• the setting of nil targets for the March and June 2002 quarters and the failure to set a target for the September and December 2002 and March 2003 quarters." (para 883)
222 The judge nonetheless declined to make the declaration, because Mobile had continued to receive benefits under the ASP Agreement, it had not accepted the repudiation, and no consequential relief could be given. This was, with respect, clearly correct (see Sanderson Computers Pty Ltd v Urica Library Systems BV (1998) 44 NSWLR 73), and it may have been better not to make a finding which led nowhere. But what the judge said in paras 641-2 and 758 seems to have been particularly directed to whether Vodafone's conduct should be regarded as repudiatory.
223 The key statement is in para 641, that Vodafone "made a clear and conscious and very deliberate decision that it was not able to and did not wish to continue with Mobile as its direct marketing agent or with the ASP and would proceed to force the issue in some fashion by using its entitlement to set the targets as a weapon in this regard."
224 Even if Vodafone did not wish to continue with Mobile as its direct marketing agent, (still more if it was unable to do so), to the extent that so far as it was entitled to act under the ASP Agreement so that Mobile's activity would be cut down, it could do so without acting improperly. The judge said that the use of the weapon was "to force the issue in some way". What was the issue? The judge referred to Vodafone's expectation that Mobile would in due course put up high-value business plans, and in para 642 to Vodafone's "continuing anxiety to reduce the acquisitions on low-level plans for financial reasons". Consistently with this, the issue was using Mobile as its agent only for higher-level plans, and there was no suggestion that Vodafone would not pay the appropriate Minimum Base Acquisition Fee or the Management Fee. Even on the view the judge took, Vodafone could determine target levels no more than a positive number - if it could do that, it was entitled to turn the tap down to a dribble. The judge may have had that in mind when he later referred, as something open to Vodafone to use, to the discretionary power to set target levels as a pragmatic weapon of persuasion (para 768). It is consistent with the judge's findings that Vodafone exercised the power with a view to using Mobile only for higher level plans.
225 At the risk of repetition a clear finding of exercise of the power for the extraneous purpose of bringing the ASP Agreement to an end would have been expected, and would have been expected as an operative breach of the implied term of good faith and reasonableness, if the judge had intended to make it. That the judge did not decide the case on the basis of exercise of the power to determine target levels for the extraneous purpose, indeed held back from finding the cognate arbitrariness or capriciousness, supports the conclusion that he did not intend to make that finding. He certainly did not make it unequivocally.
226 It should not be overlooked that the judge considered that Vodafone was not entitled to determine target levels of nil. That plainly coloured his factual findings, since therein lay the "walking away from such obligation as there was to endeavour to agree upon business plans" (para 641) and, in the judge's view, the stopping of Mobile in its tracks from following and working to Business Plans (para 758). I have come to a different view. There was no repudiation in Vodafone doing what it was entitled to do. That meant that Mobile was confined in its acquisition activities. But Vodafone was entitled to do what it did, even if the foreseen result was adverse to Mobile and meant that the ASP Agreement stalled in that subscribers would not be acquired through Mobile. In my opinion, there was no finding of exercise of the power in cl 18.4 for the extraneous purpose of bringing the ASP Agreement to an end, and Mobile cannot uphold claims 6 and 7 on that ground.
227 What is left in claims 6 and 7, then, is damages for Vodafone's breach of contract because it failed to determine target levels for the March 2002 to March 2003 quarters.
228 When he came to damages the judge first turned to "principles dealing with causation and damage" (para 737). He discussed a number of cases and other writings under the headings of "Onus", "Difficulty of assessment", "Hypotheticals", "Loss of benefit or detriment dependent upon the making or exercise of discretionary decisions", "Doctrine of efficient breach" and "Viscissitudes" (paras 738-756)
229 Under the sub-heading "Applying these principles" the judge then said -
"759 There is no doubt but that Mobile has suffered actionable loss occasioned by reason of Vodafone's setting of nil targets or refusing to set any targets. It has proven on the balance of probabilities that Vodafone's breach of the ASP caused it to lose an opportunity of clearly high value, namely the opportunity to make profits through the activity of participating in the endeavour to agree upon business plans and then to follow those business plans. It lost an opportunity because once no targets were set, the whole of the scheme set by the ASP underpinning its participation into the future went into freeze mode. And this remains the position today."
230 In the discussion which followed the judge said that the exercise was one of "ascertainment of the quantum of the loss by reference to the possibilities" (para 762). He said -
"767 It seems to me to be far too simplistic to analyse the factual question which is raised for determination by suggesting that Vodafone would have set a target of 1 or of some number colourably the same: Ms Blake said as much. In this regard it is also relevant to bear in mind that Vodafone had been content to subject itself to the prohibitions with respect to the persons conducting Mobile Direct Marketing operations in competition with Mobile with whom it might deal [clause 2.7]. Hence the court is entitled to infer from the wording of the ASP that Vodafone had an interest in the continued viability of Mobile, if only because of Mobile's appointment by the very terms of the ASP."
231 The judge posed two alternative courses Vodafone might have taken -
"768 It was one thing for Vodafone to
· be concerned in the extreme with the difficulties it was experiencing in terms of Mobile's focus upon low-level access acquisitions and perceived failure to acquiesce in or produce what Vodafone regarded as viable alternative plans; and
· to have elected to endeavor, using its discretionary power to set targets as a pragmatic weapon of persuasion.
769 It was altogether another thing for Vodafone to clip Mobile's wings by setting a target such as would effectively limit Mobile either:
· to such profitability as to Vodafone may seem sufficient to do no more than to permit Mobile, as appointed direct marketing agent, to survive; or
· to a relatively low but not laughable figure, in which event the background thinking would have been to keep Mobile on a tight rein so as to ensure that it would continue to endeavor to come up with constructive proposals with respect to new plans."
232 He then said -
"770 The former approach is that which in my view and on the balance of probabilities, weighed in the light of all of the evidence, is likely to have been taken by Vodafone. Whilst it is very difficult to make a finding of fact as to how Vodafone's discretionary decision or power would have been exercised had the nil target estimate not been made, in my view a target of 12,000 acquisitions per quarter [ie based upon 4000 acquisitions per month] would have been made in respect of the December 2001 quarter and in respect of each of the following 5 quarters."
233 In para 771 the judge said that he had reached this conclusion "in a judgmental fashion", taking into account a number of considerations "none of which is pervasive [sic], but all of which seem to me to play a proper part justifying the finding"; the considerations were -
"• the number 12,000 was the number for calculating Minimum Base Acquisition Margin in the ASP [4,000 per month];
• when Vodafone sought for the first time to drastically reduce targets on 7 March 2001 TB 775], the target was 12,000 new connections for the year, but the forecast connections for the first quarter of that year were 12,000 new connections. Accordingly, there would have been nil for the remaining 3 terms. Thus, when it came to choosing between a real target and nil, Vodafone chose 12,000 for the quarter ;
• during the December 2001 quarter and the March and June 2002 quarters, Mobile experienced churn of 15,762, 11,413 and 11,759 for each quarter, respectively. This represents an average churn for those quarters of
38,934 / 3 = 12,978 per quarter = 4,326 per month.
This calculation would keep Mobile in a state of static equilibrium (see the Schedules provided by the plaintiff appendix "H" which reflect these calculations); and
• for the last quarter where a target was set in respect of which there is no dispute, the number was 14,150 [TB 939, 941 and 945] which is a monthly target of 4,716;"
234 The judge went on to say that he had taken into account some other matters, in summary being the 3000 gross connections per month Benchmark figure (para 772), some evidence as to which the judge said that "there is a sense in which it seems to me that setting a low target is likely to the decision makers to have been counter-productive to Vodafone" (para 773), and a letter of 13 January 2003 inviting Mobile to provide a business plan for the June 2003 quarter which the judge saw as supporting that Vodafone might "select such targets as would permit Mobile to go forward" (para 770).
235 The judge then used the target level of 12,000 new connections per quarter in the assessment of damages for each of the December 2001 to March 2003 quarters, saying that the figure calculated according to a model used by the parties should be reduced by 10 per cent as a discount "for general vicissitudes and contingencies including of course the possibility that 12,000 connections would not have been able to be achieved by Mobile" (paras 792-795).
236 By this reasoning, without distinguishing between damages for determining a target level of nil and damages for failing to determine a target level the judge found as a matter of fact what target level Vodafone would have determined if it had not been in breach of contract. Mobile submitted that this finding and the consequential assessments of damages stood for the breaches by failing to determine target levels at all, even if the breaches by determining target levels of nil fell away. Vodafone submitted that the finding that it would have determined a target level of 12,000 new connections per quarter was for a number of reasons unwarranted, to which Mobile replied that it was a finding of fact, in part credibility based and otherwise made with the advantage of the trial judge's familiarity with the evidence in the case as a whole and attracting the well-known inhibition upon appellate review. Vodafone further submitted that, although speaking of loss of opportunity (para 759) and the possibilities (para 762), the judge had erroneously taken the determination of a target level of 12,000 new connections per quarter as a certainty: this, it said, was apparent from the specific contingency that 12,000 connections would not have been able to be achieved by Mobile, without mention of the prior contingency that Vodafone would not have determined the target level of 12,000 new connections. It said that in any event the 10 per cent discount was wholly inadequate.
237 I do not find the judge's evaluation of the loss of opportunity and the possibilities easy to accept, even if the assumption that Vodafone was not entitled to determine a target level of nil be adhered to. I am not sure that I understand the distinction he saw between "using its discretionary power to set targets as a pragmatic weapon of persuasion" (para 768) and limiting Mobile's profitability to survival or some low but not laughable figure (para 769), particularly when on the judge's view the only contractual limitation on Vodafone's determinations of target levels was that they had to be positive figures. To what end was Vodafone meant to have been persuading Mobile? Apparently in the first postulated approach Vodafone was to be more kind to Mobile, allowing it greater profitability than survival or a relatively low but not laughable figure, it seems because of an interest in Mobile's continued viability (para 767). Yet if the persuasion were to have Mobile depart from its "focus upon low-level access acquisitions and perceived failure to acquiesce in or produce what Vodafone regarded as viable alternative plans" (para 768), there was little reason for Vodafone to do more than have Mobile survive.
238 What is plain is that Vodafone wanted to "reduce the acquisitions on low-level plans for financial reasons" (para 642). As has been seen in the consideration of whether it failed to determine target levels, it resolutely maintained its determination of a target level of nil in the letter of 13 July 2001, and its intention to continue to set target levels of nil. Vodafone's stance was the subject of the judge's disapprobation in para 641, and was regarded by him as repudiatory in para 883. In the face of that stance a finding that, if it had realised that it was obliged to determine quarterly target levels rather than adhere to the earlier announcement, and if it had realised that it was obliged to determine target levels other than nil, Vodafone would have determined target levels of 12,000 new connections for each of the five successive quarters, is bold indeed.
239 Once there is removed the assumption that Vodafone was not entitled to determine a target level of nil, the judge's finding is undermined. At the least, in legal principle the damages for failing to determine target levels are not to be assessed on the basis that Vodafone would have done more than it was contractually obliged to do: Biotechnology Australia Pty Ltd v Pace (1988) 15 NSWLR 130 at 156; TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130 at 154; The Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 92-3. Vodafone submitted that this went further, and required assessment on the basis that Vodafone would not have done more than it was contractually obliged to do. It is not necessary to enter upon that. As a matter of fact, in my opinion, the only conclusion which could properly be reached is that, if Vodafone had determined target levels for the March 2002 to March 2003 quarters, under the pressure of its desire to avoid acquiring unprofitable customers and in accordance with its announced intention it would have determined the target levels at nil. In my opinion determining target levels of nil was a certainty and there was no lost opportunity or possibility of determination of target levels otherwise than at nil.
240 I do not think that any of the considerations which the judge thought justified his finding, in the different context of inability to determine a target level of nil, is of any weight against the overwhelming demonstration of Vodafone's stance. That the ASP Agreement used 12,000 for the Minimum Base Acquisition Margin and 3,000 in respect of the Benchmarks is of no consequence. That in the past Vodafone had determined target levels of particular numbers is also of no consequence - Vodafone had then come to a firm stance of target levels of nil. The letter of 13 January 2003 was non-specific and part of the legal game then being played. So far as the judge thought that target levels of 12,000 would keep Mobile viable, again Vodafone had taken a different stance. I doubt that the judge's finding was in part credibility based, Mobile's reliance being on some evidence of Ms Blake whom the judge did not find impressive, because the finding was despite the evidence rather than by preference of another witness. But in any event Ms Blake was asked about target levels if target levels of nil had not been available, and her difficulty with that hypothesis served to underline Vodafone's resolve to determine target levels of nil.
241 In my opinion, what Mobile lost through Vodafone's failure to determine target levels at all did not rise above loss of what would have fallen to it in the event of determinations of target levels of nil. It is not necessary to consider Vodafone's submission that the judge incorrectly equated loss of opportunity as to determination of target levels with loss of opportunity as to determination of a business plan. Treating them as equivalent, in the manner damages were calculated what Mobile lost attracted no substantive damages, and Mobile is entitled only to nominal damages because it failed to determine target levels for the March 2002 to March 2003 quarters. It is also not necessary to go to the other respects in which Vodafone asserted error in the assessment of damages, or to the contest over components in the calculation of damages.
242 It would seem to follow that, even if Mobile had obtained a finding of breach of the implied terms by exercise of the power in cl 18.4 for the extraneous purpose of bringing the ASP Agreement to an end, its damages for breach of contract in that respect would also have been no more than nominal damages.