Kytec Pty Ltd v ProLearn Corporation Pty Ltd [No 2]
[2024] VSCA 122
•7 June 2024
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S EAPCI 2022 0021
KYTEC PTY LTD (ACN 167 847 430) Appellant v PROLEARN CORPORATION PTY LTD (ACN 112 114 646) [NO 2] Respondent
S EAPCI 2022 0026 TELSTRA LIMITED (ACN 086 174 781) Appellant v PROLEARN CORPORATION PTY LTD (ACN 112 114 646) First Respondent AND KYTEC PTY LTD (ACN 167 847 430) [NO 2] Second Respondent ---
JUDGES: FERGUSON CJ, KENNEDY and MACAULAY JJA WHERE HELD: Melbourne DATE OF HEARING: On the papers DATE OF JUDGMENT: 7 June 2024 MEDIUM NEUTRAL CITATION: [2024] VSCA 122 JUDGMENT APPEALED FROM: [2022] VSC 5 (Digby J) ---
COSTS – Costs of appeal – Calderbank offer – Whether unsuccessful appellant (Kytec) to pay appeal costs of respondent (ProLearn) on indemnity basis following rejection of Calderbank offer prior to appeal – Whether rejection unreasonable – Rejection unreasonable – Unsuccessful appellant to pay costs on indemnity basis after date of offer – Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority [No 2] (2005) 13 VR 435, applied.
COSTS – Costs of trial – Apportionment – Trial orders apportioned respondent’s costs evenly between appellants – Apportionment reflected respective liabilities – Successful appellant no longer liable – Unsuccessful appellant to pay whole of respondent’s trial costs.
COSTS – Costs of trial – Calderbank offer – Whether respondent (ProLearn) to pay trial costs of successful appellant (Telstra) on indemnity basis following rejection of Calderbank offer prior to trial – Whether rejection unreasonable – Rejection not unreasonable – Respondent to pay costs on standard basis only – Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority [No 2] (2005) 13 VR 435, applied.
PRACTICE AND PROCEDURE – Orders consequent upon judgment – Repayment of amounts paid pursuant to orders at trial – Whether repayment of full judgment sum and interest or net amount after deducting counterclaim sum – Repayment of full judgment sum and interest required – Restitutionary interest rate fixed at 3 per cent per annum – Meerkin & Apel v Rossett Pty Ltd [No 2] [1999] 2 VR 31, applied; Millsave Holdings Pty Ltd v Connective Group Pty Ltd [No 2] [2024] VSCA 28; Amcor Ltd v Barnes & Ors [No 2] [2021] VSCA 87; Leeda Projects Pty Ltd v Zeng [No 2] [2020] VSCA 244; Bauer Media Pty Ltd v Wilson [No 3] [2018] VSCA 164; MLC Nominees Pty Ltd v Daffy [No 2] [2018] VSCA 10, 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
The appeals and their outcomes
Issues concerning orders
Does Telstra remain liable?
Issue 5: Whether orders are to be made on a ‘Telstra remains liable’ basis or a ‘Telstra not liable at all’ basis?
Kytec appeal orders
Issue 1: Whether interest is payable by Kytec on the extra damages component after 4 April 2022?
Issue 2: To whom is Kytec to pay the extra damages and interest?
Issue 3: Whether Kytec should still only pay half of ProLearn’s trial costs?
Issue 4: Whether the appeal costs payable by Kytec to ProLearn should be on an indemnity or standard basis after 14 October 2022 (the date of ProLearn’s Calderbank offer)?
Telstra Appeal Orders
Issue 6: Whether, on Telstra’s counterclaim, in addition to the sum of $304,172 for unpaid invoices, ProLearn should also be ordered to pay the $209,481 for early termination charges (total $513,653); and, if so, what orders should be made as to interest?
Issue 7: Whether ProLearn should repay to Telstra the full judgment sum and interest paid pursuant to paragraph 3(c) of the January Orders and paragraph 9 of the October Orders (as contended by ProLearn) or only the net amount after deducting the counterclaim sum of $304,172 payable by ProLearn to Telstra (as contended by Telstra)?
Telstra’s position
ProLearn’s position
Conclusion
Issue 8: Whether the interest rate payable by ProLearn when repaying the sums Telstra paid it for damages and interest is to be calculated at 2 per cent or 3 per cent?
Issue 9: Whether ProLearn is to pay Telstra’s trial costs on an indemnity basis after either of 17 August 2018 (the date of the first Telstra Calderbank offer) or 17 April 2019 (the date of the second Telstra Calderbank letter), or on a standard basis?
The Calderbank offers
Submissions
Consideration
Issue 10: Whether Telstra’s costs of its application for leave to appeal, and appeal, should be paid in whole by ProLearn; or by ProLearn and Kytec in equal shares (or, perhaps, 75 per cent by ProLearn and 25 per cent by Kytec)?
Issue 11:Whether ProLearn should pay Kytec’s costs of Telstra’s counterclaim on the indemnity issue (Telstra grounds 4 and 5) or, perhaps, all three parties should bear their own costs of that issue?
Issue 12:Whether ProLearn should also pay Telstra’s costs of applying for an extension of time?
Issue 13: Whether Telstra should have liberty to apply (on the basis that ProLearn might be insolvent and further orders might be required if payments are not made)?
Conclusion
APPENDIX A: KYTEC APPEAL ORDERS
APPENDIX B: TELSTRA APPEAL ORDERS
FERGUSON CJ
KENNEDY JA
MACAULAY JA:Introduction
1On 6 March 2024 this Court published its reasons for judgment in two appeals, the first in which Kytec Pty Ltd (‘Kytec’) was appellant and the second in which Telstra Limited (‘Telstra’) was appellant (‘Principal Reasons’).[1] ProLearn Corporation Pty Ltd (‘ProLearn’), the plaintiff at trial, was a respondent to both appeals. These reasons deal with questions concerning the orders to be made as a result of our Principal Reasons.
[1]Kytec Pty Ltd v ProLearn Corporation Pty Ltd [2024] VSCA 23 (Macaulay JA, Ferguson CJ agreeing at [1], Kennedy JA agreeing at [2]) (‘Principal Reasons’).
2At trial, ProLearn was awarded damages against both Kytec and Telstra resulting from their respective contraventions of ss 18 and 29(1)(g) of the Australian Consumer Law (‘ACL’).[2] Those contraventions stemmed from representations made to ProLearn with respect to the attributes of a new telephone system proposed for ProLearn’s call centre. Kytec was Telstra’s agent. Both were involved in supplying and installing the new telephone system for ProLearn.
[2]Competition and Consumer Act 2010 (Cth), sch 2.
3The trial judge apportioned liability between Kytec and Telstra and ordered that each pay ProLearn $1,339,776, that sum being 50 per cent of ProLearn’s assessed loss of $2,679,552. Kytec and Telstra were each ordered to pay 50 per cent of ProLearn’s costs of those claims.
4The trial judge also determined various counterclaims and cross-claims, in the following manner:
(a)Telstra’s counterclaim against ProLearn for unpaid invoices was dismissed, although the trial judge ordered (by consent) that ProLearn pay Telstra $304,172. Both parties to the counterclaim were ordered to bear their own costs of that counterclaim.
(b)Kytec’s counterclaim for $10,340 against ProLearn was dismissed, and Kytec was ordered to pay ProLearn’s costs of that counterclaim.
(c)Telstra’s claim against Kytec for an indemnity in respect of Telstra’s liability to ProLearn upon the damages award was dismissed. Telstra was ordered to pay Kytec’s costs of that claim.
5Substantive orders were made by the trial judge on 17 January 2022 (the ‘January Orders’) and orders concerning costs and interest were made, by consent, by a different judge on 26 October 2022 (the ‘October Orders’).
6Kytec’s contraventions of the ACL were founded upon representations that were mostly contained in a written proposal which Kytec prepared in relation to the new telephone system for ProLearn’s call centre. Telstra’s contraventions of the ACL were founded upon:
(a)representations it made by incorporating that same proposal into contractual documents it executed with ProLearn (‘direct conduct’); and
(b)Kytec’s conduct which, because Kytec was Telstra’s agent in dealing with ProLearn, Telstra was deemed to have engaged in pursuant to s 84(2) of the Competition and Consumer Act 2010 (Cth) (‘CCA’) (‘imputed conduct’).
7The representations made by Kytec and Telstra (both directly and as imputed) were representations as to future matters as described in s 4 of the ACL. For that reason, both Kytec and Telstra sought to defend ProLearn’s claims by adducing evidence to establish they each had reasonable grounds for making the representations. Before the trial judge, both failed in that endeavour.
The appeals and their outcomes
8To understand the two appeals and their outcomes, it is necessary to set out in full the January Orders and the October Orders.
9The January Orders, made by Digby J, were:
1. IN RELATION TO THE PROLEARN CLAIMS AGAINST KYTEC
(a)a declaration that in contravention of s 18 of Schedule 2 of the Competition and Consumer Law [sic] 2010 (Australian Consumer Law), Kytec made Representations A, B, E, F and G to ProLearn;
(b)a declaration that in contravention of s 29(1)(g) of the Australian Consumer Law, Kytec made Representation F to ProLearn;
(c)that Kytec pay ProLearn damages pursuant to s 236(1) and s 237(1) of the Australian Consumer Law in the total sum of $1,339,776;
(d)a declaration pursuant to s 237(1) and s 243(a)(ii) of the Australian Consumer Law, that the Kytec Contract is wholly void ab initio and of no effect, and is hereby set aside.
2. IN RELATION TO THE KYTEC COUNTERCLAIM
That Kytec’s Counterclaim against ProLearn, in the sum of $10,340.00 is dismissed.
3. IN RELATION TO THE PROLEARN CLAIMS AGAINST TELSTRA
(a)a declaration that in contravention of s 18 of the Australian Consumer Law, Telstra made Representations TA, TB, TD and TE to ProLearn;
(b)a declaration that in contravention of s 29(1)(g) of the Australian Consumer Law, Telstra made Representations F and TD to ProLearn;
(c)Telstra pay ProLearn damages pursuant to ss 236(1) and 237(1) of the Australian Consumer Law in the total sum of $1,339,776;
(d)a declaration that pursuant to s 237(1) and s 243(a)(ii) of the Australian Consumer Law, that each of the Equipment and Services Contract, the Telephone Contract and the Data Contract are wholly void and of no effect and are hereby set aside;
4. IN RELATION TO THE TELSTRA COUNTERCLAIMS
(a)The Telstra counterclaims and claims against ProLearn and against Kytec are dismissed;
(b)ProLearn pay Telstra the sum of $304,172 in relation to unpaid Telstra invoices.
10The October Orders, made by Stynes J, were:
1.Pursuant to rule 36.07 of the Supreme Court (General Civil Procedure) Rules 2015, order 3(d) of the orders made by the Honourable Justice Digby on 17 January 2022 (‘January Orders’) be amended as follows:
a declaration that pursuant to s 237(1) and s 243(a)(ii) of the Australian Consumer Law, that each of the Equipment and Services Agreement, the Telephone Contract and the Data Contract are wholly void ab initio and of no effect and hereby set aside.
2.Kytec pay fifty percent (50%) of ProLearn’s costs, including any reserved costs, of and incidental to ProLearn’s claims in the proceeding against Kytec and Telstra on a standard basis, with such costs to be taxed in default of agreement.
3.Telstra pay fifty percent (50%) of ProLearn’s costs, including any reserved costs, of and incidental to ProLearn’s claims in the proceeding against Kytec and Telstra on a standard basis, with such costs to be taxed in default of agreement.
4.Kytec pay ProLearn’s costs, including any reserved costs, of and incidental to the Kytec counterclaim on a standard basis, with such costs to be taxed in default of agreement.
5.Telstra and ProLearn bear their own costs, including any reserved costs, of and incidental to the Telstra counterclaim against ProLearn.
6.Telstra pay Kytec’s costs of and incidental to the Telstra counterclaim against Kytec, including any reserved costs, with such costs to be taxed in default of agreement.
7.ProLearn pay interest on the amount awarded to Telstra in order 4(b) of the January Orders in the sum of $70,292.90, such interest calculated from 21 August 2017 to 4 April 2022 at $41.64 per day.
8.Kytec pay interest on the damages awarded to ProLearn in order 1(c) of the January Orders in the sum of $633,915.82, such interest calculated from 22 June 2017 to 16 March 2022 at $367.06 per day.
9.Telstra pay interest on the damages awarded to ProLearn in order 3(c) of the January Orders in the sum of $641,257.17, such interest calculated from 22 June 2017 to 4 April 2022 at $366.85 per day.
11In the Kytec appeal, Kytec appealed against the orders:
(a)declaring that, by making its representations to ProLearn, Kytec contravened ss 18 and 29(1)(g) of the ACL;
(b)that Kytec pay to ProLearn $1,339,776 in damages pursuant to ss 236(1) and 237(1) of the ACL;
(c)dismissing Kytec’s counterclaim against ProLearn; and
(d)that Kytec pay 50 per cent of ProLearn’s costs of its claim, together with all of ProLearn’s costs of Kytec’s counterclaim.
12In the Telstra appeal, Telstra appealed against the orders:
(a)declaring that, by making its representations to ProLearn, Telstra contravened ss 18 and 29(1)(g) of the ACL;
(b)that Telstra pay to ProLearn $1,339,776 in damages pursuant to ss 236(1) and 237(1) of the ACL;
(c)dismissing Telstra’s counterclaims against ProLearn and its claim against Kytec; and
(d)that Telstra pay 50 per cent of ProLearn’s costs of its claim, and Kytec’s costs of Telstra’s claim against Kytec.
13Telstra sought orders that ProLearn’s claim against it be dismissed, or alternatively, that Kytec pay Telstra the sum of $1,035,604 (pursuant to the indemnity the subject of Telstra’s claim against Kytec).
14From the grounds of appeal and the arguments advanced to this Court both in writing and orally, we identified six issues to be decided:[3]
(1)Did Kytec have reasonable grounds for making Representation A due to its assumption that ProLearn would have in place a web-based customer relationship management system?[4]
(2)Did Kytec have reasonable grounds for making Representations A, B, E and F based upon the evidence given at trial?[5]
(3)Did Telstra have reasonable grounds for making its representations (both imputed and separate) by relying upon the skill and expertise of Kytec?[6]
(4)Did the installation of the Solution cause loss and damage to ProLearn?[7]
(5)Did the judge correctly quantify ProLearn’s recoverable loss and damage?[8]
(6)Did the judge err in dismissing Telstra’s indemnity claim against Kytec?[9]
[3]Principal Reasons, [20].
[4]Kytec ground 2.
[5]Kytec ground 1.
[6]Telstra grounds 1 and 2.
[7]Kytec grounds 3, 4 and 5; Telstra ground 3.
[8]Kytec ground 6; Telstra ground 3.
[9]Telstra grounds 4 and 5.
15We concluded that Kytec did not have reasonable grounds for making its representations.[10] We also concluded that the installation of the new telephone system caused loss and damage to ProLearn and that the trial judge correctly quantified ProLearn’s loss and damage.[11] Accordingly, Kytec failed on each of its grounds.
[10]Principal Reasons, [121], [165].
[11]Ibid [284], [327].
16With respect to Telstra, we concluded that Telstra had reasonable grounds for making its representations, both those made directly and those imputed to it by reason of s 84(2) of the ACL.[12] Thus, it succeeded on its grounds 1 and 2. It failed on its ground 3 by which it had adopted Kytec’s grounds with respect to causation and quantification of loss.[13]
[12]Ibid [167], [218]–[219].
[13]Ibid [354(b)].
17Given that we found that Telstra was not liable to ProLearn ‘at all’[14] — because it had reasonable grounds for making the representations as to future matters (that is, those made directly and those imputed to it) — strictly speaking there was no need to determine the sixth question, that is whether the trial judge had erred in dismissing Telstra’s indemnity claim against Kytec. Nevertheless, we indicated that, had it been necessary to decide, we would have allowed Telstra’s appeal on that question and ordered Kytec to indemnify Telstra for any liability it had to ProLearn.[15]
[14]Ibid [355].
[15]Ibid [9], [346].
18In the result, Kytec is solely liable to ProLearn for the assessed loss of $2,679,552. Telstra is not liable to ProLearn at all. Kytec’s obligation to indemnify Telstra for any liability to ProLearn does not arise.
19Arising from this result, the Court requested the parties to confer and, if possible, agree on consequential orders. Failing agreement, the Court directed the parties to file and serve written submissions (of no more than three pages) explaining their proposed form of order. Subsequently, the parties informed the Court that they could not agree on orders, sought further time to file submissions and proposed orders, and requested a staggered sequence of submissions rather than simultaneous submissions. In due course, the following documents were filed:
(a)Kytec’s Minute of Proposed Orders;
(b)Kytec’s Submissions on Proposed Orders dated 27 March 2024;
(c)ProLearn’s Minute of Proposed Orders — Option A;
(d)ProLearn’s Minute of Proposed Orders — Option B;
(e)ProLearn’s Submissions on Proposed Orders dated 27 March 2024;
(f)Affidavit of Patrick Walsh sworn 27 March 2024;
(g)Telstra’s Minute of Proposed Orders — Annexure A;
(h)Telstra’s Minute of Proposed Orders — Annexure B;
(i)Telstra’s Minute of Proposed Orders — Annexure C;
(j)Telstra’s Submissions on Proposed Orders dated 28 March 2024;
(k)First Affidavit of Benjamin Kiely sworn 27 March 2024;
(l)Second Affidavit of Benjamin Kiely sworn 3 April 2024;
(m)Kytec’s Reply Submissions dated 3 April 2024;
(n)ProLearn’s Reply Submissions dated 3 April 2024;
(o)Telstra’s Reply Submissions dated 3 April 2024; and
(p)ProLearn’s Proposed Further Reply Submissions (undated).[16]
[16]ProLearn’s Proposed Further Reply Submissions (undated) were forwarded to the Court without express permission to be filed. As they entirely concern ProLearn’s proposal for Option A orders, we have not had to refer to them.
Issues concerning orders
20From the outcome of the appeals, orders to the following effect must (at least) be made on the Kytec appeal —
(a)leave to appeal be granted and the appeal dismissed;
(b)the order by which Kytec is to pay only 50 per cent of ProLearn’s loss be varied to provide that Kytec pay the whole of the damages, namely $2,679,552;
(c)the order by which Kytec is to pay only 50 per cent of ProLearn’s costs of its claim be varied to provide that Kytec pay the whole of such costs; and
(d)the order by which Kytec is to pay interest on the damages awarded to ProLearn be set aside and replaced with an order that adjusts the interest by reference to the larger principal sum.
21On the outcome we have determined, orders to the following effect must (at least) be made on the Telstra appeal —
(a)time be extended to apply for leave to appeal, and leave to appeal be granted as against both respondents;
(b)the appeal be allowed as against ProLearn but dismissed as against Kytec;
(c)the order by which Telstra is to pay ProLearn $1,339,776 be set aside;
(d)the order by which Telstra is to pay 50 per cent of ProLearn’s costs of its claim be set aside;
(e)the order by which Telstra is to pay interest on damages awarded to ProLearn be set aside; and
(f)the order by which Telstra is to pay Kytec’s costs of Telstra’s claim against Kytec be set aside.
22From the submissions and proposed forms of order filed by the parties, numerous issues arise for determination.
23The issues in respect of the Kytec appeal are:
(1)Whether interest is payable by Kytec on the extra damages component after 4 April 2022?
(2)To whom is Kytec to pay the extra damages and interest?
(3)Whether Kytec should still only pay half of ProLearn’s trial costs?
(4)Whether the appeal costs payable by Kytec to ProLearn should be on an indemnity or standard basis after 14 October 2022 (the date of ProLearn’s Calderbank offer)?
24Continuing the numbering, the issues in respect of the Telstra appeal (including on Telstra’s counterclaims against ProLearn and Kytec) are:
(5)Whether orders are to be made on a ‘Telstra remains liable’ basis or a ‘Telstra not liable at all’ basis?
(6)Whether, on Telstra’s counterclaim, in addition to the sum of $304,172 for unpaid invoices, ProLearn should also be ordered to pay the $209,481 for early termination charges (total $513,613); and, if so, what orders should be made as to interest?
(7)Whether ProLearn should repay to Telstra the full judgment sum and interest paid pursuant to paragraph 3(c) of the January Orders and paragraph 9 of the October Orders (as contended by ProLearn) or only the net amount after deducting the counterclaim sum of $304,172 payable by ProLearn to Telstra (as contended by Telstra)?
(8)Whether the interest rate payable by ProLearn when repaying the sums Telstra paid it for damages and interest is to be calculated at 2 per cent or 3 per cent?
(9)Whether ProLearn is to pay Telstra’s trial costs on an indemnity basis after either of 17 August 2018 (the date of the first Telstra Calderbank offer) or 17 April 2019 (the date of the second Telstra Calderbank offer), or on a standard basis?
(10)Whether Telstra’s costs of its application for leave to appeal, and appeal, should be paid in whole by ProLearn; or by ProLearn and Kytec in equal shares (or, perhaps, 75 per cent by ProLearn and 25 per cent by Kytec)?
(11)Whether ProLearn should pay Kytec’s costs of Telstra’s counterclaim on the indemnity issue (Telstra grounds 4 and 5) or, perhaps, all three parties should bear their own costs of that issue?
(12)Whether ProLearn should also pay Telstra’s costs of applying for an extension of time?
(13)Whether Telstra should have liberty to apply (on the basis that ProLearn might be insolvent and further orders might be required if payments are not made)?
Does Telstra remain liable?
25Because it would affect how all other orders are approached, but also because it can be disposed of quickly, we turn first to Issue 5 in respect of the Telstra appeal orders before dealing with the remaining issues in turn.
Issue 5: Whether orders are to be made on a ‘Telstra remains liable’ basis or a ‘Telstra not liable at all’ basis?
26ProLearn proposed a potential form of order, called ‘Option A’, predicated on a result whereby Telstra remains liable to ProLearn. Hence, under Option A, the order by which Telstra is to pay ProLearn $1,339,776 would remain in place and not be set aside.
27A substantial body of submissions advocating Option A was filed by ProLearn, met by responsive submissions from Telstra and pressed further in reply submissions from ProLearn. Because ProLearn’s Option A would have ramifications for the position between Telstra and Kytec on the issue of the indemnity, Kytec was also drawn into filing reply submissions addressing Option A. In brief compass, ProLearn sought to argue that the Principal Reasons only dealt with — or only could have dealt with — Telstra’s liability stemming from its direct conduct, leaving in place its liability for the imputed conduct.
28By its application for leave to appeal, Telstra sought orders that ProLearn’s claim against it ‘be dismissed’. As stated, in the Principal Reasons, after addressing all the arguments on the appeal, we concluded that Telstra has no liability to ProLearn ‘at all’.[17] For that reason, it was unnecessary to determine Telstra’s appeal against the trial judge’s dismissal of Telstra’s claim for indemnity against Kytec. Option A directly contradicts this Court’s conclusion on Telstra’s liability to ProLearn and the stated inutility of determining the indemnity issue.
[17]Principal Reasons, [355].
29ProLearn’s Option A is misconceived. It is not a form of order that purports to give effect to the Principal Reasons. Rather, it amounts to an appeal against the Court’s judgment. Put simply, ProLearn’s submission advocating Option A cannot be entertained.
30It follows that we will only consider proposed forms of order and submissions that are premised on the finding that Telstra has no liability to ProLearn at all. Accordingly, we now consider the remaining orders in turn, beginning with the Kytec appeal orders.
Kytec appeal orders
31In respect of the Kytec appeal, Kytec accepted that the orders must reflect Kytec’s liability to pay the full amount of ProLearn’s assessed loss, with Telstra no longer being responsible to bear any part of that loss. Kytec also accepted that it must pay the full share of interest payable on those damages. Further, Kytec accepted that it should pay ProLearn’s costs of Kytec’s application for leave to appeal and the appeal which, it submitted, should be assessed on the standard basis.
32From Kytec’s and ProLearn’s submissions, three contentious issues arise in respect of the orders on the Kytec appeal. One is the amount of interest Kytec must pay in place of Telstra sharing responsibility for ProLearn’s loss (Issue 1). Another is whether Kytec should pay any more than half of ProLearn’s trial costs (Issue 3). Yet another is whether Kytec must pay ProLearn’s costs on an indemnity basis rather than, as Kytec submitted, on a standard basis (Issue 4). An additional issue arises from an argument raised by Telstra (Issue 2).
Issue 1: Whether interest is payable by Kytec on the extra damages component after 4 April 2022?
33By paragraphs 8 and 9 of the October Orders, each of Kytec and Telstra were ordered to pay interest on their respective half-shares of the assessed loss. The total amount of interest each was ordered to pay reflected the arithmetical calculation of a certain dollar rate per day up to the date when each paid their share of the principal sum and interest to ProLearn. In Telstra’s case, the interest component was $641,257.17 calculated from 22 June 2017 to 4 April 2022. In Kytec’s case, the interest component was $633,915.82 calculated from 22 June 2017 to 16 March 2022. Against Kytec, ProLearn now seeks an order that, in addition to paying the further $1,339,776 for damages, Kytec also pay an additional $909,574.68 for interest. That amount is calculated at $367.06 per day from 22 June 2017 to 3 April 2024 (the date which ProLearn assumed would be the date of this Court’s orders).
34Kytec submits that it should only have to pay $641,257.17 by way of interest, that being the amount which Telstra was originally ordered to pay by the October Orders. On 4 April 2022, Telstra paid ProLearn $1,526,276 made up as follows:
$1,339,776
Damages
$641,257 Interest $1,981,033 Total payable to ProLearn LESS $304,172 Unpaid invoices $140,585 Interest ($444,757) Total payable to Telstra $1,526,276 Net payable to ProLearn[18] [18]As is evident from the figures in the table, the sum of $1,526,276 is wrong and should be $1,536,276. When it was later ascertained that Telstra had underpaid ProLearn, Telstra made a second payment to ProLearn in the amount of $10,000 on 25 November 2022.
35Kytec submits that, because ProLearn has had the use of Telstra’s payment since 4 April 2022, there is ‘good cause’ for Kytec not to pay statutory interest pursuant to s 60 of the Supreme Court Act 1986 beyond that date. Moreover, Kytec submits it should not be ordered to pay interest under s 101 of the Supreme Court Act1986 on the appeal judgment debt until ProLearn has restored to Telstra the payments it received from Telstra. Otherwise, Kytec argues, ProLearn will be unjustly enriched.
36At this point, the orders to be made on the Telstra appeal intersect with those to be made on the Kytec appeal. As set out below (see [67]–[80]), on the Telstra appeal, Telstra seeks restitution of the money it paid to ProLearn for damages and interest pursuant to paragraph 3(c) of the January Orders and paragraph 9 of the October Orders. In this regard, Telstra seeks payment of:
(a)the sum set out above, namely $1,526,276; and
(b)the further $10,000 amount it paid on 25 November 2022,
that together comprise the net amount it paid to ProLearn.[19] Telstra also seeks interest on those sums from their respective dates of payment — 4 April 2022 and 25 November 2022 — to the date of this Court’s orders giving effect to these reasons.
[19]In addition, Telstra also seeks repayment of a third amount, $70,292.50, together with interest, which it paid to ProLearn on 28 November 2022. However, as discussed below at [70]–[71], this third payment appears to effect the return of an overpayment by ProLearn to Telstra of interest on Telstra’s counterclaim. It is not referable to paragraph 3(c) of the January Orders and paragraph 9 of the October Orders, and is immaterial to the resolution of Issue 1.
37Instead of Kytec paying the further $1,339,776 and interest directly to ProLearn, Telstra seeks an order that Kytec pay that money to Telstra in part satisfaction of the amounts ProLearn must pay to Telstra. Alternatively, Telstra seeks an order that Kytec pay those sums to ProLearn’s solicitors to be held on trust for Telstra to secure amounts owing by ProLearn to Telstra.
38For its part, ProLearn accepts that it is obliged to repay all of the sums it received from Telstra pursuant to paragraph 3(c) of the January Orders and paragraph 9 of the October Orders, together with restitutionary interest. Should it be ordered to do so, ProLearn submits it would be disadvantaged to the benefit of Kytec were Kytec not to pay any interest on the additional component of damages beyond 4 April 2022. That is, ProLearn would have to repay to Telstra the interest it received up to 4 April 2022, together with interest on that sum from that date to the date of this Court’s order. On the other hand, Kytec would be relieved of having to pay any interest after 4 April 2022. ProLearn submits that the orthodox position is that Kytec pay interest at the penalty interest rate on the additional component of judgment debt from 22 June 2017 through to the date of this Court’s order.
39The Court of Appeal may in proceedings before it exercise every power of the Court.[20] In particular, in resolving an appeal, the Court of Appeal may give any judgment or make any order that ought to have been given or made, or make any further or other order.[21]
[20]Supreme Court Act 1986, s 10(3).
[21]Supreme Court (General Civil Procedure) Rules 2015, ord 64.36(2)(b)–(c).
40In our view, the correct approach in this case is that this Court should put in place the orders that should have been made at trial based upon the conclusions we have reached in our Principal Reasons. That is, Kytec would have been ordered to pay damages in the sum of $2,679,552 together with interest from 22 June 2017 to the date of payment. Since Kytec has already paid half that sum of damages and interest on that half to 16 March 2022, it remains for it to be ordered to pay the further sum of $1,339,776 together with interest at the penalty interest rate from 22 June 2017 to the date of this Court’s orders. The repayment by ProLearn to Telstra of the damages and interest paid by Telstra is a separate issue and will be dealt with in accordance with orthodox principles in the Telstra appeal.
41Hence, the order we make will follow the form set out in paragraph 4 of ProLearn’s Minute of Order – Option B but will reflect a calculation up to the date of this Court’s orders, namely that:
Order 8 of the orders made by the Honourable Justice Stynes on 26 October 2022 be varied to provide that Kytec pay interest to ProLearn in the sum of $1,566,982.36, such interest calculated on the sum of:
(a)$1,339,776 from 22 June 2017 to 16 March 2022 at 367.06 per day, being $633,915.82; and
(b)$1,339,776 from 22 June 2017 to 7 June 2024 at 367.06 per day, being $933,066.54.
Issue 2: To whom is Kytec to pay the extra damages and interest?
42Telstra argued that, in the Kytec appeal, the order requiring Kytec to pay the additional component of damages and the interest on those additional damages be expressed to direct that payment be made to Telstra, or on trust for Telstra, rather than to ProLearn. Nevertheless, the amount of interest Telstra sought to be paid to it was limited only to the amount referrable to the period up to 4 April 2022 ($641,257) and not beyond.
43Telstra’s reasoning is that ProLearn is required to repay (and does not resist repayment of) the $1,339,776 which Telstra paid to ProLearn on 4 April 2022 together with the interest up to that date ($641,257). Because Kytec is required to pay at least that sum of money to ProLearn, and ProLearn is similarly required to pay the same sums to Telstra, Telstra seeks to avoid the payment risk it perceives it faces if the money goes to ProLearn first by having Kytec pay those amounts directly to Telstra (or at least to be held on trust for Telstra).
44ProLearn resists such an order. It argues that the two transactions — ProLearn’s repayment to Telstra and Kytec’s additional payments to ProLearn — are distinct, and that the Court’s orders should not alter ProLearn’s existing right to funds nor its priorities for liabilities owing to third parties. Kytec made no submission on this issue.
45We agree with ProLearn’s submission and the reasons for it. There will be no order directing Kytec’s payments to go to Telstra or to be held on trust for Telstra. Kytec should make its payment to ProLearn.
Issue 3: Whether Kytec should still only pay half of ProLearn’s trial costs?
46By paragraphs 2 and 3 of the October Orders, each of Kytec and Telstra were respectively required to pay 50 per cent of ProLearn’s costs of the proceeding below on a standard basis. The parties agree that, in light of our conclusion that Telstra is not liable to ProLearn at all, paragraph 3 of the October Orders must be set aside. However, Kytec does not propose to disturb paragraph 2 of that order, thus leaving it liable to pay only 50 per cent of ProLearn’s costs of the proceeding below. Kytec argued that the percentage was agreed between the parties to reflect the proportion of costs devoted to ProLearn’s claim against Kytec alone, and that it should not be disturbed even though Kytec is now obliged to pay the whole of ProLearn’s damages. ProLearn seeks to have paragraph 2 of the October Orders set aside and, in its place, Kytec be ordered to pay ProLearn’s costs, including reserved costs, on a standard basis. ProLearn argues that it was wholly successful as against Kytec and that Kytec should now pay the whole of the costs.
47We agree with ProLearn’s submission. The original apportionment of costs reflected the apportionment of liability for damages. Now that that basis has gone, so too should any apportionment of the cost liability. Kytec must pay the whole of ProLearn’s costs of the trial.
Issue 4: Whether the appeal costs payable by Kytec to ProLearn should be on an indemnity or standard basis after 14 October 2022 (the date of ProLearn’s Calderbank offer)?
48ProLearn submitted that Kytec should pay ProLearn’s costs of Kytec’s appeal on a standard basis until the date ProLearn made a Calderbank offer (14 October 2022) and thereafter on an indemnity basis. Kytec resists payment of any indemnity costs.
49The principles which guide the exercise of the Court’s discretion to award costs on an indemnity basis following the delivery and subsequent rejection of a Calderbank letter are well established. They are set out in Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority [No 2].[22] The test is whether the rejection of the offer was, in all the circumstances, unreasonable. With the caveat that it is not possible or desirable to set out an exhaustive list of relevant circumstances to take into account, this Court listed the following as those matters to which the Court should ordinarily have regard in deciding whether the rejection was unreasonable:
(a)the stage of the proceeding at which the offer was received;
(b)the time allowed to the offeree to consider the offer;
(c)the extent of the compromise offered;
(d)the offeree’s prospects of success, assessed as at the date of the offer;
(e)the clarity with which the terms of the offer were expressed; and
(f)whether the offer foreshadowed an application for indemnity costs in the event of the offeree’s rejecting it.[23]
[22](2005) 13 VR 435; [2005] VSCA 298 (‘Hazeldene’s Chicken Farm’).
[23]Ibid 442 [25] (Warren CJ, Maxwell P and Harper AJA).
50ProLearn’s Calderbank offer, dated 14 October 2022, effectively offered Kytec as follows:
(a)the damages payable by Kytec to ProLearn under the January Orders be reduced (from $1,339,776) by $100,000;[24]
(b)the Kytec appeal be dismissed; and
(c)Kytec pay ProLearn’s costs of the Kytec appeal on the standard basis.
[24]The reduced sum represented 46 per cent of its total potential liability: see [57] below.
51Kytec rejected ProLearn’s offer and maintained, for the following reasons, that it was not unreasonable to do so:
(a)the Offer did not refer to or deal with Telstra’s Appeal, under which Telstra sought an indemnity against Kytec under the Dealership Agreement. The trial judge had found that the indemnity was not engaged. Telstra sought leave to appeal from that finding. The effect of this was that if Kytec had accepted the Offer it still had to participate in and defend the Telstra Appeal (as did ProLearn) and faced liability under the Telstra indemnity claim;
(b)the Offer was made after all of the written submissions had been filed and preparatory work for both the appeals had been completed;
(c)leave to appeal was granted on all of Kytec’s grounds of appeal, which were all arguable. Kytec’s application therefore had reasonable prospects of success at the time of the Offer, a factor noted in Hazeldene's Chicken Farm. In addition, Telstra had in its application for leave to appeal adopted Kytec’s grounds of appeal 3 to 6;
(d)the Offer involved only a very modest reduction in the damages payable by Kytec; and
(e)the Offer did not foreshadow an application for indemnity costs in the event of Kytec rejecting it.
52ProLearn, for its part, maintained that the rejection of the offer was unreasonable because:
(a)the appeals were at an advanced stage, the written cases having been served in May 2022, and the parties had mediated on 26 September 2022;
(b)the offer was open for a period of 13 days, until 27 October 2022;
(c)the compromise of $100,000 was a significant amount; and
(d)the offers foreshadowed an indemnity costs application by making reference to the principles in Calderbank v Calderbank[25] and Hazeldene’s Chicken Farm.
[25][1976] Fam 93; [1975] 3 All ER 333.
53Moreover, compared to the damages liability to which Kytec was potentially exposed, ProLearn submitted that its offer represented a very significant reduction. Had Kytec accepted the offer it would not have been exposed to the scenario that its liability could expand to $2,679,552. ProLearn maintained that its offer amounted to a significant compromise in relation to Kytec’s potential liability and a significant elimination of risk.
54In our view, Kytec should be obliged to pay ProLearn’s costs of the Kytec appeal on an indemnity basis on and after 15 October 2022. The proceeding was at an advanced stage at the time the offer was made. All of the written submissions had been filed and the parties had recently had a mediation. A reasonable period of time in the circumstances — 13 days — was allowed to Kytec to consider the offer.
55The terms of the offer were clear and readily comprehendible. The extent of the compromise was significant. Even on the simplest scenario, a reduction of $100,000 from $1,339,776 was itself a meaningful reduction in liability.
56Kytec argues that ProLearn’s offer did not take account of the possibility that, whilst maintaining its own liability for 50 per cent of ProLearn’s loss, it (Kytec) might lose Telstra’s appeal on the counterclaim and also be liable to indemnify Telstra for its 50 per cent liability toward ProLearn. The existence of these potential risks (whether pointed out to Kytec or not) was not of sufficient weight to make Kytec’s rejection of the offer reasonable. Nor are we persuaded that ProLearn’s failure to refer to all of the potential permutations and combinations of outcomes in its Calderbank letter made Kytec’s rejection of ProLearn’s offer reasonable. Kytec did not need ProLearn to point out the potential for even more seriously adverse scenarios.
57At the date of the offer, Kytec faced the prospect — one which has now materialised — that it would lose its appeal against ProLearn yet Telstra would succeed on its appeal, leaving Kytec liable to ProLearn for the entire amount of ProLearn’s loss. Had Kytec accepted the offer, its liability to ProLearn would have been capped at about 46 per cent of the amount it was ultimately found liable for on the damages component alone, leaving aside the additional interest it is required to pay. We agree that this would have amounted to a very substantial cap on its ultimate liability and elimination of risk.
58Kytec argued that it had an ongoing interest in contesting Telstra’s liability to ProLearn, because of Kytec’s exposure on its indemnity to Telstra. But, as the arguments on the appeal revealed, Kytec substantially left it to Telstra to argue its own defence. Kytec could have assisted Telstra’s defence on technical issues, without being required to participate as a litigant in the appeal and be exposed to a costs risk. Kytec’s dispute with Telstra concerning the indemnity was entirely self-contained and confined to a construction argument. It could readily have limited its participation in the appeal to its argument with Telstra on the indemnity.
59It is true that the offer did not foreshadow an application for indemnity costs in stark or express terms. Nevertheless, we agree that the references to Calderbank v Calderbank and Hazeldene’s Chicken Farm unmistakeably carried that connotation.
60For these reasons, we agree that the order proposed by ProLearn should be made.
Telstra Appeal Orders
Issue 6: Whether, on Telstra’s counterclaim, in addition to the sum of $304,172 for unpaid invoices, ProLearn should also be ordered to pay the $209,481 for early termination charges (total $513,653); and, if so, what orders should be made as to interest?
61By paragraphs 4(a) and (b) of the January Orders, the trial judge ordered ProLearn to pay Telstra $304,172 for unpaid invoices, but otherwise dismissed Telstra’s counterclaim against ProLearn. Telstra now seeks an order that would replace paragraphs 4(a) and (b) of the January Orders with a series of orders that:
(a)increase the judgment amount on the counterclaim by $209,481, ‘for early termination charges’, to a total of $513,653;
(b)provide for ProLearn to pay interest on the original and the increased judgment sums in the counterclaim; and
(c)provide for ProLearn to pay costs, including a component of indemnity costs, on the counterclaim.
62Neither Telstra nor ProLearn seek to reinstate the judge’s order, in paragraph 4(a), dismissing Telstra’s counterclaim against ProLearn.
63Whereas, at the trial, ProLearn conceded its liability to Telstra for the $304,172, it contested its liability for the $209,481. According to Telstra, the basis for that dispute — that the relevant contracts between Telstra and ProLearn were void ab initio due to Telstra’s alleged misleading and deceptive conduct — now falls away and the full amount should be ordered.
64ProLearn disputes any basis for ordering that it should now pay the additional sum. It maintains that there was no finding by the trial judge that it make any such payment and no order was sought on appeal for the payment of early termination charges. In particular, ProLearn argues that the justification for it not being liable to pay charges for terminating contracts that it would never have entered, because of misleading and deceptive conduct, still applies. That is, ProLearn submits that it would not have entered the contracts with Telstra except for the misleading and deceptive conduct of Kytec.
65Telstra had no ground of appeal which contested the sum awarded in paragraph 4(b) of the January Orders. Nor, in its application for leave to appeal, did it propose any order that disturbed the quantum of the judgment on the counterclaim ordered by that paragraph. On the appeal, Telstra made no submissions concerning the effect of a finding which excused it of any contravention of the ACL on its entitlement to early termination charges.
66In those circumstances, we reject Telstra’s claim for an order granting it additional damages on its counterclaim against ProLearn, with associated interest. ProLearn is liable to Telstra only for the sum of $304,172 and interest thereon.
Issue 7: Whether ProLearn should repay to Telstra the full judgment sum and interest paid pursuant to paragraph 3(c) of the January Orders and paragraph 9 of the October Orders (as contended by ProLearn) or only the net amount after deducting the counterclaim sum of $304,172 payable by ProLearn to Telstra (as contended by Telstra)?
67There is no dispute between ProLearn and Telstra that ProLearn must restore to Telstra the money which Telstra paid to ProLearn (including interest) in accordance with paragraph 3(c) of the January Orders and paragraph 9 of the October Orders. But there is a dispute about how that repayment is to be effected.
Telstra’s position
68For its part, Telstra submits that this Court should order ProLearn to make a single payment to Telstra that is derived from the netted-off product of sums which Telstra was both to pay and receive under the January Orders and October Orders. As set out above at [34], Telstra paid ProLearn $1,526,276 on 4 April 2022. On that day, Telstra owed ProLearn $1,981,033 for damages and interest on ProLearn’s claim pursuant to paragraph 3(c) of the January Orders and, as later agreed and ordered, paragraph 9 of the October Orders. Subject to a qualification mentioned below, on the same day, ProLearn owed Telstra $444,757 for damages and interest on Telstra’s counterclaim pursuant to paragraph 4(b) of the January Orders and paragraph 7 of the October Orders. The difference was $1,536,276.
69As explained,[26] it was later ascertained that Telstra had underpaid ProLearn by $10,000. So, a second payment was made in that amount on 25 November 2022.
[26]See n [18] above.
70Telstra’s solicitor, Mr Kiely, has deposed that Telstra made a third payment to ProLearn of $70,292.50 on 28 November 2022. He has exhibited a document proving the payment. Telstra has added this payment to the first two payments to arrive at the total sum it requires to be repaid and upon which interest should be paid. The reason for that third payment has generated some confusion. Mr Kiely says it was paid in accordance with paragraph 7 of the October Orders. That order required ProLearn to pay $70,292.90 to Telstra (not the other way around) as interest on the damages owed under the counterclaim. The amount recorded in that order was very similar, but not identical, to the third Telstra payment.[27]
[27]At one point, Telstra had calculated the interest on the counterclaim at $140,585.80 (80 cents more than the figure used to determine the payment made on 4 April 2022) and this variance may account for the slight difference between the amount of Telstra’s third payment to ProLearn, and the amount referred to in paragraph 7 of the October Orders.
71However, for the following reasons, it seems that the payment by Telstra on 28 November 2022 was to effect a refund to ProLearn of an overpayment of interest on the counterclaim judgment. In calculating the $444,757 referred to above, Telstra had nominated that ProLearn was to pay it interest on the counterclaim in the sum of $140,585. That sum was later compromised when the parties agreed that ProLearn pay only half of the applicable penalty rate. Presumably, the payment of half that sum by Telstra to ProLearn on 28 November 2022 (after the parties had consented to the October Orders) represented Telstra’s reimbursement to ProLearn of the overpaid portion of interest inherent in the netted-off payment made on 4 April 2022. In truth, therefore, the ‘third payment’ was a restoration to ProLearn of money which had been wrongly paid by it in the first place.
72In its submissions as to orders, Telstra originally sought an order that ProLearn repay to Telstra the amount of $1,536,276 (being the sum of its first payment to ProLearn on 4 April 2022, and its second payment on 25 November 2022). Its final position is that ProLearn should pay the sum of all three payments that were made in 2022, namely $1,606,568.50. As can be seen, this figure is the aggregate of the original payment by Telstra of $1,526,276 and the two additional payments of $10,000 and $70,292.50 respectively.
73In addition, Telstra seeks an order that ProLearn pay interest in an amount calculated by applying a daily interest rate, at the restitutionary rate of 3 per cent per annum, to the incremental total sum derived after each of the three tranches of payments made in 2022, through to the present time.
ProLearn’s position
74By its proposed orders, ProLearn contends that this Court should make orders that:
(a)set aside paragraphs 3 and 4(a) of the January Orders and, in their place, order that ProLearn’s claims against Telstra be dismissed; and
(b)by way of restitution, require ProLearn to repay Telstra $1,339,776 and the associated statutory interest paid on those damages, together with interest on those sums at the restitutionary rate (the quantum of which is the subject of Issue 8).
75ProLearn notes that Telstra criticised ProLearn’s submission on the basis that it ‘does not take into account that Telstra paid those amounts net of the counterclaim figures’. ProLearn maintains that its approach is correct because paragraph 4(b) of the January Orders made in relation to Telstra’s counterclaim, requiring the payment for unpaid invoices, is not to be set aside.
Conclusion
76In our view, ProLearn’s approach is correct. Because of this Court’s judgment, Telstra was not in fact obliged to pay the sums under paragraph 3(c) of the January Orders and paragraph 9 of the October Orders. On the other hand, our judgment leaves undisturbed ProLearn’s obligation to pay the sums in accordance with paragraph 4(b) of the January Orders and paragraph 7 of the October Orders (except that, as explained below, ProLearn’s liability for interest under paragraph 7 is extended to the date of this Court’s order).
77The amount which ProLearn is obliged to repay to Telstra by way of restitution is only the sum which Telstra had paid in reliance upon paragraph 3(c) of the January Orders and paragraph 9 of the October Orders. The fact that there was an accounting allowance at the time with respect to amounts owed by ProLearn on the counterclaim does not alter that fact.
78To properly reflect the orders that should have been made at the time, in light of our judgment, our order will require that ProLearn make restitution to Telstra of the $1,339,776 for damages and $641,257.17 for statutory interest, a total of $1,981,833.17. On that sum, ProLearn is to pay interest at the restitutionary rate from 4 April 2022 to the date of this Court’s order. To do otherwise would distort the proper liabilities for interest due from and to the relevant parties. If ProLearn was relieved of paying restitutionary interest on the full amount of damages due to be repaid to Telstra — by allowing for a netting off of its liability for damages and interest on Telstra’s counterclaim — that would impact Kytec’s liability to pay interest to ProLearn on its additional component of damages. It would also mean that ProLearn was effectively relieved of paying statutory penalty interest on the judgment on the counterclaim.
79In our view it is preferable that orders now be made to distinctly account for each of the individual and separate liabilities arising from the conclusion of each claim.
80Paragraph 4(b) of the January Orders should remain in place — that is, the order that ProLearn pay Telstra the sum of $304,172 in relation to unpaid Telstra invoices. Similarly, the substance of paragraph 7 of the October Orders by which ProLearn was ordered to pay interest to Telstra on the amount in paragraph 4(b) of the January Orders should also remain in place. However, because the netting-off of the judgments on the claim and counterclaim are to be undone, ProLearn will not be reckoned as having paid the counterclaim sum at all. Thus, the period for it to pay statutory interest in paragraph 7 of the October Orders, at the compromised rate, should be extended in duration from 4 April 2022 to the date of this Court’s order giving effect to these reasons. How, if at all, Telstra and ProLearn should adjust their respective liabilities on each of these components for the underpayment (by Telstra) of $10,000 and the overpayment (by ProLearn) of $70,290.90 is an imponderable. We intend to leave the consequences of those over or under payments where they fall.
Issue 8: Whether the interest rate payable by ProLearn when repaying the sums Telstra paid it for damages and interest is to be calculated at 2 per cent or 3 per cent?
81There is no dispute between ProLearn and Telstra that ProLearn should pay interest on the sums it now must repay to Telstra. The sums it must repay are those which Telstra paid pursuant to paragraph 3(c) of the January Orders and paragraph 9 of the October Orders — namely, the damages of $1,339,776 and the statutory interest on that judgment amount.[28]
[28]There is no evidence that Telstra paid any costs to ProLearn as ordered by paragraph 3 of the October Orders. Nor is there any reference in any proposed minute of order or submission to any need to have ProLearn repay any sum to Telstra on account of costs. We infer that no costs were paid.
82There is no dispute that the nature of the interest to be paid on those sums is as described in Meerkin & Apel v Rossett Pty Ltd [No 2][29] — that is, interest that is designed to restore to a successful appellant the fruits of its judgment and to do justice between the parties.[30] Where a judgment for debt or damages is set aside on appeal after being complied with, the appellant is entitled, by way of restitution, to interest on the entire judgment sum (including both the principal amount and interest). The rate of interest is not the penalty interest rate referred to in either ss 58 or 60 of the Supreme Court Act 1986, but a rate calculated to restore to the appellant the fruits or presumed fruits of the judgment and to do justice between the parties.
[29][1999] 2 VR 31; [1999] VSCA 10.
[30]Ibid 35 [11] (Callaway JA, Charles JA agreeing at 32 [1], Batt JA agreeing at 37 [17]).
83In Millsave Holdings Pty Ltd v Connective Group Pty Ltd [No 2],[31] this Court recently observed that in a number of recent cases, a rate of 2 per cent has been applied to restitutionary repayments made following a successful appeal.[32] Observing, however, that interest rates had risen in recent years and that such a rate may no longer be appropriate, the court in Millsave Holdings sought further submissions from the parties as to the appropriate rate of interest. In the end, the parties agreed on a rate being the cash rate target set from time to time by the Reserve Bank of Australia. The court was prepared to make an order reflecting the parties’ agreement. In other words, the court did not make its own determination of an appropriate rate of interest.
[31][2024] VSCA 28 (‘Millsave Holdings’).
[32]Ibid [30], n 11 (McLeish, Macaulay and Lyons JJA). The Court referred to the following cases: Amcor Ltd v Barnes [No 2] [2021] VSCA 87, [97] (Ferguson CJ, Beach and Whelan JJA); Leeda Projects Pty Ltd v Zeng [No 2] [2020] VSCA 244, [14] (Tate, Kaye and McLeish JJA); MLC Nominees Pty Ltd v Daffy [No 2] [2018] VSCA 10, [8] (Beach and McLeish JJA).
84In this case, ProLearn seeks a restitutionary interest rate of 2 per cent per annum, and Telstra seeks a rate of 3 per cent per annum. In seeking 3 per cent, Telstra argues that its approach is consistent with recent authorities which have applied the Reserve Bank of Australia’s cash target rate for the relevant period. Relying upon evidence adduced by Mr Kiely of rates published on the Reserve Bank of Australia’s website, Telstra argues that since April 2022, the cash target rate has increased from 0.1 per cent to 3.1 per cent in December 2022, and then to 4.35 per cent in November 2023 (where it remained until the date of Mr Kiely’s affidavit). The cases to which Telstra referred as supporting its approach were Amcor Ltd v Barnes & Ors [No 2];[33] MLC Nominees Pty Ltd v Daffy [No 2];[34] Leeda Projects Pty Ltd v Zeng [No 2];[35] and Bauer Media Pty Ltd v Wilson [No 3].[36]
[33][2021] VSCA 87, [95]–[97] (Ferguson CJ, Beach and Whelan JJA) (‘Amcor [No 2]’).
[34][2018] VSCA 10, [8] (Beach and McLeish JJA) (‘MLC Nominees [No 2]’).
[35][2020] VSCA 244, [14] (Tate, Kaye and McLeish JJA) (‘Leeda Projects [No 2]’).
[36][2018] VSCA 164, [3]–[5] (Tate, Beach and Ashley JJA) (‘Bauer Media [No 3]’).
85In Amcor [No 2], this Court allowed an interest rate of 2 per cent across a period from 2012 to 2021.[37] In MLC Nominees [No 2], this Court, in February 2018, allowed an interest rate of 2 per cent per annum on the repayment of a judgment sum which had been paid in November 2016.[38] In Bauer Media [No 3], this Court, in June 2018, allowed interest at the rate of 2 per cent per annum on the repayment of a judgment sum which had been paid in October 2017.[39] In Leeda Projects [No 2], this Court, in September 2020, allowed a rate of 2 per cent per annum on the repayment of a sum which had been paid in May 2019.[40]
[37]Amcor [No 2] [2021] VSCA 87, [97] (Ferguson CJ, Beach and Whelan JJA).
[38]MLC Nominees [No 2] [2018] VSCA 10, [8] (Beach and McLeish JJA).
[39]Bauer Media [No 3] [2018] VSCA 164, [5] (Tate, Beach and Ashley JJA).
[40]Leeda Projects [No 2] [2020] VSCA 244, [14] (Tate, Kaye and McLeish JJA).
86In the period from April 2022 until now, the cash rate of the Reserve Bank of Australia has steadily risen. For about one quarter of that period of time, the cash rate was below 2 per cent, but for about two thirds of the time it has been above 3 per cent. For nearly the last 12 months, it has been above 4 per cent.
87Having regard to this evidence, for the period in question it is appropriate to set 3 per cent per annum as the restitutionary rate of interest in order to do justice between the parties.
Issue 9: Whether ProLearn is to pay Telstra’s trial costs on an indemnity basis after either of 17 August 2018 (the date of the first Telstra Calderbank offer) or 17 April 2019 (the date of the second Telstra Calderbank letter), or on a standard basis?
88ProLearn accepts that paragraphs 3 and 5 of the October Orders must be vacated. It proposes that they be replaced by an order requiring ProLearn to pay Telstra’s costs of ProLearn’s claim against Telstra, and Telstra’s counterclaim against ProLearn, on a standard basis. Telstra, which had delivered two Calderbank offers to ProLearn prior to trial, seeks an order that ProLearn pay Telstra’s costs of the claim and counterclaim on a standard basis to the date of one or other of those two offers, but on an indemnity basis thereafter. The parties agree that the only issue between them is the basis for the assessment of costs. Hence, there are three possibilities: (1) costs on a standard basis for the whole time; (2) on a standard basis until the first Calderbank offer and thereafter on an indemnity basis; or (3) on a standard basis until the second Calderbank offer and thereafter on an indemnity basis.
89We have already set out above (at [49]) the established principles that guide the court in the exercise of its discretion in relation to this issue.
The Calderbank offers
90The first Calderbank offer sent on behalf of Telstra was dated 17 August 2018 (the ‘first Calderbank offer’). The second Calderbank offer was dated 17 April 2019 (the ‘second Calderbank offer’). Telstra advanced its argument in its principal submission and submission in reply. Likewise, ProLearn advanced its argument in its principal submission and submission in reply.
91By its first Calderbank offer, Telstra informed ProLearn that its purpose was to ‘outline the weakness in your [...] claim against Telstra, to provide you with updated figures for Telstra’s counterclaim, and to make a settlement offer to resolve the matter’. In the letter, Telstra maintained that ProLearn would fail to establish that: Kytec was Telstra’s agent for the purpose of making representations; Telstra made any of the representations itself; ProLearn relied upon the representations; Telstra could not rely upon a contractual limitation of liability; and any loss and damage was caused to ProLearn by the alleged wrongdoing. Moreover, Telstra claimed that its full entitlement on its counterclaim was $514,663.98 in ‘unpaid debts’, plus interest. Its offer was to settle ProLearn’s claim and Telstra’s counterclaim on the basis that each party walk away and bear their own costs.
92In the second Calderbank offer, Telstra again stated its purpose was to ‘reiterate the weaknesses in your [...] claim against Telstra, and to make a settlement offer to resolve this matter, particularly in light of the expert evidence that [Telstra] has recently filed’. In purporting to reiterate the weaknesses of ProLearn’s claim, Telstra substantially repeated its arguments from its first Calderbank offer on the topic of Kytec’s agency, Telstra’s own representations, ProLearn’s reliance on representations, Telstra’s contractual limitation of liability and alleged problems with ProLearn’s case on causation of loss and damage.
93In respect of causation of loss and damage, Telstra referred in its second offer to the expert reports of Michael Smith, Dawna Wright and Daniel Wolff which had been filed since the first Calderbank offer. Telstra put arguments, based upon those reports, that ProLearn had failed to adduce any cogent evidence to support its alleged loss and damage claim.
94An additional argument in the second Calderbank offer addressed ProLearn’s allegation that Kytec had made the representations with the implied consent or agreement of an employee or agent of Telstra, so that the representations were thus deemed to have been made on behalf of Telstra pursuant to s 84(2)(b) of the CCA. Telstra denied that any such implied consent or agreement existed. Further, Telstra again referred to the value of its counterclaim for ‘unpaid debts’ at a similar level and in similar terms to its previous offer. Once again, its offer was that each party walk away and bear their own costs.
Submissions
95Telstra argued that it was unreasonable for ProLearn to have rejected each of the offers. As to the first offer, Telstra submitted that the offer was made at a well-developed stage in the proceeding, after discovery and a mediation had taken place and with evidence preparation in progress. Sufficient time was given for the offer’s acceptance. Telstra claimed it had correctly outlined the reasons why ProLearn’s contract claim would fail. As to why ProLearn’s claims for misleading and deceptive conduct would fail, Telstra argued that ‘ProLearn’s claim always had a persuasive burden that Telstra did not have reasonable grounds for its representations’. Relying upon this Court’s finding in Telstra’s favour on that question, Telstra argued that ProLearn’s refusal to accept its offer was therefore unreasonable.
96Telstra put the same arguments in relation to ProLearn’s refusal to accept the second Calderbank offer, adding that the second offer was made only five weeks before the trial commenced, with Telstra’s lay and expert witness evidence having been filed by that point, and with ProLearn enjoying greater opportunity to assess its prospects of success, ‘particularly in relation to Telstra’s reasonable grounds defence’.
97ProLearn argued that, by its pleading, ProLearn had sought to attribute liability to Telstra on the basis that Telstra was liable for Kytec’s conduct pursuant to s 84(2) of the CCA. Given that its claims against Kytec were ultimately upheld, ProLearn argued that it was not unreasonable for it to reject Telstra’s offers. Moreover, ProLearn pointed out that this Court did not ultimately endorse the alleged weaknesses in ProLearn’s misleading and deceptive conduct claims as articulated by Telstra in its two offers.
98In reply, Telstra submitted that ProLearn’s reliance on s 84(2) of the CCA is linked with its erroneous reliance upon its Option A basis for resolving this Court’s orders. In any event, Telstra submitted that ProLearn had not pleaded reliance upon s 84(2) before the first Calderbank offer and, generally, ProLearn had not grappled with the basis upon which Telstra ultimately succeeded, namely its reasonable grounds defence.
Consideration
99It is of considerable significance, in our view, that nowhere in either of Telstra’s two Calderbank letters does it place any reliance upon its reasonable grounds defence. As ProLearn correctly pointed out, each of the arguments Telstra relied upon in respect of the misleading and deceptive conduct claim to assert the weakness of ProLearn’s claim failed at trial and did no better on appeal. We think there is some merit in ProLearn’s argument that, at least by the second Calderbank letter, part of its argument against Telstra was that Telstra was fixed with Kytec’s conduct pursuant to s 84(2) of the CCA. That argument had the capacity to deal with a number of the asserted weaknesses set out in the Calderbank offers. As we have already observed, when dealing with the s 84(2) argument in the second Calderbank offer, Telstra denied the fundamental agency rather than rely upon a separate ‘reasonable grounds’ defence.
100In the end, as our Principal Reasons explain, Telstra’s defence of reasonable grounds was found to have merit. However, the reasons why Telstra succeeded on its reasonable grounds defence, whereas Kytec did not, involved some subtlety and nuance. Telstra did not address the crucial basis for its successful defence of ProLearn’s claim in either of its two Calderbank offers.[41]
[41]There is no general rule that an offeror must specify why the offeree should accept the compromise. Whether the offeror should do so depends on the consideration of all circumstances existing at the time of the offer: Hazeldene’s Chicken Farm (2005) 13 VR 435, 442 [26]–[27] (Warren CJ, Maxwell P and Harper AJA); [2005] VSCA 298.
101Taking all matters into account, we are not persuaded that it was unreasonable for ProLearn to have rejected the offers made by Telstra on either of the two occasions when the Calderbank offers were sent. It follows that ProLearn is to pay Telstra’s costs of ProLearn’s claim and Telstra’s counterclaim at trial on a standard basis only.
Issue 10: Whether Telstra’s costs of its application for leave to appeal, and appeal, should be paid in whole by ProLearn; or by ProLearn and Kytec in equal shares (or, perhaps, 75 per cent by ProLearn and 25 per cent by Kytec)?
Issue 11:Whether ProLearn should pay Kytec’s costs of Telstra’s counterclaim on the indemnity issue (Telstra grounds 4 and 5) or, perhaps, all three parties should bear their own costs of that issue?
Issue 12:Whether ProLearn should also pay Telstra’s costs of applying for an extension of time?
102It is convenient to deal with Issues 10, 11 and 12 together. They concern a mixture of appeal costs and trial costs.
103In its proposal for orders, ProLearn proposed that it should pay one half of Telstra’s costs of the Telstra appeal, not including the application for an extension of time, on a standard basis, with Kytec paying the other half. This raises Issues 10 and 12. ProLearn argued that it should pay no more than half of Telstra’s costs because, whilst Telstra succeeded against ProLearn on grounds 1 and 2, ProLearn resisted Telstra’s ground 3 (on which Telstra failed) and Telstra’s grounds 4 and 5 did not involve ProLearn and were resolved against Kytec.
104For its part, Telstra argued:
(a)ProLearn should pay Telstra’s costs of the appeal on a standard basis consistent with the general principle that costs should follow the event and that, absent disqualifying conduct, a successful party should recover its costs even where it has not succeeded on all heads of claim;[42]
(b)the costs of its application for an extension of time should be included in the costs ProLearn must pay because there was no disqualifying conduct on the part of Telstra and ProLearn unsuccessfully opposed the extension (raising Issue 12);
(c)Telstra and Kytec should bear their own costs of and incidental to Telstra’s counterclaim against Kytec (on the indemnity issue); and
(d)there should be no apportionment of appeal costs as between ProLearn and Kytec as this is not a case where the court should undertake a cost apportionment; but, if the court is minded to apportion costs, a pragmatic approach reflecting the relevant importance of issues would support an apportionment of 75 per cent and 25 per cent as between ProLearn and Kytec.
[42]Chen v Chan[No 2] [2009] VSCA 233, [10] (Maxwell P, Redlich JA and Forrest AJA).
105Kytec resisted any order that it pay any component of Telstra’s costs of the Telstra appeal. It points out that it is already paying ProLearn’s costs of the Kytec appeal. Kytec further argues that the issues concerning grounds 4 and 5 of the Telstra appeal (that is, Telstra’s indemnity claim against Kytec) were rendered moot by this Court’s finding that Telstra had no liability to ProLearn. Kytec’s primary argument in respect of the costs of Telstra’s counterclaim against Kytec for the indemnity is that ProLearn should pay both Telstra’s and Kytec’s costs. Raising Issue 11, Kytec’s alternative submission, should its primary submission not be accepted, is that all three parties should bear their own costs, both at trial and on appeal, of and incidental to Telstra’s counterclaim against Kytec and grounds 4 and 5 of the Telstra appeal.
106Subject to one discrete qualification, and acknowledging that this Court has significant flexibility in the exercise of its discretion so as to do ‘substantial justice’ between the parties,[43] in our view there is no reason for any departure from the general rule that costs should follow the event, both at trial and on appeal. Even though, on appeal, Telstra only succeeded against ProLearn on grounds 1 and 2, its success on those two grounds entirely disposed of its liability to ProLearn. That means that, apart from issues that did not concern ProLearn, ProLearn should pay Telstra’s costs at trial and also on appeal.
[43]See the seven principles enunciated in Chen v Chan[No 2] [2009] VSCA 233, [10] (Maxwell P, Redlich JA and Forrest AJA).
107Applying that general rule to Telstra’s counterclaim against Kytec, because Kytec would have been liable to indemnify Telstra if Telstra had had any liability to ProLearn, Kytec should ordinarily pay Telstra’s costs of its counterclaim against Kytec at trial, and Telstra’s costs of grounds 4 and 5 on the Telstra appeal. As matters transpired, Kytec ought to have accepted its liability to indemnify Telstra, had Telstra been liable to ProLearn, and removed that issue from the contest. We can see no reason why ProLearn should have to pay Kytec’s costs of defending Telstra’s counterclaim against Kytec on the indemnity issue (as Kytec proposed), nor to order that each of the three parties should bear their own costs of that issue.
108However, Telstra has not pressed for Kytec to pay its costs of successfully prosecuting its claim for indemnity, and has proposed that each bear their own costs of that issue. That does not mean, of course, that the burden of those costs should be transferred to ProLearn as Kytec seems to suggest. With respect to Telstra’s and Kytec’s costs of Telstra’s counterclaim, we will make the order proposed by Telstra.[44]
[44]See above, [104(c)].
109The one qualification to the application of the general rule against ProLearn, raised by Issue 12, is that, although Telstra was granted an extension of time within which to bring its appeal for the reasons set out at [347]–[353] of the Principal Reasons, there is no reason we can see why ProLearn should have to pay those costs. The application for an extension of time was necessitated because Telstra delayed in filing its application for leave to appeal on time for its own commercial and practical reasons. Telstra should bear its own costs of that application.
110In summary, apart from the costs of the application for an extension of time and Telstra’s appeal against Kytec, ProLearn should pay all of Telstra’s costs of the application for leave to appeal and the appeal.
Issue 13: Whether Telstra should have liberty to apply (on the basis that ProLearn might be insolvent and further orders might be required if payments are not made)?
111Telstra proposes a final order that it have ‘liberty to apply’. Lying behind that proposal is Telstra’s belief that ProLearn is impecunious. Evidence from Mr Kiely indicates that ProLearn was the trustee of a trading trust which is no longer trading and that the assets of the trust, as at June 2022, comprised less than $30,000 in cash. Telstra foreshadows possible applications for non-party costs orders against ProLearn’s directors, and other ‘further supplementary orders or directions’, if ProLearn does not pay the costs orders or repay the judgment sum. ProLearn resists this Court reserving any such liberty to Telstra. It argues that Telstra should elect against whom it seeks orders and, Telstra having done so, costs orders should now finally be determined.
112We touched upon some of these matters when dealing with Issue 2, the question of whether Kytec should pay the additional component of damages and associated payments to Telstra instead of to ProLearn. As then, we are not inclined to make assumptions or to speculate about ProLearn’s financial position. Whether Telstra has some basis for seeking orders for costs against non-parties, or other orders and directions, depends upon it putting forward a proper application on proper material. Any such application would be dealt with by the Court on orthodox principles. The orders we propose to make will be final orders. At this point there is no reason to think that there may be further orders necessary to implement, give effect to or work out those final orders.[45] Liberty to apply is refused.
[45]Australian Hardboards Ltd v Hudson Investment Group Ltd (2007) 70 NSWLR 201, [50], [54], [56] (Campbell JA, Tobias JA agreeing at [1], Young CJ in Eq agreeing at [92]); [2007] NSWCA 104.
Conclusion
113We have answered the 13 issues that were in dispute as follows:
(1)Whether interest is payable by Kytec on the extra damages component after 4 April 2022? Yes, Kytec must pay interest on the additional component of damages from the date it was first due (22 June 2017) to the date of this Court’s order.
(2)To whom is Kytec to pay the extra damages and interest? Kytec is to pay the extra damages and interest to ProLearn.
(3)Whether Kytec should still only pay half of ProLearn’s trial costs? Kytec must pay the whole of ProLearn’s trial costs.
(4)Whether the appeal costs payable by Kytec to ProLearn should be on an indemnity or standard basis after 14 October 2022 (the date of ProLearn’s Calderbank offer)? Kytec should pay ProLearn’s appeal costs on an indemnity basis from 15 October 2022.
(5)Whether orders are to be made on a ‘Telstra remains liable’ basis or a ‘Telstra not liable at all’ basis? Orders are to be made on the basis that Telstra is not liable at all.
(6)Whether, on Telstra’s counterclaim, in addition to the sum of $304,172 for unpaid invoices, ProLearn should also be ordered to pay the $209,481 for early termination charges (total $513,653); and, if so, what orders should be made as to interest? ProLearn is liable to Telstra only for the sum of $304,172 and interest thereon.
(7)Whether ProLearn should repay to Telstra the full judgment sum and interest paid pursuant to paragraph 3(c) of the January Orders and paragraph 9 of the October Orders (as contended by ProLearn) or only the net amount after deducting the counterclaim sum of $304,172 payable by ProLearn to Telstra (as contended by Telstra)? ProLearn must make restitution to Telstra of the $1,339,776 for damages and $641,257.17 for statutory interest, a total of $1,981,833.17. On that sum, ProLearn is to pay interest at the restitutionary rate from 4 April 2022 to the date of this Court’s order.
(8)Whether the interest rate payable by ProLearn when repaying the sums Telstra paid it for damages, interest and costs is to be calculated at 2 per cent or 3 per cent? The appropriate rate of interest is 3 per cent per annum.
(9)Whether ProLearn is to pay Telstra’s trial costs on an indemnity basis after either of 17 August 2018 (the date of the first Telstra Calderbank offer) or 17 April 2019 (the date of the second Telstra Calderbank offer), or on a standard basis? ProLearn is to pay Telstra’s costs of ProLearn’s claim and Telstra’s counterclaim at trial on a standard basis only.
(10)Whether Telstra’s costs of its application for leave to appeal, and appeal, should be paid in whole by ProLearn; or by ProLearn and Kytec in equal shares (or, perhaps, 75 per cent by ProLearn and 25 per cent by Kytec)? Apart from the costs of Telstra’s application for an extension of time and Telstra’s appeal against Kytec, ProLearn should pay all of Telstra’s costs of the application for leave to appeal and the appeal.
(11)Whether ProLearn should pay Kytec’s costs of Telstra’s counterclaim on the indemnity issue (Telstra grounds 4 and 5) or, perhaps, all three parties should bear their own costs of that issue? No; Telstra and Kytec should bear their own costs of Telstra’s counterclaim against Kytec.
(12)Whether ProLearn should also pay Telstra’s costs of applying for an extension of time? No; Telstra should bear its own costs of that application.
(13)Whether Telstra should have liberty to apply (on the basis that ProLearn might be insolvent and further orders might be required if payments are not made)? No.
114It remains only to deal with the parties’ liabilities for the costs of submissions made in respect of orders to dispose of the appeals. Save in respect of one issue, we consider that each party should bear its own costs of such submissions. The exception relates to ProLearn’s argument that orders should be made on the basis that Telstra remains liable to ProLearn (Option A). For reasons already explained, this submission was misconceived. It has caused a substantial amount of unnecessary debate and submission. ProLearn should pay each of the other parties’ costs of that issue.
115Having regard to the matters that were agreed between the parties, and our conclusions on each of the 13 issues in dispute, we will make orders in the two appeals in the terms as set out in Appendix A (the Kytec appeal) and Appendix B (the Telstra appeal) to these reasons.
APPENDIX A: KYTEC APPEAL ORDERS
THE COURT OF APPEAL ORDERS THAT:
Leave to appeal is granted.
The appeal is dismissed.
Order 1(c) of the orders of the Honourable Justice Digby made on 17 January 2022 be set aside and in its place it be ordered that: Kytec pay ProLearn damages pursuant to ss 236(1) and 237(1) of Schedule 2 of the Competition and Consumer Act 2010 (Cth) in the total sum of $2,679,552.
Orders 2 and 8 of the orders of the Honourable Justice Stynes made on 26 October 2022 be set aside and:
(a)in place of order 2 it be ordered that: Kytec pay ProLearn’s costs, including any reserved costs, of and incidental to ProLearn’s claims in the proceeding against Kytec and Telstra on a standard basis, with such costs to be taxed in default of agreement;
(b)in place of order 8 it be ordered that: Kytec pay interest on the damages awarded to ProLearn in order 3 of this Court’s orders in the sum of $1,566,982.36, such interest calculated on the sum of:
(i)$1,339,776 from 22 June 2017 to 16 March 2022 at $367.06 per day, being $633,915.82; and
(ii)$1,339,776 from 22 June 2017 to 7 June 2024 at $367.06 per day, being $933,066.54.
Subject to order 6 hereof, the appellant pay the respondent’s costs of the appeal, including the application for leave to appeal and any reserved costs, on a standard basis up to 14 October 2022 and on an indemnity basis from 15 October 2022.
Each party bear their own costs of their submissions made to this Court pursuant to this Court’s order dated 6 March 2024 in respect of orders to dispose of the appeal, save that the respondent is to pay the appellant’s costs of and incidental to the respondent’s contention that orders should be made in accordance with the respondent’s ‘Option A’ minute of proposed orders, on a standard basis.
APPENDIX B: TELSTRA APPEAL ORDERS
THE COURT OF APPEAL ORDERS THAT:
The time within which the appellant file and serve its application for leave to appeal be extended.
Leave to appeal is granted in respect of the application for leave to appeal as against both respondents.
The appeal is allowed as against the first respondent but dismissed as against the second respondent.
Orders 3 and 4(a) of the orders of the Honourable Justice Digby made on 17 January 2022 are set aside and in place of order 3 it is ordered that ProLearn’s claims against Telstra are dismissed.
Orders 1, 3, 5, 6, 7 and 9 of the orders of the Honourable Justice Stynes made on 26 October 2022 be set aside and:
(a)in place of orders 3 and 5, it be ordered that ProLearn pay Telstra’s costs, including any reserved costs, of and incidental to ProLearn’s claims against Telstra and Telstra’s claims against ProLearn on a standard basis, with such costs to be taxed in default of agreement;
(b)in place of order 6, it be ordered by consent that Telstra and Kytec bear their own costs, including any reserved costs, of and incidental to Telstra’s counterclaim against Kytec;
(c)in place of order 7, it be ordered that ProLearn pay interest on the amount awarded to Telstra in order 4(b) of the orders of the Honourable Justice Digby made on 17 January 2022 in the sum of $103,350.46, such interest calculated from 21 August 2017 to 7 June 2024 at $41.64 per day.
By way of restitution, the first respondent pay to the appellant:
(a)$1,981,833.17, being the total of $1,339,776 paid by the appellant pursuant to order 3(c) of the orders of the Honourable Justice Digby made on 17 January 2022 and $641,257.17 paid by the appellant pursuant to order 9 of the orders of the Honourable Justice Stynes made on 26 October 2022; and
(b)$129,497.87, being interest on $1,981,833.17 at the rate of 3 per cent per annum from 4 April 2022 to 7 June 2024.
Subject to order 8 hereof, in respect of the costs of the appeal:
(a)the appellant bear its own costs of and incidental to its application for an extension of time within which to file an application for leave to appeal;
(b)the appellant and the second respondent bear their own costs of and incidental to the appellant’s grounds 4 and 5 (the appellant’s claim for indemnity from the second respondent); and
(c)except for the appellant’s costs referred to in (a) and (b) hereof, the first respondent pay the appellant’s costs of the appeal against the first respondent, including the application for leave to appeal and any reserved costs, on a standard basis.
Each party bear their own costs of their submissions made to this Court pursuant to this Court’s order dated 6 March 2024 in respect of orders to dispose of the appeal, save that the first respondent is to pay the appellant’s and second respondent’s costs of and incidental to the first respondent’s contention that orders should be made in accordance with the first respondent’s ‘Option A’ minute of proposed orders, on a standard basis.
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