McCartney v Orica Investments Pty Ltd (No 2)

[2011] NSWCA 387

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:

McCartney & Ors v Orica Investments Pty Ltd & Ors (No 2) [2011] NSWCA 387

Hearing dates:

(On the papers)

Decision date:

13 December 2011

Before:

Giles JA, Macfarlan JA, Young JA

Decision:

(1) Appeal allowed.

(2) Set aside the orders made on 28 May and 2 June 2010.

(3) Remit the proceedings to the Equity Division for a new trial as to whether the Clos distributorship would have been lost in any event and consequentially the damages for loss of the distributorship.

(4) Order that the respondents repay to the appellants $1,819,350.59 and interest at pre-judgment Court rates from the date of payment by the appellants.

(5) Trial costs to date be costs in the new trial.

(6) Respondents pay 85 per cent of the appellants' appeal costs.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Catchwords:

Orders following decision of appeal - no question of principle.

Category:

Consequential orders

Parties:

William Thomson Venables McCartney - First Appellant
Ingredients Plus Pty Ltd - Second Appellant
Graeme Bruce Love - Third Appellant
Orica Investments Pty Ltd - First Respondent
Bronson & Jacobs Pty Ltd - Second Respondent
Orica Australia Pty Ltd - Third Respondent

Representation:

A J Sullivan QC & J Zerelli - Appellants
I M Jackman SC, J Stoljar SC and J K Taylor - Respondents
Hassett Dixon - Appellants
Mallesons Stephen Jaques - Respondents

File Number(s):

CA 260399/05

 Decision under appeal 

Citation:

Orica Investments Pty Ltd & Ors v William McCartney & Ors [2007] NSWSC 645;
Orica Investments v McCartney [2010] NSWSC 488

Before:

White J - 25/6/07
Ball J - 28/5/10

File Number(s):

SC 3895/05

Judgment

1. THE COURT : Judgment in this appeal was given on 8 November 2011: McCartney v Orica Investments Pty Ltd [2011] NSWCA 337. These reasons are concerned with consequential matters.

1. The primary judge assessed damages for the loss by B & J of the Clos distributorship. A significant issue was whether the Clos distributorship would have been lost in any event, even if the appellants had not engaged in their wrongful conduct. The primary judge did not accept Mr Bontoux' evidence that Clos would have terminated the distributorship in any event, and made findings on a percentage basis of the likelihood of its termination. His Honour assessed damages at $1,219,829.70 plus interest.

1. The appellants' challenge to his Honour's refusal to accept Mr Bontoux' evidence was upheld. That did not mean that his evidence should be accepted, and we held that there should be a new trial on the issue of whether the Clos distributorship would have been terminated in any event.

1. We went further, against the possibility that the parties would be assisted in the future course of the proceedings, perhaps even assisted to come to an accommodation. On the assumption that Mr Bontoux' evidence was not accepted, we held that the primary judge's findings as to the likelihood that the Clos distributorship would have been terminated was erroneous and his assessment of damages on that basis could not stand. Contingent findings of likelihood on a percentage basis were made, and we contingently reassessed damages at $612,917 plus interest.

1. The parties did not come to an accommodation. Written submissions on outstanding matters were received.

The reassessment of damages

1. The parties were given the opportunity to verify the calculation of the reassessed damages, and were directed to advise of any correction to the calculation.

1. The parties were in agreement that the $612,917 was incorrect, because it was based on figures in the judgment of the primary judge which had subsequently been corrected under the slip rule. The correct figure was $479,650.80.

1. The appellants submitted, and the respondents disputed, that the calculation was also incorrect in the way the contingent percentage findings as to likelihood were used. No submission as to the use for which the appellants contended had been made at the hearing, and the opportunity to verify and correct the calculation did not extend to reopening its basis.

1. Further, the submission was to no point. The parties were not assisted by the contingent reassessment. It is otiose when there must be the new trial.

The new trial

1. The appellants' submissions included that the new trial should be limited to whether through acceptance of Mr Bontoux' evidence the Clos distributorship would have been terminated in any event. They sought to preserve our contingent findings.

1. No liberty so to submit was reserved. We believe it was made clear that the new trial on the issue of whether the Clos distributorship would have been lost in any event would extend generally to the likelihood of termination, see in particular at [98] pointing out that "the two questions of acceptance of [Mr Bontoux'] evidence, and some lesser likelihood of termination can not sensibly be separated". We remain of that view.

1. The appellants' submission that in the new trial the findings contingently made on appeal will bind the trial judge is not correct. The trial judge will determine the likelihood that the Clos distributorship would have terminated on the evidence as freshly adduced, including (if he gives evidence) the evidence of Mr Bontoux. The finding will then be translated into the damages.

Repayment of the judgment sum

1. The appellants had paid the judgment sum. The respondents accepted that it should be repaid, but only in so far as it exceeded our contingent assessment, and submitted that the amount of the contingent assessment should be paid into court or into an interest-bearing account pending final determination of the proceedings.

1. The submission suffers the same difficulty as the appellants' submissions abovementioned. Our contingent reassessment falls away when there must be the new trial; it may be that the damages are nil or a much smaller amount. Payment into court would amount to a form of Mareva relief, for which no basis has been shown.

1. An order for restitution of the amount paid, with interest at Court rates, should be made.

Costs

1. The appellants submitted that the trial costs should be costs in the new trial. The respondents submitted that they should be in the disposal of the judge hearing the new trial, alternatively that they should be costs in the new trial.

1. For what reason(s) might the judge dispose of the costs of the previous trial in a different manner from the costs of the new trial? The respondents suggested that much of the preparation for the first trial would be relied upon for the new trial. No doubt some will, but that will make it appropriate for those costs to follow the event of the new trial. The respondents also said that there had been without prejudice correspondence prior to the conclusion of the trial before the primary judge. Whatever may flow from that will equally flow in the costs order(s) following decision in the new trial.

1. In our view, the trial costs thus far should be costs in the new trial. If there be grounds to do so, the judge's orders as to costs can take account of the earlier trial. The alternatives suggested by the respondents may not differ in practice.

1. The appellants submitted that they should have the appeal costs. They said that they succeeded in the event (UCPR r 42.1), being a successful challenge to the primary judge's assessment, and that the issues of gross profit margin, allowance for overheads and failure to mitigate on which they were unsuccessful were not dominant or separable issues and did not otherwise call for an order other than that costs follow the event. If any reduction were to be made, they said, it should be modest - in the order of 10 per cent. The respondents submitted that the appellants should bear a proportion of the appeal costs, to reflect the fact that they were unsuccessful on some issues. They said that the reduction should be in the order of 30 per cent.

1. In our view the issues of gross profit margin, allowance for overheads and mitigation of loss were sufficiently discrete, each apt to reduce (even eliminate) the damages, to warrant a reduction in the costs entitlement of the appellants. However, the bulk of the costs would have been incurred in attention to the larger issues on which the appellants succeeded, and the appellants had signal success in a hard-fought appeal. The reduction should be 15 per cent.

Orders

1. We make the following orders.

(1) Appeal allowed.

(2) Set aside the orders made on 28 May and 2 June 2010.

(3) Remit the proceedings to the Equity Division for a new trial as to whether the Clos distributorship would have been lost in any event and consequentially the damages for loss of the distributorship.

(4) Order that the respondents repay to the appellants $1,819,350.59 and interest at pre-judgment Court rates from the date of payment by the appellants.

(5) Trial costs to date be costs in the new trial.

(6) Respondents pay 85 per cent of the appellants' appeal costs.

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Decision last updated: 13 December 2011