CSG Limited v Fuji Xerox Australia Pty Ltd (No 2)

[2012] NSWCA 4

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:

CSG Limited v Fuji Xerox Australia Pty Ltd (No 2) [2012] NSWCA 4

Hearing dates:

On written submissions

Decision date:

19 March 2012

Before:

Bathurst CJ at 1;
Campbell JA at 2;
Sackville AJA at 3.

Decision:

1. Appeal allowed in part.

2. Set aside Declaration 3 and Order 4 made by the Supreme Court of New South Wales on 23 November 2010 insofar as the Declaration and Order relate to paragraph 3(c) of the Second Further Amended Summons.

3. Declare that following termination of the Brisbane and Maroochydore dealer agreements, the appellant is contractually bound to perform all acts within its power necessary to procure the novation to the respondent or its nominated third party of any or all Full Service Maintenance Agreements and Docu/mation version 1.1. Agreements referred to in Orders 5 and 6 of the primary Judge's Orders dated 16 December 2010.

4. Order that the obligation described in Order 3 be specifically performed and put into execution in the manner required by the Orders dated 16 December 2010.

5. Appeal otherwise dismissed.

6. The appellant pay the respondent's costs of the appeal.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Category:

Principal judgment

Parties:

CSG Limited (Applicant)
Fuji Xerox Australia Pty Ltd (Respondent)

File Number(s):

2011/56823

 Decision under appeal 

Jurisdiction:

9111

Citation:

[2010] NSWSC 1258

Date of Decision:

2010-11-23 00:00:00

Before:

McDougall J

File Number(s):

2010/281890

JUDGMENT

1. BATHURST CJ : I agree with Sackville AJA.

1. CAMPBELL JA : I agree with Sackville AJA.

1. SACKVILLE AJA : Judgment was delivered in this appeal on 4 November 2011: CSG Ltd v Fuji Xerox Australia Pty Ltd [2011] NSWCA 335 (" Appeal Judgment "). This judgment uses the same abbreviations.

1. Directions were made in the Appeal Judgment for the parties to file agreed short minutes of order giving effect to the judgment, including orders dealing with costs. If no agreement could be reached, the following directions applied:

"(a) CSG to file and serve within 14 days short minutes of the orders that it says should be made (including on any question of costs), together with brief written submissions (not exceeding four pages) in support of those proposed orders; and

(b) FXA to file and serve within a further 14 days short minutes of the orders that it says should be made (including on any question of costs), together with brief written submissions (not exceeding four pages) in support of those proposed orders."

1. The parties were given the opportunity to make further submissions because, as the Appeal Judgment pointed out (at [140]), they had not specifically addressed the consequences, if any, that would flow ( inter alia ) from concluding that:

"cl 37.2.2 [of the Dealership Agreement] required CSG, in the event that FXA terminated the Dealership Agreement, to perform all acts within its power necessary to procure the novation of the FSMAs [full service management agreements] and other identified agreements to FXA or to a nominated third party."

1. On 22 November 2011, CSG filed written submissions attaching orders in the following form (with slight editorial changes):

"1. Appeal allowed in part.

2. Set aside Declaration 3 and Order 4 made by the Supreme Court of New South Wales on 23 November 2010 insofar as the Declaration and Order relate to paragraph 3(c) of the Second Further Amended Summons.

3. Declare that following termination of the Brisbane and Maroochydore dealer agreements, the appellant is contractually bound to perform all acts within its power necessary to procure the novation to the respondent or its nominated third party of any or all Full Service Maintenance Agreements and Docu/mation version 1.1. Agreements referred to in Orders 5 and 6 of the primary Judge's Orders dated 16 December 2010.

4. Order that the obligation described in Order 3 be specifically performed and put into execution in the manner required by the Orders dated 16 December 2010.

5. Appeal otherwise dismissed.

6. The appellant to pay the respondent's costs of the appeal."

1. On 29 November 2011, the respondent ("FXA") filed written submissions indicating that FXA did not dispute proposed Orders 1, 2, 5 and 6. However, FXA sought amendments to proposed Orders 3 and 4, as indicated on the following marked up version of the proposed orders:

"3. Declare that following termination of the Brisbane and Maroochydore dealer agreements, the appellant is contractually bound to perform all acts within its power necessary to procure the novation to the respondent or its nominated third party of [omitted text: any of all Full Service Maintenance Agreements and Documation version 1.1 Agreement referred to in orders 5 and 6 of the primary judge's orders dated 16 December 2010] any or all Customer maintenance agreements (within the meaning of clause 37.2.2 of the Brisbane and Maroochydore dealer agreements) in respect of the Products (as defined in the Brisbane and Maroochydore dealer agreements) which were in effect as at 24 August 2010.

4. Without prejudice to the respondent's ability, for the purposes of quantifying the damages claimed at paragraph 6 of the Second Further Amended Summons dated 8 November 2010, to argue that the orders dated 16 December 2010 did not exhaust the obligations of the appellant under clause 37.2.2 of the dealer agreements, order [omitted text: Order] that the obligation described in order 3 be specifically performed and put into execution in the manner required by the orders dated 16 December 2010."

1. Unfortunately, FXA's written submissions, although filed in the Registry in compliance with the Court's directions, were not drawn to the attention of the Court. This Court accordingly delivered a judgment on 6 February 2012 without the benefit of FXA's submissions. The judgment also contained an error in the orders.

1. The parties correctly drew those matters to the attention of the Court. The parties were advised that the appropriate course, if they agreed, was for the judgment and orders made on 6 February 2012 to be recalled and for the Court to reconsider the form of orders and its judgment in the light of both parties' submissions. Very sensibly, the parties agreed to this proposed course.

1. In the First Judgment, given on 23 November 2010 ( Fuji Xerox Australia Pty Ltd v CSG Ltd [2010] NSWSC 1258), the primary Judge made declarations that:

• FXA, by a termination notice dated 20 August 2010, had validly terminated each of the Dealership Agreements (Declarations 1 and 2);
• CSG was contractually obliged to provide to FXA certain sales and customer information, to return certain Confidential Information to FXA (Declaration 3); and
• CSG was obliged:

"to provide commercially reasonable co-operation to [FXA] to procure the novation to [FXA] of existing maintenance contracts which [CSG] had with customers" (Declaration 3).

Declaration 3, insofar as it relates to CSG's obligation to provide co-operation to FXA, incorporates by reference the language used in Prayer 3(c) of the 2 FAS [second further amended summons].

1. In addition, the primary Judge ordered that the obligations specified in Prayer 3 of the 2 FAS be specifically performed and put into execution (Order 4) and that CSG execute deeds of novation for certain customer contracts in favour of FXA (Order 5). His Honour reserved liberty to reply in relation to Orders 4 and 5.

1. In the Second Judgment delivered on 14 December 2010, the primary Judge dealt with disputes concerning the form of the orders made in the First Judgment. The position was summarised in the Appeal Judgment as follows (at [6]-[7]):

"As his Honour explained (at [5]ff), the position had been complicated by the belated joinder, on its own application, of Capital Finance Australia Ltd (" CFAL ") as a party to the proceedings. CFAL sought to be joined as it provided finance to about 401 of CSG's customers who had acquired FXA's MFDs.

... [T]he primary Judge held that:

● novation should not be ordered in respect of CFAL's customers and FXA should be left to its rights in damages against CSG arising from CSG's failure to perform its contractual obligations in relation to those customers (at [44]); and

● a " moratorium " should be imposed on CSG contacting FXA's customers for a limited period of time to enable FXA to approach those customers seeking to retain their business (at [70])."

1. The primary Judge made further orders on 16 December 2010, including the following:

"2. For the purpose of order 5 and following, FXA customer means a customer having [an FXA] branded MFD as at 24 August 2010 which the customer acquired the use of by or through [CSG] in or from the Brisbane or Maroochydore Territories ... but does not have a Rental Agreement or Facilities Management Agreement with Capital Finance Australia Limited (CFAL) in relation to that [FXA] branded MFD.

...

5. By 5.00 pm 16 December 2010, in respect of each agreement styled 'Full Service Maintenance Agreement' to which an FXA customer (as defined in paragraph 2) ... and [CSG] ... is a party ...[CSG] will execute and deliver to [FXA] a deed in the terms of the deed annexed to the [2 FAS] and marked 'A'.

6. By 5.00 pm 16 December 2010, [CSG] will execute and deliver to [FXA] in respect of each agreement styled 'Fuji Xerox Finance Docu/mation Agreement' (version 1.1) to which an FXA customer ... and [CSG] is a party, a deed in the terms of the deed annexed to the [2 FAS] and marked 'B'."

Orders 5 and 6 reflected the terms of the orders sought in para 5 of the 2 FAS.

1. The only issue on which CSG succeeded on the appeal concerned the construction of cl 30.1.4 of the Dealership Agreement. Clause 30.1.4 provided that upon expiration or termination of the Dealership Agreement, all rights of CSG under the Agreement were to cease and CSG had to:

"provide commercially reasonable co-operation to [FXA] and any intended alternative dealer in establishing an alternative dealer in the Territory (which may include the assignment or novation of existing [CMSAs] under cl [37.2.2]."

This Court held (at [140]) that:

"cl 30.1.4 applied only when FXA decided to replace an outgoing dealer with a new dealer and did not apply where FXA decided not to appoint a replacement dealer, but to distribute products directly to customers."

1. CSG also challenged the primary Judge's finding that cl 37.2.2 of the Dealership Agreement required CSG to procure the novation of FSMAs to FXA or a nominated third party (as distinct from procuring an assignment of the benefit of the FSMAs). This challenge failed.

1. FXA did not cross-appeal from the orders made by the primary Judge.

1. The only changes to the orders made by the primary Judge that are warranted by the Appeal Judgment are those that necessarily follow from the holding that cl 30.1.4 did not apply in circumstances where FXA decided to distribute products directly to customers and not to appoint a replacement dealer. Neither set of submissions filed after the Appeal Judgment appears to direct attention to this point.

1. CSG submits that Declaration 3 and Order 4 made on 23 November 2010 should be set aside insofar as they relate to para 3(c) of the 2 FAS. Its submissions do not explain why the declaration and order should be set aside by reason of its success on the question of construction of cl 30.1.4. Nonetheless, FXA does not dispute that the declaration and order should be set aside.

1. CSG proposes a fresh declaration in lieu of Declaration 3 (insofar as it relates to Prayer 3(c)) made on 23 November 2010. The declaration it proposes corresponds with the language used in Orders 5 and 6 made by the primary Judge on 16 December 2010. CSG's submissions do not explain why a declaration in that form is appropriate, having regard to its limited success on the appeal.

1. FXA takes the opportunity to submit that this Court should make a declaration in terms wider than those suggested by CSG. But FXA does not explain why a declaration in wider terms is necessary to give effect to the Court's holding on the construction of cl 30.1.4. FXA argues that the wider declaration is justified by the terms of cl 37.2.2. But FXA has not challenged any of the orders or declarations made by the primary Judge, whether by reference to cl 37.2.2 or otherwise.

1. As between the two alternatives proffered by the parties, CSG's is to be preferred. The language of its proffered declaration corresponds to orders made by the primary Judge that have not been challenged.

1. FXA's modifications to CSG's proposed Order 4 are designed to preserve FXA's ability to advance an argument, in the context of its unresolved damages claim, which it describes as follows:

"(a) the precise ambit of the obligation imposed upon CSG by clause 37.2.2 of the Dealer Agreements affects the value of the chance, lost to FXA, to obtain novations of customer maintenance agreements in the period immediately following the termination of the Dealer Agreements on 24 August 2010 (' the Lost Chance '); and

(b) accordingly, to the extent that clause 37.2.2 requires of CSG more than what was prescribed in the December Orders, this will be relevant to, and must be taken into account in, the quantification of the damages to which FXA is entitled, and in particular, any assessment of the value of the Lost Chance."

1. The argument that FXA wishes to advance has not been an issue on the appeal. The proceedings thus far have addressed, relevantly, FXA's claim for specific performance. As FXA recognises in its written submissions, it was open to FXA to seek whatever orders it considered appropriate by way of specific performance. The effect, if any, of the relief sought by and granted to FXA is a matter to be determined by the primary Judge at the next stage of the proceedings.

1. For these reasons, the orders proposed by CSG should be made. These orders are as follows:

1. Appeal allowed in part.

2. Set aside Declaration 3 and Order 4 made by the Supreme Court of New South Wales on 23 November 2010, insofar as the Declaration and Order relate to paragraph 3(c) of the Second Further Amended Summons.

3. Declare that following termination of the Brisbane and Maroochydore dealer agreements, the appellant is contractually bound to perform all acts within its power necessary to procure the novation to the respondent or its nominated third party of any or all Full Service Maintenance Agreements and Docu/mation version 1.1. Agreements referred to in Orders 5 and 6 of the primary Judge's Orders dated 16 December 2010.

4. Order that the obligation described in Order 3 be specifically performed and put into execution in the manner required by the Orders dated 16 December 2010.

5. Appeal otherwise dismissed.

6. The appellant pay the respondent's costs of the appeal.

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Decision last updated: 20 March 2012