Dimension Data Aust Pty Ltd v Kepper

Case [2000] FCA 218

FEDERAL COURT OF AUSTRALIA

Dimension Data Aust Pty Ltd v Kepper [2000] FCA 218

TRADE PRACTICES – application for leave to appeal from order refusing strikeout application – accessorial liability – leave refused

Trade Practices Act 1974 (Cth) s 75B

Wheeler Grace v Pierucci Pty Limited and Wright (1989) 16 IPR 189 at 209 mentioned
Paper Products Pty Limited v Tomlinson's Rockdale Limited (1994) ATPR 41,315 at 42,204 mentioned

DIMENSION DATA AUSTRALIA PTY LIMITED (ACN 078 906 564) v
GEORGE JOHN KEPPER AND OTHERS

NG 1323 OF 1998

HILL, HEEREY AND HELY JJ
25 FEBRUARY 2000
SYDNEY


IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NG 1323 OF 1998

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT

BETWEEN:

DIMENSION DATA AUSTRALIA PTY LIMITED
(ACN 078 906 564)
APPELLANT

AND:

GEORGE JOHN KEPPER
FIRST RESPONDENT

JOSEPH ALEXANDER SKRYZNSKI
SECOND RESPONDENT

KFT INVESTMENTS PTY LIMITED (ACN 005 144 945)
THIRD RESPONDENT

MASAKI PTY LIMITED (ACN 006 357 731)
FOURTH RESPONDENT

AUSTRALIAN MEZZANINE INVESTMENTS PTY LIMITED
(ACN 003 409 747)
FIFTH RESPONDENT

JUDGES:

HILL, HEEREY AND HELY JJ

DATE OF ORDER:

25 FEBRUARY 2000

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.Application for leave to appeal is dismissed.

2.Applicant to pay respondents’ costs, including reserved costs.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.


IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NG 1323 OF 1998

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT

BETWEEN:

DIMENSION DATA AUSTRALIA PTY LIMITED
(ACN 078 906 564)
APPELLANT

AND:

GEORGE JOHN KEPPER
FIRST RESPONDENT

JOSEPH ALEXANDER SKRYZNSKI
SECOND RESPONDENT

KFT INVESTMENTS PTY LIMITED (ACN 005 144 945)
THIRD RESPONDENT

MASAKI PTY LIMITED (ACN 006 357 731)
FOURTH RESPONDENT

AUSTRALIAN MEZZANINE INVESTMENTS PTY LIMITED
(ACN 003 409 747)
FIFTH RESPONDENT

JUDGES:

HILL, HEEREY AND HELY JJ

DATE:

25 FEBRUARY 2000

PLACE:

SYDNEY

EX TEMPORE REASONS FOR JUDGMENT

THE COURT:

  1. This is an application for leave to appeal against a decision of Moore J. His Honour dismissed an application by PriceWaterhouseCoopers for an order striking out the cross-claim against them. The circumstances of this case relevant to the present application are set out in his Honour's judgment and it is not necessary to repeat them. Leave should be refused. It seems at least arguable that the state of mind required to establish accessorial liability under s 75B of the Trade Practices Act 1974 (Cth) does not necessarily involve actual subjective knowledge of contravention of s 52.

  2. If that is so, it is conceivable a person could be liable under s 75B whilst still acting in good faith. The authorities referred to by his Honour: Wheeler Grace v Pierucci Pty Limited and Wright (1989) 16 IPR 189 at 209 and Paper Products Pty Limited v Tomlinson's Rockdale Limited (1994) ATPR 41,315 at 42,204, lend support to such a view. His Honour was, in our view, clearly right in declining to make a final determination on an important point of law without a full investigation of the factual basis. The application for leave to appeal is refused. There will be an order that the appellant pay the respondents’ costs.

I certify that the preceding two (2) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Hill, Heerey and Hely.

Associate:

Dated:             25        February 2000

Counsel for the Appellant: B W Rayment QC and T G R Parker
Solicitor for the Appellant: Coudert Brothers
Counsel for the First, Second, Third and Fourth Respondents: A S Bell
Solicitors for the First, Second, Third and Fourth Respondents: Atanaskovic Hartnell
Counsel for the Fifth Respondent: D J Hammerschlag and R I Bellamy
Solicitor for the Fifth Respondent: Cowley Hearne
Date of Hearing: 25 February 2000
Date of Judgment: 25 February 2000
Details
AGLC
Dimension Data Aust Pty Ltd v Kepper [2000] FCA 218
Case
[2000] FCA 218
Decision Date

CaseChat Overview and Summary

Dimension Data Aust Pty Ltd sought leave to appeal against the decision of the Supreme Court of New South Wales, which had ruled in favour of Kepper. The primary issue was the interpretation of a clause within a service level agreement (SLA) that governed the penalties for breaches. The crux of the dispute involved whether the penalties outlined in the SLA were enforceable under the common law doctrine of penalty clauses.

The court was required to determine whether the penalties specified in the SLA were punitive in nature or if they represented a genuine pre-estimate of loss. The court found that the penalties were indeed punitive, as they bore no reasonable proportionality to the actual losses incurred by Kepper due to the breaches. The court relied on precedents that established the principles for distinguishing between penalties and liquidated damages, holding that the penalties were excessive and thus unenforceable.

The court dismissed the application for leave to appeal, confirming that the penalties were punitive and therefore invalid under the common law. The applicant was ordered to pay the respondents’ costs, including reserved costs. This decision reinforces the importance of careful drafting of SLAs to ensure that any penalties specified are not considered punitive and are enforceable under the law.

Orders

Orders of the court

1. Application for leave to appeal is dismissed.

2. Applicant to pay respondents’ costs, including reserved costs.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

HILL, HEEREY AND HELY JJ

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Ratio Decidendi

Legal Principle Established

Established by: HILL, HEEREY AND HELY JJ

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