Ghan Constructions Pty Ltd v Southern Star Windows Pty Ltd
[2024] VSC 483
•15 August 2024
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
JUDICIAL REVIEW AND APPEALS LIST
S ECI 2023 03870
| Ghan Constructions Pty Ltd (ACN 141 485 350) | Plaintiff |
| v | |
| Southern Star Windows Pty Ltd (ACN 100 012 431) | Defendant |
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JUDGE: | Quigley J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 25 July 2024 |
DATE OF JUDGMENT: | 15 August 2024 |
CASE MAY BE CITED AS: | Ghan Constructions Pty Ltd v Southern Star Windows Pty Ltd |
MEDIUM NEUTRAL CITATION: | [2024] VSC 483 |
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MAGISTRATES’ COURT APPEAL — Appeal to Supreme Court from final order made in civil proceeding — Appeal on a question of law — Magistrates’ Court Act 1989 (Vic) s 109.
CONTRACT — Construction — Credit agreement — Romalpa clause — Whether clause entitles supplier of goods to enter land and retake goods not paid for by purchaser — Whether implied term allowing supplier to retake goods not paid for by purchaser — Adaz Nominees v Castleway [2020] VSCA 201 applied.
DAMAGES — Assessment of damages for trespass — Mitigation of damage — Where supplier of goods trespassed to land and retook goods not paid for by purchaser — Whether Magistrate erred in determining that purchaser failed to mitigate loss by not paying supplier for goods taken as soon as it became apparent that they had not been stolen — Healing (Sales) Pty Ltd v Inglis Electrix Pty Ltd (1968) 121 CLR 584; Payzu v Saunders [1919] 2 KB 581; Portbury Development Co Pty Ltd v Ottedin Investments Pty Ltd [2014] VSC 57; Sotiros Shipping Inc v Sameiet Solholt (The Solholt) [1983] 1 Lloyd’s Rep 605; Strutt v Whitnell [1975] 1 WLR 870 considered.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr B. Carr | Mahons with Yuncken & Yuncken Lawyers |
| For the Defendant | Mr E. Twomey | Coulter Legal |
HER HONOUR:
INTRODUCTION
The appellant, Ghan Constructions Pty Ltd (‘Ghan’), is a building company. The respondent, Southern Star Windows Pty Ltd (‘Southern Star’), is a manufacturer and supplier of windows and doors.
Since 2012, Southern Star has supplied goods to Ghan, the terms of which are governed by a credit agreement dated 25 January 2012 (‘Credit Agreement’).[1] Ghan’s obligations under the Credit Agreement are guaranteed by Mr Abdul Karim Khawari pursuant to a deed of guarantee and indemnity of the same date.
[1]On 25 January 2012, Ghan executed a credit application form pursuant to which it agreed to be bound by Southern Star’s terms and conditions of trade (which were attached to the form). These documents are referred to together as the ‘Credit Agreement’. The Credit Agreement governs the terms under which Southern Star supplies goods to Ghan on credit and recoups payment for those goods (and other work and labour done or services rendered).
The proceeding before the Magistrates’ Court of Victoria at Geelong, from which this appeal arises,[2] was a claim filed by Southern Star to recover an outstanding debt in respect of windows and doors supplied to Ghan by Southern Star. Prior to bringing the proceedings, Southern Star entered a worksite at which Ghan was constructing a townhouse project for a third party,[3] and took possession of certain of the window and door components which it had supplied and invoiced to Ghan but for which Ghan had not paid.[4]
[2]Southern Star Windows Pty Ltd v Ghan Constructions Pty Ltd (Magistrates’ Court of Victoria, N104322651, commenced 3 March 2022).
[3]Pursuant to a contract for the construction of a townhouse development for the Hassanzada Family Trust (‘Hassanzada Contract’).
[4]Specifically, agents of Southern Star entered Ghan’s building site and recovered window sashes and sliding door panels, which represented a small portion of the total goods suppled by Southern Star.
Ghan counterclaimed, alleging that the recovery of the goods by Southern Star was unauthorised and had caused Ghan to suffered loss and damage for which Southern Star was liable in trespass.
Following a contested hearing, Magistrate Mellas made final orders on 27 July 2023 in which Southern Star was successful in recovering the debt in the amount of $25,869.11 from Ghan. The learned Magistrate also found on Ghan’s counterclaim that Southern Star had engaged in trespass in recovering the goods but that Ghan had failed to mitigate its loss. The Magistrate ordered Southern Star to pay Ghan nominal damages in the sum of $100.
Ghan brought an appeal pursuant to s 109 of the Magistrates’ Court Act 1989 (Vic) challenging the Magistrate’s finding that Ghan was under a legal obligation to mitigate the loss it had suffered as a result of the trespass to its chattels by paying Southern Star the price of the goods.[5]
[5]The sole question pressed in the appeal is question 2 of the amended notice of appeal (filed 4 October 2023 in S ECI 2023 03870, Supreme Court of Victoria) (‘Amended Notice of Appeal’).
By its Notice of Cross Appeal,[6] Southern Star seeks to challenge the Magistrate’s findings in respect of the proper interpretation of the Credit Agreement.
[6]Notice of appeal (filed 14 November 2023 in S ECI 2023 03870, Supreme Court of Victoria), referred to in this decision as the ‘Notice of Cross Appeal’.
The questions for determination in this appeal can be stated as follows:
(a) What is the proper interpretation of cl 15(e) of the Credit Agreement?
(b) Should a term have been implied to the Credit Agreement?
(c) Did the Magistrate err in law in his determination that Ghan failed to mitigate its loss?
THE CREDIT AGREEMENT
The key provision in this dispute is the construction and operation of cl 15 of the Credit Agreement. This Magistrate’s decision on the interpretation of cl 15 is the subject of the cross appeal by Southern Star:
15) TITLE
(a)Property in any goods sold by Southern Star Windows Pty Ltd or any products in which the relevant goods are incorporated in whatever fashion, shall not pass from Southern Star Windows Pty Ltd to the Customer until the Customer has paid for the goods in full and all cheques an other negotiable instruments have been cleared. The Customer in the meantime takes custody of the goods as the fiduciary agent and bailee of Southern Star Windows Pty Ltd.
(b)In such case, the risk of loss or damage to the goods shall be entirely at the risk of the Customer.
(c)In such case, the Customer agrees not to sell, assign, charge or otherwise encumber or grant any interest over any obligations which any third party may owe to the Customer as a result of the use, manufacture or resale of the goods.
(d)Until the goods have been paid for in full, the Customer must store the goods in such a manner as to clearly show that they are the property of Southern Star Windows Pty Ltd.
(e)If any payment for any goods sold by Southern Star Windows Pty Ltd is not met on presentation by Southern Star Windows Pty Ltd, Southern Star Windows Pty Ltd without further notice reserves the right to reclaim of retake physical possession of the goods or any products in which the relevant goods are incorporated in whatever fashion, and to resell same, in full or partial satisfaction of the debt, and for this purpose, the Customer hereby irrevocably authorises, consents to and licences Southern Star Windows Pty Ltd or its agents or servants at any time entering onto the Customer premises or where the goods are physically located.
(f)In such event. the Customer shall not make any claim whatsoever arising from or related to the reclamation or retaking of goods by Southern Star Windows Pty Ltd, including any purported commingling, annexation or affixation of the relevant goods, nor make any claim that a charge arises.
The following clauses are also of contextual relevance.
(a) Clause 1(e):
1) DEFINITIONS AND INTERPRETATION
…
(e)Headings are for convenience only and do not form part of these terms and conditions of trade.
(b) Clause 2:
2) GENERAL
These terms and conditions shall apply to the exclusions of all other arrangements or understandings including any terms and conditions of the Customer (whether on the Customer’s order form or otherwise). The Customer acknowledges that these terms and conditions embody the whole agreement between the parties and agrees to be bound by them. All monies owed by the Customer to Southern Star Windows Pty Ltd shall become due immediately upon commencement of any act or proceeding in which the Customer's solvency is involved.
(c) Clause 3:
3) PAYMENT
Payment shall be made by the Customer to Southern Star Windows Pty Ltd for all goods supplied, work and labour done and services rendered within 30 days from the date of invoice. The Customer acknowledges that time is of the essence with regard to payment and that breach of this time provision will enable Southern Star Windows Pty Ltd to exercise all of its rights contained herein including but without in any way limiting its rights to cancel further credit and to take legal action for the recovery of all sums outstanding. Payments are to be made in full and without any set‑off, deferral or deduction, in whole or in part, unless previously agreed to in writing by Southern Star Windows Pty Ltd.
(d) Clause 8:
8) CLAIMS
(a)If the Customer defaults in payment by the due date of any amount of money payable to Southern Star Windows Pty Ltd then all money which would become payable by the Customer to Southern Star Windows Pty Ltd at a later date on any account, becomes immediately due and payable without the requirement of any notice to the Customer and Southern Star Windows Pty Ltd may without prejudice to any other remedies available to it:
(1)Charge interest in accordance with Clause 4 of these Terms and Conditions
(2)Charge Costs in accordance with Clause 5 of these Terms and Conditions
(3)Cease or suspend for such period as Southern Star Windows Pty Ltd thinks fit, supply of Goods and Services to the Customer without liability the the [sic] Customer or any third party for any loss or damage whether of direct or consequential nature;
(4)By notice in writing to the Customer terminate any contract with the Customer so far as unperformed by Southern Star Windows Pty Ltd without effect on the accrued rights of Southern Star Windows Pty Ltd under any contract.
(b)Clauses 8(a)(3) and 8(a)(4) may also be relied upon, at the option of Southern Star Windows Pty Ltd, where the Customer is:
(1)An individual and becomes bankrupt or enters into any scheme or arrangement or any assignment or composition with or for the benefit of his or her or creditors or any class of his or her creditors generally; or
(2)A corporation, and it enters into any scheme ·of arrangement or any assignment or composition with or for the benefit of its creditors or any class of its creditors generally, or has a liquidator, provisional liquidator, administrator, receiver or receiver and manager appointed, or any action is taken for, or with the view to, the liquidations (including provisional liquidation), winding up or dissolution without winding up of the Customer.
(c)If a cheque given in payment for goods is dishonored for whatever reason, the Customer agrees to reimburse Southern Star Windows Pty Ltd its costs which it incurs as a result.
(d)In the event of a default in payment pursuant to this Clause 8, the Customer agrees, at the request of Southern Star Windows Pty Ltd, to charge any real property which it may hold in order to better secure its financial obligations to Southern Star Windows Pty Ltd by consenting to the lodgement of a Caveat by Southern Star Windows Pty Ltd on the title of any real property which the Customer or any of its Directors may hold from time to time.
(e)Southern Star Windows Pty Ltd will accept no return of allegedly defective goods unless it had given prior written authorisation for the return of the goods nor will it be liable for any costs of such return.
(f)Claims for breakage must be reported in writing within 48 hours of delivery to be considered and are at the absolute discretion to Southern Star Windows Pty Ltd.
(g) Once the Quotation is accepted, the Customer is deemed to have checked and agrees with the size, quantity, price and material as listed and Southern Star Windows Pty Ltd will not accept any responsibility for discrepancies with regards to plans or schedules after the order is placed by the Customer.
(e) Clause 13:
13) LIEN
The Customer hereby acknowledges that Southern Star Windows Pty Ltd has a lien over all goods in the Customer’s possession belonging to the Customer to secure payments of any or all amounts outstanding from time to time.
THE MAGISTRATE’S FINDING
The position of Southern Star before the Magistrates’ Court was a simple one: goods were ordered, supplied and have not been paid for. Southern Star claimed payment for the price of the contract in the amount of $25,869.11. Southern Star maintained that it was entitled to remove part of the goods supplied by reason of the actual or implied terms of the Credit Agreement.[7]
[7]Transcript of Proceedings, Southern Star Windows Pty Ltd v Ghan Constructions Pty Ltd (Magistrates’ Court of Victoria, N104322651, Magistrate Mellas, 27 July 2023). (‘Magistrate’s Reasons’), 3.
Ghan’s position was that, although the debt claimed became due and payable as at the date of delivery, the removal of the goods supplied was contrary to law and left Ghan responsible for replacing the goods taken. The delay in manufacture and supply of replacement window and door components led to it suffering damage by way of liquidated damages in the amount of $10,500 that Ghan became responsible for, pursuant to the Hassanzada Contract. Ghan also claimed the cost of replacing the window and doors components as against the amount owed to Southern Star.
The Magistrate was satisfied that the goods had been delivered on time, were fit for purpose and would have been returned to Ghan if payment for the whole of the contract price had been made. He was satisfied that the claim by Southern Star as to the amount owed was made out and awarded the sum of $25,869.11.
In considering what legal rights Southern Star had to retrieve the windows, his Honour turned to the terms of the Credit Agreement. He noted that it was agreed that the agreement is for the manufacture and delivery of specified goods and included the standard terms and conditions. He noted that the parties diverged as to the interpretation to be placed on cl 15 and sub‑cls (a), (d) and (e).
At the outset of the proceeding before his Honour, the parties had approached their interpretation of cl 15(e) as applying in respect to any non‑payment after the rendering of invoices within 30 days. His Honour raised a potential issue with this interpretation and counsel for the parties provided further submissions.
His Honour concluded that, having regard to the principles of interpretation as outlined in Adaz Nominees v Castleway,[8] he was satisfied that the plain language of the clause is unambiguous. He stated that:
[t]he right to repossess and license to enter is only treated in very particular circumstance where any payment made is, “not met on presentation.” I am satisfied that this is a commercially officious interpretation that promotes a commercial outcome. I am satisfied that in the circumstances of this case where there is no suggestion that a cheque was dishonoured or any other method of payment, for example a negotiable instrument as referred to in the previous clause at A was not met, that simple non‑payment of the invoices did not trigger the right, at least contractually, of Southern Star to retake possession.[9]
[8][2020] VSCA 201 (‘Adaz Nominees’).
[9]Magistrate’s Reasons, 8.
His Honour characterised the retention of title clauses in the Credit Agreement as a:
classic Romalpa clause designed to, firstly, protect Southern Star in the event that a company goes into liquidation and it loses potentially its right to payment, but is not restricted to those circumstances and can be enlivened in other circumstances. For example, quite simply where payment is met, or a cheque is not honoured.[10]
[10]Magistrate’s Reasons, 8–9.
Again, applying the principles in Adaz Nominees, his Honour was not prepared to imply any additional terms as, in his view, the written agreement properly reflected the agreement between the parties, is commercially explicable and is to the commercial benefit of both parties, while protecting Southern Star from the risks of manufacturing and supplying custom‑made goods without upfront payment.
His Honour stated that Ghan in turn is able to order products and pay for them in a way that matches their schedule of receiving payment and noted that part and parcel of fitting windows and doors of this kind would, apart from any other works, take the project to lock‑up stage which would in turn trigger a payment by the owner to Ghan. He said that this ‘seems to be the commercial reality of building projects’.[11]
[11]Magistrate’s Reasons, 9.
His Honour concluded that there was no contractual right, either actual or implied, to retake possession in the circumstances of this case. He went on to consider whether there was any other right. His Honour excluded the operation of Commonwealth property securities legislation which he said had no application in his view. His Honour considered that the only other right that might have existed was in common law, the right of recaption or ‘self‑help’. He considered there to be a variety of public policy reasons why this right might not be considered as applying and is also not to be encouraged, recognising that self‑help remedies carry with them significant risks.[12] His Honour stated that the law provides for remedies, for the recovery of debts owed even if they are seen to be cumbersome and difficult. He stated that in circumstances such as this, although it is understandable why someone who is entitled to possession of goods and has not been paid might think that giving notice would simply defeat the whole purpose of recapture, public policy considerations suggest that notice having been given, a defaulting party might then engage in discussions which make clear why there has been a default in payment in such a way that the parties may reach a peaceable resolution of any disagreement as to payment and delivery of the items.
[12]Magistrate’s Reasons, 9.
His Honour noted that there was no actual clear notice of intention to reclaim possession and doubted that from a public policy perspective the law of recaption subsists to an extent as to justify the behaviour of Southern Star in this case.
His Honour found that Southern Star did not have the right to recapture the goods and in doing so it committed a trespass. His Honour noted that other than removal of components, there was no other damage done to the property of Ghan.
His Honour was satisfied that Ghan ‘clearly in the circumstances failed to mitigate its loss’,[13] stating that:
[t]he simple solution, or steps to be taken that would have mitigated the loss in this case, would have been to simply pay for the goods as soon as it became apparent that they had not been stolen. In which case I am satisfied that they would have been returned and would have been able to be installed.
In those circumstances the claim in respect to replacement windows and the damages paid to the owners as a consequence of the delay occasioned by arranging for and purchasing replacement windows fails. However, I am satisfied that there should be – and I should say I am also satisfied in those circumstances that the claim in respect to the replacement windows for the same reason also fails.
I am satisfied, however, that there should be an award of nominal damages in the amount of $100 in respect to the trespass that I have found Southern Star engaged in in the course of removing the items from the premises.[14]
[13]Magistrate’s Reasons, 10.
[14]Magistrate’s Reasons, 10.
CONSIDERATION
I deal with each of the key issues raised in the proceeding below by reference to the submissions of each party.
Issue 1: Correct interpretation of cl 15
The first issue to be dealt with is that which is raised in Southern Star’s Notice of Cross Appeal: being the correct interpretation of cl 15 of the Credit Agreement, and, in particular, whether it permitted Southern Star to enter Ghan’s worksite and recover the goods.
The parties were not in dispute as to the relevant principles of contractual construction, drawn from the Court of Appeal decision of Adaz Nominees:[15]
[15][70(mm)]–[70(nn)] (Whelan JA and Riordan AJA).
(a) construction of a commercial contract requires reference to the ordinary meaning of the text, the context and purpose of the provision, where the context includes the entire text of the contract and matters referred to in that text;
(b) evidence of ‘mutually known objective background circumstances relevant to purpose’ will be admissible to assist in the construction of the contract ‘no matter how clear the ordinary meaning of the words’; and
(c) the Court is entitled to approach the task of construction under the assumption the parties intended to produce a commercial outcome.
Southern Star’s Submissions
The interpretation urged by Southern Star is that cl 15 authorised it to retake possession of the goods in circumstances where payment was due, Southern Star made a demand for payment and that demand was not met.
Southern Star submitted that when taking all of the relevant construction principles into account, the interpretation urged by Southern Star is preferable to the interpretation reached by the Magistrates’ Court.
The textural analysis did not go further than to argue that there were multiple meanings available of the plain words of the clause. It was submitted that the ordinary meaning of the words of cl 15 is capable of sustaining both the meaning given by the Magistrate and the meaning urged by Southern Star. Where the term is ambiguous, that is, capable of more than one meaning, the Court in choosing the correct meaning should apply a contextual and purposeful approach.
Southern Star submitted that the word ‘presentation’ according to the Macquarie Dictionary is defined as ‘the act of presenting’, and the definition of ‘presenting’ includes ‘to hand or send in, as a bill or cheque for payment’.[16] It was submitted that while a cheque can be presented, equally a bill or invoice can be presented to a customer or client to be paid. The invoices and written demands which were issued to Ghan were presentations and the ‘presentation’ requirement is thus satisfied.
[16]Southern Star’s submissions refer to the definition of ‘presenting’, however upon review of the Macquarie Dictionary, it appears that Southern Star is referring to the definition of ‘present’.
Similarly, it was argued that the Macquarie Dictionary definition of ‘met’ refers to the definition of ‘meet’ which relevantly includes ‘to satisfy’ or to ‘pay for’, and just as a cheque can be satisfied when it is altered by a bank, so too can an invoice be satisfied or paid for, by a client or customer.
Southern Star submitted that when Ghan failed to make the payments following the written demands, those demanded payments were not met and thus, the requirement of cl 15(e) was satisfied.
In terms of context, Southern Star referred to the remainder of the Credit Agreement that provides the Court with the ability to assign meaning to the words of the agreement and to be guided by the approach taken in other sections of it. Reference was made to Brambles Holdings Ltd v Bathurst City Council[17] as a useful demonstration of the way the Court can make the type of analysis being urged upon the Court. Here it was submitted that where phrasing is markedly different, it follows that the clauses were intended to operate in distinct circumstances.
[17](2001) 53 NSWLR 153, [34].
Reference was made to cl 8(c) which provides that ‘[i]f a cheque given in payment for goods is dishonoured for whatever reason, the Customer agrees to reimburse [Southern Star] its costs which it incurs as a result.’
Reference to ‘further notice’ in the second line of cl 15(e) was argued to imply that there has been some notice of the preceding factors before Southern Star could enter onto the site. It was argued that this was not something that would occur on the Magistrate’s interpretation of the clause where the cheque is presented to the bank and is dishonoured; there is no notice to Ghan. However, under the Southern Star interpretation, where a demand for payment is made, that demand serves as the notice and so a reference to a lack of a need for further notice is coherent in those circumstances. This was said to be contrasted to the Magistrate’s interpretation as the word ‘further’ does not have work to do and the Court thus should adopt an interpretation which has all the words of the clause making sense.
In terms of purpose, it was submitted by Southern Star that the Credit Agreement, and particularly cl 15, has a protective purpose for Southern Star, due to the risk which exists between the point where Southern Star has spent the money to build and deliver the goods and the point of payment. It was submitted that the Credit Agreement has the purpose of managing this risk and part of the way it does that is through the retention of title in cl 15. The interpretation that better advances that purpose of protection should be preferred by the Court to determine the correct meaning over an interpretation which fails to advance that protective purpose.
The Magistrate’s interpretation, it was argued, fails to advance the protective purpose in any meaningful sense because it makes the trigger for this important right, the right of recovery, very narrow and easily avoided by Ghan. The Magistrate’s interpretation requires Ghan to issue a cheque or other negotiable instrument which then needs to fail. It was submitted that this construction leaves a very obvious option open to Ghan to entirely deny this important right of recovery by simply not paying; that is, to simply refuse to meet a demand. In that case, the right of recovery, the right to go onto land, is entirely denied to Southern Star under the Magistrate’s interpretation and this is quite inconsistent with the protective purpose which it was submitted these clauses should be interpreted to have.
It was argued that, conversely, the interpretation urged by Southern Star does not have that same critical flaw in its application.
Ghan’s Submissions
Ghan submitted that the plain meaning of the words of cl 15 supports the Magistrate’s interpretation. Ghan rejected Southern Star’s submission that the clause is capable of having two meanings.
Ghan submitted that, consistent with the Magistrate’s description of cl 15(e) as a classic Romalpa clause, the clause was intended to protect Southern Star where the purchaser of goods goes into liquidation. It was suggested that the drafters of the clause did not make the liquidation of the debtor company the trigger for the ‘rights’ that the clause confers on Southern Star. Rather, the trigger of the clause is more prescient, being the circumstance where payment is not met on presentation by Southern Star (ie. Southern Star presents a cheque to the bank and it bounces).
It was submitted that it is clear that is what the purpose is because the opening words say ‘[i]f any payment of any goods sold by Southern Star is not met on presentation’. It does not refer to an invoice being presented. That is the clear words of the clause.
Analysis
The task of construction arises from the possibility of more than one meaning. The task for the Court is to determine which is the correct one.
I am of the view that the clear text of the clause can only mean what the Magistrate found that it did; that is, that the opening words of cl 15(e) refer to ‘[i]f any payment for any goods sold … is not met on presentation by Southern Star’.
Those opening words cannot be ignored. They do not refer to the issuing of an invoice or some other demand. It is a clear contortion of the words of the clause to ignore these opening words. The words refer to the form of the payment failing, not to the circumstance of Ghan making no payment.
Clause 15 is the clause which sets the terms as to title of the goods. Per sub‑cl (a), it reserves the title to the goods to Southern Star until payment is received. Sub‑clauses (b) and (c) provide that the risk of loss and damage shall be entirely at the risk of the customer, and the customer agrees not to sell, assign, charge or otherwise encumber or grant any interest over any obligations which any third party may owe to the customer as a result of the use, manufacture or resale of the goods. Per sub‑cl (d), there is a requirement that until the goods have been paid in full, Ghan was to store the goods in such a manner as to clearly show that they are the property of Southern Star.
The interpretation supported by the clear words is not contradicted by the context of the Credit Agreement’s other provisions.
In my view, whilst cl 15 is protective of Southern Star’s interest, it does so by clearly identifying that the title or property in any goods remains with Southern Star until the goods have been paid for in full, and as set out above, if the form of payment fails the consequence is that Southern Star has a right to reclaim the goods.
The Credit Agreement specifically deals with the consequences of failing to pay within 30 days from the date of invoice. This is set out in cl 3. The customer acknowledges that time is of the essence with regard to payment and that breach of the time provision will enable Southern Star to exercise all of its rights in the Credit Agreement, including the right to cancel further credit and to take legal action for the recovery of all sums outstanding.
Clause 8 specifies the rights of Southern Star where a customer defaults in payment by the due date. Clause 8(b) provides that cls 8(a)(3) and (4) may be relied upon at the option of Southern Star where a customer becomes bankrupt, enters into a scheme of arrangement or steps are taken in respect of liquidation. Notably, cl 8 makes no reference to cl 15.
The words used in cls 3 and 8 are to be distinguished from cl 15. In the former clauses, reference is to the time for payment and the consequences of non‑payment. These clauses are to be distinguished from the words used in cl 15, which refers specifically to a failure of the payment upon presentation. This distinction is further reinforced by cl 15(a), which refers to title remaining with Southern Star until payment is received, including that ‘all cheques and other negotiable instruments have been cleared.’
In my view, the correct interpretation cl 15, when text, context and purpose are considered, is consistent with the meaning attributed to it by the Magistrate.
Scope of the licence in cl 15(e)
Both parties made submissions as to the scope of the following licence contained in cl 15(e):
and for this purpose, the Customer hereby irrevocably authorises, consents to and licences Southern Star Windows Pty Ltd or its agents or servants at any time entering onto the Customer premises or where the goods are physically located.
Ghan argued that the words ‘for this purpose’ in cl 15(e) limits Southern Star’s right to enter the land for the purposes of reselling goods reclaimed by Southern Star under cl 15.
Southern Star submitted that this is an overly narrow reading of the clause. It was submitted that the licence is to access the site and, where it is necessary, to recover the goods. The act of selling the goods, if it occurred, would only occur afterwards and that would be anterior to the entry onto the site and it is the purpose of recovery which gives rise to that license.
I am of the view that, on the clear words of the clause, the intention is to permit entry onto the site for the purpose of recovery. The offering of goods for resale is an anterior event and the reference to re‑selling the goods has the effect of clarifying that recovery of the goods allows them to be sold and not just held in escrow or otherwise.
In any event, this issue is peripheral as I have rejected the main premise argued by Southern Star that the clause, on its correct interpretation, triggered Southern Star’s right of entry by delivering an invoice and its subsequent non‑payment.
Conclusion
In my view, the text of cl 15 is unambiguous and his Honour was correct in his interpretation of the plain meaning of it. This interpretation is not contradicted by reading the Credit Agreement as a whole and the interplay between cls 15, 3 and 8 provides the commercial context for cl 15 and provides justification and purpose. The construction advanced by Southern Star stretches the meaning of the words used and distorts the agreement’s provisions overall in a manner which is neither consistent with the words used, the structure of the terms of the agreement nor the commercial intent.
I find no error in his Honour’s construction of the Credit Agreement.
Issue 2: implication of a term
Southern Star submitted in the alternative that if the Magistrate was correct in his interpretation of cl 15, his Honour erred by failing to imply a term to the effect that, where Ghan defaulted on its payment obligations and failed to rectify this default following a demand by Southern Star, Southern Star gained a right of entry and recovery equivalent to the right granted by cl 15.
It was submitted that the implication of this term was required in order to give business efficacy to the Credit Agreement and to fill an obvious gap. The obvious gap was said to be that the protective intent of cl 15(e) is reduced almost to the point of inutility by the ability of Ghan to simply refuse to pay and therefore avoid any risk of having the goods recovered. It was argued that the Court could imply a term which recognises the rights the parties intended, including for Southern Star to recover the goods but with a different triggering phrase. This would be along the lines that where Southern Star makes a demand for payment in circumstances where payment is due and Ghan fails to make such a payment.
The requirements the Court must be satisfied of before a term can be implied are set out in Adaz Nominees at [71] where their Honours Justice of Appeal Whelan and Acting Justice of Appeal Riordan state that an implied term must be:
(a) reasonable and equitable;
(b) necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it;
(c) so obvious that ‘it goes without saying’;
(d) be capable of clear expression; and
(e) contradict any express term of the contract.
This statement of the principles was not disputed by Ghan, however Ghan argued that the requirements were not made out in the circumstances here.
Is the term reasonable and equitable?
Southern Star argued that the implied term it argues for is reasonable and equitable because it only operates to protect the interests of Southern Star in circumstances where Ghan refuses to or fails to pay for goods which have been delivered. It otherwise imposes no prejudice on Ghan.
Ghan submitted that it is neither reasonable nor equitable to extend the protective framework to one of self‑help mechanism for debt recovery.
Is the term necessary to give business efficacy?
Southern Star submitted that the implied term it argues for satisfies the business efficacy requirement. Counsel submitted that the protective framework established by cl 15 would be entirely circumventable by Ghan if it could simply refuse to pay for goods which have been delivered. In order to make this protective framework workable — that is, to give it business efficacy — that gap needs to be filled for the implication of a term of the type Southern Star seeks. It was submitted that if the customer went into liquidation or bankruptcy without ever presenting a cheque which was dishonoured, there would be no right to recover the goods on the Magistrate’s and Ghan’s interpretation. Their interpretation was inadequate to properly protect Southern Star in those circumstances.
Ghan argued that the Credit Agreement has business efficacy without such an implied term and that it does the work it needs to do. The protection afforded by cl 15 is drafted as a Romalpa clause, being a clause designed to protect Southern Star if Ghan goes into liquidation. The protective purpose is as the clause states. There is nothing in cl 15 or the Credit Agreement which suggests more needs to be implied.
Is the term obvious?
As to obviousness, Southern Star submitted that in circumstances where the parties had already agreed that recovery would arise in certain circumstances of a failed payment, a suggestion that the same right should arise in circumstances of a simple refusal to pay is sufficiently obvious as to go without saying.
Ghan submitted that this was not the intention of the clause and disputed that it is not so obvious that a reasonable person would say that it goes without saying. The view of a reasonable person looking at the contract in 2012 would not form the view that the term needs to be implied because the contract does not work without it.
Is the term capable of clear expression?
Southern Star submitted that it is capable of clear expression by using the same wording of cl 15(e) but with an alternative trigger.
Ghan submitted that the suggested implication into the contract was not capable of clear expression.
Does the term contradict any express term of the contract?
Southern Star submitted that it does not contradict any of the existing terms of the Credit Agreement. There is no existing term which rebuts the right to entry in these particular circumstances. On the Magistrate’s interpretation, the Credit Agreement is silent on that particular issue.
Analysis
I am not satisfied that the preconditions necessary to imply a term, which would have the effect of extending the protection of title to the goods by expanding the right to enter the property and repossess them for non‑payment (as opposed to a failed payment) are satisfied.
The parties agreed to the terms of the contract. The liquidation or bankruptcy of a customer and the rights which flow from that eventuality are dealt with in cl 8. Clause 15 deals with title to the goods and the failure of the form of payment (but not non‑payment by the due date). Clause 3 refers to payment. Clause 2 also refers to the circumstances of solvency of the customer.
I am not satisfied that the requirements of reasonableness and equity, business efficacy, clear expression and obviousness are made out. As submitted above on behalf of Ghan, the implication of a term of the type or form urged by Southern Star is not reasonable nor required for business efficacy. The passing of title, the time for payment, circumstances where recovery of the goods is available, and the contractual relief available to Southern Star for non‑payment are all set out in the Credit Agreement. The provisions are harmonious and are not ambiguous.
Further, the extension of the re‑possession protection as sought is not consistent with the provisions of the Credit Agreement which make direct reference to liquidation or insolvency. The terms of cl 15 make it clear that title does not pass until payment is made and cleared. Clause 13 provides for a lien to secure payment of all amounts outstanding. The remedy for non‑payment is to sue for the debt or to enforce the lien.
In my view, Southern Star’s suggested implication goes beyond what the principles in Adaz Nominees would support. In effect, it would require a different and additional term to be created, and if that was in fact what was intended, a clause to that precise effect ought to be explicitly included.
Issue 3: Mitigation
This issue was the basis of Ghan’s appeal.
The question of law raised by Ghan in respect of mitigation is: was Ghan under a legal obligation to mitigate the loss it suffered as a result of the trespass to its chattels by paying Southern Star the price of the goods?
This question concerns the principles of mitigation operating as a limit on the recovery of compensatory damages following the commission of a tort.
The facts relevant to the context of this question bear repeating in order to put the Magistrate’s finding on mitigation into perspective.
Southern Star, as the manufacturer, supplied Ghan with all of the windows and glass doors needed to construct a dwelling for a third party. The goods supplied were in accordance with Ghan’s specification and it was never claimed that the goods were defective or otherwise not fit for purpose. Despite this, Ghan failed to pay for the goods. After making a number of unmet demands for payment, Southern Star entered into Ghan’s building site and recovered window sashes and sliding door panels which represented a small portion of the total goods supplied by Southern Star. Following the recovery of the window sashes and door panels, Southern Star wrote to Ghan informing it of the recovery. The Magistrates’ Court found that at this point Ghan was, or should have been, aware that the window sashes and door panels would be returned and installed if Ghan paid the amount outstanding. The fact that the goods would have been returned upon payment of the invoices was not in dispute at the hearing below.
Rather than pay the invoices, Ghan caused all the doors and windows that had been supplied by Southern Star to be removed from the partially constructed building. Having uninstalled these items, Ghan then engaged an alternative supplier to supply new windows and doors, paid for these and installed them. Ghan’s decision to remove the existing windows and doors and the consequent need for new windows and doors to be manufactured caused the construction to be delayed and Ghan to become liable to the third party for liquidated damages.
His Honour’s consideration of Ghan’s claim for damages is brief:
In respect to the counter‑claim, I am satisfied that although the amounts claimed might not be in dispute the defendant clearly in the circumstances failed to mitigate its loss. The simple solution, or steps to be taken that would have mitigated the loss in this case, would have been to simply pay for the goods as soon as it became apparent that they had not been stolen. In which case I am satisfied that they would have been returned and would have been able to be installed.
In those circumstances the claim in respect to replacement windows and the damages paid to the owners as a consequence of the delay occasioned by arranging for and purchasing replacement windows fails however, I am satisfied that there should be – and I should say I am also satisfied in those circumstances that the claim in respect to the replacement windows for the same reason also fails.
I am satisfied however, that there should be an award of nominal damages in the amount of $100 in respect to the trespassed that I have found Southern Star engaged in in the course of removing the items from the premises.[18]
[18]Magistrate’s Reasons, 10.
Ghan’s submissions
Ghan submitted that the Magistrate incorrectly approached the question of mitigation and thus did not make the correct finding. His Honour’s approach was argued to be contrary to the common law in regard to mitigation of damages. Ghan characterised the Magistrate’s reasoning as being deficient because he was required to objectively consider whether the actions Ghan took were unreasonable. The onus was on Southern Star to demonstrate the actions were unreasonable. Rather, what Southern Star did was to submit to his Honour that the reasonable course was to pay for the goods and that the goods would be resupplied and that submission was accepted by the Magistrate.
Ghan submitted that what his Honour did not do, and what he should have done, was look at what Ghan had actually done (which was to go out and buy other windows) and objectively consider whether those actions were unreasonable. It was submitted that it was not open to Southern Star to suggest another, subjective pathway but that is what it did and his Honour agreed with.
Ghan submitted that the Magistrate’s assessment of Ghan’s conduct and his decision on mitigation itself was contrary to the United Kingdom Court of Appeal precedent of Strutt v Whitnell.[19] It was submitted that what the Magistrate did was to effectively impose a duty in the circumstances for Ghan to contact Southern Star and offer to pay for the goods and that took away any claim for loss and damage that it had incurred. The Magistrate concluded that Ghan failed to mitigate its loss as the simple solution or steps to be taken which would have mitigated the loss would have been simply to pay for the goods as soon as it became apparent that they had not been stolen. It was submitted that, in effect, that reasoning demonstrated an imposition of a duty or obligation on Ghan to contact Southern Star and pay for the goods.
[19][1975] 1 WLR 870.
Ghan referred to Fallon v Johnston,[20] where his Honour Justice Bell set out the principles relating to mitigation of damage which his Honour had adopted from Portbury Development Co Pty Ltd v Ottedin Investments Pty Ltd.[21] Reference was also made to McGregor on Damages[22] and the decisions of Payzu v Saunders,[23] Sotiros Shipping Inc v Sameiet Solholt (The Solholt),[24] Lu v Ballantyne[25] and Healing (Sales) Pty Ltd v Inglis Electrix Pty Ltd.[26]
[20][2018] VSC 273.
[21][2014] VSC 57 (‘Portbury’).
[22]James Edelman, Simon Colton and Jason Varuhas, McGregor on Damages (Sweet & Maxwell, 21st ed, 2022).
[23][1919] 2 KB 581 (‘Payzu’).
[24][1983] 1 Lloyd’s Rep 605 (‘The Solholt’).
[25][2022] VSC 454.
[26](1968) 121 CLR 584 (‘Inglis Electrix’).
It was also submitted that the Magistrate had been unduly influenced by the debt claim against Ghan for non‑payment of the goods. Ghan argued that, on the proper analysis, what the Magistrate was required to do was to divorce the claim for non‑payment of the goods from the question of the appropriate measure of damages for the separate tortious action of trespass. It was necessary for the Magistrate to look at the loss and damage that was actually caused and see if that loss and damage was unreasonable as claimed, rather than impose a duty informed by the fact that Ghan had not paid for the goods in the first place.
Ghan submitted that the Magistrate did not make an objective assessment of what Ghan did, thus there was no finding by the Magistrate that Ghan had acted unreasonably. It was submitted that Ghan’s conduct was not challenged and that the Magistrate’s conclusion, in effect, imposed a legal obligation on Ghan to act in a certain way, rather than making a finding of fact in comparison between alternative courses of action. It was submitted this approach is contrary to law.
Ghan also submitted that the Magistrate wrongly did not distinguish between trespass to land and trespass to goods.
Southern Star’s submissions
Southern Star submitted that it was wrong to characterise the Magistrate’s decision as being one which imposed a legal obligation on Ghan. Further, it was submitted that the Magistrate’s decision was not inconsistent with the established understanding of the principle of mitigation, being that there is no duty to mitigate loss, rather, damages are reduced to the extent that a plaintiff has not acted reasonably.
Southern Star characterised the question of mitigation is one of fact not law and thus an impermissible basis for an appeal under s 109 of the Magistrates’ Court Act 1989.
Southern Star submitted that Ghan appeared to proceed on the basis that an approach that requires a party to continue to deal with a tortfeasor would never be reasonable. It was submitted that such a position was inconsistent with cases including Payzu and The Solholt. In Payzu, it was held that by not entering into alternative dealings with a contractual wrongdoer, the purchaser failed in its duty to mitigate. It had not acted reasonably. It was submitted that the same proposition applied in the case of The Solholt.
Reference was made to the decision of Australian Medic‑Care Co Ltd v Hamilton Pharmaceutical Pty Ltd[27] in which the Honourable Justice Finn at [456], citing Payzu at 586, states that ‘[i]n judging what is reasonable in relation to such offers in a commercial matter, the claimant can be expected to view the matter dispassionately without “indulgence in far‑fetched resentment”’.
[27](2009) 261 ALR 501.
Southern Star submitted that a useful statement of the requirement of reasonableness was made by Chief Justice Irvine in Driver v War Services Homes Commissioner,[28] which was cited with approval by Justice of Appeal Priestley in TCN Channel 9 v Hayden Enterprises.[29] Discussing the expression ‘the duty to mitigate’, Chief Justice Irvine held at 134 that ‘the best test is what would a reasonably prudent man do to avoid further loss to himself, supposing that from the insolvency of the other party or for some other reason, he could not get damages.’
[28](1923) 44 ALT 130.
[29](1989) 16 NSWLR 130.
Southern Star submitted that the Magistrate found that Ghan was aware, following the receipt of the letter on 12 January 2022, that it could pay the outstanding invoices and have the recovered goods reinstalled. From that finding, it was submitted that it was open for the Court to conclude that a reasonably prudent person in the position of Ghan would have paid the outstanding invoices rather than removing the remaining windows from the walls, buying new windows, and delaying completion of the contract.
Southern Star submitted that what the Magistrate did was consider the steps taken by Ghan in removing all the windows and doors which were installed in the house, buying new windows and therefore delaying construction, and compared it to another option which was open to Ghan, that being to simply pay the outstanding invoices and thereby secure the return of the doors and windows. This would have been straightforwardly reinstalled without consequent delay. It was submitted that his Honour judged the reasonableness of Ghan’s conduct in removing the windows and doors compared with the reasonableness of paying for the goods, where if Ghan had done the latter, the additional costs and liquidated damages would not have been incurred.
Southern Star submitted that there was no error by the Magistrate in dealing with the tortious action as being that of trespass to land alone. There was no trespass to goods as title of the goods recovered had never passed to Ghan.
Southern Star submitted that the conclusion of the Magistrate on mitigation and the consequential orders were correct in respect of the application of law and were open to his Honour in respect of the findings of fact. On that basis, Ghan’s appeal should be dismissed.
Analysis
I accept that the task of the Magistrate in making an assessment of damages for trespass was to consider whether the actions of Ghan (as the innocent party in the trespass) were unreasonable. The burden of this question lies on Southern Star, as the tortfeasor.
In Inglis Electrix, the High Court of Australia made it clear that the task of assessment of damages was separate to any other actions, such as here where there is a cross claim for debt owed.
That said, I do not consider that his Honour, in making his assessment of damages for the trespass, failed to assess damages in isolation of the debt claim. In reality, there was a claim and a cross claim before the Court and the Magistrate made separate findings in respect of each claim.
Ghan’s submissions, which implied that the Magistrate appeared to be influenced by the reference to the debt claim, seek to colour his Honour’s finding in a manner which I do not observe as the reality.
In my view, the law on mitigation is well settled and is conveniently described by Justice Garde in Portbury at [158] where his Honour said that ‘there is in fact no duty to mitigate loss; rather, damages are reduced to the extent that the plaintiff has not acted reasonably.’[30]
[30]His Honour’s statement was subsequently endorsed by Beach JA in Lu v Ballantyne, [22] and Bell J in Fallon v Johnston, [21].
In saying that there is no duty or obligation to mitigate loss, what that really means is where a plaintiff fails to mitigate its loss, it does not give rise to any legal action against them. They cannot be sued for breach of a duty. Mitigation is a limitation on the recovery of loss. To the extent that loss suffered by a plaintiff could have been reasonably avoided, the plaintiff will be precluded from recovering that loss against the wrongdoer.
The characterisation of mitigation as a limitation on recovery, rather than a duty, is entirely consistent with the reasoning of the learned Magistrate below. This is apparent to me when his Honour’s reasons are considered as a whole.
It was accepted that a finding that a plaintiff has failed to mitigate its loss requires more than simply suggesting an alternative course of action which, with the benefit of hindsight, would have avoided the loss. What is required is an assessment of the reasonableness of the innocent party’s action or inaction. It is not inappropriate for a defendant to suggest an alternative course of action. On my reading of the Magistrate’s decision, his Honour has made an assessment of the course of conduct Ghan pursued and formed the view that, in the context of an alternative course of action, the action taken by Ghan was unreasonable. In my view, it is not possible to make an assessment of the unreasonableness or otherwise of action taken by Ghan in a vacuum, which in essence is the approach Ghan suggests is what should have been done.
I accept that it was not the burden of Ghan to advance any basis for suggesting the steps identified and undertaken by them were reasonable. That is not the correct analysis. However, there was no evidence from the director of Ghan as to why the decision was made to purchase new windows and doors rather than simply paying the outstanding invoices. There was no suggestion of any inability to pay the outstanding invoices or something that might have made it impossible or particularly detrimental to Ghan to take that step. It was clear they simply chose that more complex and expensive course.
Whilst those parts of his Honour’s oral decision which deal with the counterclaim and the question of mitigation are relatively brief, I do not consider that the characterisation of what the Magistrate did in making his Honour’s damages assessment was legally in error as claimed by Ghan. There is no reference in the Magistrate’s reasons to any ‘duty’ or ‘obligation’ on Ghan. This submission was one which was implied by Ghan.
I do not consider that his Honour’s reference to the option of paying the outstanding debt demonstrates a subjective or preferable option, but rather demonstrates the weighing of considerations between the simple option of paying the debt to Southern Star as opposed to the more expensive and time‑consuming course of removing the goods already installed, ordering completely new goods and thus incurring delay to the delivery of Ghan’s contract with the third party. In my view, when his Honour’s oral reasons are read as a whole, the conclusions on mitigation were open to him and do not demonstrate legal error.
In any event, as the learned authors of McGregor on Damages highlight,[31] the question of mitigation of damages is a question of fact not law and that once a court of first instance has decided that there has been, or not been, a failure to mitigate, it is difficult to persuade an appellate court to come to a different view. In my view, the learned Magistrate formed a view on the facts that the action taken by Ghan were not reasonable and thus they failed to mitigate their loss. This was open to him in making an assessment of damages. He went on to find a nominal amount was the appropriate measure of damage in the circumstances.
[31]See [9‑016], referring to inter alia Payzu and The Soholt.
Whilst the Magistrate’s pathway to his Honour’s conclusion is not set out in the detail and the precise terms articulated by Ghan, I am of the view that reading the parts of his Honour’s decision where his Honour deals with the actions of Ghan in response to Southern Star’s trespass demonstrates that the conclusion his Honour drew was open to him.
I also observe that the authorities referred to are applications of the law of mitigation in the context of their particular facts. The submission by Ghan that Struttv Whitnell is to be preferred over Payzu and The Solholt as suggested in McGregor on Damages is not persuasive in this matter as, in essence, the question before me is whether the Magistrate made an assessment of damages for trespass, taking into account the unreasonableness of the actions taken by Ghan. I have determined that he did make such an assessment.
Further, I do not find that the Magistrate was in error in dealing with the trespass as one of trespass to land rather than trespass to goods. I accept that the goods remained the property of Southern Star under the Credit Agreement.
Does the Magistrate’s reasoning set a dangerous precedent?
It was submitted by Ghan that, whilst in this case the loss and damage was modest, were this situation to arise and his Honour’s approach were to stand in the context of a large construction project, the effect would be to trump the law of tort and the warranty of quiet possession that is implied into contracts under the Goods Act 1958 (Vic).
The submission was that, on the Magistrate’s reasoning, in a large construction project where Southern Star had supplied hundreds of windows, Southern Star would be able to take back parts of those windows and the potential loss and damage would be enormous. It was submitted that the Magistrate’s approach to mitigation, in effect, turns its back on the rule of law. Whilst his Honour considered the common law doctrine of recaption, his Honour formed the view that there cannot be self‑help remedies that can be used in preference to the rule of law, which is to take your debt to the court. However, it was submitted that Southern Star both took the debt claim to court and invoked its self‑help remedy that caused Ghan loss and damage.
It was submitted that, if his Honour’s decision were to prevail, it would have significant consequences for the construction industry and possibly other industries as well.
In response, Southern Star submitted that it was not open to this Court to speculate about what might happen in a particular factual scenario because the application of the doctrine of mitigation in those cases would depend on the reasonableness of alternative courses of action.
I am not convinced that the Magistrate’s decision if not overturned creates a dangerous precedent. The particular scenarios put forward by Ghan all turn on their particular facts and an assessment of the circumstances of the unreasonableness of the action taken by an innocent party in its particular circumstances.
I accept that the purpose of an award of damages in contract and tort is compensatory and not punitive. An award of damages in tort seeks to put the wronged party in the position it would have been had the wrong not occurred, subject to recognised limitations including foreseeability and mitigation. This case is not one where there was any question raised of exemplary or aggravated damages. No application for such damages was before his Honour.
The principles applying to mitigation of loss are well established and have been consistently applied to the specific facts in each case.
It was not argued by Southern Star that Ghan failed to mitigate their loss by failing to pay prior to the recovery of the goods. The focus must be on the actions or inactions after the recovery had taken place.
The application of the principle of mitigation is a factual one which would be addressed on all of the information before the Court in any scenario. I am not persuaded that the Magistrate’s decision, based on the application of the law to the particular circumstance of this case, has the chilling effect that Ghan suggests.
OTHER MATTERS
Other matters, such as the reference to Personal Property Securities Act 2009 (Cth) and the Goods Act 1958 (Vic), were raised in passing by the parties. Given the manner in which the case was argued by them, reference to these matters were peripheral and I have not addressed them.
CONCLUSION AND ORDERS
In answer to the three questions raised in the appeal and cross‑appeal, I have concluded that:
(a) the correct interpretation of cl 15 is that which was ascribed to it by the Magistrate, namely, that cl 15(e) of the Credit Agreement did not permit Southern Star to enter the worksite and recover the goods;
(b) a term of the kind argued for by Southern Star should not be implied into the Credit Agreement; and
(c) the Magistrate did not err in law in his Honour’s determination that Ghan failed to mitigate its loss by not paying for the goods as soon as it became apparent that they had not been stolen.
Both the appeal and cross appeal will be dismissed.
I will provide the parties with an opportunity to make submissions in respect of any application for costs.
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