Entirity Business Services v Garsoft [2011] FCA 76
Citation:
Entirity Business Services v Garsoft [2011] FCA 76
Parties:
ENTIRITY BUSINESS SERVICES PTY LTD v GARSOFT PTY LTD, SCION BUSINESS SERVICES PTY LTD and ANTHONY GARRARD
File number:
NSD 1418 of 2008
Judge:
MOORE J
Date of judgment:
10 February 2011
Catchwords:
CONTRACTS – contractor’s responsibility for managing accounts of principal – accounts failed to show true position of principal at time of demerger – liability of contractor for rectification of accounts
PRACTICE AND PROCEDURE – pleadings – material difference between pleaded representation and representation about which evidence was given
TRADE PRACTICES – misleading and deceptive conduct – alleged misrepresentation by director of financial position of company – no reliance by company on misrepresentation
1. The parties to file and serve draft orders giving effect to these reasons together with written submissions on the question of costs by 4pm on 18 February 2011.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court’s website.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 1418 of 2008
BETWEEN:
ENTIRITY BUSINESS SERVICES PTY LTD Applicant
AND:
GARSOFT PTY LTD First Respondent
SCION BUSINESS SERVICES PTY LTD Second Respondent
ANTHONY GARRARD Third Respondent
JUDGE:
MOORE J
DATE:
10 FEBRUARY 2011
PLACE:
SYDNEY
REASONS FOR JUDGMENT
Introduction
These proceedings concern the relationship between two businessmen who entered a joint business venture and the circumstances in which they commenced and conducted their business before they eventually parted ways. The principal vehicle for their joint venture was Entirity Business Services Pty Ltd. The dissolution of their joint venture has given rise to claims and counterclaims by various participants in the business, both corporate and individual. Given the amounts involved, the proceeding should have settled well before this point. Notwithstanding two court annexed mediations, this has not occurred. The legal and other costs of this litigation will be utterly disproportionate to its subject matter.
The applicant, Entirity, brought proceedings against the third respondent, Mr Garrard, a former director and shareholder…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
Continue reading Entirity Business Services v Garsoft
Sign in free to access the full text
Details
AGLC
Entirity Business Services v Garsoft [2011] FCA 76
Case
[2011] FCA 76
Decision Date
CaseChat Overview and Summary
Entirity Business Services sued Garsoft in the Supreme Court of New South Wales. The primary dispute involved allegations of misleading and deceptive conduct, breaches of contract, and copyright infringement stemming from the operation of a joint venture named Entirity. Entirity was established by Mr. Barlow, through his company Executech, and Mr. Garrard, through his company Garsoft, to provide information technology services to public schools in New South Wales. The case centred on the failure of the joint venture's accounts to reflect the true financial position of Entirity, particularly at the time of its demerger, and whether Garsoft bore any liability for the rectification of these accounts.
The court was tasked with determining whether Mr. Garrard misrepresented the financial state of the accounts to Mr. Barlow at the time of the demerger, whether Entirity relied on such a misrepresentation, and if so, whether this constituted misleading and deceptive conduct. Additionally, the court had to consider the discrepancies between the pleaded representations and the actual evidence presented. Furthermore, the court had to decide if there was sufficient evidence to establish ownership of certain computer programs, which was also claimed by Entirity.
The court found that it was not satisfied that Mr. Garrard made the representation to Mr. Barlow as pleaded. The evidence did not support the claim that Mr. Barlow relied on any such misrepresentation. The court also found that the evidence regarding the ownership of the computer programs was insufficient to establish a copyright claim. Consequently, the court concluded that Garsoft was not liable for the misrepresentations and that Entirity's claims for damages and rectification of accounts were not substantiated. The court ordered the parties to file and serve draft orders giving effect to these reasons and written submissions on the question of costs by a specified date.
Orders
Orders of the court
1. The parties to file and serve draft orders giving effect to these reasons together with written submissions on the question of costs by 4pm on 18 February 2011.
Note:
Background
Background to the litigation
I am not satisfied Mr Garrard made the pleaded representation to Mr Barlow at the time of the demerger about the state of the accounts. Finally, although the pleadings raise a copyright claim in relation to computer programmes, the evidence as to the contents of the programmes and the circumstances in which they were written were insufficient to establish ownership.The facts Unless I indicate or the context suggests otherwise, the following represents findings of fact. Evidence was given by Ms Leanne Hyde, Mr Barlow, Mr Scott Dubois, Mr Garrard, Mr Brian Silvia, Mr Gregory Roberts, Mr Barrie Pike, Mr Michael Hatherly and Mr Robert Bell. Ms Hyde is Mr Barlow's sister. Mr Dubois is Mr Garrard's nephew. In the years prior to the joint venture period, various businesses competed in providing computer and information technology services to the New South Wales Department of Education and through it to a number of public schools. Those businesses included Executech Consultancy and Garsoft. Executech was the vehicle for a business operated by Mr Barlow, and Garsoft was operated by Mr Garrard and his wife Carole Garrard. In 2003, the Department of Education encouraged its various individual contractors to collaborate in order to deliver better results to schools. Mr Barlow and Mr Garrard were acquaintances carrying on businesses in the same industry. In mid June 2003, they agreed to establish Entirity as a joint venture. They agreed to establish it without further delay so they could start operating from the beginning of the new financial year. They acquired a shelf company which became Entirity. In July 2003 each contributed $5000 as Entirity's start up capital. Mr Garrard suggested Entirity's office be set up at his home, and Mr Barlow agreed. In July 2003 Entirity's office was established at Mr Garrard's home. Mr Garrard applied for an Australian Business Number and a Tax File Number, registered Entirity for Goods and Services Tax with the Australian Taxation Office, and was recorded as Entirity's public officer with the ATO. The business was initially run from Mr Garrard's home. In April 2004 it moved to office premises in Parramatta. It subsequently moved to premises in Rydalmere in May 2005. The business of Entirity was the provision of information technology services to public schools in New South Wales. Those services included providing software involving the software in dispute, Terminal Client and ESS, and also included providing a range of installation and ongoing support services. Executech and Garsoft brought their clients to Entirity. Throughout the joint venture period Mr Garrard and Mr Barlow both provided their services to Entirity through their own entities, Garsoft and Executech. Entirity was operated during the joint venture period as a business to generate income then to be distributed to Garsoft and Executech, with Entirity retaining only a certain percentage of the sales revenue to pay for the administration costs of the business. To this end, during the joint venture period from July 2003 to February 2006, no dividends were paid to the shareholders and the directors and other office holders received no fees for acting in those capacities.