Plaintiff v Defendant

Supreme Court of Victoria|2011-06-23|Before: ROBSON J

PRACTICE AND PROCEDURE - Application by plaintiff to reopen its case to amend its particulars of loss and damage and to lead further evidence in support - Relevant principles to granting leave to reopen a party's case after the trial concludes but before judgment issued - Application granted.

1 NCON has brought proceedings against Spotlight claiming damages for breach of contract. NCON alleges that it agreed with Spotlight under a Rental Agreement to lease electrical devices, called Yes boxes, for use in Spotlight's stores for five years. Spotlight has some 106 stores throughout Australia selling fabrics and other haberdashery items. Each store, depending on its size, would take one two or three Yes boxes. The Yes boxes were to be installed between the power meter and the fluorescent overhead lights in the shop. The Yes boxes reduce the voltage of the power flow to the lights enabling less electricity to be used in store lighting. There is allegedly no discernable loss of light to Spotlight's customers. Spotlight deny any binding agreement was reached and deny the loss of light is not discernable.

2 The matter was heard before me over 12 days beginning 15 February 2011 and concluding on 2 March 2011. I reserved my decision. Several weeks later, I forwarded a memorandum to the parties indicating that I proposed to reconvene the hearing of the proceeding to hear submissions on whether or not NCON wished to apply to re-open its case on damages.[1]

3 As a consequence, NCON sought leave to serve and file further amended particulars of loss and damage[2] and to re-open its case on the issue of damages.[3]

4 The statement of claim annexed to NCON's writ[4] alleges that as a result of Spotlight's breach of the Rental Agreement and repudiation by Spotlight, NCON claims loss and damages for the loss of profits from Spotlight's repudiation of the Rental Agreement. The particulars allege NCON has suffered loss of profits and states NCON has supplied particulars.

5 Subsequently, NCON supplied particulars of loss and damage claiming damages of $1,494,556.70.[5] The claim was put on a loss of profits basis. The loss of profit was calculated by deducting from the revenue to be received by NCON the cost of manufacturing the Yes boxes and installing the Yes boxes in Spotlight's stores. Also added to the revenue was the value of the Yes boxes at the end of the five year rental period. The moneys to be received were described as the present value of the rental stream. NCON proposed assigning the rental payments to a financier who would in exchange pay NCON a lump sum described as the present value of the rental stream. NCON's claim was summarised as follows:

The present value of the Rental Stream $2,027,078.71

Total value of the transaction to the plaintiff $2,514,216.72

Less the value of manufacture and installation $1,019,660.00

Accordingly the plaintiff claims the sum of $1,494,556.72

6 Accordingly, at that stage the claim for loss and damage was a loss of profits claim and took into account the cost of the manufacture and installation of the Yes boxes. Shortly before the trial began,[6] Mr Richards, the solicitor for NCON, informed Cornwall Stodart, the solicitors for Spotlight, that NCON wished to amend its particulars of loss and damage to those set out in an amended witness statement of Mr Anthony Reibel.[7] Mr Reibel is the general manager, sales and rental finance for NCON. NCON called him as a witness at the trial.

7 Mr Richards[8] explained to Ms Forde of Cornwall Stodart that there were two changes, that he said were simple, namely, allowing for tax offsets which had been omitted, and, secondly, taking account, that on the balance of probabilities, the five year lease would have been extended for a further term of five years to ten years. He further deposed that he told Ms Forde that Mr Reibel was concerned about disclosing in his supplementary witness statement information and material which he considered constituted valuable intellectual property owned by himself. Mr Richards told Ms Forde that Mr Reibel requested that the statement be given to counsel briefed on behalf of Spotlight, Ms Forde and Cornwall Stodart, on the basis that they give undertakings as to confidentiality. Although these amended particulars were not in evidence, the amendments proposed do not suggest that the nature of the claim was changed from a loss of profits claim.

8 In a follow up letter, Mr Richards informed Cornwall Stodart that NCON's damages claim was now $2,292,558.32 on the basis that, on the balance of probabilities, the five year lease would have been extended to ten years and that this amount is the loss of profit for a lease comprising two periods of five years. Alternatively, he said that if the court finds on the balance of probabilities that the lease was confined to five years only, the damages claim was now $1,789,205.70. Mr Richards said that the difference between this amount and the amount shown in the original particulars of loss and damage already served was the tax offset. He said that this offset had initially been omitted but that it should have been included.[9]

9 Soon after,[10] Mr Richards sent to Cornwall Stodart the supplementary witness statement of Mr Reibel incorporating the amended claim for loss and damage. Mr Richards informed Cornwall Stodart that unless Spotlight was prepared to give the undertakings sought as to confidentiality they should return Mr Reibel's supplementary witness statement and the amended claim for loss and damage without making copies of them.

10 Cornwall Stodart responded[11] to Mr Richards and informed him that Spotlight was not prepared to agree to the confidentiality undertakings sought in relation to Mr Reibel's supplementary witness statement and subsequently the statement was returned to Mr Richards and the trial commenced with the damages claim being unamended.

11 During the trial,[12] NCON called Mr Reibel to give evidence. Before Mr Reibel was sworn in as a witness, Dr Dean, senior counsel for NCON, applied for a confidentiality order on Mr Reibel's evidence. Dr Dean said that Mr Reibel wished to give evidence of a secret method he used to allow customers of NCON to pay "lower rent than they would if they were financing on interest."[13] Dr Dean said this was done by "smoke and mirrors" and that Mr Reibel would explain this.[14]

12 Mr Garratt senior counsel for Spotlight said that he couldn't address on the matter until he knew what the evidence was.[15] I deferred consideration of this application and Mr Reibel began his evidence on other matters. His evidence was stood over to the next day. Before Mr Reibel continued his evidence in chief the next day,[16] counsel for NCON informed the court that Mr Reibel would no longer be giving evidence of his confidential model. Rather, NCON would rely on the particulars of loss and damage of 4 September 2009.[17] As noted above, this claim was the then particulars of loss and damage claimed on the pleadings and was based on loss of profits that took into account the manufacturing and installation costs of the Yes boxes.

13 Mr Reibel was taken to these particulars and asked questions about how each line was calculated. When he was taken to the value of the Yes boxes as shown on these particulars he said that he didn't know how that figure was arrived at.[18] He was taken to the cost of manufacture and installation. He said he assumed the cost of manufacture was a correct figure,[19] but he could not determine the cost of manufacture or any other figures. He said those were for NCON to determine.[20]

14 Later that day, counsel for NCON sought to lead from Mr Reibel evidence of additional damage arising from the alleged probability that the lease of the Yes boxes would have been extended for another five years. Spotlight objected to that evidence being led. After argument, I ruled that I would allow such evidence to be led on condition that NCON amended its particulars of loss and damage.[21] NCON sought and obtained leave to do so.

15 NCON thereupon filed and served amended particulars of loss and damage of 23 February 2011 that claimed loss and damages of $2,890,251.60. The amended particulars of loss and damage of 23 February 2011 are set out in schedule A.[22]

16 Although the proposed amendment was said by NCON to only relate to claiming damages in respect of a second five year term lease of the Yes boxes, the amended particulars of loss and damage omitted the explanation of the amount financed that had been included in the original particulars, omitted any reference to the value of the Yes boxes at the end of the lease (which previously had been specified at $487,138.01) and removed the deduction for the cost of manufacture and installation of the Yes boxes (which had been $1,019,660.00). No explanation was given for these omissions.

17 After my ruling and before NCON delivered the amended particulars of loss and damage, Dr Dean had asserted that NCON was abandoning any reference to tax offsets and was maintaining the original 4 September 2009 particulars but transposing the document into a ten year document.[23] Dr Dean, at the prompting of his instructing solicitor, did add that it would be a net present value for five years and a net present value for ten years.

18 After my ruling, Mr Reibel stood down and was recalled the next day on 24 February 2011 when he was taken through the amended particulars of damage which had been served on Spotlight.[24]

19 Mr Reibel was asked why there were no subtractions in the amended particulars of costs that may have to come off rental. He said that at the end of the rental term the boxes would have the same value as at the beginning and could be rented again like a plant hire company.

20 Mr Reibel conceded that NCON's amended particulars of loss and damage was not calculated on the basis of loss of profits but calculated on the basis of loss of revenue.[25] Mr Reibel acknowledged that NCON's damages claim did not make any allowances for costs and expenses that may have being incurred to earn the rental.[26] He said that damages claim was for a lesser sum than a damages claim for loss of profit.[27]

21 In support of that contention, Mr Reibel thereupon produced a document, Exhibit P50,[28] which showed his calculations in support of the amended particulars of loss and damage. It also gave a calculation of the loss of profit. He said that this demonstrated that a claim for loss of profit would be for more than the NCON's claim for loss of revenue.

22 Exhibit P50 repeats the amended particulars claim of 23 February 2011 for the first term of the rental agreement as $2,027,078.71. The document also includes a calculation for the second term that differs slightly from the amended particulars in calculating the present value of the second term revenue and reaches a figure of $2,905,430.68 as compared to $2,890,251.60 in the amended particulars.

23 His calculation for the five year term loss of profits to NCON (PV of net value in deal to NCON) is $2,643,364.76 and it is more than the claim made by NCON based on lost revenues of $2,027,078.71.[29]

24 I understood from Mr Reibel's evidence, that taking the five year term, NCON were content to claim a lesser sum as calculated from the loss rental stream of $2,027,078.71 than its loss of profit which he calculated at $2,643,364.76.

25 The loss of profit calculation for the first term in Exhibit P50[30] of 24 February 2011 was as follows:

PV of goods to NCON at 60 months equals PV of

Re-lease revenue in open market for a further 60 months

at end of 60 months (ie 61 to 120 months) $1,317,462.08

PV of Revenue First 60 Months $2,027,078.71

Tax Depreciation Offsets Five Years $ 364,344.46

Value in deal to NCON $3,713,885.25

Less Cost of Goods Sold $1,070,520.50

26 It was clear, therefore, that NCON intentionally omitted from the amended particulars of loss and damage the deduction for the expenses of manufacturing and installation that was contained in the original particulars of loss and damage.

27 The trial then continued with the claim for NCON's claim for damages in that form. Spotlight did not lead any evidence on NCON's damages claim.

28 During final submissions, Spotlight contended both in writing and orally that NCON's damages claim was bad at law as it was based on the loss of revenue and not the loss of the anticipated profit.[31]

29 At the conclusion of NCON's counsel's final address,[32] I indicated that I had certain questions concerning the damages claim including whether proper allowance had been made for any expenses that NCON might have incurred in generating the rental income. I asked where was the evidence that supported the claim that NCON would receive $2,027,078.71 for the first rental period.[33] I said to Dr Dean that he should address the issue of why NCON's claim for loss and damages is a claim for loss of revenue.[34] Dr Dean offered to supply the court the answers in writing but I asked that he return the next day to provide the information to me in Court.

30 The next day,[35] NCON produced a written calculation of damages calculated on a loss of profits basis.[36] The calculation took into account the cost of manufacturing and installing the Yes boxes and other expenses that NCON would incur in supplying the Yes boxes to Spotlight.

31 NCON did not seek to replace its amended particulars with this document. The document also contained several expenses about which there was little or no evidence.

32 For the purposes of the application to reopen NCON's case, Mr Richards explains the decision to omit expenses from the amended particulars of damage of 23 February 2011 and the tendering of the calculation of loss and damage in exhibit P53 on the final day of Dr Dean's address.[37] The loss of profits claim that was made on 2 March 2011 is set out in schedule B.

33 Mr Richards says that the original particulars of 4 September 2009 were prepared by him on the instructions of Mr Reibel and to a very minor extent not material, Gregory Gill. Those particulars did not include what he calls notional expenses being:

(i) Overheads of the Plaintiff for the 2008 calendar year;

34 Mr Richards says that Mr Greg Gill's and Mr Tim Gill's affidavits seek to explain why each of the items of the notional expenses were not given in instructions to him or were not included in the original particulars. He says that no instructions were given to him by anyone on behalf of NCON between the 4 September 2009 and the penultimate day of trial (on 1 March 2011) which lead him to believe the particulars ought to be amended to include the notional expenses as proper deductions from gross revenue. He says that his general instruction from Greg Gill was that the operating costs of NCON up until relatively recently were paid personally by either or all of Greg Gill, Derek Barnes and Tim Gill out of their own pockets, by way of unsecured loans.

35 Mr Richards deposes that in order to obviate the requirements of Mr Reibel to obtain a confidentiality undertaking, the amended particulars of 23 February 2011 were prepared by himself during the running of the trial on the instructions of Mr Reibel. Mr Richards concedes that the amended particulars of loss and damage claimed damages on a loss of revenue basis; in particular, the net present value of the future income stream. He deposes that Mr Reibel advised him that that figure resulted in a lesser quantum of claim, than for loss of profits. He says that accordingly at that time he considered it was appropriate to proceed on that basis.

36 Mr Richards says that the principal but not the sole reason for NCON's decision during the trial to mistakenly pursue damages on the basis of revenue, was a "pragmatic but mistaken and ill-conceived stratagem of [NCON's] legal team in response" to the difficulty in advancing the original basis of the claim to damages in Mr Reibel's supplementary statement which was in dispute with Spotlight.[38]

37 Mr Richards deposes that "during further evidence and as the proceeding unfolded it became apparent on a re-consideration, however, that the proper basis on which damages should be claimed was for loss of profits as originally claimed and as claimed in Reibel's Supplementary Statement (without the notional expenses) and that a loss of revenue claim was bad in law."[39]

38 He concedes that as a consequence, expenses ought to properly be deducted from the net present value of the future income stream paid to NCON to ascertain loss of profits as originally contended. He says that those expenses, other than the notional expenses, were all specified in Mr Reibel's proposed supplementary statement which was not tendered in evidence.[40]

39 He describes the notional expenses as those expenses not included in the original particulars of loss: overheads of NCON for the 2008 calendar year; repairs and maintenance; management costs of the roll-out of the Yes boxes; and freight and shipping costs.[41]

40 Mr Richards deposes that the final address of Dr Dean, and supporting written submissions, was entirely predicated upon a loss of profits claim, with all expenses properly deductible from gross revenue, except the notional expenses. He says that no evidence was given about these for the reasons deposed to in Mr Greg Gill's affidavit and Mr Tim Gill's affidavit.[42]

41 Mr Richards says that by inadvertence of the whole of the legal team of NCON, NCON failed to seek leave to further amend the amended particulars of loss and damages dated 23 February 2011 to reflect the case as finally advanced by NCON with the exception of the notional expenses.[43]

42 Mr Richards deposes that one further matter militated to some extent against NCON properly seeking leave to make a second amendment of the particulars of loss and damage, and that was the time pressure. He says that the trial was into its twelfth day against an estimate of four days. He said that NCON's legal team was concerned with the length of the trial and that Spotlight's counsel had pending commitments. He says that that perceived time pressure added to NCON's failure. Mr Richards says that the failure to seek that leave was not by reason of NCON's instructions to its legal team not to do so.[44]

43 I accept that exhibit P53 was intended to set forth a loss of profits claim for loss and damage. As conceded by Mr Richards, no application was made to amend the claim for loss and damages to make the claim set forth in exhibit P53. Further, as conceded by Mr Richards certain items had not been proved and the evidence on others was not clear.

44 NCON now seeks leave to amend the particulars of loss and claim as set out in schedule C. I will deal with each category of further evidence NCON seeks to lead and where appropriate compare it to the evidence led at the trial.

45 A comparison of the proposed further amended particulars of loss and damage of 14 April 2011[45] and the amended particulars of loss and damage of 23 February 2011[46] identifies that certain particulars are retained with some added.

46 Paragraphs 1, 2, 3 and 4 of 23 February are not the subject of amendment. Paragraph 5 of 14 April is expressed differently to that of 23 February, but appears to make the same allegation, that is, that the present value of the monthly rental payments is $2,027,078.71.

47 Paragraph 6 of 14 April introduces the first significant amendment by taking into account depreciation of the Yes Boxes of 20% over ten years, giving a current value of the Yes Boxes at the end of the five year term of $551,830.16.

48 Mr Gregory Gill contends that the cost to NCON of installing the Yes boxes in the 106 stores of Spotlight would be $219,067. The expense is itemised in paragraph [7] of 14 April. The 4 September particulars[47] included the costs of manufacture and installing the Yes boxes as $1,019,660. That expense also was included in the 2 March damages calculation.[48] The cost of installation was not separately identified.

49 Mr Gill says that this item of expense was proved and appears in the Report Presentation to Spotlight Stores,[49] tendered as part of Mr Tobin's evidence.

50 The figure of $219,067 does not appear in the report. According to Mr Gill the cost of installing the units 1210, 3420 and 3630 (the specific units that NCON said would need to be installed in the Spotlight stores) appear at CB 50. Mr Gill says that by doing the calculation that he performs in an exhibit to his affidavit[50] the weighted average cost of installation of $2066.70 can be calculated and then extrapolated to 109 stores.

51 Mr Gill wishes to lead further evidence that details all the tasks comprised or included in the installation costs.[51]

52 The proposed 14 April particulars identify the cost of manufacturing the Yes boxes for Spotlight as $851,515. The 4 September particulars included a total figure for the cost of manufacture and installation as $1,019,660, which is not materially different from that in the proposed particulars of 14 April or the 2 March calculation of the loss of profit.

53 Mr Gregory Gill says that evidence in relation to the cost of manufacture was given by himself and Mr Reibel.[52] Mr Reibel eschewed all knowledge of the cost of manufacture as discussed above.

54 In Mr Gregory Gill's cross-examination during the trial, he said that the average cost of the Yes Box was approximately $2,200 per box.[53] He later testified that the average number of boxes per store was 1.7 boxes.[54]

55 In his affidavit in support of the application to reopen, he says that this was manifestly incorrect, as he meant to say 3.7. He says that the tendered document, described as Mr Reibel's calculations of rental and purchase costs of Yes boxes,[55] demonstrates that the total number of boxes in the three stores surveyed was 11 boxes,[56] which, when divided by three, achieves a weighted average of boxes per store of 3.67 boxes per store, or 3.7 when rounded up.

56 Thus, Mr Gill says that correcting the weighted average number of boxes per store to 3.7, the cost of installed boxes is calculated to be 106 x 3.7 x $2,200 = $862,840.[57]

57 Mr Gill says in his affidavit, however, that the actual mathematical methodology to ascertain the cost of manufacture is to deduct the total cost of installation from the total cost of installed boxes. He says that figure was $1,070,582 (total cost of installed boxes) less $219,067 (cost of box installation), which equals $851,515 total cost of manufacture.

58 To calculate the cost of manufacture, Mr Gill has put forward detailed calculations of installing the Yes Boxes.[58] He says that the information can be gleaned from the existing evidence. As discussed above he says that the total cost of installation is $219,067.[59]

59 Mr Gill says that NCON seeks to clarify the costs of manufacture by leading further evidence of actual cost of manufacture, as opposed to ascertaining that figure by mathematical deduction from the evidence.[60] He says the two figures are identical, subject to adjustment for decimal point rounding, which is not material.

60 He seeks to lead evidence of the manufacturers and marketing heads of agreement dated 14 December 2007.

61 Mr Gill says that during the trial, he attempted to physically locate the manufacturers agreement in the new and old offices of NCON. He says that he was assisted by Derek Barnes and Tim Gill. He says that between them, they carried out extensive searches. He says that they were unsuccessful, and did not ascertain the reason for their failure to locate the document until weeks after the trial concluded. He says that NCON was never given a signed copy of the document. He says that during the trial, by reason of the death of the principal of Green Lighting Pty Ltd, Mr Peter Connolly, he was unable to make, as a matter of urgency, the necessary inquiries. He says that after trial, he made inquiries with Green Lighting Pty Ltd and ascertained that NCON was never given its copy of the signed document. He thus then requested from Green Lighting Pty Ltd NCON's copy of the document.[61] He says that he is aware that Derek Barnes collected the document directly from their offices.

62 In Mr Gill's affidavit, he sets out in some detail the cost of manufacture of the various Yes box models and the weighted average cost per model. He concludes that the weighted average cost of manufacture for 106 stores is $851,515.[62] Mr Gill says that he seeks leave to lead the further evidence in order to clarify evidence already given which proves the cost of manufacturing the Yes Boxes.

63 The proposed particulars of 14 April set out the commissions that would have been payable to the persons who were to receive commission on the rental agreement.[63] They total $312,187.93. This is the same as the commission figure taken into account in the 2 March loss of profit calculation.[64]

65 GSG was retained by NCON to market the Yes boxes. Mr Gill contends that NCON has led evidence to the requisite standard to demonstrate that, pursuant to an exclusive agreement between it and GSG, GSG receives 10% of the total capital cost of the Yes Boxes, less total cost of installation, which equates to $210,834. He says that figure is also demonstrated in Exhibit GG5.[65]

66 Mr Gill says, however, that his evidence was confusing when he testified with an imprecise description that the commission was 10% of "sale price whether the goods were sold or rented". Mr Gill says that NCON seeks leave to lead evidence by himself to clarify the mathematical formulation of the commission payable to GSG as 10% of the total capital cost of the Yes Boxes, less the total cost of installation.

67 Mr Reibel's company Akranda Pty Ltd was retained to provide his managerial services. Mr Gill says that NCON has led evidence to the requisite standard to demonstrate that Tony Reibel (in particular to his company Akranda Pty Ltd) reaps 2% of the net funds receivable by NCON from Societé Generale, namely, $2,027,078.71, being $40,541.57.[66]

68 Mr Gill says, however, that his evidence was confusing[67] when he testified with an imprecise description that the commission was 2% of "the amount raised in finance." He says that NCON seeks leave to lead evidence by himself to clarify the formulation of the commission payable to Tony Reibel as 2% of the net funds received by NCON from Societé Generale. Mr Gill produces Exhibit GG5, which he says is an analysis of the evidence and calculations by which the amounts referred to by him are arrived at.

69 He says that NCON does not seek to lead any further evidence in relation to the quantum of the commissions payable to GSG and Tony Reibel, other than the clarification by himself in relation to the mathematical formulation of the commission.

70 SME was retained to procure finance from a financier for the assignment of the rental stream. Mr Gill says that NCON seeks leave to lead clarifying evidence of commissions or administration fees payable to SME, namely, 3% of net funds receivable by NCON from Societé Generale. The evidence of Mr Reibel[68] was that either 3% or 4% of the moneys "received on a discounted - the amount of moneys banked by NCON" was payable.[69]

71 Mr Gill says that the actual percentage is specified in an undated and unsigned letter from SME addressed to NCON given by SME to NCON in or about 2007. NCON seeks leave to tender it into evidence. Mr Gill says that to the best of his knowledge, no other documents exist which go to the question of SME's commission arising out of the contract. He says that self-evidently, the contract did not proceed.

72 He exhibits as Exhibit GG6 an undated letter which he says indicates that in respect of contracts of $100,000 or more, commission payable applicable to professional and large companies is 3%. Mr Gill says that NCON contends that Spotlight would come within the category of professional and large company.

73 Mr Gill contends that the reason for the uncertainty concerning the commission payable to SME is because of the uncertainty in the evidence of Mr Reibel. Mr Gill says that Mr Reibel correctly nominated 3% or 4% specified in the letter,[70] but could not specify the precise criteria which resulted in 3% and not 4%, or vice versa, being applicable. Mr Gill says that, were the Court to grant leave to lead this further evidence,[71] the uncertainty would be clarified so that it would be clear that 3% of the bankable amount payable to NCON, being $2,027,078.71, namely $60,812.36, is payable by NCON.

74 Mr Gill says that if the Court makes a finding in the proceeding in favour of NCON that the contract was valid and binding, then he believes that NCON will thereupon be liable to each of GSG, SME and Tony Reibel for commission. Spotlight objects to his belief being tendered in evidence. Mr Gill says that Mr Tobin[72] testified that if NCON's claim succeeded, commissions would be paid by NCON. Mr Gill says that NCON's contention is that commissions are an expense incurred in reliance on the contract.

75 Mr Gill says that in NCON's submission, the total of the commissions are at once an expense in reliance on the contract for which it seeks compensation and also a cost to be deducted from gross revenue as an expense, and thus one category ought to be netted off against the other.

76 Mr Gill says that NCON accordingly seeks the leave of the Court for him to clarify that evidence given by him, that although in the end it has not paid the commissions, it will be liable to do so depending upon the Court's ultimate finding. He says that without netting off, there would be effectively a double liability for NCON in respect of commissions (or, perhaps more accurately, a deduction as an expense and additionally as subsequent payment by NCON of the same amount).[73]

77 The proposed particulars of 14 April identify other incidental expenses relevant to the calculation of the profit forgone.[74] These are identified as overheads, maintenance, management and costs of roll-out, freight and shipping and marketing. The 2 March profit calculation included further expenses under the headings of office, maintenance, vicissitudes and Tim Gill rollout. None of these items were proved in evidence.

78 Mr Gill says that an amount attributable by reason of the contract to overheads of NCON for the nominated six month roll-out ought to be deducted as an expense to the claim. He concedes that no evidence was led by NCON in relation to this amount.[75]

79 He says that he believes this was by inadvertent admission by reason that the expenses were ongoing notwithstanding the failure of the contract to proceed. He says thus, office rent was payable, Tim Gill remained on an irregular monthly retainer (which was paid when NCON was in funds to do so) and similar operating expenses were incurred notwithstanding. He says that this is evident by a retrospective examination of the events as they have occurred and speculation as to how long roll-out may have taken.

80 He says that NCON sought in final submissions to identify expenses on account of overheads, but he concedes that such expenses were not tendered into evidence. He says that he believes that Mr Timothy Gill will swear an affidavit in support of NCON's application deposing to this submission.

81 Mr Gill says that while the amount to be deducted on account of overheads is necessarily a notional amount only, a constructive sum arrived at after the event, NCON concedes that it would be proper to make such a deduction. He says that, accordingly, if the Court grants NCON leave to re-open its case, NCON would seek leave to lead evidence of an amount of expenses to be deducted on account of overheads. He says that that evidence would be constituted by him tendering evidence, being the books of account of NCON. He says that these form part of the records of or kept by NCON. He seeks to give evidence attributing a notional charge of 50% of the overheads over a period of 12 months (for a roll-out of six months and six months beyond). He says that for the relevant period of 1 January 2008 to 31 December 2008, that amounts to $26,484.95. He exhibits the relevant books of account of NCON and amounts of overheads derived from those books.[76]

82 Mr Gill contends that its failure to lead this evidence at trial was an error as a result of a misapprehension of conventional accounting practice. [77]

83 Mr Gill says that the cost of repairs to Yes Boxes installed in Spotlight's stores over the five year term should be deducted from NCON's claim. He says that this expense was omitted by inadvertence only and resulted from NCON innocently and inadvertently initially instructing its legal advisers that the Yes Boxes had no moving parts and were therefore maintenance-free. Mr Gill says that this remains the substantially true position. He concedes that subsequent to this proceeding being commenced in May 2009, the experience has been that there has been an observed maintenance requirement of approximately 4% per annum in respect of boxes installed. He says that by extrapolation for five years, the total is $14,657.40.

84 Mr Gill says that NCON concedes it is appropriate to ascribe a value to repairs and maintenance. He says that such a value is based entirely on an estimate of costs and not based on any recorded cost to NCON. Mr Gill says that in practice, maintenance requirements such as they are, typically occur initially soon after installation, and have been attended to by Derek Barnes free of charge, or by electricians at no charge as part of their installation warranty. Mr Gill says that he believes that cost of materials is in the order of tens of dollars only. He says that as a consequence of all the foregoing, it has been unnecessary for NCON to raise invoices to itself.

85 He says that he has extracted from rudimentary company records and on-site experiences details of maintenance requirements otherwise met by NCON in respect of other contracts and applied that 4% per annum maintenance rate to the assumed 392 (106 x 3.7) units the subject of the contract. Mr Gill says that NCON seeks leave for him to tender this evidence in the event the Court grants NCON leave to re-open its case.[78]

86 Mr Gill contends that NCON's failure to lead this evidence at trial was as a result of inadvertence only. He says that while NCON acknowledges it requires the Court to excuse such inadvertence, he says that in the context of the claim, this is de minimis, representing approximately 1% of the claim.

87 Mr Gill says that NCON failed to lead evidence of any amount in respect of management costs of NCON attributable to the roll-out under the contract, had it proceeded. He contends that this failure resulted from a misapprehension of accounting and standard commercial practice.

88 Mr Gill says that Tim Gill gave evidence[79] that he was paid a monthly retainer fee for his specified responsibilities. Mr Gill says that NCON has thus wrongly assumed that those fees were payable notwithstanding the status of the contract or any roll-out under it, and were unconnected and independent of that contract.

89 Mr Gill says that Tim Gill, like other executive shareholders in NCON, namely, Derek Barnes and himself, especially in the beginning of the start-up of the company, as he says is routinely the case in start-up companies, carried out a great deal of work and tasks. He says this was largely unremunerated or excessively under-remunerated. He says that tasks associated with roll-out are an example of such tasks. He says that it is his distinct recollection that in calendar year 2008, Tim Gill was not paid any retainer at all. Mr Gill says he was paid a retainer if and only when the company was in funds to do so. He says that NCON thus inadvertently assumed that no management costs of roll-out were separately attributable to the contract and properly deducted from any claim for loss of profits to do. He says that to do so necessarily requires a speculation as to expenses not incurred, but that might have been incurred had the contract proceeded. He says it is an estimate and notional only.

90 Mr Gill says that, accordingly, if the Court grants NCON leave to re-open its case, NCON would seek leave to lead further evidence from Tim Gill which details the management responsibilities of Tim Gill that would have related to the contract and its implementation and the appropriate proportion of cost related thereto attributable to the contract had it proceeded. He says that Tim Gill would propose to give evidence that his responsibilities would have included matters such as coordination of all initial surveys activities leading up to store specification and assessing the requirements of each store.[80]

91 Mr Timothy Gill confirms that he was only paid for his work when NCON was in start up phase if and when NCON had the funds to do so.[81] He says that in 2007-2008 NCON paid him no retainer at all. Mr Timothy Gill says that while NCON, as he understand it, accepts that sums on account of overheads and management costs related to roll-out ought properly be deducted from its claim as an expense, the assessment of those sums is entirely notional and not precisely related to actual sums paid to him in the relevant period. He says that it is by reason of these factors, that he joins in with NCON to affirm that it was by inadvertence and based on actual events as they happened that expenses in respect of overheads and management costs in the roll-out were not originally lead in evidence. He says that he joins in with NCON to seek leave to lead evidence of those amounts in the event the Court grants NCON leave to re-open its case.[82]

92 Mr Gill says that NCON would propose that in respect of Tim Gill, 100% of the notional monthly retainer for six months ought to be attributed as an appropriate expense on account of his management costs of roll-out. He says that this represents an expense of $36,000 (being the evidence of approximately $70,000 per annum rounded up to $6,000 per month).

93 Mr Gill says that NCON contends that its failure to lead this evidence at trial was as a result of inadvertence only as is earlier described, and NCON acknowledges it requires the Court to excuse such inadvertence.

94 Mr Gill says that NCON failed to lead evidence of the freight and shipping costs it would have incurred had the contract been performed. He suggests that this was an innocent omission from the evidence in relation to costs not incurred, that, had they been properly considered by NCON, would have been brought to account as a legitimate expense. Mr Gill says that this was by inadvertence only and resulted from NCON failing to instruct its legal advisors that these were expenses which would have been absorbed by NCON had the contract proceeded.

95 Mr Gill says that if the Court grants NCON leave to re-open its case, NCON seeks leave to lead further evidence from Tim Gill which details NCON's estimate of shipping costs which would have been payable by NCON to effect delivery of the Boxes to 106 Spotlight stores throughout Australia.[83]

96 Mr Gill says that evidence will establish that estimated costs on this account at $11,017 should be deducted as an expense from NCON's claim.[84]

97 Mr Gill says that NCON has lead evidence to the requisite standard to demonstrate that NCON outsources all marketing[85] and that GSG was exclusive sales agent.[86] Mr Gill says that NCON does not seek leave to lead further evidence in relation to marketing expenses.

98 Mr Gill says that NCON has satisfied the contractual burden to secure a financing facility of $2,500,000[87] and that was not challenged by Spotlight. He says, however, that NCON seeks leave to lead evidence of alternative financiers who were available to it in the event the proposed arrangement with Societé General was not consummated.[88] He says that self-evidently no alternative financiers were ever required.

99 He says that NCON seeks to give through him, elaborating evidence of other financiers who were attracted by the credit-worthiness of Spotlight as a top-tier borrower, to an investment which offered a certain and attractive income stream. He says that NCON failed to disclose the identity of two such potential investors, as he felt bound by commitments of confidentiality to those financiers. [89]

100 Mr Gill says that if the Court grants NCON leave to re-open its case, NCON seeks leave to lead further expert evidence verifying evidence already given by Tony Reibel[90] that as a first principle the discount rate used in a net present value calculation is the same as the interest rate at the time of calculation.

101 NCON applies to lead further or clarifying evidence from Mr Reibel on the discount rate of 9% used to calculate the alleged revenue to be received by NCON, further evidence on the depreciation of the installed Yes boxes, and clarifying evidence on the calculation of the present value of the revenue to be received if a further lease of 5 years was taken up by Spotlight.

102 In particular, NCON applies to lead additional evidence of the alleged "commercially acceptable" discount rate of 9% used to discount the rental income to be paid by Spotlight to calculate the sum to be received by NCON.[91] Mr Reibel sets out the proposed evidence in his affidavit including information from the RBA.[92]

103 The current amended particulars of loss and damage allege that NCON retains ownership of the Yes boxes.[93] No adjustment is made to income or expenses for the initial five year term for depreciation by reason of the retained ownership of the Yes boxes. NCON applies to amend its particulars of loss and damage by deducting from the revenue received the cost of manufacturing and installing the Yes boxes. The proposed particulars seek to add to the anticipated revenue stream the depreciated current value of the Yes boxes at the end of the five year term.[94]

104 NCON applies to lead "clarifying" evidence from Mr Reibel of the depreciation calculation which Mr Reibel says is set out in the existing evidence but only in relation to 90 stores.[95] NCON seek to lead evidence from Mr Reibel extending the "cost" to 106 stores.[96] I do not believe this evidence was relied on by NCON to support its 23 February amended particulars of loss and damage. The calculation, however, was made in the profit calculation that Dr Dean explained and tendered on 2 March 2011.[97] NCON applies to lead further evidence from Mr Reibel of the depreciation calculation that leads to the residual value of the Yes boxes that appears in the proposed particulars and of the present value of the depreciated value using a 20% discount rate.[98]

105 NCON applies to lead further evidence from Mr Reibel "clarifying" the methodology of calculating the present value of the payments to be received by NCON for a the second term of five years.

GENERAL OBSERVATIONS BY NCON ON FAILURE TO LEAD EVIDENCE

106 Mr Gill gives general evidence on NCON's application. He says that insofar as NCON has not led sufficiently clear evidence concerning the constituent parts of the expenses of its damages claim to properly discharge its evidential onus, this was largely by inadvertence, and certainly not deliberate to overstate its claim or to understate proper deductions from its claim.

107 He says that the principal reason is that in November 2007 and in the months which followed, NCON was a start-up company. He says that its processes and procedures were not mature or in place and were evolving, and that the contract the subject of the proceeding was the first major contract it had negotiated. He says that various expenditures which rightly were deductible now from the claim were, in November 2007 and the months following, not actually incurred in the administration of the contract or any other contract of NCON.

108 He says that to now establish categories of expenses, and to attribute value to various categories, requires a theoretical retrospective assessment about expenses which plainly were not incurred, but had the contract proceeded, may have been incurred. He says that accordingly, in the quantification of the claim, NCON was obliged to postulate unknown facts flowing from known facts and make reasonable predictions, and some of those predictions might not have been sufficiently clear or were inadvertently not made at all.

109 As a further general comment, he says that were other factors that militated against the proper exposition of an income damages claim -

(a) the untimely death, some weeks prior to trial, of Mr Peter Connolly, the principal of Green Lighting Pty Ltd, the entity which was contracted to manufacture the Yes Boxes. He says that Mr Connolly would have given direct evidence of the costs of manufacture of the boxes and provided the document, being the manufacturer's and marketing heads of agreement dated 14 December 2007 between NCON and Green Lighting Company Pty Ltd;

(b) the demise, as an operating entity in Australia, of Societé Generale following the recent Global Financial Crisis. Societé Generale, he says, would have given direct evidence, inter alia, of its interest rates; and

(c) the unfortunate happenstance of NCON shifting offices during the trial, which he says meant that some documents and evidence, which was in some cases over three years old, which he concedes was rightly called upon during the trial, were sometimes difficult to readily locate, and in some cases could not be located at all.

110 Mr Gill says that NCON was advised by email by Spotlight at 3.59pm on 10 February 2011 (effectively two business days before trial) and at the beginning of the trial on 15 February 2011, of Spotlight's objection to the Court receiving the evidence of Tony Reibel contained in the witness statement headed "NCON Australia Loss of Profit Calculation" and this resulted in NCON being unable to place before the Court, in an orderly and complete way, much of the evidence which now might be considered to be inadequately proved. He says that the viva voce evidence of Tony Reibel given at trial was accordingly not as orderly or as complete as it might otherwise have been.

111 The Court has a discretion to allow a party to re-open its case before or after judgment has been given.[99] The overriding principle that guides a court in exercising its discretion in deciding whether to grant an application to re-open is whether the interests of justice are better served by allowing or rejecting the application, as the case may be.[100] An application to re-open may be based on accident, mistake or want of foresight.[101]

112 Justice Kenny of the Federal Court of Australia says there are, "broadly speaking,.... four recognised classes of case in which a court may grant leave to reopen although these classes overlap and are not exhaustive": fresh evidence; inadvertent error; mistaken apprehension of the facts; and mistaken apprehension of the law.[102] An important factor for the Court to consider is the reason or explanation for the evidence now sought to be led not being led at the trial.[103] Where evidence has not been called for some tactical reason that will tell against an application to reopen to call that evidence.[104] Also where an unsuccessful litigant is seeking a back door method to reargue a case, that will tell against an application.[105] Prejudice to the other party is an important consideration.[106] Whether the application is made before or after judgment is of relevance. There is a public interest in the finality of litigation.[107]

113 NCON rely on the principle stated by Bowen LJ in Cropper v Smith[108] "... the object of the courts is to decide the rights of the parties, and not to punish them for mistakes which, if not fraudulent or intended to overreach, the court ought not to correct."

114 NCON also rely on the decision of Justice Kourakis sitting in the Full Court of the South Australian Supreme Court in Brown v Dream Homes SA Pty Ltd..[109] There Ms Brown took proceedings against Dream Homes over a pre-purchase report, provided to Ms Brown before she purchased a house. The report failed to advise her that the house was structurally damaged. In the Magistrate's Court she succeeded. In assessing her damages, however, the Magistrate concluded that Ms Brown had not suffered any loss because the capital appreciation she realised when she sold the house more than offset her transaction costs. She sought to re-open her case to lead evidence that her damages included the general increase in the housing market that she missed out on by purchasing on the basis of the report. The Full Court by a majority decided to refer the matter back to the magistrate to consider her application to re-open. In making that decision, Kourakis J held that the mistake made by her lawyers in not tendering the evidence was not tactical and was not sufficient to deny her application to adduce further evidence.[110] He went on to say:

In deciding this issue the consideration of paramount importance is the ultimate effect on the interests of both parties of allowing or refusing the appellant's application. If the appellant is given an opportunity to adduce the evidence now the prejudice to the respondent caused by her failure to adduce the evidence at trial can be met by an order for costs. If the appellant is denied the opportunity, the contractual wrong that I have found she has suffered will forever remain without a remedy. Subject to the question of whether taking the further evidence is practicable and manageable, there is therefore a strong argument that the interests of justice favour the grant of leave. [111]

115 NCON rely on the fact that in the above case, judgment had already been given.

116 NCON submits that its failure to lead evidence to calculate a loss of profit was not a deliberate tactical decision. On the contrary, NCON says that the initial particulars of loss and damage was claimed on a loss of profit basis after taking into account the cost of manufacture and installation of the Yes boxes.

117 NCON sought to amend that claim to include damages flowing from the likely extension of the lease for another five years. NCON encountered difficulties about relying on the proposed amended particulars of loss and damage as Mr Reibel, their finance consultant, claimed confidentiality in an aspect of the calculations that was resisted by Spotlight. Overnight NCON came up with a solution to the problem by withdrawing the application to amend the particulars in the form put forward by Mr Reibel and instead putting forward the amended particulars of loss and damage of 23 February 2011. Although Dr Dean said that these were the original particulars of 4 September with the addition of a claim for the extra five years, the particulars omitted the profit based calculation of the original and moved to a lost revenue basis.

118 Mr Richards says that he made that decision because he believed that the lost revenue was less than the lost profit. A mere statement of the proposition discloses its error. Mr Richards says that he came to realise this error and that the claim should be based on loss of profits. An attempt was made to correct the position in the final days of the hearing but the particulars were not sought to be amended nor was evidence adduced to make out all the elements of the calculation appearing in the profit calculation of 2 March 2011.

119 Mr Heaton who appeared for NCON on the application to re-open, said that:

We concede what should have happened was that the plaintiff should have sought leave to effectively reopen its case then, amend its particulars and lead the appropriate evidence in relation to particularly expenses which ought to be deducted from the gross revenue that the plaintiff would receive of its claim.[112]

120 Mr Heaton contends that there was some confusion in NCON's side.[113] He said that perhaps NCON's side was a little flummoxed or a better description may be a little bit rattled.[114] NCON relied on the several factors referred to by Mr Gill including the death of Mr Connelly, Societe General leaving Australia and the relocation of NCON's offices during the hearing.

121 NCON contends that Spotlight will suffer no prejudice that cannot be cured by appropriate cost orders. On the other hand, unless leave to re-open is given, NCON faces the real prospect that if it establishes a breach of contract by Spotlight it will not recover any damages.

122 Mr Heaton relies on the amendment rule which relevantly to this case provides that for the purpose of determining the real question in controversy between the parties or correcting any defect or error in the proceedings the court may at any stage order that the particulars of loss and damage be amended.[115] Mr Heaton contends that the amendment of the particulars in this case will enable the real question in controversy to be determined and will correct a defect or error in the proceedings. Mr Heaton also refers to the Civil Procedure Act 2010 that provides amongst other matters that the overarching purpose of the Act and the rules of court is to facilitate the just, timely and cost-effective resolution of the real issues in dispute[116] and that in making any order in a civil procedure the court shall further the overarching purpose by having regard to the just determination of the civil proceeding.[117]

123 Reference can also be made to the injunction in the Supreme Court Act 1986 that relevantly provides that subject to the Act or any other Act, the Court must exercise its jurisdiction as to secure that, as far as possible, all matters in dispute between the parties are completely and finally determined, and all multiplicity of proceedings concerning any of those matters is avoided.

124 Spotlight laid emphasis on the finality of litigation principle pointing out the length of the trial and, in effect, the public interest in the expeditious use of Court time. Spotlight argues that NCON made a deliberate decision as to how the damages claim would be conducted. Spotlight points out that its submissions of 28 February 2011[118] expressly asserted that although NCON claimed loss of profits by its amended statement of claim NCON eschewed presenting a loss of profits claim by its amended particulars of 23 February.[119] In those written submissions Spotlight expressly contended that NCON had not presented any evidence in chief to sustain a loss of profits claim. Spotlight point out that the issue was also raised in oral submissions and by me during Dr Dean's submissions. Spotlight conclude that the issue was not one that was forgotten by NCON.[120]

125 Further, Spotlight says an unusual feature of the case is that I gave a preliminary view and invited NCON to consider making an application to re-open. Although not expressly stated by Spotlight, the fact that NCON was given a preliminary view further reinforces Spotlight's submission that NCON made a deliberate decision to run the case as it did without seeking to re-open its case to change the course it had adopted.

126 I do not accept that analysis. The submissions on a loss of profit on the final day by Dr Dean must be treated as a decision by NCON to return to its original claim to make a loss of profits claim. The oversight (if that what is was) was in not seeking to lead the necessary evidence to make out the renewed claim or in seeking to amend the particulars of loss and damage, as conceded by Mr Heaton.

127 Spotlight says that NCON's application is difficult to know. Dr Pannam QC who appeared for Spotlight points to four categories of evidence. First, NCON says that it has tendered sufficient evidence but nevertheless seeks to give clarifying evidence. Spotlight says that this category applies to the cost of installation of the Yes boxes,[121] the commission to GSG,[122] the commission to Tony Reibel,[123] the commission payable to SME,[124] the income received by NCON from the financier and the discount rate to be applied,[125] the depreciated value of the Yes boxes,[126] and the second five year claim.[127] Spotlight argues that this not an basis for reopening.

128 Spotlight submits that this is a matter for appeal. That is, if the evidence is sufficient and the judge fails to make that finding, then that is an error to be corrected on appeal. Spotlight says that the possibility that the judge may not accept the evidence, which NCON says is sufficient, is a matter for appeal, not a re-opening.

129 Dr Pannam says that the second category of evidence is where NCON has contended that it will not tender any further evidence in relation to other marketing expense[128], and that there is no residual value in the Yes boxes after the second five years.[129]

130 Thirdly, Dr Pannam says that NCON seeks to tender inadmissible evidence where Mr Gill proposes to give evidence of his belief on the commission entitlements[130] and Mr Gill's proposed evidence on what other financiers were attracted to financing the start up costs.

131 Fourthly, Dr Pannam says that NCON seeks to tender evidence where there are errors in the evidence or it wishes to lead fresh evidence.

132 Spotlight argues that Mr Richard's affidavit makes it clear that NCON knowingly and deliberately converted the damages from a loss of profits claim to a loss of revenue claim. Mr Richard's affidavit did say that, but he also said he did so as he was informed by Mr Reibel that a loss of profits claim would be a greater claim. Mr Richards believed Mr Riebel. Mr Reibel was in error. The loss of revenue claim for the five years lease was $2,027,078. The loss of profit claim of 2 March 2011 was $1,864,126 and in the proposed particulars of loss and damage of 14 April is either $1,107,963 or $1,420,151. In any event, Mr Richards must have realised his error when the loss of profit claim of 2 March 2011 was prepared and tendered.

133 Spotlight tenders a written analysis of the documents exhibited to the affidavit of Mr Gregory Gill.[131] Spotlight argues that if leave to re-open is given and this evidence is led there will be further argument about the effect of the evidence. Spotlight says that the evidence does not fall into the category of an undisputed fact that was overlooked. In response, I would say that the discretion to re-open is not limited to allowing non contentious evidence to be introduced.

134 Spotlight relies on three passages from authorities. It will be necessary to set each of these out to fully record the points that Spotlight wishes to make.

135 First is an extract from the judgment Mason CJ in Autodesk:[132]

However, it must be emphasized that the jurisdiction is not to be exercised for the purpose of re-agitating arguments already considered by the Court; nor is it to be exercised simply because the party seeking a rehearing has failed to present the argument in all its aspects or as well as it might have been put. What must emerge, in order to enliven the exercise of the jurisdiction, is that the Court has apparently proceeded according to some misapprehension of the facts or the relevant law and that this misapprehension cannot be attributed solely to the neglect or default of the party seeking the rehearing. The purpose of the jurisdiction is not to provide a backdoor method by which unsuccessful litigants can seek to re-argue their cases.

136 Spotlight contends that in this case I opened the door and I should not allow an unsuccessful litigant to re-argue its case.

137 Second is from the judgment of Brennan J also in Autodesk:[133]

It is desirable to add in the context of the present case a further observation about the opportunity to be heard. A court should not pronounce a judgment against a person on a ground which that person has not had an opportunity to argue (Pantorno v. The Queen). However, a sufficient opportunity to argue a ground is given when the ground is logically involved in a proposition that has been raised in the course of argument before the court or is to be considered by the court as an unconceded step in determining the validity of a conclusion for which one of the parties contends (University of Wollongong v. Metwally (No.2). Of course, the precise ground which a court or judge assigns for a decision will frequently be formulated in terms different from the terms of a submission by counsel but, provided the ground has arisen in one of the ways mentioned, the court or judge may properly proceed to judgment without requiring the case to be relisted for further argument and without inviting supplementary submissions to be made. (citations omitted)

138 Spotlight contends that the invalidity of NCON's approach to proving loss and damage was squarely raised in the sense referred to by Brennan J.

139 The third authority is Bradshaw and the following passage from Kenny J's judgment:[134]

The present is not a case of new evidence, inadvertent error or mistaken apprehension of the facts. Further, I accept that, as counsel for the respondents submitted, this was not a case of mistaken apprehension of the law, because the applicants knew the substance of the respondents' case, which depended on an understanding of the law that differed from their own. That is, with full knowledge that there was another view of the law to theirs, the applicants decided not to attempt to present the evidence that was relevant and necessary if the Court accepted the respondents' case and not theirs. This was not a case in which a particular issue was pleaded or argued but, by reason of circumstances outside the relevant litigant's control, was not adequately addressed at trial (as in David Securities Pty Ltd v Commonwealth Bank of Australia per Mason CJ, Deane, Toohey, Gaudron and McHugh JJ). There could have been no misapprehension on the applicants' part about the respondents' position as to the law. All that has happened is that the Court has accepted the respondents' submissions on the bond in preference to their own. I accept that, as counsel for Ace contended, the principle of finality of litigation should preclude the Court from regarding this circumstance as a relevant 'misapprehension' on an application for leave to re-open. (citation omitted)

140 Spotlight contend that the facts of this case are the same as in this case; that a deliberate decision was made and NCON should be bound by it. I do not accept the deliberate tactical decision argument contended for by Spotlight.

141 In my view each of these authorities are not directly on point. Spotlight's submissions may have been on point if NCON had proceeded and concluded its case with a loss and damage claim based on lost revenues. NCON did not. It sought to make a claim for loss and damage based on a loss of profits. As said previously, NCON overlooked fully proving it and formally seeking to amend its particulars of loss and damage.

142 There are several elements to the application to re-open NCON's case. First, NCON wishes to amend its particulars of loss and damage. The amendments include the deduction of anticipated expenses from the anticipated lost revenue to reach a calculation of the anticipated loss of profit from Spotlight's alleged repudiation of the leasing agreement and the amending of the residual value of the Yes boxes.

143 Secondly, NCON wishes to lead further evidence on four categories of expense that NCON uses in the proposed particulars of loss and damage of 14 April. One, the cost of manufacture and installation of the Yes boxes. Two, the residual value of the Yes boxes which is calculated by deducting the expense of depreciation of 20% per annum over 10 years. Three, the commissions payable to its service providers. Four, other expenses such as overheads and the like.

144 Thirdly, NCON wishes to lead further on the anticipated loss of revenue. The amended particulars do not amend the existing allegations in this regard. Rather, NCON wish to lead evidence to clarify existing evidence.

145 The anticipated further evidence is extensive. The issue faced by me in the exercise of my discretion is similar to that faced by Kourakis J of the Supreme Court of South Australia in Brown. It is likely that if NCON succeeds in establishing liability on the part of Spotlight that it will fail in establishing any damages as its existing claim is based on the lost revenues when it is clear that expenses would have been incurred by NCON in performing the contract and earning the revenues. On the other hand, Spotlight do not point to any prejudice it will suffer that can not be met by an appropriate costs order.

146 In the exercise of my discretion the governing principle is to determine where do the interests of justice lie. I must also keep in mind that I am bound by statute and the rules to achieve a just resolution of all the matters in dispute.

147 The authorities establish that the interests of justice do not lie in permitting a re-opening of the case in a least two circumstances. First it would be unfair to permit an unsuccessful party that has made a deliberate decision as a tactical matter that has failed, to re-open its case. Secondly, it would be unfair to permit an unsuccessful party that was merely seeking a back door method to reargue its case, to re-open its case.

148 The application to amend the particulars should be allowed.

149 I have already referred generally to the provisions of the relevant rule.[135] The amendments sought are for the purpose of determining the real question in controversy between the parties and of correcting an error in the proceedings. My jurisdiction to allow the amendment is enlivened.

150 The error was the failure of NCON to seek to amend its particulars of loss and damage when it tendered its calculation of its loss and damage on a loss of profits basis on 2 March 2011. I understand that the proposed particulars do vary in some respects from those put forward that day but the substance is the same. In the exercise of my discretion, I will allow the application to amend.

151 NCON claims that its failure to properly prove the expenses was due to a failure of instructions by NCON to its legal team, or an oversight. It is apparent that the decision to include a claim based on loss of profit was made shortly before Dr Dean concluded his address. It is apparent that it was done in a rush and that mistakes were made. It differs in some material respects from the proposed particulars.

152 On the final day of the hearing when the loss of profit calculation was presented, Dr Dean informed the Court that his wife had typed it up the previous night, that her computer stopped and they had to come into chambers to finish it off. It was apparent to me that Dr Dean was exhausted. At one stage when I asked him a question, he was too tired to rise from his chair.

153 What is not clear to me is why no attempt was made after the hearing concluded to seek leave to amend the particulars and lead further evidence of the expenses. It is inappropriate for me to speculate. What is clear is that the case that NCON finally wanted to present was not properly presented.

154 I have not delivered judgment. The issue is should NCON be given the opportunity to present the case that it sought to make but failed to do so. I do not consider that NCON should suffer through any oversight by their legal team if that position can be rectified without any prejudice to Spotlight. I do not consider the interests of justice would be served if NCON was denied the opportunity to make the case on damages that it ultimately realised it should have made.

155 I accept the evidence as to why the claim was altered from a profits based claim to a revenue claim. That was clearly based on a misapprehension of the law and the facts. The failure to amend the particulars and lead evidence to prove the case sought to be made must lie at the feet of the legal team. As I have said, the interests of justice would not be served for NCON bearing the consequences of those failures.

156 Accordingly, I propose to allow NCON to reopen its case and lead the fresh evidence it seeks to lead subject to any proper evidentiary objections Spotlight may have.

157 As for NCON's application to "elaborate", I propose to allow that evidence to be given. As Spotlight has submitted, the evidence in chief of NCON's witnesses did not seek to prove loss and damages on the basis of loss of profits. The evidence that was given was often given in cross examination or buried in a report where the court was not specifically taken to the relevant parts in the context of leading evidence on the loss of profit. In the instances referred to, I would be assisted in coming to a just result to receive the proposed evidence.

(a) NCON have leave to file and served the proposed further amended particulars of 14 April 2011 by 4.15pm on Monday 4 July 2011.

(b) NCON have leave to lead evidence of the kind referred to in the affidavits of Gregory Gill, Anthony Reibel and Tim Gill all sworn 14 April 2011.

(c) That by 4.15pm on Monday 4 July 2011, NCON file and serve a witness statement for each of Mr Gregory Gill, Mr Reibel and Mr Tim Gill of the evidence they propose to give which subject to objection and adoption may be relied on as their evidence in chief.

(d) The further hearing of the trial will proceed on Tuesday 12 July at 10.30am.

(f) At the further hearing of the trial I will hear argument on the costs of this application.

23 February 2011 amended particulars of loss and damage

1. RENTAL BASED ON 5 YEAR RENTAL AGREEMENT

[1] Rental rates quoted to the Defendant in the Plaintiff's proposal for the Plaintiff's Smart Power Control System referred to in paragraph 3 of the Statement of Claim herein ("the Yes Box") were:

[2] The weighted average of the above cost of supply and installation of Yes Boxes in the three surveyed sites was $21,957.

[3] The weighted average of the above rentals, based on the weighted average store cost, was $396.97 per month per store.

[4] For the 106 stores this rental then equated to $42,078.82 p.m which then equates to total payments of $2,524,729,20 of the 60 month term .

Income Stream due to Plaintiff

[5] The monthly payments of $42,078.82 have a present value of $2,027,078.71 when the commercially acceptable rate, applicable at the time, of 9.0% is used.

[6] The Plaintiff also retains ownership of the Yes Boxes.

[7] Accordingly the Plaintiff claims the sum, for a five year rental period, of $2,027,078.71

2. FURTHER AND ALTERNATIVE CLAIM BASED ON ADDITIONAL 5 YEA RENTAL RENEWAL

[9] It was agreed with the Plaintiff that should they wish to extend the rental for a further period of five years the monthly payment would be calculated at 66.67% of the original rental figure.

[10] The original rental cost was $396.97 per month per store. Therefore the extension rental price at 66.67% of this figure would be $264.66 per month per store.

[11] For the 106 stores this rental then equated to $28,053.95 p.m which then equates to total payments of $1,683,236.96 over the further 60 month term.

[12] The present value of $1,683,237.00 is $1,351,453.41. Note: this is the present value of the second term payments IN FIVE YEARS TIME.

[13] Converted to today's present value this figure becomes $863,172.89.

[14] The Total Loss for two five year terms is thus $2,890,251.60

[15] This figure is made up of the present value of the first term of payments being $2,027,078.71

[16] And the present value of the second term payments, being

$ 863,172.89

[17] In the alternative Total Loss and Damage claimed is $2,890,251.60

Go to CB 85
Number of Yes Boxes of different types for three stores.
Total price of Boxes: (Equipment for three stores)

$59,670.00 ÷ 3 = $19,890.00 (average cost per store)
Average cost of installation per store:

Rental has five parameters worked out on a financial calculator.
- (a) Capital cost $21,957.00
- (b) Term 60 months
- (c) Nominal interest rate 3.25%
- (d) Original value - Future value 0
Average rent per month per site $396.67
Total monthly rent for all sites:

Present value of monthly payment:
- (a) Term 60 months
- (b) Monthly payment for

Discounted rate of 66.67%
Average monthly rental: $28,053.95
Total rental for 5 years (average

Present value of 5 years income: $1,351,453.38
Today's present value of 10 year income: $878,351.97
Therefore, 1st and 2nd term rentals: $2,027,078.71

Tax office deductions: + $453,391.00
Total value of deal $3,360,477.75
Less cost of goods: $851,418.50

Office $30,000.00 2. Maintenance $50,000.00

Proposed Further amended particulars of loss and damage

"AMENDMENT TO PARTICULARS of 23 FEB 2011

[1] Rental rates quoted to the Defendant in the Plaintiff's proposal for the Plaintiff's Smart Power Control System referred to in paragraph 3 of the Statement of Claim herein ('the Yes Box') were:

1210 $ 53.34

3420 $ 92.93

3630 $140.84

[2] The weighted average of the above cost of supply and installation of Yes Boxes in the three surveyed sites was $21,957.

[3] The weighted average of the above rentals, based on the weighted average store cost, was $396.97 per month per store.

[4] For the 106 stores this rental then equated to $42,078.82 p.m which then equates to total payments of $2,524,729.20 of the 60 month term.

Income stream due to plaintiff

[5] The monthly payments of $42,078.82 have a present value of $42,078.82 - where the commercially accepted rate, applicable at the time, is 9.0% have a total present value of $2,027,078.71.

[6] The Plaintiff also retains ownership of the Yes Boxes depreciate at 20% over 10 Years Current value of Yes Boxes at end of 5 year term

$551,813.15

[7] Accordingly, the Plaintiff claims the sum, for a five year rental period, of $2,578,891.87

LESS EXPENSES

Cost of manufacture of YES Boxes $ 851,515.00

Cost of installation of YES Boxes $ 219,067.00

$1,070,582.00

Commissions-

Alternative 1

No commissions as that would be double counting

Commissions deducted as an expense, but thereafter

liability to pay them.

Alternative 2

(i) GSG $ 210,834.00

(ii) SME $ 60,812.36

(iii) Reibel

/Akranda

Pty Ltd $ 40,451.57

$ 312,187.93 $ 312,187.93

Overheads (100% for 6 months) $ 26,484.95

Maintenance $ 14,657.40

Management costs of Roll-out $ 36,000.00

Freight and Shipping $ 11,017.00

Marketing $ Nil

TOTAL OF ALL EXPENSES $1,470,929.28

LOSS OF PROFITS CLAIMED FOR

FIRST FIVE YEAR TERM

($2,578,891.87 less $1,470,929.28) $1,107,962.59

(If Alternative 1 allowed add back $312,187.93 $1,420,150.52

2. FURTHER AND ALTERNATIVE CLAIM BASED ON ADDITIONAL 5 YEAR RENTAL RENEWAL

[9] It was agreed with the Plaintiff that should they wish to extend the rental for a further period of five years the monthly payment would be calculated at 66.67% of the original rental figure.

[10] The original rental cost was $396.97 per month per store. Therefore the extension rental price at 66.67% of this figure would be $264.66 per month per store.

[11] For the 106 stores this rental then equated to $28,053.95 p.m which then equates to total payments of $1,683,236.96 over the further 60 month term.

[12] The present value of $1,683,237.00 is $1,351,453.41. Note: this is the present value of the second term payments IN FIVE YEARS TIME.

[13] Converted to today's present value this figure becomes $863,172.89

[14] EXPENSES

[15] Alternative 1

To add commissions would be double counting

Commissions deducted as an expense, but thereafter

liability to pay them.

Alternative 2

Commissions -

(i) to GSG $ 86,317.29

(ii) to SME $ 25,895.19

(iii) Reibel

Akranda Pty Ltd $ 17,263.46

$129,475.94 $129,475.94

[16] Overheads $ 26,484.95

[17] Repairs $ 14,657.40

[18] Vicissitudes $ 67,219.54

$108,361.89 $108,361.89

Total Expenses $237,837.83 $237,837.83

LOSS OF PROFITS CLAIMED FOR SECOND FIVE YEAR TERM

($863,172.89 less $237,837.83) $625,335.06

(If Alternative 1 allowed, add back $129,475.94) $754,811.00

Rental rates quoted to the Defendant in the Plaintiff's proposal for the Plaintiff's Smart Power Control System referred to in paragraph 3 of the Statement of Claim herein ("the Yes Box") were:

The weighted average cost of supply and installation of Yes Boxes in the three surveyed sites was $21,957, this equated to a capital cost of $2,327,442.00 for the 106 stores nominated by Spotlight as part of the roll out program.

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Judgment (308 paragraphs)

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Legislation Cited (24)

Cases Cited (9)