ACN 151 368 124 v Pro-Pac Packaging (Aust) Pty Limited - [2017] NSWSC 913

Supreme Court

New South Wales

Medium Neutral Citation: ACN 151 368 124 v Pro-Pac Packaging (Aust) Pty Limited [2017] NSWSC 913
Hearing dates: 26/06/2016, 27/06/2017 and 28/06/2017
Date of orders: 30 June 2017
Decision date: 30 June 2017
Jurisdiction: Common Law
Before: McDougall J
Decision:
Separate questions answered as set out at [102].

Catchwords: CONTRACT – whether side letter had contractual effect – where no consideration – CONTRACT – whether representation had contractual effect – CONSUMER LAW – whether representation misleading and deceptive – where representation was not relied on – CONTRACT – whether estoppel defence available
Legislation Cited: Competition and Consumer Act 2010 (Cth)
Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited: Australian Co-operative Foods Ltd v Norco Co-operative (1990) 46 NSWLR 267
Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424
Golden Horizon Finance Co Ltd v Financial & Energy Exchange Limited [2016] NSWSC 593
Hoyt’s Ltd v Spencer (1919) 27 CLR 133
Johnson Matthey Ltd v AC Rochester Overseas (1990) 23 NSWLR 190
Taylor v The Owners – Strata Plan No 11564 (2014) 253 CLR 531
Watson v Foxman (1995) 49 NSWLR 315
Whittet v State Bank of New South Wales (1991) 24 NSWLR 146
Category: Principal judgment
Parties: ACN 151 368 124 formerly Eco Food Pack Australia Pty Ltd (Plaintiff)
Pro-Pac Packaging (AUST) Pty Limited (Defendant)
Representation:
Counsel:
M R Pesman SC/ A D Crossland (Plaintiff)
S Duggan (Defendant)
Solicitors:
Watson Law Pty Ltd (Plaintiff)
Harpur Phillips (Defendant)

File Number(s): 2014/132717

Judgment

HIS HONOUR: By written agreement now agreed to have been made on 19 June 2013 (the sale agreement), the plaintiff (EFP) agreed to sell its business to the defendant (Pro-Pac). At the same time, three other written agreements were made: a “Supply Agreement”; a “Commission Agreement”; and an “Employment Agreement”. In addition (it is now agreed) there was signed a “Side Letter” that purported to affect some of the terms of the sale agreement.
In very broad terms, the total consideration payable by Pro-Pac was $6 million together with stock at valuation. The consideration was payable by way of a “Completion Payment” of $1.2 million subject to adjustment, a “Deferred Payment” of $250,000 payable in four half-yearly instalments, and incentive payments to be made if earnings and gross profit targets were met in the following years. In addition, there was to be an inventory of good and saleable stock, and Pro-Pac was to pay the value of that stock.
EFP sues to recover the unpaid balance of the deferred payment and what it says is the “Inventory Amount” – the value of the stock that was transferred to Pro-Pac. Pro-Pac denies that it is liable for the deferred payment, accepts that it is liable to pay something on account of the inventory amount, but says that it is entitled to set off, against anything otherwise payable, damages for breach of warranty, breach of an alleged collateral contract, or for alleged misleading or deceptive conduct.

The issues for decision

By…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2017] NSWSC 913
Decision Date: 30 June 2017

CaseChat Overview and Summary

In the case of ACN 151 368 124 v Pro-Pac Packaging (Aust) Pty Limited, the court was asked to determine the enforceability of various representations and agreements between the parties. The plaintiff, ACN 151 368 124, sought to enforce a side letter agreement which the defendant, Pro-Pac Packaging, argued lacked contractual effect. Additionally, the plaintiff argued that a representation made by the defendant was misleading and deceptive under the Australian Consumer Law, even though the representation was not relied upon. The defendant also contended that an estoppel defence should apply.

The central legal issues before the court involved the contractual enforceability of the side letter, the effect of the representation under the Australian Consumer Law, and the applicability of estoppel as a defence. The court had to assess whether the side letter had contractual effect in the absence of consideration and whether the representation was misleading and deceptive despite the plaintiff not relying on it. Furthermore, the court needed to determine if estoppel could be invoked by the defendant.

The court found that the side letter did not have contractual effect as there was no consideration provided by the plaintiff. Regarding the representation, the court held that it was not misleading and deceptive because the plaintiff had not relied on it. The court also ruled that the defendant's estoppel defence was not applicable as there was no clear representation or assumption made by the plaintiff which the defendant could have relied upon to its detriment. Consequently, the plaintiff's claims were dismissed.

Orders