Date of Hearing: 3 June 2020 Date of Judgment: 5 August 2020
S315/2019
ORDER
1.Appeal allowed.
2.Set aside orders 1 and 2 made by the Full Court of the Federal Court of Australia on 4 June 2019 and, in lieu thereof, order that, in place of order 2 made by Rares J on 17 August 2018, there be judgment for the appellants in the sum of $27,078,507, plus interest pursuant to statute.
3.The respondent pay the appellants' costs of the appeal to the Full Court of the Federal Court of Australia and to this Court.
On appeal from the Federal Court of Australia
Representation
J T Gleeson SC with C S Ward SC and P F Santucci for the appellants (instructed by Marque Lawyers)
G K J Rich SC with J L Roy and J E Taylor for the respondent (instructed by Arnold Bloch Leibler)
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.
CATCHWORDS
Berry v CCL Secure Pty Ltd
Damages – Misleading or deceptive conduct – Where first appellant induced to give up agreement by respondent's misleading or deceptive conduct in contravention of s 52 of Trade Practices Act 1974 (Cth) – Where appellants sought damages pursuant to s 82 of Trade Practices Act referable to amounts payable had agreement not been terminated – Whether respondent entitled to contend that but for its misleading or deceptive conduct it would have lawfully terminated agreement – Whether presumption against wrongdoers applied – Whether evidence established real (not negligible) possibility that respondent would have terminated agreement by lawful means.
Words and phrases – "balance of probabilities", "counterfactual lawful termination", "deliberate contravention", "evidential burden", "lawful means alternative", "legal burden", "misleading or deceptive conduct", "notice of termination", "presumption against wrongdoers", "real (not negligible) possibility", "recovery of damages for lost commercial opportunities", "reversal of onus of proof".
BELL, KEANE AND NETTLE JJ. This is an appeal from a judgment of the Full Court of the Federal Court of Australia (McKerracher, Robertson and Lee JJ)[1] allowing in part an appeal from judgments of the Federal Court (Rares J)[2]. The question is whether the Full Court erred in their assessment of the amount recoverable by the appellants under s 82 of the Trade Practices Act 1974 (Cth) ("the TPA") for the loss or damage they suffered by the respondent's misleading or deceptive conduct contrary to s 52 of the TPA, where such conduct caused the appellants to give up an agreement beneficial to them yet where, but for the misleading or deceptive conduct, the respondent would have been entitled lawfully to terminate the agreement. For the reasons which follow, the Full Court erred in their assessment of the damages…
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
AGLC
Berry v CCL Secure Pty Ltd [2020] HCA 27
Case
[2020] HCA 27
Decision Date
CaseChat Overview and Summary
The High Court of Australia heard an appeal concerning damages awarded under the *Trade Practices Act 1974* (Cth) for misleading or deceptive conduct. The appellants, Dr Berry and GSC, had entered into an agreement with the respondent, CCL Secure Pty Ltd (formerly Securency Pty Ltd), which they subsequently relinquished due to the respondent's conduct in contravention of section 52 of the Act. The central dispute revolved around the quantum of damages, specifically whether the respondent could contend that, absent its misleading or deceptive conduct, it would have lawfully terminated the agreement, thereby reducing the appellants' recoverable loss.
The legal issues before the High Court were whether the Full Court of the Federal Court had erred in its assessment of the damages recoverable by the appellants. This involved determining whether the respondent bore the onus of proving that it would have lawfully terminated the agreement in the absence of its contravening conduct, and if so, whether it had discharged that onus by demonstrating a "real (not negligible) possibility" of such lawful termination. The court was required to consider the application of the presumption against wrongdoers and the evidential burden of proof in the context of a statutory claim for damages under section 82 of the *Trade Practices Act*.
The High Court allowed the appeal, finding that the respondent had failed to discharge the evidentiary onus imposed upon it regarding causation of the appellants' loss. The court clarified that in a statutory action under section 82, the plaintiff bears the legal onus of proving the loss or damage suffered and its connection to the contravention. However, where the defendant seeks to rely on a "lawful means alternative" to reduce the quantum of damages, the burden of adducing evidence to establish the real possibility of such an alternative lies with the defendant. The court concluded that the respondent had not presented sufficient evidence to establish that, but for its misleading or deceptive conduct, it would have lawfully terminated the agreement.
Consequently, the High Court set aside the orders of the Full Court and ordered judgment for the appellants in the sum of $27,078,507, plus interest, and awarded them costs of the appeal to the Full Court and the High Court.
Orders
Orders of the court
1. Appeal allowed.
2. Set aside orders 1 and 2 made by the Full Court of the Federal Court of Australia on 4 June 2019 and, in lieu thereof, order that, in place of order 2 made by Rares J on 17 August 2018, there be judgment for the appellants in the sum of $27,078,507, plus interest pursuant to statute.
3. The respondent pay the appellants' costs of the appeal to the Full Court of the Federal Court of Australia and to this Court.
Background
Background to the litigation
This is an appeal from a judgment of the Full Court of the Federal Court of Australia (McKerracher, Robertson and Lee JJ)[1] allowing in part an appeal from judgments of the Federal Court (Rares J)[2]. The question is whether the Full Court erred in their assessment of the amount recoverable by the appellants under s 82 of the Trade Practices Act 1974 (Cth) ("the TPA") for the loss or damage they suffered by the respondent's misleading or deceptive conduct contrary to s 52 of the TPA, where such conduct caused the appellants to give up an agreement beneficial to them yet where, but for the misleading or deceptive conduct, the respondent would have been entitled lawfully to terminate the agreement. For the reasons which follow, the Full Court erred in their assessment of the damages payable, and the appeal should be allowed.[1]CCL Secure Pty Ltd v Berry [2019] FCAFC 81.[2]Berry v CCL Secure Pty Ltd [2017] FCA 1546; Berry v CCL Secure Pty Ltd [No 2] [2018] FCA 1351.The facts The facts of the matter were found by the primary judge in very considerable detail, but, for present purposes, they may be stated compendiously. Up until about 2013, the Reserve Bank of Australia and Innovia Films Ltd (a United Kingdom company and a subsidiary of Union Chimique Belge) ("Innovia Films") conducted a 50-50 joint venture through the respondent (then named Securency Pty Ltd) ("Securency"). Together, they had succeeded in commercialising the production and printing of polymer banknotes using production facilities at Securency's premises in Craigieburn, which was then an outer suburb of Melbourne. The polymer printing process consisted of three stages. The first involved Innovia Films producing a large bubble or film of polymer to be cut into many sheets. Innovia Films had two production plants, one of which was at Craigieburn. The second stage involved the conversion of the polymer film sheets into opacified polymer or polymer substrate, a process known as "opacification". Innovia Films had two opacification plants, one of which was also at Craigieburn. The third stage involved a mint or commercial banknote printer using suitable equipment to print banknotes or other specialised documents on the opacified polymer. Although more expensive to produce, opacified polymer banknotes have distinct technical and economic advantages over paper banknotes, including the principal advantage that they last in circulation at least four or five times longer than their paper equivalents, resulting in a cost saving for the central bank or mint of the issuing government. In 1992, the Commonwealth of Australia began printing Australian banknotes on polymer. Thereafter, throughout the 1990s, Securency set about marketing polymer banknotes and opacified polymer to other nations' central banks, governments and mints. By 2004, a total of 17 countries had switched to printing one or more denominations of their banknotes on opacified polymer. The Federal Republic of Nigeria ("Nigeria") was one of the countries to which Securency directed its marketing efforts, but, initially, to no avail. It was only later, when the first appellant ("Dr Berry") became involved in the marketing effort, that the then president of Nigeria, President Obasanjo, and the then Governor of the Central Bank of Nigeria ("the CBN"), Governor Soludo, agreed to place an order.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
BELL, KEANE AND NETTLE JJ
GAGELER AND EDELMAN JJ
Finally, neither Mr Ellery nor Mr Curtis, who were Messrs Brown and Chapman's superiors at Securency, and, as it appeared, the ultimate Securency decision makers in relation to the engagement of Securency agents, was called to give evidence as to whether he considered that it was in Securency's best interests to terminate the Agency Agreement and appoint JH Marketing or JHM Global and SPT in place of Dr Berry and GSC. Naturally, the primary judge inferred[107] that nothing which either man might have said on those subjects would have assisted Securency's case. [107]Berry v CCL Secure Pty Ltd [2017] FCA 1546 at [31], applying Australian Securities and Investments Commission v Hellicar (2012) 247 CLR 345 at 412‑414 [167], [169] per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ, Jones v Dunkel (1959) 101 CLR 298 at 308 per Kitto J, 312 per Menzies J, 320‑321 per Windeyer J and Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361 at 384‑385 [63]‑[64] per Heydon, Crennan and Bell JJ.Conclusion It follows that the appeal should be allowed. Orders 1 and 2 of the Full Court made on 4 June 2019 should be set aside and, in their place, it should be ordered that there be judgment for the appellants in the sum of $27,078,507, plus interest pursuant to statute, and costs. The respondent should pay the costs of the appeal to the Full Court and to this Court. Together with Bell, Keane and Nettle JJ, we would allow the appeal by Dr Berry and GSC. Their Honours' detailed recitation of the facts and procedural history allows us to state our reasons shortly. Though some large issues of legal principle were canvassed in written and oral submissions, the appeal can and in our opinion should be allowed on the narrow basis suggested by Dr Berry and GSC in their written reply. The narrow basis is that Securency failed at trial to discharge the evidentiary onus imposed upon it by the way it had joined issue with Dr Berry and GSC on the pleadings on the question of causation of the loss they claimed to have suffered. Given that the only action on which Dr Berry and GSC succeeded against Securency was an action under s 82 of the Trade Practices Act 1974 (Cth) to recover the amount of the loss which Dr Berry and GSC claimed to have suffered by conduct of Securency in breach of s 52 of that Act, the findings of the primary judge couched in the conclusory language of a common law action in deceit have been an unfortunate distraction. A feature of the statutory action on which Dr Berry and GSC succeeded against Securency is that the statute itself requires for the action "the suffering of loss or damage", requires a connection between the loss or damage and the contravention of s 52 through the requirement that the loss or damage "must be sustained 'by' the contravention", and instructs that "the measure of compensation is 'the amount of' the loss or damage sustained"[108].[108]Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 at 527 [95]. "Economic loss may take a variety of forms"[109] all of which involve the identification of some "prejudice or disadvantage" that has occurred[110]. Plaintiffs pursuing the statutory action are initially responsible for formulating how such loss or damage as they claim to have suffered is to be identified. The initial question must always be: "what loss or damage does the plaintiff allege"[111]? The plaintiff then bears the legal onus of proving that the identified loss or damage has been suffered by the contravention of which they complain and of establishing the amount of that loss or damage. The plaintiff bears, in other words, the ultimate burden of establishing both the required connection with the contravention and quantum by inferences drawn from the whole of the evidence. That legal onus is constant.[109]Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 527.[110]Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 at 513 [46].[111]Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 555. See also Henville v Walker (2001) 206 CLR 459 at 488‑489 [94], 507 [153].
Ratio Decidendi
Legal Principle Established
Established by:
BELL, KEANE AND NETTLE JJ,
GAGELER AND EDELMAN JJ