Busways Blacktown Pty Ltd v Westbus Region 1 Pty Ltd (No 2)

[2018] NSWSC 1901

Supreme Court

New South Wales

Medium Neutral Citation:	Busways Blacktown Pty Ltd v Westbus Region 1 Pty Ltd (No 2) [2018] NSWSC 1901
Hearing dates:	On the papers
Decision date:	10 December 2018
Jurisdiction:	Equity - Commercial List
Before:	Stevenson J
Decision:	Earlier judgment to be corrected; further opinions as to effect of disputed clause
Catchwords:	JUDGMENTS AND ORDERS – amending, varying and setting aside – correction under slip rule – where paragraph of earlier judgment does not reflect Court’s intended reasons   CONTRACTS – construction – interpretation – further issues arising from earlier judgment
Cases Cited:	Busways Blacktown Pty Ltd v Westbus Region 1 Pty Ltd [2018] NSWSC 1590
Category:	Consequential orders (other than Costs)
Parties:	Busways Blacktown Pty Limited (Plaintiff) Westbus Region 1 Pty Limited (First Defendant) Area 1 Management Company Pty Ltd (Second Defendant) B Calabro & Sons Pty Ltd (Third Defendant)
Representation:	Counsel: P M Wood with T E O’Brien (Plaintiff) I M Jackman SC with D Klineberg (First Defendant)   Solicitors: HWL Ebsworth Lawyers (Plaintiff) King & Wood Mallesons (First Defendant)
File Number(s):	SC 2015/141105

Judgment

1. I gave judgment in this matter on 23 October 2018: Busways Blacktown Pty Ltd v Westbus Region 1 Pty Ltd [2018] NSWSC 1590.

2. I shall use the same abbreviations here as in that judgment.

3. I have since received written submissions in relation to a number of matters arising from my reasons.

Error in earlier judgment

4. In the course of considering those submissions I have identified an error in [142] of my reasons of 23 October 2018. That error is reflected in my formulation of the decision on the coversheet of the judgment.

5. At [139] I concluded that in order that Westbus CDC’s profit be calculated “on the same basis” as Bosnjak’s “Westbus” business in the Westbus Bid Template, “costs” incurred by CDC Australia to generate that profit, being costs not incurred directly by Westbus CDC itself, should be brought to account.

6. At [140] I observed that although this was not “conceptually precise”, such costs would correspond to 25.69% of the “indirect labour costs” that Bosnjak incurred in relation to its business generally.

7. At [141] I observed that the “indirect labour costs” brought to account in the Westbus Bid Template were costs incurred by Bosnjak and attributable to Bosnjak’s bus businesses in all four regions in which it operated.

8. I then expressed the following opinion at [142]:

“It follows, in my opinion, that in order that Westbus CDC’s profit be calculated “on the same basis” as the profit calculation in the Westbus Bid Template, 25.69% of indirect labour costs incurred by CDC Australia referable to the businesses being conducted by the four CDC Australia subsidiaries (including Westbus CDC) in the four regions in which Bosnjak formerly operated should be brought to account. But not indirect labour costs not so referable. That is, not indirect labour costs referable only to one or more of the numerous other bus businesses that CDC Australia came to operate during the life of the Government Contract.” (Emphasis added.)

9. In that paragraph, I referred on three occasions to “indirect labour costs”. That was a mistake. I intended to refer to “indirect costs” consistently with the reference to “costs” at [139] and the reference to conceptual imprecision at [140].

10. The parties accept that as this is an accidental slip on my part, my reasons should be corrected.

11. I have concluded that the appropriate way to do that is to publish these reasons and to cause to be placed on my original reasons a note to the effect that [142], and the formulation of the decision on the coversheet, have been corrected.

12. A matter arising from those corrected reasons is the identification of those CDC Australia overhead costs that are referrable to the four businesses which Bosnjak formerly operated.

13. After I made known to the parties my conclusion concerning [142] of my earlier judgment, Mr Wood, who appeared with Mr O’Brien for Busways, sought leave to file further submissions in relation to that question.

14. Mr Jackman SC, who appeared with Mr Klineberg for Westbus CDC, did not oppose such leave being granted. Appropriate directions have now been made.

15. The result is that, unfortunately, the matter will now have to be adjourned until next year for such further submissions as are necessary. I apologise to counsel, and to the parties, for the delay and inconvenience that my error has caused.

16. In the meantime, I am in a position to deal with the further two issues raised by the parties in written submissions since my judgment on 23 October 2018.

Should profitability from 1 January 2007 to 30 June 2007 take into account profits from 1 July 2006 to 30 June 2007?

17. The answer to this question is “no”.

18. Clause 17.2(e) requires determination of whether “from 1 January 2007” Westbus CDC made profits in excess of 12% EBIT to cost.

19. It is only those profits, that is those made “from 1 January 2007”, that must be distributed.

20. Although the period 1 January 2007 to 30 June 2007 represents the second half of the financial year ended 30 June 2007, I see no reason to take into account Westbus CDC’s profitability for the first half of that financial year to determine its profitability in the second half.

21. I therefore do not accept Westbus CDC’s submission that the appropriate course is to calculate Westbus CDC’s profit for the financial year ended 30 June 2007 and then halve it in order to calculate the profit for the six month period from 1 January 2007.

Is the SKR adjustment required by cl 17.2(e) for the entire period of the contract or only for that part of the contract during which Westbus CDC achieved profit in excess of 12% EBIT to cost?

22. The object sought to be achieved by the profit distribution contemplated by cl 17.2(e) was to “attempt to equalise” the Standard Kilometre Rate “plus” the “Patronage Benchmark Payment”: see my earlier judgment at [81] and [82].

23. If, in any financial year, Westbus CDC did make a profit in excess of 12% EBIT to cost, the effect of cl 17.2(e) is that the Standard Kilometre Rate must be adjusted “accordingly” with a view to achieving that object.

24. If in any financial year, Westbus CDC did not make a profit in excess of 12% EBIT to cost, no further adjustment would be called for in that year. But there would be no call for the Standard Kilometre Rate in that financial year to revert to an earlier rate.

25. Once the object contemplated by cl 17.2(e) is achieved, that is once the subcontractors’ Standard Kilometre Rates “plus” Patronage Benchmark Payments were equal, no further adjustment would be called for.

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Decision last updated: 10 December 2018