Credex Australia Pty Ltd v Tradebanc International Pty Ltd

[1997] FCA 426

IN THE FEDERAL COURT OF AUSTRALIA )
  )
VICTORIA DISTRICT REGISTRY       )    No VG 499 of 1996
  )
GENERAL DIVISION                 )

BETWEEN:

CREDEX AUSTRALIA PTY LTD
  ACN 070 862 181

Applicant

- and -

TRADEBANC INTERNATIONAL
  PTY LTD
  ACN 055 037 459 and
  WILLIAM FREDERICK RORKE and
  MICHAEL TERP

Respondents

REASONS FOR JUDGMENT

CORAM:    Mansfield J
PLACE:    Melbourne
DATE:        14 May 1997

This application comes before the Court for assessment of damages against the third respondent only.  The application was commenced on 9 August 1996, accompanied by a statement of claim.  It is alleged that the business of the applicant is that of a reciprocal trade exchange, trading at material times under the name Credex, and that the first respondent, Tradebanc International, also carries on business as a reciprocal trade exchange in competition with the applicant.  The second respondent is a director of the first respondent.  The third respondent is alleged to be a servant or agent of the first respondent.

The substantive complaint giving rise to the application was a series of communications made by the first respondent, by its servants or agents, and including the third respondent in about July 1996, reflecting upon the solvency and business status of the applicant.  The claims against the first and second respondents were resolved by agreement on 6 November 1996 in terms of the terms of settlement now before me.  Those terms included the first and second respondents submitting to permanent undertakings given by them to the Court, and those undertakings were given on 8 November 1996.

On the basis of those undertakings the proceedings against them were struck out with no order as to costs.  In the meantime the third respondent had failed to comply with directions of the Court, including the filing of a defence, and by motion of 27 September 1996 the applicant applied for judgment in default of defence against the third respondent.  Such judgment was entered on 24 October 1996, and the matter adjourned for the assessment of damages.  It is that matter which is before the Court today.

The judgment was based upon O10 r7(1)(b) of the Federal Court Rules and identified a number of the specified allegations in the statement of claim upon which the assessment of damages is to proceed.  It is important to note that not all the allegations made about publications adverse to the applicant are made against the third respondent, either on his own behalf or as a participant on behalf of the first respondent. On the other hand, there are a number of publications made by the third respondent which are said to give rise to a separate cause of action against him.  In particular I note that the publications to which the third respondent is said to have been a party are those specified in subclauses ii, iii, iv, v, ix and xi of the particulars of claim, and that those communications relate only to the matters which are specified in subpars(a), (b), (c), (d) and (g) of par9 of the statement of claim.  By the default judgment, the applicant has established that those matters were, when published, not correct in fact, except for the matter referred to in par9(g) of the statement of claim.  The affidavit of Mr Damman, sworn on 7 August 1996, asserts, in respect of that particular topic, that the applicant was not then - that is at the time of that affidavit - indebted to National Business Systems.  But it does not assert that at the time of the communication complained of, no such indebtedness existed.  There is no allegation in the statement of claim itself that the allegation in par9(g) is or was untrue.  Accordingly, for the purposes of this judgment, I do not think it is established by reason of the default judgment that that particular communication to which the third respondent was a party is made out as having been untrue at the time of its publication.

Although I have noted those matters I do not think they result in the claim for damages presently formulated being reduced in any way.  I am satisfied on the material before me, but in particular the affidavit of Mr Petkoff, that as a result of the communications in July 1996 complained of, including the communications to which the third respondent was a party and for which the third respondent is sued, the applicant engaged two persons to try and mitigate the adverse consequences of those communications by communicating with its customers and that it incurred, as a result, expenses or costs totalling $6443.20.  I am also satisfied, as a result of those communications and its reasonable attempts to negate the consequences of them, that the applicant also incurred additional costs in having two of its directors travel to Sydney to communicate with its customers about them, and that the additional cost reasonably incurred was $1226.

Those two amounts totalling, on my assessment, $7669.20 reflect the amount of the claim for damages now made.

In my view the conduct of the third respondent complained of was a cause, in the relevant sense, of the applicant taking that action and so he should, but for the matters I now deal with, be liable for damages for that consequence.

But for the terms of settlement between the first and second respondents and the applicant, those respondents too would be liable for those damages.  The difficulty which I now address arises from the terms of settlement.  Although each of the respondents caused the applicant to sustain the losses complained of, and in a practical sense were common causes of it, the third respondent separately engaged in conduct on his own behalf (and on behalf of the first respondent) in producing or causing those losses.  It is in respect of the separate cause of action against him that the claim for damages is now made.  I should nevertheless reflect the fact that the applicant has had the benefit of the settlement sum so that it does not, to use the vernacular, double dip in recovering damages by virtue of the events which have happened.  The evidence before me indicates that the amount of the settlement sum was, up to the time of that settlement, almost the same amount as the applicant's costs to that time.  Although the judgment striking out the claim against the first and second respondents was on the basis that there be no order as to costs made by the Court, it does not follow that the terms of settlement agreed upon did not reflect either wholly or in part the fact that such costs had been incurred.

Consequently I think it is proper for me to have regard to the matter of that settlement sum and the matter of the costs incurred to that time in assessing the damages which I am now asked to assess.  When the default judgment was entered against the third respondent on 24 October 1996 it was ordered that the third respondent pay to the applicant its costs as against the third respondent to the date of that judgment.  It will also follow from today's hearing that the applicant should recover its costs against the third respondent since the date of that default judgment.  But those costs will not be of great moment as there have been only a few attendances on directions hearings, and the additional affidavit material required has been relatively short.
I have considered whether I should simply allow the cost orders to stand and seek to apportion in some way the amount of the applicant's claimed loss, having regard to the terms of settlement.  The alternative to which I am attracted, and one which counsel for the applicant accepted as a reasonable alternative, is to treat the settlement sum in relation to the first and second respondents as covering all the costs up to the time of that settlement, namely, 6 November 1996.  The practical consequence would be that, despite the order made by this Court on 24 October 1996 in favour of the applicant on costs payable by the third respondent, those costs would not, in fact, be recoverable because they will have been covered by the claimed losses.  That does not seek to alter that order, but only to reflect it in a practical way in the present assessment of damages.  That seems to me to be a more practical and sensible way of going about the matter.  If anything, it works an advantage to the third respondent because for reasons I have expressed I think the third respondent would be liable in any event for the full amount of the claimed damages, and those amounts could be recovered against him.  It would then be up to him to seek such contribution as he might otherwise be entitled to from the first and second respondents.  The amount of the costs incurred up to the date of the default judgment against him would, I think, be greater and perhaps significantly greater than a one-third share of the damages which I propose to assess. As I say, it therefore seems to me that treating the assessment of damages as including the costs awarded against the third respondent by the Court order on 24 October 1996, certainly
leaves the third respondent in no worse position, and perhaps in a better position than he would otherwise have been.

Accordingly, I now assess the applicant's damages against the third respondent at $7669.20.  I indicate that that amount includes the costs payable by the third respondent to the applicant pursuant to the order of this court on 24 October, 1996.  I order that the third respondent pay to the applicant the costs incurred by the applicant in prosecuting its claim for the assessment of damages subsequent to 24 October, 1996.

I certify that this and the preceding       pages are a true copy of the Reasons for Judgment of the Honourable Justice Mansfield.

Associate:

Dated:

Counsel for the Applicant            :    Mr L Watts
Solicitors for the Applicant     :    Efrons

No appearance by or on behalf
     of the Third Respondent

Hearing Date  :    14 May 1997