Cellarit Pty Ltd v Cawarrah Holdings Pty Ltd

[2018] NSWCA 213

Court of Appeal

Supreme Court

New South Wales

• Summary available

Medium Neutral Citation:

Cellarit Pty Ltd v Cawarrah Holdings Pty Ltd [2018] NSWCA 213

Hearing dates:

15 March 2018

Decision date:

28 September 2018

Before:

McColl AP at [1];
Macfarlan JA at [299];
Leeming JA at [300]

Decision:

See [298]

Catchwords:

CONTRACTS – construction – contract for storage and sale of wine on payment of commissions – whether term of contract that commission payable at a fixed rate of 15% over term of contract – whether appellant entitled to vary rate at its discretion

 

CONTRACTS – variation – mutual assent – knowledge of increased commission rates – whether conduct of respondent in paying increased commission rates manifested acceptance of variation

 

CONTRACTS – variation – consideration – where benefits of contract foregone and liability incurred for increased seller’s commission

 

EVIDENCE – Browne v Dunn – documentary evidence – where witness on notice of allegation upon which party intends to rely – whether rule in Browne v Dunn requires cross-examination of witness – whether judge obliged to accept evidence on which no cross-examination

 

EVIDENCE – opinion evidence – opinion rule –– tables summarising and analysing invoices – whether opinion rule applied –– Evidence Act 1995 (NSW), s 79

 

CIVIL PROCEDURE – Court of Appeal – cross-appeal – whether notice of cross-appeal required – Uniform Civil Procedure Rules 2005 (NSW), r 51.17

CIVIL PROCEDURE – Court of Appeal – notice of cross-appeal – form – Uniform Civil Procedure Rules 2005 (NSW), r 51.18

Legislation Cited:

District Court Act 1973 (NSW)
Evidence Act 1995 (NSW)
Supreme Court Act 1970 (NSW)
Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

Allied Pastoral Holdings Pty Ltd v Federal Commissioner of Taxation [1983] 1 NSWLR 1
Anikin v Sierra [2004] HCA 64; (2004) 79 ALJR 452
Apollo Shower Screens Pty Ltd v Building and Construction Industry Long Service Payments Corporation (1985) 1 NSWLR 561
Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540
Australian Securities and Investments Commission v Hellicar (2012) 247 CLR 345; [2012] HCA 17
Bale v Mills (2011) 81 NSWLR 498; [2011] NSWCA 226
Blatch v Archer (1774) 1 Cowp 63; (1774) 98 ER 969
Bonny Glen Pty Ltd v Country Energy [2009] NSWCA 26
Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153; [2001] NSWCA 61
Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34
Browne v Dunn (1893) 6 R 67
Commissioner of Taxation of the Commonwealth of Australia v Sara Lee Household & Body Care (Australia) Pty Ltd (2000) 201 CLR 520; [2000] HCA 35
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Australian Competition and Consumer Commission (2007) 160 FCR 466; [2007] FCAFC 132
Concut Pty Ltd v Worrell [2000] HCA 64; (2000) 75 ALJR 312
Crawford Fitting Co v Sydney Valve & Fittings Pty Ltd (1988) 14 NSWLR 438
Dearman v Dearman (1908) 7 CLR 549; [1908] HCA 84
Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd [2017] HCA 12; (2017) 91 ALJR 486
Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7
Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523
Fox v Percy (2003) 214 CLR 118; [2003] HCA 22
Gardiner v Grigg (1938) 38 SR (NSW) 524
Henry Kendall & Sons (A Firm) v William Lillico & Sons Ltd [1969] 2 AC 31
Hightime Investments Pty Ltd v Adamus Resources Ltd [2012] WASC 295
Hillam v Iacullo (2015) 90 NSWLR 422; [2015] NSWCA 196
Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 97,326
Johnston v Brightstars Holding Company Pty Ltd [2014] NSWCA 150
JR Consulting & Drafting Pty Ltd v Cummings (2016) 329 ALR 625; (2016) 116 IPR 440
Kriketos v Livschitz [2009] NSWCA 96
Live Board Holdings Ltd v Cody Live Pty Ltd [2017] NSWCA 302
Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749
Martech International Pty Ltd v Energy World Corp Ltd [2007] FCAFC 35; (2007) 248 ALR 353
Martech International Pty Ltd v Energy World Corporation Ltd [2006] FCA 1004
Masterton Homes Pty Ltd v Palm Assets Pty Ltd [2009] NSWCA 234; (2009) 261 ALR 382
Moratic Pty Ltd v Gordon [2007] NSWSC 5; (2007) 13 BPR 24,713
Morley & Ors v Australian Securities and Investments Commission [2010] NSWCA 331; (2010) 274 ALR 205
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37
Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; (1992) 67 ALJR 170
North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd [1979] QB 705
NU v NSW Secretary of Family and Community Services (2017) 95 NSWLR 577; [2017] NSWCA 221
Provident Capital Ltd v Papa (No 2) [2013] NSWCA 156
Purkess v Crittenden (1965) 114 CLR 164; [1965] HCA 34
Qantas Airways Ltd v Gama [2008] FCAFC 69; (2008) 167 FCR 537
Seymour v Australian Broadcasting Commission (1977) 19 NSWLR 219
The Proprietors Strata Plan 30102 v Energy Australia (formerly known as Sydney Electricity) [1997] NSWCA 25
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; [2004] HCA 52
University of Wollongong v Metwally (No 2) [1985] HCA 28; (1985) 59 ALJR 481
Watson v Foxman (1995) 49 NSWLR 315
Westport Insurance Corporation v Gordian Runoff Ltd (2011) 244 CLR 239; [2011] HCA 37
Whisprun Pty Ltd v Dixon (2003) 77 ALJR 1598; [2003] HCA 48

Texts Cited:

H G Beale et al (eds), Chitty on Contracts (32nd ed, 2015, Sweet & Maxwell)
J D Heydon, Cross on Evidence (looseleaf, 1991, LexisNexis)
K Lewison, The Interpretation of Contracts (6th ed, 2015, Sweet & Maxwell London)

Category:

Principal judgment

Parties:

Cellarit Pty Ltd (ACN 092 360 195) (Appellant)
Cawarrah Holdings Pty Ltd (ACN 094 092 734) (First Respondent)
Crusader Pty Ltd (ACN 094 092 734) (Second Respondent)

Representation:

Counsel:
N J Kidd SC (Appellant)
S Robertson with R E Raffell (Respondents)

  Solicitors:
Banki Haddock Fiora (Appellant)
Bayside Solicitors (Respondents)

File Number(s):

2017/313665

Publication restriction:

Nil

 Decision under appeal 

Court or tribunal:

District Court of New South Wales

Jurisdiction:

Sydney Civil Jurisdiction

Citation:

Not published on Caselaw

Date of Decision:

29 September 2017

Before:

Gibb DCJ

File Number(s):

2014/377541

HEADNOTE

[This headnote is not to be read as part of the Judgment]

The appellant, Cellarit Pty Ltd (Cellarit), facilitates the storage, logistics and sale of wine on behalf of its customers through an e-commerce website. The respondents, Cawarrah Holdings Pty Ltd (Cawarrah) and Crusader Pty Ltd (as trustee for the Storch Superannuation Fund) (Crusader), were customers of Cellarit. By oral agreement made in 2006 (2006 contract), between Mr Witt on Cellarit’s behalf and Mr Storch on Cawarrah and Crusader’s behalf, they used, and paid for, Cellarit’s services from August 2006 until May 2016. That period continued after they commenced proceedings against Cellarit in the District Court of New South Wales, initially seeking to recover monies allegedly paid pursuant to misrepresentations concerning the acquisition of shares in Cellarit. In the course of those proceedings, the statement of claim was amended to seek to recover excess amounts of commission that Cawarrah and Crusader alleged Cellarit had charged them.

At trial, the controversy between the parties turned principally on whether the 2006 contract provided for Cawarrah and Crusader to pay a fixed rate of commission of 15% on wine sales (in particular, 5% seller’s commission) for the entirety of their relationship, or whether, as Cellarit contended, the parties agreed that Cellarit would, at its discretion, provide a discount on the commission rate it charged Cawarrah and Crusader.

From 2006 to October 2008, Cellarit charged Cawarrah and Crusader a commission rate of 15%. On 1 October 2008, it notified them that both the buyer’s and seller’s commission rates would rise by 1% on and from that date. Cawarrah and Crusader initially complained about these increases.

Between October 2008 and May 2016, Cellarit sent Cawarrah and Crusader approximately 172 monthly account statements/invoices relating to wine sales, each of which charged Cawarrah and Crusader commission rates exceeding 15% (in particular, the seller’s commission rate exceeding 5%) and each of which they “paid”, in the sense that the commissions said to be due were debited from their monthly invoices.

Cawarrah and Crusader’s case at trial, which was accepted by the primary judge, was that pursuant to the 2006 contract, and for the duration of its indefinite term, Cellarit was to charge Cawarrah a fixed 15% commission rate. The primary judge also found that the 2006 contract was terminable on reasonable notice.

Cellarit appealed, principally on the basis that the increases in the seller’s commission rates were permissible contract variations. It also contended the primary judge erred in her construction of the 2006 contract as to the commission rate.

During the hearing of the appeal, Cawarrah and Crusader sought leave to file a notice of cross-appeal seeking, in the event the appeal was allowed and the judgment in their favour was set aside, a lesser judgment. They claimed their entitlement to a lesser judgment was based on them, recovering commission they claimed Cellarit had overcharged them even on the 2006 contract as varied and the benefit of the reversal of shareholders’ discounts that they contended Cellarit had effected in 2014 in breach of contract.

The principal issues on appeal were whether the primary judge erred in:

(i)   finding that a binding oral agreement was made in 2006 between Cellarit and Cawarrah and Crusader, respectively, which included a term that Cellarit would charge 15% commission on wine sales, comprised of a seller’s commission of 5% and a buyer’s commission of 10%, for the indefinite term of the 2006 contract.

(ii)   failing to find that the parties by their conduct from October 2008 to May 2016 varied the terms of their agreement relating to the commission rate payable.

The issues raised by the cross-appeal were whether the primary judge:

(iii)   erred in failing to hold that Cellarit breached the 2006 contract as varied by reversing shareholders’ discounts previously given to the cross-appellants.

(iv)   erred in failing to hold that Cellarit breached the 2006 contract as varied by charging commissions different to those it was entitled to charge under the varied 2006 contract.

Held, allowing the appeal, per McColl AP (Macfarlan and Leeming JJA agreeing):

As to issue (i)

(1) In resolving a controversy as to the terms of the 2006 oral contract, the primary judge enjoyed an advantage both in evaluating Mr Storch and Mr Witt’s credibility and had the benefit of understanding the “feeling” of a case which an appellate court, reading the transcript, cannot always fully share. The primary judge’s evaluative conclusion concerning the objective effect of Mr Witt’s words could not be said to be “glaringly improbable” or “contrary to compelling inferences”: [209].

Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 referred to.

As to issue (ii)

(1) It may be inferred from Cawarrah and Crusader’s conduct in 2008 that the 2006 contract was varied on and from 1 October 2008 when Cellarit increased the rates of commission, including of seller’s commission. Looking at the whole of the parties’ relationship, the Court should infer that Cawarrah and Crusader agreed to the 2008 variation, having regard to their conduct in continuing to trade with Cellarit after the commission rates were increased, particularly in circumstances where the 2006 contract was terminable on reasonable notice: [236].

Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153; [2001] NSWCA 61; Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523; Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 97,326; Moratic Pty Ltd v Gordon (2007) 13 BPR 24,713; [2007] NSWSC 5; Henry Kendall & Sons (A Firm) v William Lillico & Sons Ltd [1969] 2 AC 31 at 90 applied.

(2) Consideration for a contract variation can be found in the mutual abandonment of existing rights, the conferment of new benefits by each party on the other/or the incurring of liability to an increased detriment: [232].

Martech International Pty Ltd v Energy World Corporation Ltd [2006] FCA 1004; North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd [1979] QB 705 referred to.

(3) Consideration for the variation was provided by Cawarrah and Crusader foregoing the benefits of the 2006 contract and, too, by them continuing to incur liability for the increased seller’s commission rate in exchange for using Cellarit’s services: [238].

As to issue (iii)

(1) The primary judge erred in failing to find that the 2014 reversals were effected by Cellarit in breach of the 2006 contract: [271].

As to issue (iv)

(1) The primary judge erred in failing to find that Cellarit breached the 2006 contract by charging Cawarrah and Crusader a higher commission than that which it had determined to charge “at its discretion from time to time”: [291].

Judgment

Judgment

Factual background

The pleaded cases

The Schedule

Formation of the contract

Primary judgment

The price term

Incorporation of standard terms

Term of the contract

2008 rate increase

The 2009 Agreement

The 2014 variation

Estoppel

Summary

Trial: further submissions

Issues on appeal

Cellarit’s submissions

Construction of the contract: grounds 1, 3 and 4

Incorporation of standard terms: ground 2

Payment of Cellarit invoices: ground 5

Cawarrah’s submissions

Construction of the contract: grounds 1, 3 and 4

Incorporation of standard terms: ground 2

Payment of Cellarit invoices: ground 5

Other issues

Cellarit reply submissions

Reversals claim

Overcharging claim

Post-hearing submissions

Reconciliation Issue

Cross-examination issue

Reversals issue

Necessity for a cross-appeal

Consideration

The 2006 contract

Terms of the 2006 contract: ground 1

The variation case

Of whether variation case run at trial

The variation issue: appeal grounds 3 and 4

Grounds 2 and 5

Post-hearing issues

Necessity for a cross-appeal

Form of the notice of cross-appeal

The reversals issue

The overcharging claim

Notice of contention

Orders

The appeal – main grounds

Remaining grounds of appeal

The cross-appeal and other post-hearing matters

Reversals

Overcharging

1. McCOLL AP: The appellant, Cellarit Pty Ltd (Cellarit), was unsuccessful in defending District Court proceedings brought by Cawarrah Holdings Pty Ltd (Cawarrah) and Crusader Pty Ltd (as trustee for the Storch Superannuation Fund) (Crusader) to recover excess amounts of commission they contended Cellarit had charged them. Her Honour Judge Gibb awarded Cawarrah damages (including pre-judgment interest) of $102,143.87 and Crusader damages (including pre-judgment interest) of $223,564.32 and ordered Cellarit to pay their joint and several costs of the proceedings. [1]

   1.    Cawarrah Holdings Pty Ltd ACN 101 817 243 and Crusader Pty Ltd ACN 094 092 734 as Trustee for the Storch Superannuation Fund v Cellarit Pty Ltd (District Court (NSW), 29 September 2017, unrep) (PJ). The paragraphs in the primary judgment were not numbered, contrary to the now well-established practice to do so. Accordingly, all references are to pages of the primary judgment.

2. Cellarit appeals against her Honour’s decision pursuant to s 127(1) of the District Court Act 1973 (NSW).

3. For the reasons that follow, I would uphold the appeal. In the course of the hearing, the respondents contended that even if the appeal was successful, they were nevertheless entitled to a lesser judgment consequent upon Cellarit’s failure to challenge a finding upon which part of the judgment was based and in respect of a matter about which the primary judge made no findings. In due course they sought leave to rely upon a draft notice of cross-appeal to achieve that end. Subject to that cross-appeal being amended in order to comply with the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), I would allow that cross-appeal to the extent I explain in my reasons.

Factual background

4. Cellarit facilitates the storage, logistics and sale of wine on behalf of its customers through an e-commerce website.

5. Mr Scott Witt is a director of Cellarit which he had founded in 1999.

6. Mr Richard Storch is the sole director of Cawarrah and Crusader. From around 1980 to 2001, Mr Storch was the director of a company which operated a diamond wholesaling business based in Sydney. Prior to 2006, he collected bottles of wine which he stored in a cellar at his home. By around 2006 he estimated he would have had more than 1,000 bottles of wine in his cellar.

7. As at 2006, Mr Storch and Mr Witt had been friends for some decades. [2] Mr Storch knew that Mr Witt operated a wine storage and sales business.

   2.    PJ 8

8. Cawarrah and Crusader were customers of Cellarit by oral agreement first made in 2006 (2006 contract). [3] They used, and paid for, Cellarit’s services until May 2016 after the commencement of the present proceedings. [4] For convenience, and unless the context otherwise dictates, I shall refer to the respondents collectively as “Cawarrah”.

   3.    Crusader did not “formally” engage Cellarit until 13 June 2008 when it completed an online registration form. Despite this, the primary judge found “[t]he contract was struck with the plaintiffs collectively, as is admitted in the defence”: PJ 18. There was no challenge to this finding. Accordingly, as at trial and in the primary judge’s reasons, it shall be treated as if it was a party to, and bound by, the 2006 contract.

   4.    PJ 2.

9. At all relevant times, Cellarit earned its profits relevantly for present purposes by charging its customers both a buyer’s and seller’s commission on bottles of wine it stored for them, the sale of which it facilitated through its website.

10. The buyer’s commission was included in the price of wine advertised for sale by one of Cellarit’s customers. The effect of a 10% buyer’s commission, for example, on a bottle of wine sold for $100 meant that Cellarit deducted $10 before accounting to its customer, the vendor. Mr Witt gave evidence that while the rate of buyer’s commission had increased over time, it had never been discounted for any vendor.

11. The seller’s commission was also calculated on the price of wine advertised for sale by one of Cellarit’s customers. Once again, on the sale of a bottle of wine for $100, a seller’s commission of 10% meant that Cellarit deducted another $10 before accounting to the customer. Mr Witt gave evidence that the seller’s commission had increased over time, but had been reduced for individuals or groups of vendors.

12. Accordingly, where a vendor, at face value, sold a bottle of wine for $100, taking into account the two commissions, the vendor received $80.

13. In 2006, Cellarit’s standard buyer’s and seller’s commissions were each 10%. It was common ground that at the inception of the 2006 contract, Mr Witt agreed to reduce the rate of seller’s commission Cawarrah was charged. Quite what was said by Mr Witt and Mr Storch respectively in making that agreement was a matter of controversy. Nevertheless, from the inception of the contract in September 2006, Cellarit charged Cawarrah a total commission of 15% which the primary judge found was made up of 10% buyer’s commission and 5% seller’s commission. Commencing in 2008 Cellarit increased both its commission rates and continued to do so periodically while continuing to give Cawarrah a discounted seller’s commission, until 2016, by which time (and after a substantial falling out between them) it was charging Cawarrah standard rates.

14. The controversy between the parties turned principally on whether the 15% rate of seller’s commission charged in 2006 bound the parties for the entirety of their relationship (the fixed-term case) or whether, as Cellarit contended, the parties agreed that Cellarit would at its discretion provide a discount on the rate of seller’s commission it charged Cawarrah, and that it was entitled to vary that rate in the exercise of that discretion, the first such variation having been made in October 2008 (the variation case).

4. Cawarrah’s case, which was accepted by the primary judge, was that pursuant to the 2006 contract and for the duration of its indefinite term, Cellarit was entitled to charge Cawarrah “mates’ rates” commission of 15%, made up of 5% seller’s commission and 10% buyer’s commission. [5]

   5.    PJ 18.

5. On 1 October 2008 Cellarit notified Cawarrah in writing that the commission payable for both buyer’s and seller’s commission would rise by 1% on and from that date. Cellarit then began charging Cawarrah commission of 16.5% made up of buyer’s commissions of 11% and seller’s commission of 5.5%. As I have said, there were subsequent increases in the rate of seller’s commissions Cellarit charged Cawarrah in 2010, 2011, (3 increases in) 2012, and 2014, until 2016, by which time Cawarrah was receiving no discounts on seller’s commissions. Mr Storch complained about the 2008 increase, but Cawarrah and Crusader continued to use Cellarit’s services following that increase and all subsequent increases until 2016 almost two years after these proceedings were commenced.

6. Cellarit contended unsuccessfully at trial that the increases in the rates of seller’s commission were permissible contract variations. It argued it could be inferred that Cawarrah had assented to those increases from the facts that from 1 October 2008 until May 2016, a period of 7¾ years, Cellarit sent Cawarrah a total of approximately 172 monthly account statements/invoices relating to wine sales, each of which charged Cawarrah and Crusader respectively seller’s commission exceeding 15% and each of which they “paid”, in the sense that the commissions said to be due were debited from their monthly invoices. During this period, Cawarrah also delivered thousands of bottles of wine to Cellarit for storage and on-sale.

The pleaded cases

18. On the hearing of the appeal, Cawarrah’s principal opposition to Cellarit’s complaint that the primary judge had erred in rejecting its variation case was that that case had not been run at trial. Accordingly, it is necessary to examine the pleadings and the conduct of the trial closely. [6]

    6. Whisprun Pty Ltd v Dixon (2003) 77 ALJR 1598; [2003] HCA 48 (Whisprun) at [51] per Gleeson CJ, McHugh and Gummow JJ; see also University of Wollongong v Metwally (No 2) [1985] HCA 28; (1985) 59 ALJR 481 at 483.

19. On 24 December 2014 Cawarrah commenced proceedings against Cellarit in the District Court of New South Wales. As commenced, Cawarrah sought repayment of $136,858.36 allegedly paid pursuant to misrepresentations concerning the acquisition of shares in Cellarit. In an amended statement of claim filed on 10 August 2015, Cawarrah pleaded a term to the effect of that ultimately found to have been agreed, albeit that it was alleged that it was a term of an oral contract, made “[d]uring or about 2003.”

20. It was not until their second further amended statement of claim (SFASC), filed on 19 July 2016, that Cawarrah alleged it was a term of a contract made in 2006 that Cellarit would charge each plaintiff “a total commission of 15% in relation to any sale or purchase of wine by either of the plaintiffs which was facilitated by [Cellarit]” (15% fixed-term).

21. In paragraphs 13 and 14 of the SFASC, Cawarrah pleaded that, in breach of the 2006 contract, Cellarit had charged them, or had purported to charge them, a total commission of more than 15% in relation to sales and purchases of wine by either of them which it facilitated. Paragraph 15 pleaded that by reason of the breaches, Cawarrah had suffered loss or damage. Particulars of the damages were said to be found in an affidavit of a Mr Walton which was not reproduced in the appeal books. [7]

    7.    Mr Walton apparently assisted Mr Storch when Mr Storch sought to resolve disputes concerning an alleged agreement for Cawarrah or Crusader to become a shareholder in Cellarit.

22. Rather, at trial Cawarrah said its particulars of damage were to be found in a Schedule of Issues and Damages dated 29 August 2017 (Schedule), the day before the commencement of the trial. The Schedule took the form of a narrative setting out the quantum of Cawarrah and Crusader’s respective claims, depending upon the primary judge’s findings. In addition there were two tables attached to the narrative, relating to each plaintiff, purporting to quantify elements of the various sums the subject of the narrative. I refer in more detail to the Schedule below.

23. Cellarit denied the 2006 contract contained the fixed 15% term Cawarrah pleaded. Although its amended defence (filed in court with leave on 31 August 2017, the second day of the trial) to the SFASC could not be regarded as a model of pleading, paragraph 6(b) pleaded that, between the inception of the contract in September 2006 and 1 September 2009, it was a term of the contract that Cellarit “would at its discretion from time to time give the [respondents] a discount on the standard seller’s commission charged by it on the sale of wine by either [respondent], and did so give the [respondents] a discount of 50% of the standard seller’s commission during the said period …”

24. In its amended defence, in paragraph 7, Cellarit pleaded that the 2006 contract was varied from 1 September 2009. The essence of the variation was to the effect that, provided one of either Cawarrah or Crusader (or an associated person or entity) bought shares in Cellarit, Cellarit would give Cawarrah a shareholder’s discount of 1% off the standard seller’s commission charged on the sale of wine for each $5,000 invested in shares (2009 variation). Cellarit further pleaded that, pursuant to that agreement, Cawarrah agreed to buy $150,000 worth of shares, which amount was paid in four instalments, but that in March 2014 Cawarrah asserted that they would not buy those shares and sought repayment of the $150,000. Accordingly, Cellarit pleaded in paragraph 7(e) that in or around May – June 2014 there was an agreement to set aside the 2009 agreement and “the shareholder’s discount was, in accordance with that agreement, after notice to the plaintiffs, reversed by the defendant” (2014 variation).

25. In paragraph 10 of its amended defence, pleading to paragraph 13 of the SFASC, Cellarit admitted it had charged Cawarrah a total commission of more than 15% in relation to sales and purchases of wine by both plaintiffs facilitated by it, but said that, as to the sales of wine, it was entitled to do so by reason of the facts and matters alleged in paragraph 7 and, as to purchases of wine, that it charged buyer’s commission as pleaded in paragraph 6 of the amended defence. In defence to paragraphs 14 and 15 of the SFASC Cellarit denied breaching the 2006 contract or the loss and damage Cawarrah pleaded.

26. Paragraph 12 of the amended defence pleaded an estoppel based on each increase in the rate of the seller’s commission Cellarit charged Cawarrah, allegedly with their knowledge and agreement, from October 2008 to May 2014, at which date, as I have said, the amount charged was raised to Cellarit’s standard rate. In its particulars of the estoppel claim, Cellarit relied upon each invoice it had supplied Cawarrah as identifying the commission rates for the forthcoming month. It pleaded that Cawarrah was free to terminate its services at any time but, having been informed of the rate increases, chose to continue with Cellarit’s services and to pay the commission charged.

27. In their reply filed on the third day of the trial, 1 September 2017, in paragraph 1(a) – (d), Cawarrah admitted in response to paragraph 6 of Cellarit’s amended defence that during the period 1 September 2006 to September 2009, Cellarit gave them discounts of “approximately 50% off the then standard seller’s commission” charged on the sale or purchase of wine by either plaintiff, being 15% from September 2006 to September 2008, and 16.5% from September 2008 to September 2009, but pleaded that to the extent the commission exceeded 15% it was a breach of the 2006 contract. Particulars of the loss or damage for the breach were cross-referenced to paragraph 6 of the Schedule.

28. In paragraph 1(e) Cawarrah pleaded in the alternative that if it was a term of the 2006 contract that Cellarit would, at its discretion from time to time, give them a discount off the standard seller’s commission rate, Cellarit had breached that term by purporting to reverse discounts previously given (reversals issue) and purporting to charge Cawarrah commissions other than those it indicated were being charged (overcharging claim). This paragraph was cross-referenced to paragraph 7 of the Schedule.

29. In paragraph 2 of the reply, Cawarrah also raised the reversals issue in reply to the alleged 2009 variation pleaded in paragraph 7 of the amended defence, denying that the agreement said to underpin the 2009 variation was made, but pleading that, if the 2006 contract was varied in 2009 as alleged, that variation did not permit Cellarit to make the reversals referred to in subparagraph 7(e) of the amended defence and that by making those reversals Cellarit breached the varied contract. This paragraph was cross-referenced to paragraph 8 of the Schedule.

30. In paragraph 3 of the reply, Cawarrah raised a number of argumentative matters said to support the proposition that paragraph 12 was liable to be struck out, which, on its face, constituted cavilling with the ruling the primary judge had made when giving Cellarit leave to amend its defence. The paragraph was never pursued, and the primary judge in due course determined the estoppel plea, albeit adversely to Cellarit.

The Schedule

31. In the Schedule, Cawarrah identified the “real issues” for determination as being:

“What is the proper construction of the parties’ agreement regarding discounts on commissions for the storage and sale of wine?

1.   On the proper construction of the contract concluded between the parties in 2006 (Contract), was the defendant entitled to:

(a) charge the relevant Plaintiff a total commission of 15% in relation to any sale or purchase of wine by either of the Plaintiffs which was facilitated by the Defendant (as contended by the Plaintiffs: see Claim at [7]); or

(b) charge the relevant Plaintiff such commissions as it chose to charge “at its discretion from time to time” (as contended by the Defendant: see Defence at [6(b)]?

2.   If the proper construction of the Contract is that indicated in subparagraph 1(b) above, was the Contract varied from 1 September 2009 as alleged at paragraph 7 of the Defence?

3.   If the answer to question 2 is “yes”, was the Defendant entitled to “reverse” the discounts that the Defendant previously gave to the Plaintiffs in respect of the period from 1 September 2009 (as the Defendant purported to do on 1 June 2014 and 1 January 2015)?

Defendant’s estoppel plea

4.   If the Contract was concluded on the basis indicated in subparagraph 1(a) above:

(a) should the Court entertain the estoppel plea at paragraph 12 of the Defence in the absence of the Defendant having pleaded material facts which, if found, would support an estoppel?;

(b) If the answer to question 4(a) is “yes”, are the Plaintiffs estopped from “claiming amounts for commission less than those charged by the defendant and paid by the Plaintiffs”?

Relief

5   In light of the answers to the previous questions, what orders should be made?” [Emphasis and italics in original]

32. In subparagraphs 6(a)(i) and 6(b)(i) of the narrative part of the Schedule, Cawarrah and Crusader respectively identified the quantum of their claims for damages, if the 2006 contract was found to have contained the 15% fixed-term, as identified in paragraph 1(a), as being that sum set out in column M of the table relating to the respective plaintiff. Column M was headed “Difference between actual commission and commission @ 15% ($).”

33. In paragraphs 6(a)(ii) and 6(b)(ii), Cawarrah and Crusader respectively sought to recover the sum of reversals of discounts previously given. Cawarrah’s subparagraph 6(a)(ii) was cross-referenced to pages 396 and 440 of the trial Court Book which are pages 560 and 604 of the Blue Book in this Court. Crusader’s subparagraph 6(b)(ii) was cross-referenced to pages 473 and 510 of the trial Court Book which are pages 1125 and 1162 of the Blue Book in this Court.

34. Those pages identified Cellarit invoices to Cawarrah and Crusader respectively on which were recorded, in May 2014, reversals of “Shareholder Discounts (seller’s commission through to 19 May 2014), [8] “Shareholders Discounts (storage)” and, in December 2014, reversals of “All Remaining Shareholders Discounts”.

    8.    19 May 2014 was the date from which Cellarit advised Cawarrah and Crusader that it would henceforth charge them standard seller’s commission rates.

35. Paragraph 7 of the Schedule proceeded, first, on the premise that the Court had found the proper construction of the contract was as indicated in paragraph 1(b), but had answered question 2 “no”.

36. In subparagraphs 7(a)(i) and 7(b)(i) of the Schedule, Cawarrah and Crusader respectively sought to recover in debt or as damages amounts calculated as the difference “between the commissions said to have been charged by Cellarit from time to time and the commissions actually charged”. These subparagraphs were cross-referenced to column P of the two tables attached to the Schedule. This related to what I refer to later in these reasons as the overcharging claim.

37. Column P was headed “Difference between Commission @ Witt rates and actual commission”. The “Witt rates” were, in turn, clearly derived from Table A annexed to an affidavit of Mr Witt sworn on 12 August 2016. Table A set out Cellarit’s standard rates of buyer’s and seller’s commissions during the period 2008 to the termination of Cawarrah’s and Crusader’s relationships with it and the commissions Mr Witt said it had charged each during the same period.

38. Subparagraphs 7(a)(ii) and 7(b)(ii) of the Schedule duplicated subparagraphs 6(a)(ii) and 6(b)(ii) relating to the reversals issue.

39. Paragraph 8 of the Schedule proceeded, again, on the premise that the Court had answered questions 1(b) and 2 “yes”, but question 3 “no”. In that event, Cawarrah and Crusader sought to recover in subparagraphs 8(a) and (b) only the amounts previously claimed in subparagraphs 6(a)(ii) and 6(b)(ii) in relation to the reversals issue.

Formation of the contract

40. Mr Storch’s evidence about the conversation which led to the 2006 contract as set out in his 29 April 2016 affidavit was:

“8   In or around 2006, I met with Mr Witt at his office in Double Bay. His wife was also present at this meeting. At the meeting, words to the following effect were said:

Mr Witt:   ‘Why don’t you store some of your wine with me? I could sell it for you and you could make some money out of it.’

Myself:      ‘What will you do for me, if I did that?’

Mr Witt:   ‘I’ll market your wine on Cellarit’s website to potential purchasers. I’ll charge you 10% buyer’s commission and 10% seller’s commission on any wine sales. They are my standard rates. After deducting commission, I’ll pay you the remaining wine sale proceeds I collect on your behalf.’

Myself:      ‘Thanks, but I’ll keep my wine.’

9   I then proceeded to walk out of Mr Witt’s office, when he said words to the following effect:

‘Alright, I’ll halve my rates for you.’”

41. In his evidence-in-chief, Mr Storch corrected the last sentence to read:

“Alright, I’ll halve my seller’s commission for you.”

42. According to Mr Storch, there followed meetings and discussions about commission rates before a meeting at a coffee shop in Double Bay during which Mr Storch recounted the following conversation as having taken place:

“[W]e exchanged words to the following effect:

Myself:    ‘Are you happy with 15% total commission? Will you be happy with that from now on?’

Mr Witt:    ‘Yes, 15% is fine.’

We then shook hands and I said: ‘Deal – Mazaal.’” [Emphasis added.] [9]

9.    PJ 11.

43. Mr Witt denied that the conversations Mr Storch recounted had occurred. His evidence about the first conversation which led to the 2006 contract as set out in his affidavit of August 2016 was that he explained to Mr Storch how Cellarit operated, the process of lodging wine, how to list wine for sale and other general information related to what Mr Storch wanted to know about storing and selling wine with Cellarit. The conversation continued:

“8   … When Mr Storch asked about fees and charges, I showed him the Cellarit website and said, indicating figures:

‘These are the current charges and commissions, but of course they're not set in stone, they can change.’

Mr Storch said: ‘That all looks OK. How do I get started?’

I said:   ‘Easy, just complete the online registration form.’

‘As he walked towards the door, I said: ‘I'll give you mates’ rates.’

Mr Storch replied: ‘Thank you.’” [Emphasis added.]

44. Mr Witt recalled a further conversation with Mr Storch during which he said to him:

“By mates’ rates, I mean that I’ll reduce the current seller’s commission of 10% down to 5%.”

45. In his affidavit in response, Mr Storch denied Mr Witt’s version of the conversation. He agreed Mr Witt said words to the effect of those set out in [44], but repeated that Mr Witt said “yes, 15% is fine” in response to Mr Storch’s query at the coffee-shop meeting, “Are you happy with 15% total commission? Will you be happy with that from now on?”

46. In late August/early September 2006, Cawarrah formalised its oral contract with Cellarit by completing an online registration form by reason of which its details were entered on Cellarit’s database. [10] In order to submit the form, it had to agree to Cellarit’s terms and conditions by ticking a box on the online form. As at 2006, Cellarit’s terms and conditions included:

“Payment of Cellarit’s Charges

(a) The Client agrees to pay storage, transport and other charges in accordance with Cellarit’s schedule of rates as published from time to time …”

10.    PJ 19.

47. As I have said, Crusader commenced using Cellarit’s services in 2008. Crusader’s contract was also formalised by it completing an online registration form on 13 June 2008 received by Cellarit. [11] The first invoice issued to Crusader for the month of June 2008 followed the same format as those issued to Cawarrah. [12]

    11.    Ibid.

    12.    PJ 18.

Primary judgment

48. The primary judge found Mr Storch to be a direct and frank witness, honest and reliable and, in general, accepted his evidence. [13] Cellarit contended that Cawarrah’s case as to a fixed rate of commission was implausible, among other reasons, because of the lengthy period between October 2008 and 2016, during which Mr Storch received, without complaint, 172 monthly account statements or invoices relating to wine sales, each of which charged a commission exceeding 15%. The primary judge held that this otherwise “inexplicable” inertia could be explained by depression which “afflicted him for more than a decade, and reached a particularly acute phase in the middle of the relevant periods”. [14]

    13.    PJ 6.

    14.    Ibid.

49. The primary judge described Mr Witt as a “complex witness” who professed a firm recollection, but contradicted himself in various ways. Her Honour found that it “would be unfair to treat Mr Witt as a completely unreliable witness”, observing that:

“In some respects, he was direct and frank. For example, he said directly that he [had] not thought it necessary to obtain the plaintiffs’ consent to the variation of charges, and had not done so. I accept that honest evidence in the concession that he acted unilaterally in raising rates rather than with any agreement by the plaintiffs/Mr Storch. Likewise, he honestly said nothing about having told Mr Storch that the rates would change from time to time (although he used the word ‘current’ twice in a way that I find too subtle to convey what the defendant’s contentions say was Mr Witt’s intent).”

50. Nevertheless, the primary judge concluded Mr Witt was unreliable in some respects. Accordingly, her Honour rejected his evidence, particularly where it was contradicted by a reliable source or document. [15] Despite this, the primary judge did not refer to any aspect of Mr Witt’s evidence critical to the appeal which her Honour concluded was contradicted by a contemporaneous document.

    15.    PJ 6 – 7.

The price term

51. The first issue the primary judge determined was the agreement the parties had made as to the rate of commission Cellarit would charge Cawarrah, an issue her Honour correctly stated had to be determined in accordance with the objective theory of contract. [16]

    16.    PJ 7.

52. As I have said, Cawarrah’s case was that “[i]t was a [fixed] term of the Contract that [Cellarit] would charge the relevant Plaintiff a total commission of 15% in relation to any sale or purchase of wine by either of the Plaintiffs which was facilitated by [Cellarit]”. [17] Cellarit’s case, in short, was that, while it agreed to give Cawarrah a 50% discount on the rate of seller’s commission, that discount was on the rate of seller’s commission as it was at any point in time.

    17.    PJ 10.

53. A number of matters were common ground. First, that the 2006 contract was made in about August/September 2006. [18] Second, that Cawarrah knew prior to making the 2006 contract that Cellarit operated a wine storage and sales business and charged 10% buyer’s commission and 10% seller’s commission for its services. The primary judge held that that “common knowledge shaped the backdrop to their negotiations.” [19] Third, that “the bargain was struck orally, and that there were various terms about which there is no dispute that were not discussed at all, which may be described shortly as the standard trading terms.” [20] Fourth, that “the parties specifically and separately negotiated the amount to be paid by [Cawarrah] to [Cellarit] by way of commission.” [21]

    18.    PJ 7.

    19.    PJ 8.

    20.    PJ 9.

    21.    Ibid.

54. Although, according to the primary judge, the parties concurred that there was an agreement in 2006 about a 15% charge for commission, there was “a divergence as to the precise words used”. [22] To the extent there was disagreement between the parties as to the effect of the 2006 conversations insofar as the commission rate was concerned, the primary judge appeared to resolve it both in the section of her judgment dealing with “[t]he terms of the admitted 2006 contract” [23] and, too, in the part headed “[t]he price term in the 2006 contract as pleaded by the plaintiffs”. [24]

    22.    Ibid.

    23.    PJ 8.

    24.    PJ 10; parts of each of these sections of her Honour’s reasons are repeated elsewhere in the primary judgment. I shall not refer to the repetitions unless necessary.

55. Cellarit’s commission rates were set out in its schedule of rates published from time to time to which its terms and conditions referred. The primary judge held that the one point upon which the parties agreed was that in 2006, there was no agreement that Cawarrah should pay commission in accordance with that schedule. Rather, “[t]hat term was expressly varied by agreement between the parties.” [25]

    25.    PJ 8.

56. The primary judge accepted the italicised parts of Mr Witt’s account of the conversation set out above (at [43]) as her Honour repeated them in both sections of her reasons without criticism, observing that there was “broad agreement about that discussion”. [26]

    26.    PJ 8, 10.

57. The divergence between the parties as to the precise words used was that, whereas Mr Storch recalled an express agreement to a fixed 15% commission, Mr Witt recalled only discussion about a 5% seller’s rate and no express simultaneous mention of the buyer’s rate. [27]

    27.    PJ 9.

58. Even allowing for the effect of the passage of time on both witnesses’ recollections, the primary judge held that some points were certain:

•   whether it was mentioned expressly at the time or not, both parties had in mind the fact that there was a 10% buyer's commission;

•   the buyer’s commission was part of the structure that formed part of the contract price [for the sale of wine];

•   Mr Witt offered to charge 5% or half the 10% seller’s commission;

•   an agreement was struck; and

•   nothing was said about the rates varying from time to time. [28]

28.    Ibid.

59. Insofar as Cellarit relied for its variation case on Mr Witt’s comment that the figures shown on its website were “the current charges and commissions, but of course they’re not set in stone, they can change”, the primary judge held the word “current” could have either or both of two meanings. Either “that the rates may (or will) vary from time to time or over time” or “that different rates may be offered to different customers or in different circumstances.” [29]

    29.    Ibid.

60. The primary judge held that:

“[T]he objective bystander in these pre-contractual discussions would have understood the latter meaning (about different rates to different customers) to be conveyed, because in the same conversation Mr Witt said to Mr Storch ‘I’ll give you mates’ rates’.

I find the use of the phrases ‘current charges and commissions’ and ‘current seller’s commission’ far too subtle to convey the express message to a reasonable person in Mr Storch’s position (or any objective bystander) that these and any rates offered to the plaintiffs can and will vary from time to time. (It is apparent from Mr Storch’s evidence that this is not what he understood to have been conveyed.)” [30]

30.    PJ 9 – 10.

61. In respect of the coffee-shop conversation, the primary judge held that the “parties are effectively ad idem as to the term”. [31] On this approach, Mr Witt’s statement that he would reduce the (standard 10%) seller's commission to 5% without adjusting the standard buyer’s commission of 10% produced a total commission of 15%. [32]

    31.    PJ 12.

    32.    PJ 12 – 13.

62. In a section of her reasons dealing with Cellarit’s “alternative contention as to the terms of the 2006 contract”, the primary judge rejected Cellarit’s case that, as counsel for Cellarit submitted, “what objective business people in the positions of Mr Storch and Mr Witt would take from these utterances is that at the defendant’s discretion the defendant would reduce the seller's commission, that would otherwise be payable, by 50%.” [33]

    33.    PJ 14.

63. In the primary judge’s view, that submission did not reflect “[Cellarit’s] pleaded term, which allows for an unspecified ‘discount off the standard seller’s commission charged by it on the sale of wine’ at [Cellarit’s] discretion from time to time.” In her Honour’s view, on “the pleaded formulation, the availability of discount varies, not the rate of the seller's commission” and “Mr Witt said nothing about ‘discounts’ per se (save for the offer of halving the rate), varying or variable rates, or Cellarit’s discretion at all”. In this context, the primary judge repeated, in substance, her earlier conclusion that use of the word “current” and that “rates ‘are not set in stone’ [are] far too subtle to embody a term objectively determined to the effect that the rates that [Cellarit] would charge Mr Storch/the plaintiffs would vary from time to time.” [34]

    34.    PJ 14 – 15.

64. Accordingly, her Honour held that Cellarit was not entitled to vary its rates and charges, including seller’s commission, from time to time and that for it to have done so was a breach of contract. [35]

    35.    PJ 16.

65. The primary judge then turned to a section of her reasons headed “A contract with a fixed price term: payment of 15% commission”. In this respect, her Honour held that “[t]he parties struck a very simple bargain, exactly as the plaintiffs pleaded”: “[b]oth sides recall that the price agreed was 15% commission, whether that be characterised as 10% (buyer’s commission) plus one half of the seller’s 10% or a flat figure of 15%.” Accordingly, her Honour found that the contract was struck as Cawarrah pleaded, with the price term a fixed 15% commission.” [36]

    36.    PJ 18.

66. This finding is the subject of the first, third and fourth grounds of appeal.

Incorporation of standard terms

67. In addition to the oral agreement, Cellarit relied upon its standard online terms and conditions which it contended were incorporated in the 2006 contract when each of Cawarrah (in 2006) and Crusader (in 2008) completed the online registration form. The primary judge found that Cawarrah and Crusader “obviously accepted … [Cellarit’s] terms and conditions without further (or any) enquiry.” Her Honour also held that the printed standard terms gave Cellarit the right to vary its charges from time to time. However, her Honour found that those terms were not presented to, nor seen by, either Cawarrah or Crusader, before contract and, accordingly, held that they did not form part of the agreement between the parties. [37] This finding is the subject of the second ground of appeal.

    37.    PJ 8.

Term of the contract

68. The primary judge then turned to the term of the contract. In this respect her Honour held (footnote added): [38]

“The contract was for an indeterminate period with no time bar. There was no fixed period. There was no reference to commission changing from time to time. A simple, fixed price was agreed with a simple set of words with the defendant’s usual trading terms otherwise incorporated by tacit agreement.

As with all contracts for indeterminate periods, it was open to termination as explored in Crawford Fitting Co v Sydney Valve & Fittings Pty Ltd [39] …. Plainly the parties must have intended the contract to be terminable on reasonable notice.”

38.    PJ 18 – 19.

39. (1988) 14 NSWLR 438.

69. The finding that the 2006 contract was for an indeterminate period and for a fixed price, but not the finding that the contract was terminable on reasonable notice, is the subject of the first, third and fourth grounds of appeal. There was no notice of contention challenging the finding that the 2006 contract was terminable on reasonable notice.

2008 rate increase

70. The primary judge then turned to a section of her reasons dealing with Cellarit’s “unilateral increase in the rates charged in 2008”.

71. On or about 1 October 2008, Cawarrah received an email from Cellarit advising that both the buyer’s and seller’s commission rates were to increase by 1%. Mr Storch arranged a meeting with Mr Witt in or around late 2008 or early 2009 at which he protested about the proposed increase, and saying “[you] had a deal with me”, but to no avail. Mr Witt told him he had “increased the rate for all my customers. I had to, otherwise I would have gone broke.” [40]

    40.    PJ 22.

72. The primary judge accepted that Mr Witt had explained the reason for the increase to Mr Storch, that Cawarrah continued trading using Cellarit’s services despite knowing of the rate increases, and that, in doing so, they gave up protesting and paid the bills containing the increased rates as they arrived. The primary judge rejected Cellarit’s submission that Cawarrah’s conduct demonstrated their assent to the rate increases and that Cellarit could “charge what it liked and alter the rates at will.” [41] Her Honour also held, that a reasonable person in the parties’ position would not have thought consensus had been reached just because Mr Storch gave up voicing his disagreement. [42]

    41.    PJ 21 – 22.

    42.    PJ 23.

73. Her Honour found, as appears uncontroversial, that Cellarit charged Cawarrah a 5% seller’s commission on the price paid for any given bottle of wine (exclusive of the buyer’s commission) from the inception of the 2006 contract until the invoice issued for the month of October 2008. The seller’s commission rose in the October 2008 invoice to 5.5% of the price paid inclusive of the buyer’s commission. At the time the standard seller’s commission was 11%.

74. Crusader had been charged a 5% seller’s commission up to (and including) August 2008 and was charged a 5.5% seller’s commission in September 2008. [43]

    43.    PJ 20 – 21.

75. The buyer’s commission rose to 11% at the same time. [44]

    44.    PJ 21.

76. The primary judge found, as was apparently common ground, that the “charging methodology” also changed in 2008 leading to a separate increase in the seller’s commission to slightly higher than 5.5%, as the sellers (Cawarrah) were also paying a percentage of the buyer’s commission. [45]

    45.    PJ 21.

77. The primary judge held that the rate changes were “entirely unilateral”, a point her Honour found Cellarit largely conceded in submissions. [46] This was, in fact, Mr Witt’s evidence, it being his contention that, “like any business”, he did not need to obtain Cawarrah’s explicit consent to increasing the commission rates in October 2008, or at all. [47] Her Honour held that the “unilateral” variation was a breach of contract. [48]

    46.    PJ PJ 20 – 21, 23.

    47.    PJ 23.

    48.    PJ 23.

78. This finding is also the subject of the first, third and fourth grounds of appeal.

The 2009 Agreement

79. There was an issue at trial as to whether there had been an agreement between the parties in terms of the 2009 Agreement Cellarit pleaded in its amended defence, which Cawarrah denied. The primary judge found that no shares were issued to Cawarrah. [49] Nor, as was apparently common ground, did Cawarrah receive a shareholder’s discount as Cellarit had pleaded. [50] The primary judge rejected Cellarit’s contention that the 2009 Agreement had been made. [51] This finding is not the subject of any direct challenge on appeal. However, evidence given on this issue is relevant to the reversals issue.

    49.    PJ 27.

    50.    PJ 24.

    51.    PJ 30.

80. Mr Witt gave evidence that in September 2009 Mr Storch told him he would probably invest $100,000 in Cellarit. Pursuant to that statement, he contended, Mr Storch paid $50,000 to Cellarit in January 2010 in consequence of which Cellarit “began to receive a 10% discount on their storage fees” commensurate with the $50,000 invested. Mr Witt also said that in February 2010, Mr Storch told him that he had decided to increase his shareholding investment in Cellarit to $150,000, but was having difficulty raising the $100,000 balance for the shares. Because of that difficulty, Mr Witt contended, Mr Storch asked him whether he was “willing to withhold my wine sales proceeds from my Super Account”, [52] the implication being that the amounts to be withheld would constitute the $100,000 due in respect of the additional investment in Cellarit.

    52.    Crusader was trustee for the Storch Superannuation Fund.

81. Mr Witt said that, consequent upon that conversation, he debited $25,000 from Crusader’s account in March and August 2010, and a further $50,000 in November 2010 on each occasion itemising the entry on Crusader’s invoice as “Payment via issue to you of $25,000 [$50,000 in November 2010] of Cellarit shares”.

82. Mr Witt also alleged that in about May 2010 Mr Storch asked for a full discount on seller’s commission, consistent with his agreement to take $150,000 worth of shares and that he agreed with that request although Mr Storch had not “paid for [the] shares in full”.

83. In due course, in 2015, Mr Storch took proceedings on Cawarrah’s behalf to recover the $50,000 given to Cellarit, which he contended was advanced by way of a loan in January 2010 (loan-recovery proceedings). [53] Those proceedings were resolved when Cawarrah accepted Cellarit’s offer of compromise of $55,000 in late 2016. [54]

    53.    The present proceedings as commenced in 2014 included a claim by Cawarrah only for the recovery of $50,101.90 said to have been paid to Cellarit in part in return for acquiring shares in Cellarit. That claim had been abandoned, at least on the pleadings, by the time the amended statement of claim was filed in August 2015.

    54.    PJ 28.

The 2014 variation

84. At trial, Cellarit also contended that when Cawarrah told it in March 2014 that they would not purchase any shares in Cellarit, Cawarrah sought repayment of the $150,000, being the $50,000 Mr Storch paid in January 2010 and the $100,000 debited against Crusader’s account. Cellarit contended that led, in or around May and June 2014, to an agreement to set aside the 2009 Agreement and that, in accordance with that agreement after notice to Cawarrah, Cellarit reversed the shareholders’ discounts of 30% off the seller’s commission Cawarrah had received since September 2009 (2014 reversals). [55] Cawarrah denied any such agreement had been made.

    55.    PJ 33, 35.

85. The primary judge considered the evidence concerning Cellarit’s contention that there was an agreement in 2014 to set aside the 2009 agreement as an assertion of variation. [56] Mr Storch denied that there was any such variation as he denied that either he or Cawarrah had agreed to purchase any shares in the first place.

    56.    PJ 23.

86. In the course of the loan-recovery proceedings, there was an exchange of emails between Mr Witt and Mr Walton, who was described as an agent assisting Mr Storch, and who was apparently mediating the dispute concerning the $50,000. In the course of that exchange, in April 2014, Mr Walton advised Mr Witt that Mr Storch “does not wish to proceed with his share purchase”, a proposition with which Mr Witt agreed. In turn, on 20 May 2014, Mr Witt proposed that “reversal entries to the May Cellarit accounts … will reflect [the] non-purchase of Cellarit shares”. [57]

    57.    Ibid.

87. In a follow up email dated 1 June 2014 (reversals email) sent to Mr Walton and copied to Mr Storch, to which the primary judge referred, [58] Mr Witt attached documents relating to each of Cawarrah’s and Crusader’s accounts, pointing to them as noting the adjustments off their accounts having regard to Mr Storch’s failure to purchase Cellarit shares. The amounts referred to were, in relation to Cawarrah, the figures shown in its May 2014 invoice (Blue 560) for “Reverse Shareholder Discounts” of $23,793.53 and “Reverse Shareholder Discounts (storage)” of $3,797.96. Insofar as Crusader was concerned, its May 2014 invoice (Blue 1125) recorded “Reverse Shareholder Discounts” of $66,873.37 and “Reverse Shareholder Discounts (storage)” of $17,006.34 as having been adjusted off its accounts. The same invoice also showed a credit of $100,000, recorded as “Reverse debit payments for Cellarit shares”. [59]

    58.    PJ 36.

    59.    In December 2014, Cawarrah and Crusader’s invoices recorded against the description “Reverse All Remaining Shareholder Discounts” debits of $791.20 and $21,777.69 respectively (Blue 604P and Blue 1162E). The primary judgment does not refer to those invoices.

88. Mr Witt described the adjustments as being in Mr Storch’s favour “as an act of goodwill and/or in lieu of any interest amounts [Mr Storch] feels are owing …”. In addition to the “goodwill”, the reversals email pointed out that Cellarit had left all discounts in place from 1 September 2009 through to 1 February 2010, that is to say six months of shareholder’s discounts and, too, had not reversed seller’s commission discounts which exceeded shareholder discounts for the period 1 September 2009 to 19 May 2014. Cellarit reserved the right “to revert to the less favourable treatment of adjustments and/or vary [Cawarrah’s/Crusader’s] fees at any time prior to the conclusion of the Deed of Settlement and/or if [Cawarrah/Crusader] ceases to continue as a Cellarit customer.”

89. The primary judge held that the “reversals” Mr Witt proposed in the 20 May 2014 email were not agreed. [60] Rather, in her Honour’s view, Cellarit implemented the “reversals” unilaterally as appeared from the 1 June 2014 email and issued invoices which “removed the benefit of the various discounts that had governed the charging in the previous years and charged the [respondents] slightly more than the sums that were notionally returned to them.” This led to “[m]ore than $100,000 … levied in fresh charges, which were called ‘reversals’.” [61]

    60.    PJ 34.

    61.    PJ 35 – 36.

90. Cellarit submitted that Cawarrah and Crusader bore the onus of proof in establishing the breaches of contract in relation to the reversals issue. After referring to this submission, her Honour observed:

“There seems to be confusion all round. The ‘reversals’ were never agreed and are irrelevant where the share agreement is not made out, as it was not.” [62]

62.    PJ 36.

91. The primary judge rejected Cellarit’s submission that the reversals constituted performance on its part of an agreed 2014 variation of the 2009 agreement. [63] Her Honour held “[t]here was no relevant agreement at all”. Rather, her Honour described the reversals as “just another peculiarity in [Cellarit’s] charging regime”. Her Honour found that the reversals were relevant to the calculation of Cawarrah’s loss in that they identified “various charges levied and payments made by [Cellarit]”. [64] However, her Honour did not make a finding on the issue raised in Cawarrah’s reply that the reversals were a breach of the 2006 contract whether made as Cawarrah contended, or varied as Cellarit contended. This appears to have been because, in her Honour’s view, the “reversals” formed part of Cawarrah’s “contentions as to the quantification of the losses flowing from [Cellarit’s] breach of the contract”. [65]

    63.    PJ 36 – 37.

    64.    PJ 37.

    65.    PJ 42.

Estoppel

92. Cellarit also sought to rely upon a contention that Cawarrah was estopped from complaining about the variations to the commission rates. The primary judge rejected that submission. [66] It was the subject of the sixth ground of appeal, which Cellarit did not press.

    66.    PJ 46.

Summary

93. In a summary of her findings, the primary judge concluded that Cawarrah’s contractual claim was made out in full. Her Honour found that there was an agreement that Cawarrah would be charged a fixed rate of commission of 15%, that Cellarit charged more than that amount and that Cawarrah’s loss and damage was the difference between the sum which should have been paid at the contractual rate of 15% and the sum actually paid, plus interest. [67]

    67.    PJ 37.

94. As I have said, the primary judge did not make any finding as sought in Cawarrah’s reply that the reversals were a breach of contract, nor did her Honour’s reasons expressly address the overcharging claim.

95. Her Honour directed the parties to bring in short minutes of order to give effect to her findings, albeit that her Honour also reserved for further submissions quantification of the judgment sum. [68]

    68.    PJ 46.

Trial: further submissions

96. The parties were unable to agree about the orders which should be made. The matter returned to Court before the primary judge on 6 and 13 November 2017 apparently for argument about quantification of the contractual damages, issues of costs and a stay application pending appeal. Orders were made on 13 November 2017 on the basis, finally, of short minutes of orders with “agreed figures as to the quantification of the respective judgment sums, without prejudice to the defendant’s rights”.

97. The judgment in Cawarrah’s favour was for $102,143.87 including pre-judgment interest. The judgment in Crusader’s favour was for $223,564.32 including pre-judgment interest.

Issues on appeal

98. The grounds of appeal contend that the primary judge erred in:

1. finding that a binding oral agreement was made in 2006 between Cellarit and each of Cawarrah and Crusader which included a term that Cellarit would charge each of them 15% commission on wine sales, comprised of a seller’s commission of 5% and a buyer’s commission of 10%.

2. finding that Cellarit’s printed standard terms (which the trial judge found gave Cellarit the right to vary its charges from time to time) did not form part of the parties’ agreement.

3. finding that the binding oral agreement that the trial judge found was made in 2006 continued to govern the parties’ business dealings and was not varied in the period from October 2008 to May 2016.

4. failing to find that, looking objectively at the whole of the parties’ business relationship and not only what was said when the relationship was first formed, the parties by their conduct from October 2008 to May 2016 made new agreements or varied the terms of their agreement relating to the commission. The notice of appeal identified aspects of the relationship relied upon in this respect, generally relating to the increases in commission rates over that period and the continued relationship between the parties notwithstanding the higher commission rates.

5. finding that Cawarrah and Crusader paid Cellarit’s invoices under protest.

99. Cawarrah did not file a notice of contention or a cross-appeal prior to the appeal hearing. Nevertheless, in their written submissions, Cawarrah contended that, even if the appeal was successful, they were entitled to judgment in their favour in an amount representing the 2014 reversals. Cawarrah contended that as Cellarit did not pursue the primary judge’s rejection of the 2014 variation case on appeal, the reversals were a breach of the 2006 contract, as, even if Cellarit was entitled to vary the rate of seller’s commission at its discretion, the contract could not sensibly be construed as permitting the reversal of discounts which had already been given.

100. Cawarrah also contended in their written submissions that they would be entitled to a further $25,669.42 in damages in relation to the overcharging claim.

101. On these two bases, Cawarrah contended it remained entitled to a judgment in its favour of $41,220.23 exclusive of pre-judgment interest and Crusader contended that it remained entitled to a judgment in its favour of $118,489.01, again, exclusive of pre-judgment interest. They sought to rely on the calculation of those amounts as set out in the Schedule.

Cellarit’s submissions

Construction of the contract: grounds 1, 3 and 4

102. Counsel for Cellarit, who did not appear at trial, identified its primary grounds of appeal as grounds 3 and 4. However, ground 1 concerning the terms of the 2006 contract involves substantially the same principles of law concerning the construction of contract (save as to the variation issue) such that it is convenient to set out Cellarit’s submissions on these three grounds together.

103. As to ground 1, Cellarit submits that the primary judge erred in finding that a binding oral agreement was made in 2006 which included a term that Cellarit would charge Cawarrah a fixed 15% commission on wine sales, comprised of seller’s commission of 5% and buyer’s commission of 10%.

104. Cellarit contends that the departure between the parties’ versions of the 2006 conversations which took place approximately 11 years before the witnesses gave evidence about them concerned whether the commission rate was agreed to be fixed at 15% (Mr Storch), or was agreed to be a 50% discount on seller’s commission, amounting to a total commission of 15% as at 2006, but subject to change over time (Mr Witt). Resolution of this issue turned on the precise words used in the conversations.

105. Cellarit submits that the evidence was not sufficiently cogent to justify the primary judge being satisfied, in accordance with s 140 of the Evidence Act1995 (NSW), that the price term for which Cawarrah contended was made out. Rather, Cellarit contends that the primary judge should have found that the Court could not be satisfied that an oral term for a fixed 15% commission as alleged by Cawarrah was agreed in 2006, having regard to the subtleties as between each party’s version and the passage of time which it contended gave rise to “serious difficulties as to the reliability of” the precise words used in the conversations. In its oral submissions, Cellarit also pointed to the varying and inconsistent accounts of the term alleged to have been agreed in Cawarrah’s correspondence and earlier versions of the pleadings and to the absence of contemporaneous documents to assist Cawarrah’s version. Cellarit also relied on the fact that Cawarrah agreed to its terms and conditions when completing the online registration forms which, as the primary judge held, contained an express term permitting Cellarit to vary its charges from time to time.

106. As to grounds 3 and 4, Cellarit submits that the primary judge erred in finding that the oral agreement made in 2006 continued to govern the parties’ business dealings and was not varied in the period from October 2008 to May 2016 and that, in so finding, her Honour failed to look objectively at the whole of the parties’ relationship, but, rather, focused only on what was said and done when the relationship was first formed.

107. Cellarit submits that when the whole of the parties’ long trading relationship was considered, and common sense applied, it could not conceivably be concluded that a reasonable person in the parties’ respective positions would think that the 15% commission term the primary judge found was orally agreed in 2006 continued to apply until 2016. It contends it was sufficient for this Court to allow the appeal to find that the 2006 contract was varied in 2008 when the seller’s commission rate was increased for the first time, an increase which the Court should also find was assented to by Cawarrah at the very least by their conduct in continuing to trade with Cellarit. This was because, once it was accepted the 2008 increase was a permissible variation, there was no suggestion that there was any agreement, whether express or implied, to revert to the 2006 commission rate.

108. Cellarit argues that in determining the terms of the contract, the primary judge failed to pay any, or any sufficient, regard to a number of matters.

109. First, the informal manner in which the oral agreement was made in 2006. Cellarit submits that the informality of those circumstances made it easier to infer that the parties had objectively varied a term of the contract by their subsequent course of dealings.

110. Second, the length of time of the parties’ dealings and the number of times Cellarit consistently charged more than 15% seller’s commission with Cawarrah’s knowledge. In this context, Cellarit submits that an important step in the course of the parties’ dealings were the decisions made by Cawarrah voluntarily to continue to use its services, despite, on their contention, there being no contractual obligation to do so, and knowing that Cellarit had increased its seller’s commission rates above 15% as evidenced by the 172 monthly account statements/invoices sent over the period of their relationship. Cellarit complained that the primary judge gave no weight to this important factor. It criticised the primary judge’s finding that consensus as to increased rates was not reached “just because Mr Storch gave up voicing his disagreement”.

111. Third, Cellarit submits that Mr Witt’s statement to Mr Storch in October 2008 to the effect that Cellarit had increased the rate for all customers, “otherwise [Cellarit] would have gone broke”, indicated its unwillingness to continue with the arrangement that had existed since 2006. In those circumstances, Cellarit contends the increased commission could be regarded either as a variation of the 2006 contract, or the termination of that agreement and the entry into a new agreement with the increased commission rate, like the previous one, terminable at will.

112. Fourth, Cellarit submits that the discussions between the parties relating to the rate increases were an objective indication that the 2006 Contract was replaced by an agreement for a higher commission from soon after October 2008 and, in any event, well before 2016.

113. Cellarit points to the following matters:

1. Cawarrah was notified in writing in October 2008 that the commission rate would increase;

2. Mr Witt’s Double Bay statements about increasing the rate for all his customers and his rejection of Mr Storch’s requests, both in 2008 and 2009, to be relieved of increased rates, or to receive a reduction in the seller’s commission rate;

3. emails from Mr Storch, such as one on 2 November 2010, in which he noted without complaint that Cawarrah’s commission at that date was 171/4% and other emails from him to similar effect referring to higher commission rates again without complaint;

4. emails to Mr Storch in April 2012 and September 2013 respectively in which he was told, and did not complain, first, that seller’s commission would increase to 8% and, second, that seller’s commission was 8.75%.

114. In short, Cellarit submits that from the time of the October 2008 increase, Cawarrah never asserted it was agreed in 2006 that the seller’s commission rate was, or should be, 15%. Cellarit also pointed out that this claim was not even made when the proceedings were commenced. Rather, a term to similar effect, albeit alleged to have been made in 2003 was not pleaded until the further amended statement of claim filed in November 2015 about 12 months after the proceedings were commenced, during which period Cawarrah continued to use Cellarit’s services and pay the higher seller’s commission rates.

115. Fifth, Cellarit submits that the primary judge failed to pay any, or any sufficient, regard to the fact that the 2006 Contract was terminable by either party, acting unilaterally, at any time and without cause (subject only to reasonable notice). In this context, Cellarit argues that the significance given by her Honour to the rate increases being unilateral acts was “misconceived” having regard to the fact that the 2006 contract could be terminated by a unilateral act of either party, at any time and without cause. Cellarit argues that that circumstance made it easier to infer that the parties had by their subsequent course of dealings objectively replaced some or all of the terms of the 2006 contract.

Incorporation of standard terms: ground 2

116. Ground 2 overlaps with ground 1 insofar as Cellarit contends that when Cawarrah and Crusader completed the online registration form, they would have ticked the box indicating they agreed to Cellarit’s terms and conditions. Accordingly each was bound by those terms and conditions, one of which gave Cellarit the right to vary its charges from time to time.

117. Cellarit submits that the primary judge erred in finding that its standard terms did not form part of the parties’ agreement, but were post-contractual. It argued that there was no mention at the time of the 2006 oral contract of the identity of the customers – an essential element of any binding agreement –until the online registration forms were completed. Accordingly, Cellarit submits her Honour should have held that that completion of the online registration form was not post-contractual, but was a step in the making of a contract, by reason of which its standard terms, which gave it the right to vary its charges from time to time, were incorporated into the 2006 contract.

Payment of Cellarit invoices: ground 5

118. Although the primary judge’s finding [69] that Cawarrah paid Cellarit’s invoices under protest did not appear to have played any part in her Honour’s reasoning in upholding the claim that the 2006 contract, as found to have been made, governed the whole of the parties’ course of dealing, Cellarit submits, in any event, that this finding was not supported by the evidence of Cawarrah’s payment of 172 monthly invoices without protest and was contrary to her Honour’s finding that after the October 2008 rate increase Cawarrah “gave up protesting” and continued trading with Cellarit.

Cawarrah’s submissions

69.    PJ 46.

Construction of the contract: grounds 1, 3 and 4

119. Counsel for Cawarrah, Mr Robertson, who appeared at trial, and on appeal with Mr R Raffell, submits as to ground 1, that Cellarit’s complaint that the primary judge could not be satisfied having regard to the passage of time of the “precise words used in [the] conversations” said to constitute the 2006 contract, misunderstood her Honour’s findings. They argue that her Honour properly acknowledged that the “precise words” supporting her findings about the 2006 Contract’s fixed 15% rate “were necessarily faded by time and tinged by hostilities over the years.” [70] Nevertheless, her Honour found there was a “surprising degree of conformity in the recollections” of the parties’ principals, that the “divergence” in the words recalled was “minimal” [71] and, indeed, that she would have reached the same conclusion had she accepted Mr Witt’s evidence. [72] Her Honour also considered matters of credit, reliability, context and background and correctly determined on an objective basis that the term of the 2006 contract for which Cawarrah contended had been established. Accordingly, Cawarrah submitted no appealable error had been identified in this respect.

     70.    Citing PJ 9.

     71.    PJ 3, PJ 18.

     72.    PJ 13.

120. Cawarrah also submits that Cellarit’s submission that the primary judge should have held that no binding agreement could have been made before Cawarrah and Crusader respectively completed an online registration form, had not been raised at trial. They argue such a contention was inconsistent with Cellarit’s case at trial that the parties concluded a contract during or about 2006, having regard to the evidence that the online registration form was not completed until 2008 and then only in respect of the Crusader agreement.

121. Cawarrah contends that had the terms and conditions case been raised at trial, they could have met it by leading evidence from Mr Storch, or cross-examining Mr Witt as to Cellarit’s assertion that the names of contracting parties were first communicated when Mr Storch later entered them in the online registration form.

122. In any event, Cawarrah submits that, even if ground 1 is open, it would not lead to the appeal being allowed because the primary judge held that the Cellarit’s “standard schedule of rates and charges” was “irrelevant as a matter of contractual construction”. [73] This was because, on Cawarrah’s submission, it was common ground at trial that Cellarit would not charge in accordance with a “schedule of rates as published from time to time”, rather than, on Cellarit’s case, give Cawarrah a discount “off the standard seller’s commission charged by [it]” as determined at Cellarit’s “discretion from time to time”. [74]

     73.    PJ 8.

     74.    Ibid.

123. As to grounds 3 and 4, Cawarrah submits that it was not part of Cellarit’s case at trial that the 2006 contract was varied or replaced by another contract entitling Cellarit to charge higher commissions than originally agreed. They contend the closest Cellarit came to making such a point was in its estoppel claim, which was rejected by the primary judge, and is not raised on appeal.

124. Rather, Cawarrah submits that Cellarit contended at trial that it was a term of the contract (at least until 1 September 2009) that it “would at its discretion from time to time give [Cawarrah] a discount off the standard seller’s commission charged by it on the sale of wine … but no other discounts.”

125. Accordingly, on Cawarrah’s case, they contend, the steady increases on Cellarit’s part in the commission it charged them from about 2008 until 2016, at which time Cawarrah was receiving no discount on Cellarit’s standard commission, constituted a breach of the contract sounding in damages as awarded by the primary judge.

126. On Cellarit’s case, Cawarrah accepts, the increase in the commission rates did not constitute a breach because it had a “discretion” to charge whatever commission it wished.

127. However, Cawarrah argues it is not open to Cellarit on appeal to complain that the primary judge failed to find that “the parties by their conduct from October 2008 to May 2016 made new agreements or varied the terms of their agreement”. Had such a case been argued at trial, Cawarrah submits they would have sought to meet it by leading evidence that there was no fresh consideration to support a variation or replacement of the 2006 contract and there had been no “meeting of minds” of the kind necessary to constitute a further contract. Cawarrah’s written submissions did not otherwise address the variation issue.

128. In oral submissions, and in the event the Court rejected its submissions concerning the way the trial was conducted, Cawarrah argued that the primary judge was correct to proceed on the basis that there was no relevant consensus of a kind which might be regarded as a variation of the original agreed contract in 2006. They point to the advantages the primary judge enjoyed having seen the witnesses, and also relied on her Honour’s findings about their respective credibility. They also submit that the primary judge was entitled to reject Cellarit’s mutual assent case and find, rather, that Mr Storch was “hampered by his depression, which has afflicted him for more than a decade, and reached a particularly acute phase in the middle of the relevant periods [which] explains … his episodic inertia”. [75] They repeat the submission that there was no consideration for any varied contract.

     75.    PJ 6.

275. Equally, although no doubt a laborious exercise, it would not have been a complicated exercise, for those in Cellarit’s camp on whose business records the tables were based, to examine them and identify inaccuracies, if any. Mr Witt could have given such evidence if necessary.

276. This leads into Cellarit’s next complaint, that the overcharging claim could not be allowed because Mr Witt was not cross-examined about the purported discrepancies between the commission rates in Table A and the rates set out in column P of the Schedule tables

277. What is customarily referred to as the rule in Browne v Dunn,[140] requires an opposing party “to put to an opponent’s witness in cross-examination the nature of the case upon which it is proposed to rely in contradiction of [the witness’s] evidence”. [141] The rule in Browne v Dunn is one of practice or procedure and also a rule of professional practice based upon general principles of fairness, designed to achieve not only fairness to a witness, but also a fair trial between the parties. [142]

     140. (1893) 6 R 67 (HL).

     141. Referred to in Allied Pastoral Holdings Pty Ltd v Commissioner of Taxation [1983] 1 NSWLR 1 (Allied Pastoral Holdings) at 16 per Hunt J (as his Honour then was).

     142. Bale v Mills at [43], [45]; Seymour v Australian Broadcasting Commission (1977) 19 NSWLR 219 per Glass JA (with whom Reynolds JA agreed).

278. However, Beazley P explained in NU v NSW Secretary of Family and Community Services,[143] the corollary of the rule is that “if a witness is on notice of the allegation upon which a party intends to rely and is on notice that his or her evidence is contested on that issue, the rule does not mandate that the witness be cross-examined on the matter.” Also of relevance is her Honour’s application of Campbell JA’s statement in Masterton. [144]

“While the evidence was not cross-examined on, that does not necessarily mean that the judge was obliged to accept it. A judge can reject evidence that has not been cross-examined on if, for example, it was inconsistent with other evidence that he accepted, or if it was inherently incredible.”

143. (2017) 95 NSWLR 577; [2017] NSWCA 221 at [58] (McColl JA and Schmidt J agreeing).

144.    At [105] (Allsop P and Basten JA agreeing).

289. In addition, although Cawarrah bore the legal burden of proof in relation to the overcharging claim, once they had established a prima facie case that they had been overcharged in the manner set out in the invoices as summarised in the tables, Cellarit bore “an evidential burden to advance in evidence any particular matters with which (if relevant) [Cawarrah] would have to deal in the discharge of their overall burden of proof”. [145]

     145. Apollo Shower Screens Pty Ltd v Building and Construction Industry Long Service Payments Corporation (1985) 1 NSWLR 561 at 565 per Hunt J, referring to Purkess v Crittenden (1965) 114 CLR 164 at 167 – 168; [1965] HCA 34 per Barwick CJ, Kitto, Taylor, at 171 per Windeyer J.

290. This was particularly the case, having regard to the principle in Blatch v Archer, that “… all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted.”[146] Having regard to the complexity of Cellarit’s charging regime (see [268] above), Cellarit was in a far better position than Cawarrah to demonstrate and/or explain any errors or discrepancies, if any, between the invoices and their purported summary in the tables than Cawarrah.

     146. (1774) 1 Cowp 63; (1774) 98 ER 969 at 970.

291. To the extent Cellarit sought to do so by way of submission in this Court, rather than evidence at trial, I would not accept its submission. The most substantive submission concerned the large discrepancies which appeared from 2012 to September/November 2015 between the rates of commission Cellarit said it had charged each plaintiff, and the amount the tables identified from the invoices. As Cawarrah submitted, the rebates to which Cellarit pointed related to storage charges, not seller’s commission. Accordingly, I would allow the overcharging claim. The primary judge should have held that, in breach of the 2006 contract, Cellarit charged Cawarrah and Crusader charged a higher commission than that which according to Mr Witt’s evidence in Table A it had determined to charge “at its discretion from time to time”.

Notice of contention

292. The draft notice of contention was provided without leave.

293. I have already referred to the proposition articulated in Bale v Mills that “[t]he parties and their legal representatives [have] no right … to place before the court without prior leave further material after an appeal has been heard” (see [173]).

294. To that should be added in relation to Cawarrah’s application to file a notice of contention seeking formally to agitate the question whether the variation case was open to Cellarit, as further explained in Bale v Mills,[147] and subject to the Court’s leave, that:

“The appeal is not an occasion merely for a discussion of the issues so that the parties can go away to marshall and develop their ideas further, bearing in mind the discussion with the court. It is the time and place when and where argument, and sometimes decision, occurs. Once the appeal is reserved, the parties’ rights to argument and to be heard have been exhausted.”

147. At [60].

295. The application to file a notice of contention should be rejected.

Orders

296. The consequence is that the appeal has succeeded, but, subject to filing a notice of cross-appeal in proper form, Cawarrah and Crusader should be successful on their cross-appeal.

297. However, it is appropriate that written submissions be made concerning both the costs of the trial and the appeal (including the cross-appeal) as well as to the disposition of the monies Cellarit paid into court as security for the costs of the appeal.

298. I propose the following orders:

1. Appeal allowed.

2. Set aside the orders made by the Court below on 29 September 2017 and 13 November 2017.

3. Grant the respondents an extension of time in which to file a notice of cross-appeal

4. Direct the respondents to file and serve a notice of cross-appeal within 7 days of judgment which complies with UCPR 51.18 and contains grounds seeking findings of breach of contract in relation both to the reversals issue and the overcharging claim.

5. Subject to compliance with order (4), enter verdict and judgment for Cawarrah Holdings Pty Ltd in the sum of $36,631.16, plus pre-judgment interest at the rates referred to in Practice Note DC (Civil) No 15, such judgment to take effect on 13 November 2017.

6. Subject to compliance with order (4), enter verdict and judgment for Crusader Pty Ltd (ACN 094 092 734) in the sum of $79,704.98 plus pre-judgment interest at the rates referred to in Practice Note DC (Civil) No 15, such judgment to take effect on 13 November 2017.

7. Costs reserved.

8. Direct Cellarit Pty Ltd to file and serve within 7 days of the delivery of these reasons, submissions as to the orders for which it contends in relation to the costs of the trial, of the appeal and of the disposition of the monies paid into Court on account of its security for costs such submissions not to exceed 5 pages;

9. Direct Cawarrah Holdings Pty Ltd and Crusader Pty Ltd (ACN 094 092 734) to file and serve within 14 days of the delivery of these reasons submissions as to the orders for which they contend in relation to the costs of the trial, of the appeal and of the disposition of the monies paid into Court on account of its security for costs such submissions not to exceed 5 pages;

10. Direct Cellarit Pty Ltd to file and serve within 7 days of the receipt of the respondents’ submissions referred to in paragraph (9) above any reply to those submissions such submissions not to exceed 3 pages.

299. MACFARLAN JA: I agree with McColl AP.

300. LEEMING JA: I have had the very considerable advantage of reading the judgment of McColl AP in draft. I agree with the orders proposed by her Honour, and in very substantial measure with her Honour’s reasons. These reasons presuppose familiarity with, and do not reproduce, the factual and procedural background and the parties’ submissions.

The appeal – main grounds

301. I agree with McColl AP that grounds 3 and 4, which amounted to the gravamen of the appeal, are made out, and I agree with her Honour’s reasons on those grounds. The period in question was from October 2008 (when Cellarit first increased its commissions by a total of 1.5%) until May 2016 – more than a year after proceedings had been commenced in the District Court. Throughout the whole of that time, each month, Cellarit had charged a particular amount of commission, for the most part advising rate (both buyer’s and seller’s commission) it was charging, and deducting those amounts from the proceeds remitted from the respondents’ bank accounts. The position might have been different, given the manner in which Cellarit notified its clients of the changed commissions, were this litigation about three or six or perhaps even nine months’ commissions. But throughout the entire period, which exceeds seven years, the respondents each month instructed Cellarit to sell dozens of bottles of their wine, and in each case this occurred. The commissions charged fluctuated from time to time. This is a clear case for the application of the principles stated by McHugh JA in this Court in Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1985) 5 BPR 11,110 and Heydon JA in Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61, and more recently in Kriketos v Livschitz [2009] NSWCA 96. Not every contract requires individually articulated offer and acceptance. The primary judge was correct to say that there was no express assent by Mr Storch on behalf of the respondents to the increased commissions. But there was unequivocal conduct, namely, continuing to instruct Cellarit to sell those companies’ wine, which can be referable only to the commission that was to be charged from time to time.

302. Against this, the respondents maintained that it was outside the pleaded case. The pleadings in their final form on behalf of Cellarit left much to be desired. The pleader seems to have conflated the notion of a series of agreements between the parties between October 2008 and May 2014 with an estoppel (not to mention a failure to identify what the nature of that estoppel was). But the amendments were allowed at the commencement of the trial, and on the basis that particulars were requested and provided as to each of those agreements. Further, the primary judge appears to have proceeded on the basis that those various agreements as a matter of contract were in play before her. There is no other plausible explanation for her Honour’s articulation of the issues at the commencement of her judgment (“The defendant contends that there was a series of contracts and estoppels in the years following”) and the references at pp 21-22 to the contentions that the plaintiffs had agreed to various rate changes and the reference to Brambles and Integrated Computer Services. It is true that the plaintiffs/respondents consistently treated the amended defence as a claim in estoppel. That does not deny that the questions of contract, which were alleged to have been (somewhat irregularly) the premises of the estoppel claim, were in issue.

Remaining grounds of appeal

303. I turn to the minor grounds, the resolution of which does not affect this Court’s orders. Like McColl AP, I would reject ground 1. I agree with her Honour’s reasons for doing so, save that I do not say that I would have reached a different conclusion from the primary judge (cf [209]).

304. I would also reject ground 2. No evidence was provided as to how the Cellarit printed terms became incorporated into the contract. At best, there was a recreation (some ten years after the event) of the registration which Mr Storch is said to have completed in 2006 and 2008 respectively for each plaintiff company. Even then, it is not established that in some binding contractual way the terms and conditions including that upon which Cellarit relied, were incorporated. And, even if that were so, the proffered terms and conditions referred only to Cellarit’s “schedule of rates as published from time to time”, and I did not understand that the identity of that schedule or where it was published to have been proven.

305. The parties in substance agreed that ground 5 led to no consequences. That ground asserted that there was error in finding that the invoices were paid under protest. The parties’ agreement on this issue was correct: the finding played no part in the formulation of her Honour’s orders. It follows that this is not a proper ground of appeal. There is no occasion to deal with a complaint which is not material to the orders made by the court below. Appeals lie from orders, not findings: Live Board Holdings Ltd v Cody Live Pty Ltd [2017] NSWCA 302 at [38].

The cross-appeal and other post-hearing matters

306. Success on the appeal means that it becomes necessary to deal with a contingent cross-appeal, supplied with leave after the conclusion of the hearing, and supported by written submissions. I agree with what McColl AP has said, rejecting the respondents’ submissions to the contrary, as to the need for a cross-appeal and its form. I also agree with her Honour that the draft notice of contention should not have been supplied to the Court without leave after the hearing.

307. There are two issues which arise on the cross-appeal. Both are directed to amounts of money which the respondents contend they are entitled to retain notwithstanding Cellarit’s success on the appeal. They may be referred to as “reversals” and “overcharges”. I deal with each in turn.

Reversals

308. The claims for reversals were amounts of $24,584.73 in the case of Cawarrah and $88,651.06 in the case of Crusader. Each of those claims comprised the sum of two items described as “reversals” but which more accurately might be described as debits in the account imposed by Cellarit following the decision not to invest in the business. In the case of Cawarrah, the 1 June 2014 invoice recorded an entry “Reverse Shareholder Discounts (seller’s commission through to 19 May 2014)” in the amount of $23,793.53 while the 1 January 2015 invoice included an entry “Reverse All Remaining Shareholder Discounts” of $791.20. The sum of those amounts is $24,584.73.

309. In the case of Crusader, the invoices of the same days and with the same descriptions were in the amounts of $66,873.37 and $21,777.69. The sum of those amounts is $88,651.06.

310. I do not disagree with what McColl AP has written in relation to the reversals. These amounts were in issue at trial. It was for Cellarit to justify an entitlement to increase its clients’ indebtedness by one-off transactions of $24,584.73 and $88,651.06. Although it was said this reflected the reversal of a discount following the decision not to acquire Cellarit shares, it remained necessary for Cellarit to demonstrate an entitlement at law (either contractual or, conceivably, non-contractual) such that the discount actually granted previously was contingent upon the Cellarit share transaction proceeding, and would be reversed in the event that the Cellarit transaction did not proceed. This Cellarit has failed to do. Indeed, it was rejected by the primary judge.

Overcharging

311. This claim was for $25,669.24 (being amounts of $12,837.63 and $12,831.61 said to have been overcharged by Cellarit to Cawarrah and Crusader respectively).

312. These claims turned on the percentage amounts which Mr Witt said were charged from time to time as commission. The amounts ranged from 15% to 23.5%. Those amounts were annexed to his affidavit, and although they were addressed in cross-examination, it was not suggested that they were incorrect.

313. In evidence at trial and occupying more than 1000 of the 1239 pages of blue appeal books containing documentary evidence were the invoices from August 2011 until May 2016. Those invoices identified amounts of wine which were sold and commissions charged. Attached to the submissions below was a schedule which was more complicated than it need have been (to be fair, it was directed to other purposes too, including the 15% fixed commission case) but which reproduced actual sales (column “D”) and actual total commission paid (column “J”). The schedule also contained a column reproducing Mr Witt’s rates (column “N”), a column representing the product of actual sales and Mr Witt’s rates (column “O” = “D” x “N”) and a column for the difference between the actual total commission paid and the commission which would have been charged at Mr Witt’s rates (column “P” = “J” – “O”).

314. The schedules contain about 180 rows, but as best I can see each of the entries in columns D and J correspond to actual amounts found on the invoices for each month. Significantly, in an appeal where both parties have demonstrated a willingness to argue about minutiae, it was not submitted that there was inaccuracy in those columns of the table.

315. The totals of the differences between the commission actually charged and paid, and the commissions chargeable at Mr Witt’s rates for the sales actually made, add to the amounts of $12,837.63 and $12,831.61 claimed.

316. Cellarit maintained that the comparison reflected in the schedule was invalid because it was between apples and oranges. Its senior counsel observed, correctly, that the entries up to May 2012 scarcely matter – they are around $200, which is de minimis. His submission was that from May 2012 the schedules did not reflect a 1.5% rebate on commission. The submission was illustrated with examples. However, the amounts exemplified did not appear on their face to be rebates on commission. Those amounts were described in the contemporaneous documents as storage rebates. (The example singled out in written submissions was an amount of $108.70 at Blue 404J. However, the $108.70 is not 1.5% of the gross sales for that month, rather, it reverses the charge for storage at 404E, and indeed at 405D it is described as “Loyalty Storage Credits Discount”.)

317. In further submissions supplied after the hearing, the appellant said that:

“In any event, absent any relevant cross-examination of Mr Witt about his table at Blue 58 or about the commission rates recorded in the Respondents’ Schedule at Black 438FF, the Respondents’ claim that the Appellant in fact charged the Respondents more than what is recorded in Mr Witt’s table at Blue 58 should be rejected.”

318. I do not agree. No submission was made as to what the “relevant” cross-examination might have been. I do not understand there to have been dispute about the rates which Mr Witt said he was entitled to charge, or the amounts of wine sales actually made and commission actually charged as recorded in the invoices. It is quite plain that the entitlement to commission was in issue in this litigation. I see no reason why the respondents should be prevented from holding Cellarit to the commissions which it held itself out as being entitled to charge.

319. It was also said that the respondents have not pointed “to any documents in the Blue book which enable the Court to conclude that the calculations in the Respondents’ Schedule at Black 438FF contains a reliable calculation of discrepancies between the commission rates set out in Blue 58 and the actual commission rates that the Respondents paid”. Again, I do not agree. As I have sought to point out above, the respondents pointed to the actual commission rates annexed to Mr Witt’s affidavit and the actual sales and actual commission rates as set out in Cellarit’s invoices, and calculate a $25,669.24 overcharge.

320. True it is that for the period which matters, from May 2012 until 2016, the actual commission charged is approximately 1.5% more than the rates annexed to Mr Witt’s affidavit. It is possible that that is a consequence of the complex way in which the charges and rebates were brought to bear. But if that be the explanation, I see no occasion for Cellarit to benefit from its own complexity, in circumstances where its entitlement to commission was at all times in issue. Hence I would also accede to this aspect of the cross-appeal.

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Endnotes

Decision last updated: 28 September 2018