Kewside Pty Ltd v Warman International Ltd - [1990] FCA 219

JUDGMENT No.

IN THE FEDERAL COURT OF AUSTRALIA )
WESTERN AUSTRALIA DISTRICT REGISTRY) 1
)
GENERAL DIVISION )

BETWEEN: KEWSIDE PTY LTD
Applicant

AND: WARMAN INTERNATIONAL LIMITED
Respondent

CORAM: NORTHROP, WILCOX AND HILL JJ.
PLACE: PERTH

DATED: 4 MAY 1990

EX TEMPORE REASONS FOR JUDGMENT

The appellant, Kewside Pty Ltd, which was the applicant in the proceedings below, appeals against the assessment of damages made by the learned trlal judge, French J, in an application based upon s.52 of the Trade Practices Act, 1974. The learned trial judge found liability to have been established and the respondent does not challenge the findlngs on this issue.

Briefly, his Honour held that the respondent had made certaln representations to the appellant concerning a compressor which was intended for use by the appellant in drilling operations to be conducted by it in country areas which representations went to the number of hours of use which the

alia, in Malaysia. The relevance of the latter representations

compressor had had and whether it had been used overseas, inter

was that use in Malaysia indicated not only a higher number of hours worked by the machine but also that it may have been misused. The representations were false.

Based upon the representations the appellant purchased the compressor and had it installed upon a drilling rlg by the respondent which also performed some upgrading work. The respondent's charges for performing this work were $49,365.42 and were never paid by the appellant. The respondent cross-claimed successfully for the recovery of this amount and the appellant (the respondent to the cross-claim) appeals also against the decision on the cross-claim.

At the heart of the major issue is the approach taken by his Honour to the appellant's claim for damages which were based relevantly on three clalms llsted in schedules. The first (Schedule 1) was a claim for items said to have been purchased by the appellant and when its business failed disposed of by the appellant or rendered useless. Many of the items formed part of a security held by a flnance company and were disposed of by that

company pursuant to its security. The second (Schedule 4) involved a claim for the loss of opportunity to earn a profit in

the period 14 May 1986 to 15 December 1987. The Schedule calculated that loss at $315,631. The third claim (Schedule 3) involved a claim for the loss in fact suffered by the appellant in its period of trading from 14 May 1986 to 18 August 1986. That loss was claimed as $24,715.03.
It is convenient to deal first with the most substantial
claim, being that for the loss of opportunity to make a profit

(Schedule 4) .

His Honour was of the view that the lost opportunity was compensable. The facts which his Honour regarded as relevant in the assessment of damages and the way in which he approached the task can be seen from the following passages in his Honour's judgment:

"Kewsidets decision t o acquire the…

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: [1990] FCA 219
Decision Date: 4 May 1990

CaseChat Overview and Summary

Kewside Pty Ltd, the applicant, appealed against the assessment of damages awarded by French J in proceedings based on s.52 of the Trade Practices Act, 1974. The appeal concerns the respondent, Warman International Limited, which had made certain false representations about a compressor intended for use by Kewside in drilling operations. The primary issue is the correctness of the damages awarded by French J, focusing on the lost opportunity to earn a profit, the actual operating loss, and the loss of capital assets. Kewside claimed damages for the lost opportunity to earn profit, the actual operating loss, and the loss of capital assets. French J found Kewside's loss of opportunity to earn a profit to be compensable, but Kewside argued that the damages awarded were insufficient. Kewside further claimed damages for actual operating losses and the loss of capital assets, which French J did not award. The court held that Kewside's loss of opportunity to earn a profit should be increased from 15% to 55% of the projected profit by Mr Stevens, resulting in a damage award of $133,347.50. Regarding the actual operating loss, the court upheld French J's assessment, discounting it to 15% of the loss claimed. The court also allowed 15% of the capital loss claimed by Kewside. The court adjusted the interest calculation to start from 1 April 1987, rather than 1 January 1988, resulting in a total damage award of $191,738.03. The appeal was allowed in part, and the costs of the appeal were awarded to Kewside.

Orders