragraphs)

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CITATION : Mobile Innovations Limited v Vodafone Pacific Limited [2003] NSWSC 423 HEARING DATE(S) : 15/4/03 JUDGMENT DATE : 15 April 2003

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JURISDICTION: Equity Division Commercial List JUDGMENT OF : Einstein J DECISION : Costs determined; Declarations made; Stay of money judgment ordered

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CATCHWORDS : Costs - Principles - Apportionment in terms of issues - Declarations - Orders - Stay of proceedings LEGISLATION CITED : Supreme Court Act 1970. Abigroup v Peninsula (No 2) [2001] NSWSC 1016 Anglo Cyprian Trade Agencies v Paphos Wine Industries, Devlin, [1951] 1 All ER 873 Australian Trade Commission v Disktravel [2000] FCA 62 Cretazzo v Lombardi (1975) 13 SASR 4 Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 Doric Products Pty Ltd v Lockwood Security Products Pty Ltd [2002] FCA 282 Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20 CASES CITED : Hughes v Western Australia Cricket Association Inc (1986) ATPR 40-748 International General Electric Co of New York Ltd v Customs and Excise Commissioners [1962] Ch 784 LMI v Baulderstone Hornibrook (No.2) [2002] NSWSC 72 Madden as Liquidator of Aquanaut Constructions Pty Ltd (in liq) [2001] NSWSC 1051 NRMA Ltd v Morgan (No 3) [1999] NSWSC 768 Orion Pet Products Pty Ltd v Royal Society for the Prevention of Cruelty to Animals (Vic) Inc (No 2) [2002] FCA 967 Oshlack v Richmond River Council (1998) 193 CLR 72 Trade Practices Commission v Nicholas Enterprises Pty Ltd (No 3) (1979) 28 ALR 201 Waters v P C Henderson (Australia) Pty Ltd (NSWCA, 6 July 1994, unreported) PARTIES : Mobile Innovations Limited (Plaintiff) Vodafone Pacific Limited (Defendant) FILE NUMBER(S) : SC 50123/01 COUNSEL : Mr V F Kerr (Plaintiff) Mr T D Castle (Defendants) SOLICITORS : Deacons (Plaintiff) Henry Davis York (Defendants)

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(e) Doric Products Pty Ltd v Lockwood Security Products Pty Ltd [2002] FCA 282 (Hely J): "The courts have cautioned against too ready a resort to apportionment according to issue based outcomes. See, eg, Australian Trade Commission v Disktravel [2000] FCA 62. Justice may not be served if the parties are dissuaded by the risks of costs from canvassing all issues which might be material to the decision in the case: Cretazzo v Lombardi (1975) 13 SASR 4 at 16". · A recent application of the principle was by Barrett J in LMI v Baulderstone (No.2) [2002] NSWSC 72. In that case two plainly discrete claims were made by the plaintiff - a minor claim upon which the plaintiff was successful and the dominant claim upon which the defendant succeeded. His Honour considered the claims "were so separate and disassociated (although involving common witnesses) that I think they should be treated, for costs purposes, as if they had been the subject of separate trials". · Where the principle is applied it is generally not appropriate to order that costs be paid in respect of particular issues because "that would create a degree of artificiality, and would impose an extraordinarily difficult task upon any registrar faced with the need to tax costs, in default of agreement": Orion Pet Products Pty Ltd v Royal Society for the Prevention of Cruelty to Animals (Vic) Inc (No 2) [2002] FCA 967 (Weinberg J). · Rather it is generally appropriate simply to apportion costs [SCR 52A rule 6(2)(a)] on the basis of "impression and evaluation: Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 at 272; LMI at paragraph 36. Mathematical precision is not required and the court will not attempt to be too technical or exacting in seeking to allocate costs: Dodds Family Investments at 272; NRMA Ltd v Morgan (No 3) [1999] NSWSC 768 (Giles J) at paragraph 25; Madden as Liquidator of Aquanaut Constructions Pty Ltd (in liq) [2001] NSWSC 1051 (Hamilton J) at paragraph 3; Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20 at 22. Relevant factors include the relative time devoted to evidence and submissions on the competing issues: Hughes at 48-136; Waters at 5; Fexuto at 22-25; NRMA at paragraphs 31-47 and the relative success of the party in terms of its original claim: Abigroup v Peninsula (No 2) [2001] NSWSC 1016 (13 November 2001) at paragraphs 36-40; LMI at paragraphs 41-47. 5 The proposition with which Vodafone took exception was that the principle was properly expressed in the sentence "Notwithstanding that the Court has power to deprive a successful party of costs, or even order a successful party to pay costs, that is a course to be taken in unusual cases and with a degree of hesitancy." Vodafone here submitted that caution needs to be exercised in a 'multiple issues' case such as the present in terms of awarding the successful party all of its costs, where it has failed on a number of discrete issues less an injustice be perpetrated against the unsuccessful party. [(cf. Fexuto v Bosnjak Holdings (No 3) (1998) 30 ACSR 20 per Young J)]. 6 In addition to the above authorities it seems to me that reference should be made to Oshlack v Richmond River Council (1998) 193 CLR 72. In that case McHugh J, with whose reasons for judgment Brennan CJ was in general agreement, after dealing with the statutory jurisdiction conferring on the Court a broad discretion to award costs, said at pp 96 -98:

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Claim 2 (v.mobile) involved a substantial part of the claim in monetary terms being abandoned by Mobile during the hearing, and concessions made by Vodafone in closing address as to the balance of the claim. · In exercising its discretion to award costs, Vodafone draws specific attention to the costs incurred by it in relation to claim 10 and the costs of Ernst & Young in meeting the reports served by Mobile in relation to damages claimed for repudiation. In addition, Vodafone's solicitors spent considerable time in assisting Ernst & Young in relation to that work. Mobile eschewed any claim for damages for repudiation at the hearing, and did not tender the reports of Mr Gower in which such damages were claimed. Accordingly, expenditure on the work performed by Ernst & Young in relation to claim 10 was wholly wasted. · In these circumstances, Vodafone submits that, if the Court is minded to approach the matter on a global basis, the Court ought make an order that Vodafone pay only 70% of Mobile's costs. Alternatively, Vodafone seeks an order that it be liable for Mobile's costs only in respect of the claims in which Mobile was successful and that Mobile pay Vodafone's costs (including the Ernst & Young costs) for the claims in which Vodafone was successful. 9 I have reached the clear conclusion that the proper exercise of the Court's discretion is to order that Vodafone pay 95 per cent of Mobile's costs of the proceedings. In this regard the submissions of Mobile are generally adopted in the reasons which follow. 10 As has already been seen, at trial the parties adopted, as a convenient management approach, a subdivision of the proceedings into eleven "Claims", some of which overlapped and some of which stood independently of the others. The factual matrix was, however, common to all either by way of adjectival background or by reference to contemporaneous and relevant events. The factual matrix concerned the construction of interrelated and overlapping provisions of complex contractual documents. 11 In the result, the plaintiff was substantively successful in eight of the Claims:

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(b) Claim 10 (Repudiation): while the plaintiff was not entitled to the form of declaration originally sought, it did establish that much of the conduct of which it had complained was repudiatory in nature (Judgment paragraph 883). 15 On any view, the plaintiff has been substantively successful. I have given close consideration to the clear possibility that the appropriate exercise of the Court's discretion should be in terms of an application of the usual rule that costs follow the event, by which the plaintiff would have the whole of its costs of the proceedings. The issues on which Vodafone succeeded were not so clearly dominant nor so clearly separate from the balance of the closely interwoven issues litigated at large, it may be thought, as to warrant a departure from the usual rule. Ultimately, however, it does seem to me that only a minor departure from the usual rule is justified so that the defendants are to pay 95 per cent of the plaintiff's costs of the proceedings. Declarations 16 Mobile seeks the four declarations set out in the Minute of Order. Declarations 1 and 2 17 No issue is taken as to the propriety of the making of declarations 1 and 2. Declaration 3 18 In my view it is appropriate that a declaration in the form of declaration 3 be made. The declaration squarely records an express holding to this effect [cf paragraphs 619, 641]. The agreement remains extant and on foot and it seems to me that there is utility in the making of declaration 3 in ensuring the regulation of the dealings between the parties in the future. Declarations 4 and 5 19 The parties are of course bound by a res judicata discernible from the reasons for judgment: cf International General Electric Co of New York Ltd v Customs and Excise Commissioners [1962] Ch 784 at 789 and Spencer Bower, Turner and Handley, The Doctrine of Res Judicata, Butterworths, 3rd Edn, 1996 at [159]. 20 The difficulty with the proposed form of declarations 4 and 5 is exposed in the reasons for judgment. As the judgment makes plain the real issue concerns the content of an implied term requiring Vodafone to act in good faith and reasonably in exercising its powers under the ASP. The judgment makes explicit, for example, that in certain respects there are limits to the extent to which the good faith or reasonableness implied terms constrained Vodafone from acting in a particular way [cf paragraphs 689, 691]. 21 In the circumstances where the extent to which the implied terms requiring Vodafone to act in good faith and reasonably have been tested against particular facts, matters and circumstances, and in that regard are dealt with in the reasons for judgment, there can be no doubt but that the parties are bound by a res judicata. Further those obligations will be breached if Vodafone's discretion to determine the target is exercised arbitrarily or capriciously [cf paragraph 692]; and [see paragraph 678 referable to the implied duty to co-operate]. 22 Notwithstanding these findings it does not seem to me that there is utility in the Court, in the particular facts matters and circumstances here litigated, making declarations in terms of declarations 4 and 5. As Vodafone has rightly submitted, the content of any good faith or reasonableness obligation depends upon factual circumstances. In respect of Vodafone's past conduct, these obligations were carefully addressed in the reasons for judgment with sufficient precision, as it seems to me, to ensure that the parties are bound by a res judicata.

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Damages 24 The calculation of the damages put forward by Mobile is accepted by Vodafone subject to two qualifications. These concern claims 5 and 8. Claim 5 - the September 2001 quarter [judgment paragraphs 845-853] 25 Mobile has calculated the damages for this quarter on the basis of 9,000 connections less 1,509 connections actually achieved. Vodafone does not dispute the mathematics of the calculation advanced by Mobile. 26 To the extent that the Court has invited further submissions about the question of damages for this quarter, Vodafone repeats its submissions put both orally and in writing, that Mobile has failed to sustain any basis for claiming damages against it, whether in respect of the 9,000 target or otherwise for the September 2001 quarter. 27 To my mind the submissions of Mobile in this regard are of substance and they are adopted in what follows. 28 The Court's finding (paragraph 850) is that "Vodafone's refusal to accept that the dispute resolution process had been enlivened, and to participate in that proceeding, constituted a breach of the ASP". 29 Determining what follows from that breach (paragraph 853) involves the same exercise as that upon which the Court embarked in respect of the nil target quarters: · the breach constituted the loss of an opportunity of value to Mobile, namely to engage in the dispute resolution process (paragraph 759); · the damages exercise then involves an ascertainment of quantum by reference to the possibilities (paragraph 762); · the approach likely to have been taken by Vodafone (paragraph 770) is that set out in paragraph 768 - the consequence of which for the quarters from December 2001 to March 2003 would have resulted in a 12,000 connection target; · that figure is required to be discounted for vicissitudes and contingencies reflecting the possibility the target would not have been achieved (paragraph 792). 30 In respect of the September 2001 quarter, that approach is qualified by the facts that: · a 9,000 target had been notified by Vodafone and adopted by Mobile as the basis for draft CTA worksheets; · the draft CTA worksheets included Vodafone Direct and affinity programs as elements, which elements Vodafone had not satisfied by mid August; · although Mobile commenced seeking connections during the quarter, it ceased to do so, with Vodafone's acquiescence, in mid August 2001, following the nil target determination for the December quarter (paragraphs 561-2). 31 In those circumstances whilst, prima facie, 12,000 is appropriate, the Court is not in error, as it seems to me, in taking 9,000 connections, less the 1,509 actually connected as the basis for calculating damages. A 9,000 figure more than takes into account the 10% contingency rate as adopted for subsequent quarters. The figure in the draft orders includes such a discount in favour of the defendants. In short, even though taking the figure of 9,000 would more than compensate for the 10% vicissitudes, the figure in the orders takes the 9,000 figure and further discounts it by yet another 10%. Claim 8 [Judgment paragraphs 854 - 857] 32 Mobile seeks nominal damages of $100. 33 Vodafone submits that this claim should be disallowed and puts the following submissions in this regard: · Mobile expressly abandoned the claim which it had pleaded in relation to the alleged retention funding agreement [paragraph 854]. It has neither pleaded nor particularised a breach of any other obligation so as to support an award of damages of any type in relation to retention funding matters. In these circumstances extremely limited oral submissions were advanced in relation to claim 8 by Mobile [transcript 1263/39-42; 1274/30-1275/51] and by Vodafone [transcript 1295/56-1296/30], although Vodafone had prepared detailed written submissions about this matter prior to Mobile abandoning this part of its claim. · Vodafone submits that the statement in paragraph 857 of the judgment that "the claim to any more than nominal damages on this head fails" does not connote an entitlement to nominal damages, but merely a limit on what damages could be potentially be available in respect of retention funding matters if there had been some obligation pleaded, particularised and proved by way of evidence in the proceedings. 34 I accept as of substance the submissions of Mobile in this regard. The judgment makes clear that the basis for 'nominal damages' under this head is not as a separate cause of action but rather as a separate head of damage for the nil target breaches (Claims 6 and 7). The damages calculated for those claims do not include the loss of benefit of retention funding. 35 Understood in this way the submission of Vodafone misconstrues the basis for the nominal damages sum. Mobile is entitled to an order reflecting nominal damages in the claimed sum of $100 - as a separate head of damage falling under claims 6 and 7. The schedule to the short minutes is to be re-engrossed to replace the figure of $100 by nil and an amount of $100 is to be included in claims 6 and 7 which should read: 6 and 7, Retention Damages, $100. The Direct Marketing Dispute - Claim 9 - Injunctions [Judgment paragraphs 862-880] 36 Here again for the purposes of the relief, Vodafone repeats its oral and written submissions that no basis has been established for the Court to grant any injunction in respect of the matters alleged in claim 9. 37 If the Court determines to grant injunctive relief, Vodafone has advanced two objections to the forms of order: