The Commonwealth of Australia v Amann Aviation Pty Limited

Federal Court of Australia|1996-03-22|Before: Heerey J, Branson JJ

CATCHWORDS APPEALS - application for leave to lodge an appeal outside time allowed by the Federal Court Rules - O 52 r 15(2) authorises the Court at any time to give leave to file and serve a notice of appeal - whether special reasons exist for Court to allow an extension of time to lodge a notice of appeal. COSTS - appeal against an order for costs - whether appellant should have been awarded all of its costs at trial - power to award costs is discretionary - appellant at trial failed on every issue but one - in the whole of the circumstances trial judge's order as to costs now shown to fall outside the ambit of the Court's legitimate discretion. CROSS-APPEALS - whether the cross-appeal was against the whole or part only of that judgment - reference in O 52 r 22(1) of the Federal Court Rules to "a part of the judgment" should not be read as meaning the whole of the judgment - what constitutes "a part of a judgment". DAMAGES - appeal from an assessment of damages for breach of contract - whether trial judge erred in failing to take into account damages for the recovery of expenditure thrown away by reason of breach of contract - pleadings particularised the loss and damages which it sought to recover at trial as the loss of benefits which were expected to flow from the performance of the contract - appellant having run its case at trial not free to advance an alternatively formulated claim on appeal. Federal Court of Australia Act 1976 (Cth) ss 4, 24 and 43 Federal Court Rules O 5 r 15, O 20 r 1, O 29 r 4, O 35 r 3, O 35 r 7, O 52 rr 12, 15 and 22, O 62 r 3(1) The Commonwealth of Australia v Amann Aviation Pty Limited (1991) 174 CLR 64 Anglia Television Ltd v Reed [1972] 1 QB 60 Australian Telecommunications Commission & Ors v Colpitts (1986) 12 FCR 395 TJM Products Pty Ltd v A & P Tyres Pty Ltd & Ors (1987) 17 FCR 390 Driclad Pty Ltd v Federal Commissioner of Taxation (1968) 121 CLR 45 Ah Toy v Registrar of Companies (1985) 10 FCR 280 Jess v Scott (1986) 12 FCR 187 Enzed Holdings Ltd & Ors v Wynthea Pty Ltd & Ors (1984) 57 ALR 167 Henderson & Ors v Amadio Pty Limited & Ors (unreported, Federal Court, Heerey J, 22 March 1996)

No SG 48 of 1995 HANNPOST PTY LTD trading as COPYWORLD Appellant

and - MITA COPIERS AUSTRALIA PTY LTD and REGINALD MORRISON GRAY Respondents AND BETWEEN: MITA COPIERS AUSTRALIA PTY LTD Cross-Appellant and Applicant
and - HANNPOST PTY LTD trading as COPYWORLD Cross-Respondent and Respondent SHEPPARD, SPENDER and BRANSON JJ ADELAIDE (delivered via video link-up from Canberra) 21 JUNE 1996

IN THE FEDERAL COURT OF AUSTRALIA) ) SOUTH AUSTRALIA DISTRICT REGISTRY) No SG 48 of 1995 ) GENERAL DIVISION ) ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA BETWEEN: HANNPOST PTY LTD trading as COPYWORLD Appellant

and - MITA COPIERS AUSTRALIA PTY LTD and REGINALD MORRISON GRAY Respondents AND BETWEEN: MITA COPIERS AUSTRALIA PTY LTD Cross-Appellant and Applicant
and - HANNPOST PTY LTD trading as COPYWORLD Cross-Respondent and Respondent MINUTES OF ORDER CORAM: SHEPPARD, SPENDER and BRANSON JJ PLACE: ADELAIDE (delivered via video link-up from Canberra) DATE: 21 JUNE 1996 THE COURT MAKES THE FOLLOWING ORDERS:

The Court dispenses with the requirements of O52 of the Federal Court Rules that Mita Copiers Australia Pty Ltd:-

(a) institute its appeal herein by filing a notice of appeal which shall be in or substantially in the form numbered 55 in the First Schedule to such Rules; and (b) file and serve such notice of appeal within 21 days after the date when the judgment appealed from was pronounced; on the basis that the purported notice of cross-appeal filed herein is to be treated as a notice of appeal filed and served in accordance with O52 r15 of the Federal Court Rules. 2. The appeal by Hannpost Pty Ltd be dismissed. 3. The appeal by Mita Copiers Australia Pty Ltd be dismissed. 4. Subject to paragraphs 5 and 6 hereof, each party is to bear its own costs of the appeals. 5. The costs of the preparation of the appeal papers with respect to the appeal of Hannpost Pty Ltd and the appeal papers designated as "cross-appeal" papers with respect to the appeal of Mita Copiers Australia Pty Ltd are to be taxed and Mita Copiers Australia Pty Ltd is to pay to Hannpost Pty Ltd the difference between 50% of the total taxable costs of the preparation of both sets of appeal papers and the taxable costs of Mita Copiers Australia Pty Ltd incurred in the preparation of the appeal papers in respect of its appeal. 6. Mita Copiers Australia Pty Ltd is to pay the costs of Hannpost Pty Ltd of and incidental to its notice of motion filed on 6 November 1995. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA) ) SOUTH AUSTRALIA DISTRICT REGISTRY) No. SG 48 of 1995 ) GENERAL DIVISION ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA BETWEEN: HANNPOST PTY LTD trading as COPYWORLD Appellant AND: MITA COPIERS AUSTRALIA PTY LTD and REGINALD MORRISON GRAY Respondents AND BETWEEN: MITA COPIERS AUSTRALIA PTY LTD Cross-appellant and applicant AND: HANNPOST PTY LTD trading as COPYWORLD Cross-respondent and respondent CORAM: SHEPPARD, SPENDER and BRANSON JJ PLACE: ADELAIDE (delivered via videolink up from Canberra) DATE: 21 JUNE 1996 REASONS FOR JUDGMENT SHEPPARD J: In this matter I have had the advantage of reading the judgment to be delivered by Branson J. I am in agreement with her reasons and conclusions and with the orders which she proposes. I certify that this pages is a true copy of the reasons for judgment herein of the Honourable Justice Sheppard. Associate Dated

IN THE FEDERAL COURT OF AUSTRALIA) SOUTH AUSTRALIA DISTRICT REGISTRY) No. SG 48 of 1995 GENERAL DIVISION ) ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA B E T W E E N: HANNPOST PTY LTD TRADING AS COPYWORLD Appellant

and - MITA COPIERS AUSTRALIA PTY LTD and REGINALD MORRISON GRAY Respondents A N D B E T W E E N: MITA COPIERS AUSTRALIA PTY LTD Cross-Appellant and Applicant
and - HANNPOST PTY LTD trading as COPYWORLD Cross-Respondent and Respondent CORAM: Sheppard, Spender and Branson JJ PLACE: Heard in Adelaide (delivered via videolink from Canberra) DATE: 21 June 1996 REASONS FOR JUDGMENT SPENDER J I have had the advantage of reading in draft form the reasons for judgment of Branson J. I agree with those reasons and with the orders her Honour proposes. I certify that this page is a true copy of the reasons for judgment herein of the Honourable Justice Spender. Associate Date: 21 June 1996

and - MITA COPIERS AUSTRALIA PTY LTD and REGINALD MORRISON GRAY Respondents AND BETWEEN: MITA COPIERS AUSTRALIA PTY LTD Cross-Appellant and Applicant
and - HANNPOST PTY LTD trading as COPYWORLD Cross-Respondent and Respondent REASONS FOR JUDGMENT CORAM: SHEPPARD, SPENDER and BRANSON JJ PLACE: ADELAIDE (delivered via video link-up from Canberra) DATE: 21 JUNE 1996 BRANSON J: The appellant appeals from that part of the judgment of a judge of this Court (von Doussa J) wherein his Honour assessed the appellant's damages for breach of contract by the respondent in the sum of $175,000 and from his Honour's order that the first respondent pay the appellant two thirds of its costs. The respondent to the appeal has filed a notice of cross-appeal purporting to cross-appeal against his Honour's order whereby judgment was entered for the appellant for $208,000 (being the $175,000 and a lump sum of $33,000 in lieu of interest) against the respondent and against his Honour's costs order to which reference has already been made. The appellant has challenged the competency of the notice of cross-appeal. That challenge is dealt with below. To protect itself against the eventuality that the challenge to the cross-appeal might succeed, the respondent made an application for leave to appeal out of time. The fate of that application is also dealt with below.

BACKGROUND FACTS The factual background to this matter is relatively complex. Much of the complexity may, however, be ignored for the purpose of considering the present appeal and the purported cross-appeal. The following limited outline of the facts is taken from the reasons for decision of von Doussa J. The appellant ("Copyworld") was at all material times a retail distributor in South Australia of photocopiers and parts and consumables for such machines. In 1992 it was the sole distributor in South Australia of Toshiba photocopiers. It also dealt in Panasonic photocopiers and facsimile machines and a range of other office equipment.

The respondent ("Mita") is a major manufacturer of photocopiers. At all relevant times its head office in Australia was in Sydney, New South Wales. In late 1992 it had a branch office in Adelaide, South Australia, and Reginald Morrison Gray ("Mr Gray") was its State manager. In 1992 ABM Systems Pty Ltd ("ABM") carried on business in South Australia as a retail distributor of photocopiers and parts and consumables for such machines. It was an official Mita dealer. So far as is relevant to this appeal and the purported cross-appeal, the case of Copyworld as pleaded and at trial was that by letter dated 1 December 1992 Mita agreed, upon Copyworld undertaking to pay to Mita the sum of $168,086 or such lesser sum as agreed in discharge of the debt owed by ABM to Mita, to appoint Copyworld as an official Mita dealer for a period of 12 months with an option or options to renew for further periods of 12 months; that in breach of this agreement on 3 June 1993 Australian Copier Distributors (SA) Pty Ltd ("ACD") as agent for Mita unlawfully terminated the Copyworld dealership; and that Mita thereafter failed to supply Mita products to Copyworld. With respect to the pleaded breach of contract the Amended Statement of Claim pleads:- "19.In the premises the applicant has suffered loss and damage: PARTICULARS By reason of being unable to sell and service Mita Products the applicant has suffered: (a) Loss of profits. (b) Loss of business reputation and goodwill." ARGUMENTS ON APPEAL The notice of appeal sets out 17 grounds of appeal. They were not all argued. I shall treat those not argued at the hearing of the appeal as having been abandoned. No point was taken on behalf of Mita that any of the three substantial grounds of appeal actually argued was not fairly open having regard to the terms of the notice of appeal. The primary contention of Mr Bennett QC, who appeared with Mr Evans for Copyworld on the appeal, was that the learned trial judge made an error of law in failing to have regard to the principles applied by the majority of the High Court in The Commonwealth of Australia v Amann Aviation Pty Limited (1991) 174 CLR 64 in assessing the appellant's damages for breach of contract. Mr Bennett sought to encapsulate such principles in the following way:- "... where it is extremely difficult or virtually impossible to work out a prospective future loss, which is very much what a number of witnesses said in this case and what his Honour said in his judgment, it is not inappropriate to look at a different aspect of loss which is wasted cost. In other words one says, not what did the plaintiff lose as a result of the defendant's breach but rather, what did the plaintiff waste by going into the contract which ultimately proved of no benefit." It is true, as Mr Bennett pointed out, that counsel for Copyworld at trial (Mr Bennett was not counsel at trial) addressed the learned trial judge in his final address on the Amann Aviation Case. However, the reasons for judgment of von Doussa J make no reference to the Amann Aviation Case or the principles referred to therein. The reason for this is, in my view, plain enough. Copyworld by its pleadings particularised the loss and damage which it sought to recover at trial as the loss of the profits, and the loss of business reputation and goodwill, which it suffered by reason of Mita's breach of contract. That is, the claim for damages made by Copyworld in respect of Mita's breach of contract was a claim for damages to be assessed, at least in major part, by reference to the loss of benefits which were expected to flow from the performance of the contract. As Brennan J pointed out in the Amann Aviation Case at 104 "[d]amages assessed for wasted expenditure incurred in reliance on the defendant's promise may be described as reliance damages to distinguish them from damages assessed for loss of the benefits which the plaintiff expected from performance of the contract (expectation damages)". Copyworld did not by its pleadings claim reimbursement of expenditure reasonably incurred by it by reason of the contract. Moreover, counsel for Copyworld at trial, in his opening address informed the learned trial judge that:- "... the applicant claims that the respondent acted in breach of the agreement in terminating the dealership ... and is entitled to damages on principles of loss of expectation."

He went on to say that such losses would be quantified by reference to calculations contained in an expert's report. On the basis that "the expectation loss for non-fulfilment of the bargain exceeds the reliance loss" he confirmed that Copyworld's claim with respect to the alleged breach of contract was for "expectation loss". At trial, Copyworld called evidence intended to prove its "expectation damages". The "Outline of Applicant's Submissions", which the transcript shows was provided to the learned trial judge during the course of final addresses, contains no support for any suggestion that Copyworld's case at trial with respect to the claim for breach of contract was run on the basis of "reliance damages". The conclusion seems open that Copyworld's interest in the principles applied in the Amann Aviation Case was generated only at a late stage of the proceedings before von Doussa J following criticisms of the calculations upon which its claim for "expectation damages" was based. After giving consideration to observations of Lord Denning MR in Anglia Television Ltd v Reed [1972] 1 QB 60 at 63-64 Mason CJ and Dawson J in the Amann Aviation Case at 85 stated:- "We do not regard the language of election or the notion that alternative ways are open to a plaintiff in which to frame a claim for relief as appropriate in a discussion of the measure of damages for breach of contract. In truth, damages for loss of profits and damages for expenditure reasonably incurred are simply two manifestations of the general principle enunciated in Robinson v Harman. ... Naturally, the categories of case in which a plaintiff is likely to make a claim for the recovery of expenditure incurred are those in which the plaintiff has not suffered a loss of profits and those in which it is impossible to assess what would have been the outcome had the contract been performed or those in which that outcome is otherwise uncertain." At no time has Copyworld sought to amend its pleadings to make a claim for the recovery of expenditure thrown away by reason of Mita's breach of contract. In my view, its case having been run on one basis at trial, Copyworld is not now free to advance an alternatively formulated claim. It is not, in my view, necessary on this appeal to consider whether this case was one in which Copyworld might appropriately have made a claim for the recovery of expenditure incurred. It did not make such a claim. However, it is appropriate to observe the following difficulties which would have faced Copyworld had it sought to pursue a claim for reliance damages. First, on the case as presented at trial by Copyworld, it was possible to assess what would have been the outcome had its contract with Mita been performed. Secondly, much of what Copyworld had bargained to obtain under its contract with Mita it did in fact obtain. That is, this was not a case in which all, or even most, of Copyworld's expenditure by reason of the contract could be characterised as wasted expenditure. Mr Bennett, in what must be understood as alternative arguments on the appeal, sought to identify two factual errors which he asserted were material to the learned trial judge's assessment of Copyworld's damages. The first related to the issue of sales lost as a result of the breach of contract and the second related to the numbers of customers who were parties to service contracts with the appellant. I turn to consider the alleged error concerning sales lost. Mita was found by von Doussa J to have unlawfully purported summarily to terminate Copyworld's dealership by letter dated 3 June 1993. His Honour found that, in the circumstances which then prevailed, Copyworld was justified in treating the dealership as at an end on 8 June 1993 when its solicitors wrote to Mita treating the dealership as at an end. Copyworld's allegation that Mita breached its contract with Copyworld was thus made out at trial. For the purpose of assessing the compensation to which Copyworld was entitled by reason of Mita's breach of contract, the learned trial judge considered, amongst other things, the evidence as to sales of Mita photocopiers lost by Copyworld. His Honour found, and this finding was not challenged on the appeal, that "[t]he volume of sales of copiers and accessories in the months leading up to 3 June 1993 was low". One of the reasons for the low sales in the six month period leading up to the termination of the contract was found by his Honour to be a decision of Copyworld to give priority to Toshiba products over Mita products, except for models at the bottom and top end of the Mita range for which there were no Toshiba equivalents. Again this finding was not challenged on the appeal. After considering certain evidence as to a Mita price list delivered to Copyworld in about October 1993 when a renewed relationship between Mita and Copyworld was being contemplated, his Honour concluded:- "Had Copyworld remained a Mita dealer, I think it is highly probably that the Mita sales of new copiers would have continued to be low until October 1993, and from the time of the new price list negligible." His Honour based his conclusion principally on the evidence given by Mr Gray. As mentioned above, Mr Gray was initially Mita's South Australian branch manager. Subsequently he became a director of ACD, the South Australian distributor for Mita after the closure of its branch office. Mr Gray gave evidence, which von Doussa J had "no hesitation in accepting", that Copyworld's Managing Director, Ross William Almond ("Mr Almond") had said on being given a Mita price list in about October 1993 that the Mita prices were "just not competitive" and "I really don't see any future selling Mita products, not when I can get them for the price I can get through Toshiba". His Honour also accepted evidence from Mr Gray that in November 1993, Mr Almond said that "our [i.e. Mita] prices were a joke ... he could sell Toshiba at the same price as dealers were expected to pay for Mita's and [he] saw no future for the Mita products".

His Honour found that there had been two Mita price rises during 1993 prompted in part by exchange fluctuations and that the wholesale price rose about 15%. Mr Gray had given evidence that there were two Mita price rises during the course of 1993 "totalling about 15 or 16 per cent". The learned trial judge's finding with respect to Mita price rises in 1993 was apparently based upon his acceptance of this aspect of Mr Gray's evidence. It was contended by Mr Bennett, and not, as I understand it, challenged by Mr Clayton QC, counsel both at trial and on appeal for Mita, that the official Mita price lists admitted into evidence at trial do not support his Honour's finding of a 15% price increase in 1993. The issue before his Honour, however, was not the extent of any 1993 price rise for Mita products, but the number of Mita photocopiers likely to be sold by Copyworld from June 1993. Mr Almond's attitude during the relevant time to the selling by Copyworld of Mita machines was a crucial factor in respect of that issue. Mr Gray's evidence as to Mr Almond's statements concerning the Mita prices was not put to Mr Almond. However, Mr Gray was not challenged with respect to that part of his evidence. The explanation for this is said to be that the Mita price lists were not discovered until a time when it was too late for such a challenge to be made. In my view this explanation is inadequate. Whilst the significance of Mr Gray's assertion of a 15% to 16% price rise might not have been immediately apparent at trial, his evidence that Mr Almond had, in effect, asserted an unwillingness to deal in Mita photocopiers must have been immediately recognised as of importance on the issue of Copyworld's damages. The failure of counsel for Copyworld at trial to challenge Mr Gray in respect of this aspect of his evidence, to seek to call evidence from Mr Almond in rebuttal of Mr Gray's evidence, or to seek to further cross-examine Mr Gray after the discovery and admission into evidence of the Mita price lists has the consequence, in my view, that his Honour's acceptance of Mr Gray's evidence cannot now be challenged. Having accepted Mr Gray's evidence as to Mr Almond's asserted attitude to the selling of Mita copiers, it was, in my view, open to the learned trial judge to conclude, as he did, that, had Copyworld remained a Mita dealer, from October 1993 onwards Copyworld would have sold a negligible number of Mita copiers. I turn to the issue of customer or client numbers. Another head of loss to which the learned trial judge gave consideration was that of an alleged drop in client numbers. His Honour made the following findings in this regard:- "... I am not satisfied that there has been a significant drop in the client base caused by the termination. There has been a drop in the number of clients continuing with copy cost and kit contracts, but the cause for the drop is uncertain. The evidence does not disclose whether, or to what extent, the return to Copyworld would be reduced if the client operated on a "do and charge" basis as opposed to a service contract of some kind. It is said that a loss of reputation has been suffered which is a reflection of the drop in the client base; the evidence shows that insofar as these two matters may have occurred, it is probably due mainly to service difficulties unrelated to the termination of the Mita dealership." Copy cost and kit contracts are each forms of service contracts in which the service provider is remunerated on a basis unrelated to machine breakdowns actually experienced. On copy cost contracts the service provider is remunerated by reference to the number of copies made by the relevant machine. The precise basis of remuneration on a kit contract was not made clear on the appeal, although such a contract apparently shares some features of a copy cost contract. Service on a "do and charge" basis involves payment directly for services actually rendered. Mr Bennett sought to summarise the above findings of his Honour in the following way:- "His Honour says this: Look, you have shown that there has been a drop in one type and an increase in the other type. You have not produced any evidence showing what the comparable profitability is so how am I supposed to draw any conclusions from that. What his Honour ignores is the evidence which based the claim in relation to that loss, was evidence of actual numerical loss from that type of work. So one did not need to work it out in the rather more convoluted way his Honour assumed were working it out." The difficulty with the above summary is that it overlooks his Honour's expressed concern on the issue of causation. His Honour found that the cause of the drop in the number of clients continuing with copy cost and kit contracts was uncertain. This finding was not sought to be challenged on the appeal. Copyworld is not entitled to damages in respect of any loss of profits resulting from the drop in the number of copy cost and kit contracts, absent proof on the balance of probabilities that, had its contract with Mita been performed, it would not have suffered the same drop in the number of such contracts. It may be noted that his Honour made express reference to service difficulties experienced by Copyworld unrelated to the termination of the Mita dealership. He found that such drop in the client base as was established on the evidence was probably due to such difficulties. In the face of his Honour's finding that Copyworld experienced service difficulties unrelated to the termination of the Mita dealership, it can not be contended that the drop in the number of copy cost and kit contracts must necessarily have been caused by the termination of the dealership. His Honour's finding that the cause of the drop in the number of copy cost and kit contracts was uncertain is to be understood as a finding by his Honour that the necessary connection between such drop and the termination of the dealership was not established on the evidence. Subject to the issue of his Honour's order as to the costs of the trial, which is considered below, the appeal must be dismissed. THE VALIDITY OF THE PURPORTED CROSS-APPEAL Division 2 of Order 52 of the Federal Court Rules ("the Rules") contains rules with respect to appeals. O52 r12(1) provides that an appeal is to be instituted by the filing of a notice of appeal substantially in the form numbered 55 in the First Schedule of the Rules. O52 r15 deals with the time for filing and serving a notice of appeal. So far as is here relevant, it provides as follows:- "15(1) The notice of appeal shall be filed and served- (a) within 21 days after - (i) the date when the judgment appealed from was pronounced; (ii) the date when leave to appeal was granted; or (iii) any later date fixed for that purpose by the court appealed from; or (b) within such further time as is allowed by the Court or a Judge upon application made by motion upon notice filed within the period of 21 days referred to in the last preceding paragraph. (2) Notwithstanding anything in the preceding sub-rule, the Court or a Judge for special reasons may at any time give leave to file and serve a notice of appeal. . . . . . . (6) An application shall be accompanied by an affidavit showing - (a) the nature of the case; (b) the questions involved; and (c) the reason why leave should be given." O52 r22 deals with cross-appeals. So far as is here relevant it provides:- "22(1) A respondent who desires to appeal from a part of the judgment or to seek a variation of a part of the judgment, need not institute a substantive appeal, but he shall - (a) within 21 days after the service upon him of the notice of appeal, or within such further time as the Court or a Judge fixes, file in the Registry a notice of cross-appeal; and (b) serve a copy of the notice upon the appellant and any other person affected by the relief which he seeks. (2) The notice of cross-appeal shall state what part of the judgment he cross-appeals from or contends should be varied, and shall state briefly, but specifically, the grounds of the cross-appeal and - (a) the relief which he seeks in lieu of the order cross-appealed from; or (b) the variation of that order which he seeks." The purported cross-appeal in this matter was filed in the Registry on 28 July 1995. That was outside the time allowed by O52 r15 for the filing of an appeal without the Court or a Judge having granted leave. It was, however, within the time allowed by O52 r22 for the filing of a cross-appeal, the notice of appeal in this matter having been filed, and I assume served, on 17 July 1995. A notice of motion objecting to the competency of the purported cross-appeal was filed on behalf of Copyworld on 6 November 1995. The objection to competency extends only to Part A of the purported cross-appeal which challenges the learned trial judge's findings as to liability. So far as the purported cross-appeal challenges his Honour's findings as to quantum and his order as to costs the validity of the cross-appeal is accepted. For ease of reference, however, I will refer to the challenge as being to the purported cross-appeal. It was contended on behalf of Copyworld that the purported cross-appeal in this matter is against the judgment of von Doussa J for Copyworld for $208,000 against Mita, and not against part only of that judgment. That is, it was argued that the purported cross-appeal is against the whole of paragraph 1 of the order set out above. Of course, the purported cross-appeal also seeks to appeal against paragraph 3 of such order whereby his Honour ordered that the applicant recover two-thirds of its costs to be taxed against Mita. It was argued on behalf of Copyworld that in contrast with the rules of a number of other jurisdictions which permit cross-appeals against "the whole or any part" of the judgment, (see, for example, the English Rule O59 r6(3), the South Australian Supreme Court Rule 97.07, the New South Wales Part 51 Rule 13 and the Victorian Supreme Court Rules 64.13(6)), O52 r22(1) is apparently deliberately drawn in terms of "a part of the judgment". In Copyworld's written submissions on the objection to competency, the substance of its objection is expressed as follows:- "5. Here the cross-appeal is against the judgment for the applicant. The fact that other orders were made (dismissing other claims and ordering interest and costs) does not make this an appeal against "part" of the judgment. The distinction drawn by the rule would be nugatory if, for example, a cross-appeal against judgment for the applicant were held to be against part of the judgment because there was also an order for interest or costs, or an order granting an applicant leave to proceed against a liquidator under the Corporations Law, which was not appealed against. 6. The distinction in the present case is vital for a number of reasons: (a) The respondent obtained for itself an election to which the rules did not entitle it - to see whether the applicant appealed before deciding whether it would appeal against liability. (b) The vast majority of the material reproduced in the appeal books is relevant, if at all, only to the cross-appeal. The applicant objected to including most of this material but the respondent insisted on its presence. (c) The costs of a short simple appeal on quantum have been greatly increased by a cross-appeal brought after the time for appeal had expired. (d) The applicant was entitled after 21 days to regard itself as assured in relation to the integrity of its judgment, the only issue being quantum." On behalf of Mita it was contended first, that the reference in O52 r22(1) to "a part of the judgment" is to be construed as a reference to the whole of the judgment. Secondly it was contended that the purported cross-appeal was against part of the judgment, the judgment being the whole of the order entered on the 13 July 1995. An important issue to be considered is the meaning of the term "judgment" appearing in O52 r22. The Federal Court Rules do not include a definition of "judgment" for the purposes of the Rules as a whole. However, O52 r1 contains a definition of "judgment" for the purposes of that order. It provides that, unless the contrary intention appears, '"judgment" means the judgment, decree, order or sentence of a court or judge under appeal, or in respect of which leave to appeal is sought'. This definition is consistent with that contained in s4 of the Federal Court of Australia Act 1976 (Cth) ("the Act"). Section 24 of the Act, which confers jurisdiction on the Court to hear and determine "appeals from judgments" is thus plainly to be understood as conferring a jurisdiction which includes jurisdiction to hear and determine appeals from decrees and orders, as well as judgments strictly speaking. The Rules as a whole, however, frequently draw a distinction between "judgments" and "orders". As examples I refer to the following rules:- O5 r15 - "A cross-claim may proceed notwithstanding that judgment has been pronounced and an order made and entered on the originating process or any other cross-claim in the proceedings, or that the proceeding on the originating process or any other cross-claim is stayed, dismissed or discontinued." O20 r1 - "(1)Where in relation to the whole or any part of the applicant's claim for relief, there is evidence of the facts on which the claim or part is based, and - (a) . . . (b) . . . the applicant may move on notice for such judgment for the applicant on that claim or part and the Court may pronounce such judgment and make such orders as the nature of the case requires. (2)Where the Court pronounces judgment against a party under this rule, and the party claims relief against the party obtaining the judgment, the Court may stay execution on, or other enforcement of, the judgment until determination of the claim by the party against whom the judgment is directed to be entered." O29 r4 - "Where the decision of a question under this Order: (a) substantially disposes of the proceedings ...; or (b) . . . the Court may, as the nature of the case requires - (c) dismiss the proceeding ...; or (d) pronounce any judgment; or (e) make any other order." O35 r3 - "A judgment or order shall take effect on the date on which it is pronounced or made, unless the Court orders that it take effect at an earlier or later stage." O35 r7 - "(1)The Court may vary or set aside a judgment or order before it has been entered. (2)The Court, where it is not exercising its appellate or related jurisdiction under Division 2 of Part 111 of the Act, may if it thinks fit vary or set aside a judgment or order after the order has been entered where: . . . . . . (3)A clerical mistake in a judgment or order, or an error arising in a judgment or order from an accidental slip or omission, may at any time be corrected by the Court. (4)Sub-rule (2) shall not affect the power of the Court to vary or terminate the operation of an order by a supplementary order." A reading of the Rules as a whole suggests that judgments of the Court are "pronounced" and orders are "made". Both judgments and orders may be "entered". O36 r8 provides when orders are required to be entered. It appears that a judgment is "entered", as opposed to pronounced, by the entering of appropriate orders (Australian Telecommunications Commission & Ors v Colpitts (1986) 12 FCR 395; TJM Products Pty Ltd v A & P Tyres Pty Ltd & Ors (1987) 17 FCR 390). The order which was entered following the trial of this matter is in the following terms:- "ORDER JUDGE MAKING ORDER : VON DOUSSA J DATE OF ORDER : 27 JUNE 1995 AND 30 JUNE 1995 WHERE MADE : ADELAIDE THE COURT ORDERS THAT:

Judgment for the applicant for $208,000 against the respondent Mita Copiers Australia Pty Ltd.
Judgment for the respondent Reginald Morrison Gray against the applicant.
The applicant recover two-thirds of its costs to be taxed against Mita Copiers Australia Pty Ltd.
The second respondent, Reginald Morrison Gray, recover from the applicant costs fixed at a gross sum of $34,820.00.
Execution of paragraph 4 of this order is stayed for 28 days from 30 June 1995. Date entered: 13 July 1995." It is uncontentious that, as Barwick CJ and Kitto J made plain in Driclad Pty Ltd v Federal Commissioner of Taxation (1968) 121 CLR 45 at 64:- "... it is of the nature of appeals ... that they lie only against "judgments, decrees, orders and sentences", not against reasons. The word "judgments" in this connexion refers only to operative judicial acts, and is not used ... as a convenient abbreviation for reasons for judgment." (see also Ah Toy v Registrar of Companies (1985) 10 FCR 280 at 285-286 and the cases there referred to). Nonetheless, it is necessary to identify the judgment pronounced by von Doussa J on 27 June 1993 because it is against that judgment that a right of appeal, which may be invoked by the filing of a notice of appeal, or if circumstances so allow, a notice of cross-appeal, lies. The minutes of order which are annexed, in accordance with the usual practice of this Court, to his Honour's reasons for judgment are in the following terms:- "MINUTES OF ORDER JUDGE MAKING ORDER : VON DOUSSA J WHERE MADE : ADELAIDE DATE OF ORDER : 27 JUNE 1995 THE COURT ORDERS THAT:
Judgment for the applicant for $208,000 against the respondent Mita Copiers Australia Pty Ltd.
Judgment for the respondent Reginald Morrison Gray against the applicant.
(deleted)
The question of costs be stood over for argument to a date to be fixed."

It is reasonable to assume that the judgment pronounced by his Honour on 27 June 1995 in this matter was in accord with paragraph 1 of the above minutes. That is, on that day his Honour ordered that judgment be entered for Copyworld against Mita for $208,000. It is to be noted that his Honour did not on that day make any judicial determination with respect to costs: such determination was made on 30 June 1995 when his Honour ordered that Copyworld recover two-thirds of its costs to be taxed against Mita. Paragraph 4 of the minutes of order dated 27 June 1995 which deals with costs may thus be ignored for present purposes. In any event, O62 r3(1) of the Rules, which authorises the Court to make orders as to costs even after the conclusion of proceedings, strengthens the conclusion which is to be drawn from the Rules as a whole, that orders for costs are separate and distinct from judgments. Paragraph 2 concerning Mr Gray may also be ignored as reflecting a separate judgment of his Honour, albeit one with respect to causes of action properly joined in the proceedings pursuant to O6 of the Rules. Paragraph 1 of the above minutes, which in this regard is supported by his Honour's reasons for decision, indicates that the judgment pronounced by his Honour on 27 June 1995 was that Copyworld recover against Mita a specified sum of money. His Honour's reasons for judgment disclose that the specified sum of money was arrived at by his Honour by reference only to Copyworld's claim for damages by reason of the breach by Mita of its dealership contract with Mita. His Honour found that Copyworld had not made out its claims of fraud, misleading and deceptive conduct or of misrepresentation for the purposes of the Misrepresentation Act 1971 (SA). Whilst his Honour's failure to award damages to Copyworld on any of its claims other than that of breach of contract would have been open to appeal, even, it seems, if no additional award of damages were sought (Australian Telecommunications Commission & Ors v Colpitts per Toohey J, with whom Fisher J agreed, at 400-402 and Jackson J at 410-411; also Driclad Pty Ltd v Federal Commissioner of Taxation), this does not mean that his Honour's judgment extended beyond the pronouncement that Copyworld recover against Mita the sum of $208,000. That pronouncement constituted, for present purposes, his Honour's judgment within the meaning of O52 of the Rules. Of course, his Honour's order as to costs is also open to appeal by reason of the definition of "judgment" contained in O52 r1 of the Rules. Nonetheless, in seeking to appeal against the judgment pronounced by his Honour on 27 June 1995, which judgment was entered as paragraph 1 of the order entered on 13 July 1995, Copyworld, in my view, sought to appeal against the whole of his Honour's judgment so far as it concerned its claims against Mita. As I have already indicated, I do not regard the judgment pronounced by his Honour on the claim of Copyworld against Mr Gray as having any relevance in this regard. I am unable to accept Mr Clayton's argument that the reference in O52 r22(1) to "a part of the judgment" should be read as meaning the whole judgment. No justification for so construing language apparently deliberately calculated to encompass less than the whole was offered. The fact that the rule provides, in effect, that a respondent need not institute a substantive appeal in specific circumstances suggests strongly, in my view, that the right to cross-appeal is intended to be a limited right. For these reasons the objection to the competency of the purported cross-appeal must be upheld. It thus becomes necessary to consider the application made on behalf of Mita for an extension of time within which to lodge an appeal. APPLICATION FOR LEAVE TO LODGE AN APPEAL O52 r15(2) is set out above. It authorises the Court for special reasons at any time to give leave to file and serve a notice of appeal. In Jess v Scott (1986) 12 FCR 187 at 195 the Full Court of this Court stated:- "What is needed to justify an extension of time is indicated in r15(2) by the words "for special reasons". It is that there be shown a special reason why the appeal should be permitted to proceed, though filed after the expiry of twenty-one days. In that context, the expression "special reasons" is intended to distinguish the case from the usual course according to which the time is twenty-one days. But it may be so distinguished (not necessarily will, for the rule gives a discretion) wherever the Court sees a ground which does justify departure from the general rule in the particular case. Such a ground is a special reason because it takes the case out of the ordinary." In my view, the circumstances of this case may be regarded as out of the ordinary in that the cross-appeal was lodged on legal advice, no counsel was able to refer us to relevant authority on the issue of the proper interpretation of O52 r22(1) of the Rules, and Copyworld has now been on notice of the subject of the cross-appeal since approximately 28 July 1995. I have given consideration to the matters raised by Mr Bennett in opposition to the grant of the leave sought. The issue of the increased costs resulting from the filing and serving of the purported cross-appeal can be dealt with when orders for the costs of this appeal are made. The other matters are not, in my view, such as make an exercise of the Court's discretion in favour of Mita on its application inappropriate. No point would now be served, however, by the granting of leave to Mita to file and serve a notice of appeal in terms substantially similar to its purported notice of cross-appeal. I would make an order dispensing with the requirement for Mita to file and serve a notice of appeal on the basis that its purported notice of cross-appeal be treated as a notice of appeal filed and served in accordance with the Rules. ARGUMENTS ON THE CROSS-APPEAL For convenience I shall continue to refer to Mita's appeal as the cross-appeal. The first ground of the cross-appeal was that the learned trial judge should have found that Copyworld had abandoned its contract with Mita when it agreed to deal with ACD. The background (taken largely from the reasons for judgment of von Doussa J) to this ground of cross-appeal is as set out in the following paragraphs. In December 1992 Mita determined that its branch office in Adelaide would close. When Mr Gray learnt of this decision, he and a Mr Weeks prepared a proposal, which was accepted by Mita, whereby they would establish a distributorship and take over the service of the client base of the branch office. Copyworld and other dealers were advised of the proposed changes in a circular signed by Mr Gray and Mr Weeks dated 1 March 1993. It included the statement that:- "Mita (SA) Staff are taking over the runs as MITA Dealer/Distributor for South Australia, so the support you have received in the past will remain unchanged and in the future will get stronger. Mita has made its intentions clear for the future, that is to support the Australian Dealer Network even more than in the past, aiming to set up Dealer/Distributors in every State supported by Mita Head Office in NSW. This is how MITA became so strong in America and Europe - DEALER DIRECT." A circular letter dated 17 March 1993 signed by Mita's National Sales Manager, apparently received by Copyworld, includes the following statements:- "Let me explain what is happening: The same team that you have worked with over the past years or so ... will still be in Adelaide to support your efforts not as Mita Copiers, but as our authorised distributors. What does this mean? Simply that nothing changes except you will receive personalised support ... In other words, all aspects of your Mita dealership remain the same (eg. pricing, technical support), although in the case of marketing support this will be tailored to your specific needs ... . . . The only other change will be in relation to your dealer accounts, which will of course, be with Australian Copier Distributors from 1 April 1993, naturally on the same terms and conditions as your Mita account, that is NETT 30 DAYS. Of course, payment for all purchases made prior to this date must be made to Mita Copiers Australia Pty Ltd." On 18 March 1993 Mr Gray forwarded to Copyworld a new dealership agreement between ACD and Copyworld. It was in substantially similar terms to the Mita dealership agreement and required the giving of directors' guarantees. A credit application was enclosed. Copyworld did not sign the new dealership agreement or the Credit application and did not provide directors' guarantees. It did make purchases against the line of credit offered by ACD. In my view the finding made by the learned trial judge that Copyworld did not abandon its dealership contract with Mita, but rather Mita maintained continuing contractual obligations to Copyworld which were to be met through its agent ACD was plainly open on the evidence before him and ought not to be disturbed. Contrary to the argument advanced by Mr Clayton on behalf of Copyworld, it is my view that neither Mita nor Copyworld by its conduct led the other party to their dealership agreement to assume that its reciprocal obligations were at an end. All of the conduct on which Mr Clayton placed reliance is, in my view, equally consistent with an assumption on each side that Mita was meeting its obligations under the agreement via its agent ACD. It was argued on behalf of Copyworld, in the alternative, that Copyworld and Mita had agreed that ACD should stand in the place of Mita so that a new contract was substituted for the dealership agreement entered into between Copyworld and Mita. Whether or not there has in any case been a novation is a question of fact. I am not persuaded that any reason has been shown for disturbing the findings of fact made by the learned trial judge in this regard in this case. Such findings of fact do not support the suggested novation. The second group of grounds of cross-appeal sought to attack his Honour's finding that Mita, through its agent ACD, terminated its dealership agreement with Copyworld on 3 June 1993. In my view, his Honour's finding that ACD was the agent of Mita to fulfil the entitlements of Copyworld under the dealership agreement made this subsequent finding inevitable. The evidence given by Mr Iida, the Managing Director of Mita, was that ACD was authorised to deal with Copyworld and that he believed that he had no authority to set aside Mr Gray's decision. This evidence was, in my view, open to be understood, as Mr Bennett contended, as meaning that Mita had delegated to ACD the discretion to terminate dealership contracts. His Honour apparently so understood it, and, in my view, no reason to disturb his finding on appeal has been demonstrated. Mr Clayton further observed that there was no refusal by Mita or its agent ACD to supply parts and consumables to Copyworld. His Honour expressly found this to be so, although he further found that it was reasonable in the circumstances for Copyworld not to take up the offer in mitigation of its damages. Again, no reason to interfere with this latter finding was, in my view, demonstrated. His Honour clearly acted on the basis that Copyworld was able to obtain parts and consumables from sources other than ACD. The fourth ground of cross-appeal argued by Mr Clayton was that Copyworld was itself in breach of its dealership agreement with Mita and was thus not entitled to enforce the agreement without rectifying its breach. The appointment of Copyworld as a dealer of Mita was agreed to be conditional upon, amongst other things not here relevant, "achievement of agreed sales targets" and "[a]ccount payment, agreed terms are 30 days from Statement". An initial credit line was set "at $50,000" to "be reviewed on a six monthly basis". As Mr Bennett pointed out, the agreed sales target was an annual target. The dealership agreement was terminated approximately 6 months after it was entered into. It can not be concluded that Copyworld was in breach of the condition to achieve its annual sales target. As to the condition concerning account payment, the learned trial judge accepted that on 3 June 1993 officers of Copyworld had in their possession cheques which they intended to hand to Mr Gray and Mr Weeks to clear Copyworld's debt owed directly to Mita and to make payment to ACD of an amount to be agreed. The meeting between representatives of Copyworld and representatives of ACD on that day came to a sudden end upon the representatives of Copyworld receiving from Mr Gray a letter purporting to terminate summarily Copyworld's Mita dealership. His Honour found that it was for this reason that the cheques were not handed over to Mr Gray. These findings, in my view, make untenable any argument that Copyworld was unwilling to abide by its obligations under the dealership agreement with respect to payments. As to the credit limit of $50,000, a willingness in Mita to allow Copyworld to exceed such limit is not, in my view, to be characterised as a breach of contractual conditions by Copyworld. Ground four of the cross-appeal is not sustainable. Part B of the cross-appeal complains that on the whole of the evidence, the award of damages made by the learned trial judge was too high. It is contended that there is no satisfactory proof of the individual components of the award, and that his Honour erred in finding that it was reasonable for Copyworld not to take up the offer of ACD to supply parts and consumables in mitigation of its loss. I have already indicated that I see no reason to interfere with his Honour's finding on the issue of mitigation. As to the components of the award of damages, the Full Court of this Court in Enzed Holdings Ltd & Ors v Wynthea Pty Ltd & Ors (1984) 57 ALR 167 at 183 stated: "The principle is clear. If the court finds damage has occurred it must do its best to quantify the loss even if a degree of speculation and guess work is involved. Furthermore, if actual damage is suffered, the award must be for more than nominal damages. We should add that we can see no reason why this principle should not apply in cases under the Trade Practices Act as well as in cases at common law." It was not disputed by Mita that some actual damage was suffered by Copyworld in this case. Moreover, Mr Clayton expressly disclaimed criticism of the approach to quantification of damages adopted by his Honour. He simply contended that the global award of $175,000 before the calculation of interest was too high. I note that no challenge was made to the amount awarded by his Honour in lieu of interest.

The learned trial judge had in the circumstances of this case a singular advantage over this Court so far as the assessment of damages is concerned. Not only did his Honour's assessment necessarily involve a significant degree of speculation and guess work, it was inevitably informed by his Honour's assessment of witnesses and their respective business acumen. In a case such as this, where no error of principle can be identified, it will be rare that a Full Court will be willing to set aside such an assessment. In my view, this case is not one in which this Court can be satisfied that any error was made by his Honour in his calculation of the damages to be awarded to Copyworld. COSTS As the order entered on 13 July 1995, set out above, shows, his Honour ordered that Copyworld was to recover two thirds of its costs to be taxed against Mita. Copyworld on its appeal contends that it should have been awarded all of its costs: Mita on its cross-appeal contends that this Honour's order as to costs was excessively generous to Copyworld. The power of the Federal Court to make orders for costs is found in s43 of the Act. Subject to exceptions not here relevant, it is a general power to award costs in all proceedings before the Court and, "[e]xcept as provided by any other Act, the award of costs is in the discretion of the Court or Judge." The discretion to award costs is unfettered although it must be exercised judicially. The relevant authorities have recently been helpfully and comprehensively reviewed by Heerey J in Henderson & Ors v Amadio Pty Limited & Ors (unreported, Federal Court, Heerey J, 22 March 1996 at 492-494). In this case Copyworld failed with respect to all of its claims at trial other than that alleging breach of contract. A trial on that issue alone would have been significantly shorter than that which in fact was held. It relied on expert reports and oral evidence from two accountants. The learned trial judge found such reports and evidence unhelpful. It has not been suggested on this appeal that his Honour was wrong in this regard. The costs associated with such expert reports and oral evidence go well beyond the time that each such expert was in the witness box. Expert reports in this matter were exchanged before trial. They required careful consideration by legal advisers and by experts retained by Mita, and it would be reasonable to conclude that they generated a considerable number of hours of work by Mita's legal and expert advisers. Moreover, evidence was required to be led, or adduced during cross-examination, at trial by Mita to answer the material contained in such reports. The time taken up by such evidence was significant. Although his Honour's order as to costs awarded Copyworld less than 100% of its costs, no order was made expressly requiring Copyworld to make any contribution to Mita's costs. In my view, an order requiring Copyworld to pay some part of Mita's costs, would not, in the circumstances, have been outside the proper limits of his Honour's discretion. The order that Copyworld recover two-thirds of its costs from Mita is, in a rather broad brush way, the equivalent of an order awarding Copyworld five-sixths of its costs and requiring it to pay one-sixth of its costs to Mita on account of Mita's costs. In all of the circumstances, I do not consider that Copyworld has any proper grounds for complaint with respect to his Honour's order as to costs. Whilst I hold the view that it would not have been outside the proper limits of his Honour's discretion as to costs to have required Copyworld to bear a higher proportion of the total costs of the action than his order in fact required, that does not mean that the order actually made by his Honour was necessarily outside of the proper limits of his discretion. As Heerey J pointed out in Henderson & Ors v Amadio Pty Limited & Ors, a number of factors militates against the deprivation of a successful plaintiff of its costs. Such factors are plainly relevant to cases such as this, where overly ambitious claims for damages are pressed. Moreover, the Rules, and the practice of this Court, provide means whereby respondents may protect their position as to costs where unsustainable claims are made against them (see, for example, O23). I do not consider that, in the whole of the circumstances of this case, his Honour's order as to costs has been shown to fall outside the ambit of his legitimate discretion. I would dismiss both the appeal and the cross-appeal and require each party to bear its own costs except that, in my view, the costs of the preparation of both the appeal papers and the cross-appeal papers should be shared equally by the parties. Copyworld should have its costs of and incidental to its challenge to the competency of Mita's purported cross-appeal. I certify that this and the preceding pages are a true copy of the Reasons for judgment of the Honourable Justice Branson. Associate: Dated:

Counsel for the appellant, : Mr D J M Bennett QC cross-respondent and respondent with him Mr R W Evans Solicitors for the appellant, : Condon & Co cross-respondent and respondent Counsel for the respondents, : Mr D E Clayton QC cross-appellant and applicant Solicitors for the respondents, : David Deakin Davies cross-appellant and applicant & Co Hearing Dates : 13 & 14 November 1995

Misrepresentation Act 1971(SA)

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Judgment (14 paragraphs)

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Cases Cited (7)