Fred It Group Pty Ltd v Corum Systems Pty Ltd - [2024] VSCA 176

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S EAPCI 2023 0056

FRED IT GROUP PTY LTD (ABN 68 109 546 901)	Applicant
v
CORUM SYSTEMS PTY LTD (ACN 091 519 603)	Respondent

S EAPCI 2023 0057
FRED IT GROUP PTY LTD (ABN 68 109 546 901)	Applicant
v
PHARMX PTY LTD (ACN 117 870 434)	Respondent

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JUDGES:	KENNEDY, MACAULAY and ORR JJA
WHERE HELD:	Melbourne
DATE OF HEARING:	30 May 2024
DATE OF JUDGMENT:	8 August 2024
MEDIUM NEUTRAL CITATION:	[2024] VSCA 176
JUDGMENT APPEALED FROM:	S EAPCI 2023 0056: [2023] VSC 208 (M Osborne J) S EAPCI 2023 0057: [2023] VSC 209 (M Osborne J)

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CONTRACT – Breach of contract – Trial judge held that failure to immediately give notice of ‘Change of Control’ was a breach of a ‘once and for all’ obligation which did not continue – First breach statute barred – Trial judge held that giving notice six years late was a further breach – Applicant contends that giving notice late could not constitute further breach –Respondent concedes error – Appeal allowed.

LIMITATION OF ACTIONS – Postponement of limitation period – Fraudulent concealment – Whether right of action can be fraudulently concealed where defendant is ‘wilfully blind’ to right of action – Contention of wilful blindness foreclosed by factual findings.

TRUSTS – Construction of trust deed – Whether former unitholder entitled to distribution of income – Leave to appeal refused.

Limitation of Actions Act 1958 s 27.

Larking v Great Western (Nepean) Gravel Ltd (in liq) (1940) 64 CLR 221; Finance & Guarantee Company Pty Ltd v Auswild [2019] VSC 664; Seymour v Seymour (1996) 40 NSWLR 358.

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Counsel
Applicant:		Mr CM Caleo KC with Ms GSJ Berlic
Respondents:		Mr PH Wallis KC with Mr SJH Ure
Solicitors
Applicant:	SBA Law
Respondents:	Mangioni Biggs + Co

KENNEDY JA
MACAULAY JA
ORR JA:

Introduction

These applications for leave to appeal raise two broad issues. The first concerns the circumstances that are capable of enlivening s 27(b) of the Limitation of Actions Act 1958 (the ‘Limitation Act’), which relevantly provides that where a right of action is concealed by the fraud of the defendant, a period of limitation prescribed by the Act for the action shall not begin to run until the plaintiff has discovered the fraud. The second concerns the proper construction of a clause of a trust deed governing the distribution of income to holders of units in a unit trust. Both issues arise in the context of a joint venture.
The joint venture involved four vendors of point of sale (‘POS’) software to pharmacies, who formed a company known as PharmX Pty Ltd (‘PharmX’) in 2006. PharmX subsequently commenced operating an electronic ordering gateway that facilitated the transmission of product orders and related documents between pharmacy POS software and suppliers of pharmacy products. PharmX derived income from subscription fees paid monthly by suppliers in respect of each account a pharmacy held with that supplier that was connected…

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.

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Details

Case: [2024] VSCA 176
Decision Date: 8 August 2024

CaseChat Overview and Summary

Fred It Group Pty Ltd sought to recover damages from Corum Systems Pty Ltd for breach of contract and other claims. The case was heard and determined by the Supreme Court of Victoria. The primary dispute involved the failure to notify a ‘Change of Control’ event within the agreed timeframe and the subsequent entitlement to damages for this breach.

The central legal issues concerned whether the failure to notify the ‘Change of Control’ immediately constituted a breach of a ‘once and for all’ obligation or a continuing obligation, and whether the subsequent late notice amounted to a further breach of contract. Additionally, the court had to determine whether the right of action could be fraudulently concealed where the defendant was ‘wilfully blind’ to the right of action, and whether the former unitholder was entitled to a distribution of income under the trust deed.

The court held that the failure to immediately notify the ‘Change of Control’ was a breach of a ‘once and for all’ obligation, which did not continue. This initial breach was statute-barred, but the court found that giving notice six years late constituted a further breach. The applicant argued that the late notice could not amount to a further breach, but the respondent conceded this point. The court allowed the appeal on the basis of the respondent’s concession. The court also found that the contention of wilful blindness was foreclosed by the factual findings. Finally, the court refused leave to appeal on the issue of the former unitholder’s entitlement to a distribution of income under the trust deed.

Orders