Santos Coffee Company Pty Limited v Direct Freight Express Pty Ltd

LEGISLATION CITED: Civil Procedure Act 2005 (NSW) s 60

Alderslade v Hendon Laundry [1945] KB 189 Anderson v G H Mitchell & Sons Ltd [1941] HCA 30; 65 CLR 543 Atlantic Shipping and Trading Co Ltd v Louis Dreyfus & Co [1922] 2 AC 250 CASES CITED: Bodruddaza v Minister for Immigration and Multicultural Affairs [2007] HCA 14; 228 CLR 651 Darlington Futures Ltd v Delco Australia Pty Ltd [1986] HCA 82; 161 CLR 500 Davis v Pearce Parking Station Pty Ltd [1954] 91 CLR 642 Smith v ANL Limited [2000] HCA 58; 204 CLR 493 The Council of the City of Sydney v West [1965] HCA 68; 114 CLR 481

PARTIES: Santos Coffee Company Pty Ltd (Appellant) Direct Freight Express Pty Ltd (Respondent)

COUNSEL: Mr D Bennett QC, Mr J P Donohoe (Appellant) Mr E White (Respondent)

SOLICITORS: Bryan Killalea (Appellant) Watson Stafford Zipkis (Respondent)

LOWER COURT JURISDICTION: District Court

LOWER COURT JUDICIAL OFFICER: Murrell SC DCJ

LOWER COURT DATE OF DECISION: 31 October 2008

LOWER COURT MEDIUM NEUTRAL CITATION: Santos Coffee Company Pty Ltd v Direct Freight Express Pty Ltd [2008] NSWDC 235

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL 2009/298107

ALLSOP P GILES JA HANDLEY AJA

Friday 30 April 2010 SANTOS COFFEE COMPANY PTY LIMITED v DIRECT FREIGHT EXPRESS PTY LTD (No 2) Judgment 1 THE COURT: On 18 February 2010, the Court made orders and published reasons substantially dealing with the appeal. We do not set out the history of the matter and refer to our earlier reasons ([2010] NSWCA 14). 2 A notice of motion was filed after the Court delivered judgment on 18 February 2010 seeking re-opening of the argument on the basis that some arguments of the appellant had not been addressed. 3 It was submitted that the Court misstated the position in [13] of the prior reasons. We disagree. All that was stated by that paragraph was that clause 4 had contractual status and operated (to such extent as it did) according to its terms. 4 We did not explicitly deal with the arguments that clause 4 is so fundamentally contradictory to clause 3 as not to have any relevant operation or is ambiguous and should be read down, implicitly as we did in [15] of our earlier reasons. 5 On one view, the argument (in particular paragraph 14.1 of the "Speaking Notes") was directed to clause 3 in the standard terms; but the oral argument was wider than that. Reliance was placed on Darlington Futures Ltd v Delco Australia Pty Ltd [1986] HCA 82; 161 CLR 500; The Council of the City of Sydney v West [1965] HCA 68; 114 CLR 481; Atlantic Shipping and Trading Co Ltd v Louis Dreyfus & Co [1922] 2 AC 250; Anderson v G H Mitchell & Sons Ltd [1941] HCA 30; 65 CLR 543 at 553; Smith v ANL Limited [2000] HCA 58; 204 CLR 493; Bodruddaza v Minister for Immigration and Multicultural Affairs [2007] HCA 14; 228 CLR 651; Alderslade v Hendon Laundry [1945] KB 189 at 194; and Davis v Pearce Parking Station Pty Ltd [1954] HCA 44; 91 CLR 642 at 645 and 651. 6 Resort to the principles and dicta in these cases is unnecessary here. The question is the construction of clauses 3 and 4 and whether sensible commercial work can be given to both. If clause 4 wholly negated the benefit of the contract, an issue might arise as to its operation. That, however, is not the case. Nor is there any ambiguity as asserted. The parties put in place a system which required Direct to return a number of pallets. The background was that set out in [15] of our prior reasons. Clause 4 is clear and unambiguous. A claim (any claim) had to be made within 90 days. This was a commercially sensible and reasonable provision to bring a cut-off date to avoid arguments of the kind that might arise with the passage of time. 7 We would not vary our views previously expressed. We have dealt with the arguments said to have been overlooked and thus have, in substance, done what the motion dated 5 March 2010 requested. The motion should, however be disposed of. For the sake of good order we would dismiss it. We would order that the appellant pay any costs of the motion. Our views, more elaborately put here, were embedded within [15] of our earlier reasons. 8 The orders made on the last occasion required that the parties exchange submissions about orders to be made and costs. There is no agreement about either. It is therefore necessary to deal with both matters. 9 At the outset it should be noted that it was not in dispute before the primary judge or on appeal that the appellant (Santos) owed the respondent (Direct) the freight charges that had been sought by Direct under its Local Court statement of claim in the amount of $16,559.13. Together with interest since 14 April 2007 in the Local Court up to 5 March 2010 that amount increases to $21,107.21. By oversight, the learned primary judge did not enter judgment for that amount. No cross-appeal was brought in relation to that omission. But it can hardly be doubted that this sum is owing by Santos to Direct and for that reason should be taken into account in the orders made by this Court. Properly, Santos did not oppose this course. It should be noted, however, that none of the controversy litigated before the primary judge in the District Court, or on appeal in this Court, concerned that matter. Therefore, when questions of costs in the District Court and this Court are to be considered, the outstanding indebtedness for freight charges should be put to one side, at least until any question of set off is considered. 10 It is common ground that the appeal should be allowed and that the orders of the primary judge in the District Court made on 31 October 2008 and 7 November 2008 be set aside. In their place, the orders should reflect a judgment for Santos in the sum of $1,664.74 including interest up to 5 March 2010 of $363.32. There seems to be no reason why that judgment should not be set off against the sum owing to Direct by Santos for freight.

11 The question then arises as to what orders for costs should be made in the court below and on appeal. 12 In the District Court, at least up to 7 August 2008 shortly prior to the hearing when an offer of compromise was served, Santos should have some portion of its costs of the proceeding on a party / party basis. It was entitled only to a small judgment, but it was entitled to vindicate its rights in the District Court. Nevertheless, proportionality, as reflected in the Civil Procedure Act 2005 (NSW), s 60, militates against full recovery. We are of the view that Santos should have half its costs on a party / party basis until 7 August 2008, when a letter, without prejudice except as to costs, was sent by Direct's solicitor to Santos' solicitor. The letter provided for Santos' claim to be dismissed; Santos was to pay the freight outstanding and Direct was to provide Santos with 1,177 pallets within three months; each party was to bear its own costs. Though this was not the offer of a judgment in a money sum, it clearly exceeded in value the sums to which this Court found Santos entitled. In all the circumstances, we think it appropriate to take this into account and not order costs after 7 August 2008. 13 As to the appeal costs, it is unnecessary to go through all the issues discussed in the principal judgment. A legitimate point can be made on behalf of Direct that a significant number of points were lost by Santos on appeal and the gravamen of our approach was but a small variation on the learned primary judge's reasoning. Taking into account all matters, including the small judgment to which we think Santos is entitled, and taking into account all the issues in the Court of Appeal, we are of the view that each party should bear its own costs of the appeal. 14 The parties' calculations as to interest were up to and including 5 March 2010. Judgment will be ordered with effect from that date. Post-judgment interest can thereafter apply.

2. The orders of the District Court made on 31 October 2008 and 7 November 2008 be set aside and in lieu thereof: (a) There be judgment for Santos against Direct to take effect as at 5 March 2010 in the sum of $1,664.74 including interest up to 5 March 2010 and judgment for Direct against Santos to take effect as at 5 March 2010 in the sum of $21,107.21 including interest up to 5 March 2010, such judgments to be set off. (b) Direct pay half Santos' costs up to 7 August 2008 on a party / party basis and thereafter each party bear its own costs.

3. Subject to 4 below, each party bear its own costs of the appeal.

4. Dismiss the motion dated 3 March 2010, with costs. **********

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