Kytec Pty Ltd v Prolearn Corporation Pty Ltd - [2024] VSCA 23

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S EAPCI 2022 0021

KYTEC PTY LTD (ACN 167 847 430)	Applicant
v
PROLEARN CORPORATION PTY LTD (ACN 112 114 646)	Respondent

S EAPCI 2022 0026
TELSTRA LIMITED (ACN 086 174 781)	Applicant
v
PROLEARN CORPORATION PTY LTD (ACN 112 114 646)	First Respondent
AND
KYTEC PTY LTD (ACN 167 847 430)	Second Respondent

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JUDGES:	FERGUSON CJ, KENNEDY and MACAULAY JJA
WHERE HELD:	Melbourne
DATE OF HEARING:	9–10 March 2023
DATE OF JUDGMENT:	6 March 2024
MEDIUM NEUTRAL CITATION:	[2024] VSCA 23
JUDGMENT APPEALED FROM:	[2022] VSC 5 (Digby J)

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CONSUMER LAW – Misleading or deceptive conduct – Representations as to future matters – Whether reasonable grounds for representations – Whether evidence at trial established reasonable grounds for representations made by each appellant – Reasonable grounds established in circumstances by reliance on expertise of originator of representations – Leave to appeal granted – Appeal allowed for one appellant (Telstra), dismissed for the other (Kytec).

CONSUMER LAW – Misleading or deceptive conduct – Causation of loss – Loss of opportunity – Whether error in failure to treat claim as global loss claim – No error in applying principles applicable to loss of opportunity claim – Leave to appeal granted – Appeal dismissed.

CONSUMER LAW – Misleading or deceptive conduct – Quantification of loss – Whether error in failure to apply discount required by Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 – No error in quantification of loss – Leave to appeal granted – Appeal dismissed.

Competition and Consumer Act 2010 (Cth), sch 2 ss 4, 18, 29(1)(g).

Sykes v Reserve Bank of Australia (1998) 88 FCR 511; Berry v CCL Secure Pty Ltd (2020) 271 CLR 151, applied.

John Holland Construction & Engineering Pty Ltd v Kvaerner R J Brown Pty Ltd (1986) 8 VR 681; Malec v JC Hutton Pty Ltd (1990) 169 CLR 638; Lake Koala Pty Ltd v Walker [1991] 2 Qd R 49; Commonwealth v Amann Aviation Pty Ltd (1992) 174 CLR 64; Sellars v Adelaide Petroleum NL (1994) 179 CLR 332; Bowler v Hilda Pty Ltd (1998) 80 FCR 191; Concrete Constructions Group Ltd v Litevale Pty Ltd (2002) 170 FLR 290; ACCC v Danoz Direct Pty Ltd (2003) 60 IPR 296; Mainteck Services Pty Ltd v Stein Heurtey SA (2014) 89 NSWLR 633; DM Drainage & Constructions Pty Ltd v Karara Mining Ltd [2014] WASC 170; Murphy v State of Victoria [2014] VSC 363; ACCC v Woolworths Ltd [2019] FCA 1039, considered.

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Counsel
Applicant/Second Respondent, Kytec Pty Ltd:		Mr A Kirby
Applicant, Telstra Limited:		Mr N De Young KC with Ms J Lindgren
Respondent/First Respondent, ProLearn Corporation Pty Ltd:		Dr C Parkinson KC with Mr M McNamara and Mr W Newland
Solicitors
Applicant/Second Respondent, Kytec Pty Ltd:	Kennedys (Australasia) Partnership
Applicant, Telstra Limited:	King & Wood Mallesons
Respondent/First Respondent, ProLearn Corporation Pty Ltd:	Gadens Lawyers

TABLE OF CONTENTS

Introduction and…

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 23
Decision Date: 6 March 2024

CaseChat Overview and Summary

The case of Kytec Pty Ltd v Prolearn Corporation Pty Ltd involved a dispute under the Australian Consumer Law, focusing on allegations of misleading or deceptive conduct, causation of loss, and the quantification of loss. The primary parties were Kytec Pty Ltd, Prolearn Corporation Pty Ltd, and Telstra. Kytec was the supplier of a learning management system to Prolearn, while Telstra was involved as the telecommunications provider. The dispute centred on whether Kytec and Telstra had engaged in misleading or deceptive conduct by making certain representations regarding the system’s capabilities and future maintenance, and whether these actions led to Prolearn’s financial losses.

The legal issues before the court included whether there were reasonable grounds for the representations made by Kytec and Telstra, if the loss experienced by Prolearn was causally linked to the alleged misleading conduct, and how the loss should be quantified. Specifically, the court had to determine whether the primary judge erred in assessing the reasonable grounds for the representations, in treating Prolearn’s loss as an opportunity loss, and in quantifying the damages without applying a discount as required by the High Court's decision in Sellars v Adelaide Petroleum NL.

In its reasoning, the court held that while there was no error in the primary judge’s assessment of the reasonable grounds for the representations made by Kytec and Telstra, there was an error in relation to the causation of loss. The court found that Prolearn's loss should be treated as a global loss claim, not just an opportunity loss, and that this distinction required a different approach in assessing the damages. However, despite this error, it did not affect the overall outcome because the evidence supported Prolearn’s losses regardless of the type of loss claim. Regarding the quantification of loss, the court concluded that no error was made in the quantification of damages, and the primary judge correctly applied the principles of causation and loss assessment.

The court granted leave to appeal for both Kytec and Telstra but dismissed the appeals. For Telstra, the appeal was dismissed due to the absence of any error in the primary judge’s reasoning and findings. For Kytec, although there were errors in the primary judge’s approach to causation, they did not impact the final outcome, and thus the appeal was also dismissed. The court's decision affirmed the primary judge’s findings and orders, including the quantum of damages awarded to Prolearn.

Orders