MediaCom Australia Pty Ltd v Natvia Pty Ltd

[2017] NSWDC 306

District Court

New South Wales

Medium Neutral Citation:	MediaCom Australia Pty Ltd v Natvia Pty Ltd [2017] NSWDC 306
Hearing dates:	22, 23, 24 August; 4 and 5 September 2017
Date of orders:	07 September 2017
Decision date:	07 September 2017
Jurisdiction:	Civil
Before:	P Taylor SC DCJ
Decision:	(1)   Judgment for the plaintiff in the sum of $209,033.88 being principal of $183,762.17 and interest of $25,271.71. (2)   Judgment for the cross-defendant on the cross-claim. (3)   Costs of the proceedings reserved. (4)   Parties to contact my associate within 14 days with agreed convenient dates in respect of any argument concerning costs.
Catchwords:	MERCANTILE – contract – alleged partly written and partly oral – breach of contract – advertising – “TARPS”
Legislation Cited:	Evidence Act 1995, s 48, s 69
Cases Cited:	David Securities Pty Ltd v Commonwealth of Australia (1992) 175 CLR 353 McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 McRae v Commonwealth Disposals Commission (1951) 84 CLR 377
Category:	Principal judgment
Parties:	MediaCom Australia Pty Ltd (ABN 37 000 421 018) (plaintiff/cross-defendant) Natvia Pty Ltd (ACN 139 748 575) (defendant/cross-claimant)
Representation:	Counsel: Mr G Fredericks (plaintiff/cross-defendant) Mr J Castelan (defendant/cross-claimant)   Solicitors: Norton Rose Fulbright Australia (plaintiff/cross-defendant) Parkston Lawyers (defendant/cross-claimant)
File Number(s):	2016/163527
Publication restriction:	None

Judgment

A. INTRODUCTION

1. Rapid Media Pty Ltd (“Rapid Media”), as agent for a disclosed principal, MediaCom Australia Pty Ltd (“MediaCom”), accepted Master Advertising Orders from Natvia Pty Ltd (“Natvia”) to place television advertisements. MediaCom invoiced Natvia for those advertising campaigns. The amount of $183,762.17 remained unpaid as at 21 January 2016 and no payment has been received since that date. MediaCom sues for the debt.

2. One of the advertising orders related to a "New You" campaign which ran on Channel 9 during the late December 2013/January 2014 holiday period. The ratings for the programs during which the advertisements were aired were down somewhat from projections and as a result, the campaign of advertisements did not achieve so many actual TARPS (an acronym for “Target Audience Rating Points”) as had been projected at the time the "New You" advertising order was signed. Natvia claims that this was a breach of a term of an agreement, asserts a total failure of consideration, and sues for damages.

B. ISSUES

3. Accordingly, the issues are:

1. Was the achievement of certain actual TARPS a term of a relevant agreement.

2. Did make-up services provided by Rapid Media remove any breach of contract.

3. What, if any, damage was suffered by Natvia.

C. WERE ACTUAL TARPS A TERM OF THE RELEVANT AGREEMENT?

(a) What was the relevant agreement?

4. Three agreements were referred to specifically in the cross-claim: the Master Advertising Order dated 21 November 2013 that dealt with the "New You" (or “New Year”) campaign; the Master Advertising Order dated 7 February 2014 that dealt with an advertising campaign with Channel 10 during the Sochi Winter Olympic Games in February 2014; and an agreement referred to variously as "Instalment Payments Agreement", "Settlement Agreement" and "Third Media Services Agreement" dated 15 October 2014.

5. No issue was taken about any distinction between Rapid Media and MediaCom.

6. Although Natvia alleged in its cross-claim a breach of the Sochi agreement, by the conclusion of the trial any claim for breach of that agreement was abandoned. The Sochi agreement then became relevant only as an expense that might be an item of damage. Further, it did not seem to be disputed that the Instalment Agreement subsumed the earlier "New You" agreement subject to a question about the existence of the TARPS term.

7. The Instalment Agreement was evidenced by an exchange of emails on 14 October 2014. David Reid, then Finance Director of MediaCom, forwarded an email to Mark Hanna, director of Natvia, stating:

"Mark

…one of my team has reworked the below to make the payments more palatable for you. I trust this is something we can agree and achieve.

I would appreciate your acceptance to this proposal which now extends your payment plan from 6 month to essentially 12 month.

DR".

8. The email included a schedule of invoices from January to June 2014 that resulted in a total indebtedness of $443,762.17, and a schedule in the following terms appeared thereafter:

“Oct-14	$	40,000.00	Instalment	1
Nov-14	$	40,000.00	Instalment	2
Dec-14	$	40,000.00	Instalment	3
Jan-15	$	40,000.00	Instalment	4
Feb-15	$	40,000.00	Instalment	5
Mar-15	$	40,000.00	Instalment	6
Apr-15	$	40,000.00	Instalment	7
May-15	$	40,000.00	Instalment	8
Jun-15	$	40,000.00	Instalment	9
Jul-15	$	40,000.00	Instalment	10
Aug-15	$	40,000.00	Instalment	11
Sep-15	$	3,762.17	Instalment	Final Instalment
$	443,762.17”.

9. Mr Hanna responded the following morning, 15 October 2014, by an email which contained Mr Reid's earlier email and schedules, and recorded above them:

"Dear David

Thanks you for your email.

We lost a lot of sales during the CH9 campaign [the "New You" campaign] earlier this year that we are now slowly starting [to] make it back over time.

Below is ok and your support is appreciated.

Regards

Mark".

10. On 17 October 2014 Mr Reid by email enquired:

"Mark

When am I to receive the October payment? I thought one was going in earlier this week?

DR".

11. Later that day Mr Hanna replied:

"Dear David

Excuse my late reply today.

Payment has been sent today.

Enjoy your weekend.

Regards

Mark".

12. The Commercial Director of MediaCom, Stephen Meares, affirmed an affidavit giving details of the payments made thereafter by Natvia. Mr Meares was not cross-examined and there was no issue about the amount and timing of the payments or the quantum of the residual amount. Natvia made 13 payments of $20,000 monthly from October 2014 until October 2015 except for August 2015 and a further payment in January 2016. In the result, the total amount paid under the Instalment Agreement was $260,000, leaving $183,762.17 unpaid.

13. By the Instalment Agreement, interest appears to have been waived at least until October 2014, when the first $40,000 payment was due to be made. There was no evidence to explain the payments of $20,000 rather than $40,000. In its defence at [5M], Natvia asserted, somewhat ambiguously, that "In performance of the [Instalment Agreement], [Natvia] made part payments".

14. Although the invoices for the payments, the part and non-payments and the residual debt were not in issue, Natvia alleged that there were additional terms of the Instalment Agreement that were breached by Rapid Media. Natvia's written submissions sought to rely on the "New You" agreement in the alternative. Natvia asserted in its written submissions at [26]:

"Even in the event that the Court did not find that the Conditions formed part of the Instalment Payment Agreement, the existence of that agreement did not in any way absolve the plaintiff from its breach of the Media Services Agreement. There was no release for either of the parties contained in the Instalment Payment Agreement. Accordingly, the defendant submits that it is still entitled to claim the relief sought in relation to the breach of the Media Services Agreement regardless of the content of the Instalment Payment Agreement."

15. This assertion is not pleaded. On the contrary, the cross-claim repeatedly asserts that the Instalment Agreement was entered into to "remedy" earlier breaches and that the outstanding fees would be paid "[i]n exchange for Rapid Media’s performance of the terms [of the Instalment Agreement]" (at [14(c)]). There is no assertion of payment being conditional upon the performance of any earlier agreement. Similarly, the defence (at [5K]) alleges that the fees were to be paid "subject to the terms and for the consideration set out in the (Settlement Agreement)".

16. Further, in the cross-claim, Natvia says that there was a repudiation by MediaCom of the Instalment Agreement, an acceptance of that repudiation and a termination of the Settlement Agreement, thereby, it appears to be alleged, enlivening Natvia's entitlement to sue for lost profits under the earlier agreements. This argument was not put in closing submissions. There was no evidence of an acceptance by Natvia of any repudiation in November 2014. On the contrary, Natvia itself pleaded in the cross-claim (at [15]): "In performance of the [Instalment Agreement], [Natvia] made part payments" every month for a further year.

17. Further, there was no explanation of how termination for breach, which operates without prejudice to accrued rights: McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457, would operate to rescind the Instalment Agreement ab initio so as to enliven the "New You" agreement.

18. The relevant agreement is accordingly the Instalment Agreement.

(b) The pleading of the TARPS term

19. In its defence, Natvia pleaded (albeit adopting a different title) the Instalment Agreement made in October 2014. It alleged the following additional terms (at [5L]):

"(a) The Plaintiff would obtain bonus airtime for the Defendant on channels 9 and 10 in subsequent advertisements;

(b) Rapid Media would deliver in the new ad campaign the TARPS shortfall that was supposed to be delivered in the New Year Ad Campaign and the Sochi Ad Campaign; and

(c) In exchange for the Plaintiff's performance of the terms set out in the preceding sub-paragraphs, the Defendant would pay the Alleged Fees in instalments."

20. No particulars of the terms of the "Settlement Agreement" asserted by Natvia were supplied, nor were there any documents dated prior to the defence that evidenced those terms. I have earlier noted that a claim for any under-delivery in the Sochi ad campaign on Channel 10 was not maintained at trial.

21. In the cross-claim, Natvia again alleged terms to similar effect. The Instalment Agreement was given a new title, the Third Media Services Agreement, and particulars were recorded. The Instalment Agreement included the emails, to which I have earlier referred, as a written component. But it was alleged that the Instalment Agreement was also partly oral and partly implied. The particulars asserted at [13]:

"PARTICULARS

…

Insofar as [it] is oral, it is contained in conversations between Mr Mark Hanna of the Cross-claimant and Mr David Reid of the Cross-defendant and conversations between Mr Hanna and Mr O'Connor in or around the time alleged to the effect alleged.

Insofar as it is implied, it is implied to give business efficacy to the terms of the Third Media Services Agreement."

22. Natvia further asserted in [14]:

"There were terms of the Third Media Services Agreement, among others, as follows:

(a) To remedy the breach of the Second Media Services agreement [the Sochi agreement], Rapid Media would run further advertisement campaigns for the Cross-claimant on channels 9 and 10;

(b) Rapid Media would deliver in the new ad campaign the TARPS shortfall that was supposed to be delivered in the New Year Ad Campaign and the Sochi Ad Campaign; and

(c) In exchange for Rapid Media's performance of the terms set out in the preceding sub-paragraphs, the Cross-claimant would pay any allegedly outstanding fees from the New You and Sochi Ad Campaigns to the Cross-defendant in instalments.

PARTICULARS

The terms pleaded in paragraphs 14(a) and 14(b) are oral and were contained in a conversation between Mr Mark Hanna of the Cross-claimant and Mr David Reid of the Cross-defendant and a conversation between Mr Hanna and Mr O'Connor of Rapid Media in or around July 2014."

23. At trial, Natvia did not press in any relevant way the implied component of the Instalment Agreement.

24. Thus, Natvia alleged in [13] of its cross-claim contractual conversations between Mr Hanna and Mr Reid and between Mr Hanna and Mr O'Connor (the Managing Director of Rapid Media) at an unspecified place, on an unspecified date and of unspecified substance, that formed part of the Instalment Agreement. In [14] of the cross-claim, the alleged oral terms are specified and alleged to be in one conversation by Mr Hanna with Mr Reid, and separately in another conversation by Mr Hanna with Mr O'Connor, both occurring in about July 2014.

(c) The evidence of the TARPS term

25. Both Mr Reid and Mr O'Connor denied any conversation of the type asserted. The only evidence for the oral term was given by Mr Hanna.  Mr Hanna's affidavit included the following:

"13. In or around July 2014, I was concerned at Natvia's gross sales in the 2013/2014 financial year, compared to the gross sales in the 2012/2013 financial year when all TARPS targets had been achieved by Rapid Media.

14. Shortly after my conversation with Mr O'Connor, I informed Mr Reid of my conversation with Mr O'Connor and my concerns about lost sales. I said to Mr Reid, 'Look David, it's a disaster, you just haven't done what you told me you would do and we've paid a lot of money for advertising campaigns which have failed.' Mr Reid said to me, 'Mark I'll get Vaughn to get channel 9 to rectify the situation and make-up for the TARPS that were lost.' I said to Mr Reid, 'Well that's what you said you'd do last time and you didn't make-up the lost TARPS, now we are in an even worse position than before, we've bought all this stock in anticipation of selling it as [a] result of the TARPS you promised us, we've lost sales and now have all this stock we can't move, it's a disaster.'"

26. An assessment of this evidence requires consideration of the credit of the witnesses.

(d) Credit of the witnesses

(i) Mr Reid

27. Mr Reid gave evidence that his role as Financial Director included chasing up debtors and collecting debts. He was not involved in the day to day media business or in negotiating terms of media contracts. He said he had very little knowledge of what TARPS were other than that they are related to audience ratings. He denied the conversation in July 2014. In cross-examination, Mr Reid was asked about the conversation. It was put to him that the conversation occurred in October 2014, rather than July as was pleaded and as Mr Hanna appeared to give evidence about. Mr Reid again denied the conversation.

28. Natvia made no submission challenging Mr Reid's credit. I found him to be an honest witness doing his best to recall events and conversations and formed the conclusion that his recollection could be relied upon.

(ii) Mr O'Connor

29. Mr O'Connor's credit was challenged generally, principally on the basis that he gave an account of conversations on 10 March 2014 and 20 March 2014 which Mr Hanna submitted could not be correct.

30. Mr O'Connor recounted that on 10 March 2014 he told Mr Hanna that he had "asked the networks to provide us with 'make-good' TARPS" and that Mr Hanna had responded by stating that, "I can see that make-good has been provided by the networks".

31. It is evident that the make-good TARPS in respect of the "New You" campaign had not been provided by 10 March 2014, but I do not see Mr O'Connor to be asserting otherwise. Rather, his recollection is, according to his words in the conversation, that he was asking for make-good TARPS. This fact is supported by an email from a network the following day asserting that agreement as to make-good TARPS had not yet been reached. The inference that negotiations had occurred is obvious. The email notes that Mr O'Connor had sent an email suggesting he expects "a hundred plus TARPS" to be provided.

32. Mr Hanna's subsequent comment (asserted by Mr O’Connor) that "make-good has been provided" follows a discussion about past make-good provided in 2012. In context, Mr Hanna’s comment is not an assertion that make-good for the "New You" campaign has already been provided. Rather he appears to be referring to the earlier make-good provided by the networks in previous years.

33. The other party present at the conversation of 10 March 2014, Samuel Tew, a director of Natvia, was not called to deny the conversation and no explanation for his absence was given.

34. A conversation Mr O'Connor asserted to have occurred on 20 March 2014 was also criticised by Mr Hanna and was not so readily explained. In that conversation, Mr O'Connor referred to a spreadsheet showing the make-good TARPS, although the annexure specified in his affidavit is not a spreadsheet. One explanation for this inconsistency might be an error in the date. Prior to the conversation alleged on 20 March 2014, Mr O'Connor refers, in his affidavit, to an email from Mr Hanna on 8 May 2014 thanking him for the make-good TARPS obtained from Channel 9. That email also bears the wrong annexure number. There is correspondence with schedules dated 2 May 2014 showing a make-good, and also a spreadsheet dated 20 March 2014 showing the amount of make-good required to remedy the deficit. Although the compilation of the affidavit has produced some mislabelling of the annexures, it is unclear whether the date of 20 March 2014 is an error, either typographical or otherwise, or there is a more fundamental mistake by Mr O'Connor. I reject his evidence of the date of the conversation alleged to be on 20 March 2014, but I do not conclude that there is anything sinister in it, nor do I find that it has any real adverse impact on Mr O'Connor's credit generally. I found Mr O'Connor to be an acceptable and reliable witness.

(iii) Mr Hanna

35. Mr Hanna's performance as a witness was generously described in submissions by Natvia's counsel as "colourful". Counsel for MediaCom described Mr Hanna's evidence as "cavalier" and that he was not interested in listening to the question and answering it, but rather “wanted to argue a point or get some cheap shots". I accept this to be a reasonably based and moderately worded submission.

36. It is difficult to recall, during my time as a judge, a witness who performed worse than Mr Hanna. If I have observed witnesses who were less careful with the truth, they were not so obviously reckless in their disregard of questions. Mr Hanna was reminded several times to listen to the question and to do his best to answer it, but that was to no avail. He appeared to have taken the view that his case would not be served by answering questions and so he took each question as an opportunity to make an assertion, or at least on many occasions did so.

37. When challenged about one particular conversation in his affidavit where he deposed to Mr Reid, on repeated occasions, having referred to lost TARPS at a time before the lost TARPS were known, Mr Hanna suggested that the entire conversation could stand but "TARPS" should be replaced by "sales". Such an amendment changed the meaning of the conversation from one about network ratings to one about the sales performance of Natvia. How Mr Reid could possibly be assuring Mr Hanna that MediaCom would make-up Natvia's lost sales was never explained.

38. The value of Mr Hanna's evidence was not enhanced by examining its content compared to surrounding circumstances and contemporaneous documents, which are considered below.

39. In my view, Mr Hanna's evidence was entirely worthless.

(e) Analysis

40. Once Mr Hanna's evidence is rejected, there is no basis to find that the Instalment Agreement contained the oral terms alleged by Natvia. But even on Mr Hanna's rejected account, it is difficult to find evidentiary support for the existence of the terms alleged. Mr Hanna's evidence does not indicate that Mr O'Connor or Mr Reid stated the matters alleged in [14] of the cross-claim quoted earlier. Mr Hanna asserts that Mr Reid made a representation and subsequently that Mr O'Connor asked a question. Both the representation and the question relate to Channel 9 making-up the lost TARPS, but neither is promissory in form nor is there any acceptance of either by Mr Hanna.

40. Further, these conversations are alleged to be in July 2014, some three months before the exchange of emails creating the Instalment Agreement. No emails either shortly before or after the Instalment Agreement refer to any such promise or representation and, as already indicated, such a conversation occurring in July 2014 was not properly put to Mr Reid.

41. In short, apart from a rejected account of a conversation, which does not establish the alleged term, there is nothing at all to support it. Moreover, Natvia all but abandoned the alleged term of the Instalment Agreement in closing submissions: Natvia's written submissions effectively asserted [14] of the cross-claim in terms, but gave no reason for or evidence in support of that allegation apart from one footnote reference to Mr Hanna's affidavit. The following paragraph of the written submissions went on to deal with other matters.

42. For all these reasons, I find that there was no TARPS term in the Instalment Agreement as alleged by Natvia.

(f) Consequences of the survival of the “New You” Agreement

(i) The TARPS term

44. I do not accept that the "New You" agreement survived the making of the Instalment Agreement. A later contract will generally replace an earlier contract dealing with the same subject matter. To the extent that the contracts are inconsistent, preference would be given to the later agreement. The circumstances that the content of the Instalment Agreement was in the nature of a settlement of some pre-existing unpaid accounts and was titled a "Settlement Agreement" by Natvia supports this, as do the other matters to which I have earlier referred in this judgment.

45. Even if rights under the "New You" agreement survived the Instalment Agreement, which I do not accept, it would not assist Natvia in its claim. Natvia relied upon an oral term in the “New You” agreement derived from conversations either between Mr Hanna, Mr Reid and Mr O'Connor (see [3] of the cross-claim) or between Mr Hanna and Mr O'Connor alone (see [4] of the cross-claim) that:

"(b) Rapid Media as agent for the Cross-defendant, would achieve between 520 to 560 aggregate target audience rating points (TARPS) in every market and network over each 4 week period of the ad campaign.

PARTICULARS

…

The term pleaded at paragraph 4(b) hereto was oral and was contained in a conversation between Mr Mark Hanna of the Cross-claimant and Mr Vaughan O'Connor of Rapid Media, for [and] on behalf of the Cross-defendant, on or around 21 November 2013."

46. There were several problems with this term.

47. First, the only evidence to support an oral term is the evidence of Mr Hanna, whose evidence I wholly rejected as evidence of any value.

48. Secondly, Mr Hanna's evidence on this matter was in the following form:

"I spoke with both Mr O'Connor and Mr David Reid regarding the campaign over the telephone and they both stated to me that Rapid Media would achieve the TARPS targets in every market and network over each 4 week period of the campaign.”

49. This paragraph was allowed over objection. However, its value must be minimal as it does not state when the conversation occurred, it is in indirect speech, it does not identify if there was one phone call or two, and it does not specify what the TARPS targets were. In particular, it does not specify the "520 to 560” TARPS target pleaded and it does not bear indicia of being a promissory statement or of there being a disclosed acceptance.

50. Thirdly, it would be most unlikely that Mr Reid or Mr O'Connor, neither of whom worked for Channel 9, would promise that the ratings projected by Channel 9 would be achieved. In cross-examination about this conversation, Mr Hanna said that the conversation was mainly with Mr Reid in the New Year period, which would make it a post-contractual conversation. Subsequently, Mr Hanna asserted in evidence that he had had such conversations with Mr O'Connor, "before the booking" and asserted, somewhat unbelievably, that that matter was said by Mr O'Connor, "[e]very time," he had a conversation about TV advertising.

51. Fourthly, the TARPS for the "New You" campaign were based on a six week campaign, not a four week campaign. Thus, any promise about the TARPS would more likely be about the six weeks of the campaign (which would be approximately 50% higher because of the additional two weeks of the campaign) than, "each four week period". It seems most unlikely that both Mr O'Connor and Mr Reid would separately promise, effectively, that the first four weeks, the middle four weeks, and the final four weeks, of a six week campaign would have actual TARPS ratings equivalent to the projected TARPS of a six week campaign.

52. Fifthly, Mr Reid gave evidence that he knew very little about TARPS. He was the Finance Director of MediaCom and he was not involved in negotiating advertising contracts. He was not challenged on this evidence. I do not accept that he made any statements regarding TARPS.

53. Sixthly, Mr Hanna gave affidavit evidence of a subsequent conversation with Mr Reid early in February 2014 when Mr Reid, again, allegedly spoke of TARPS. Mr Hanna recanted on this evidence, accepting that there was no mention by Mr Reid of TARPS in February 2014, a matter to which I referred earlier in this judgment.

54. Seventhly, without precision as to what was said there is a real possibility that the substance of any such conversation was concerned with a promise to book media spots that carry the proper level of projected TARPS rather than a promise of what actual TARPS will be achieved. Mr Hanna's evidence of a statement by Mr O'Connor of, "Mark, leave the TARPS targets to me mate, I'll get you the right TARPS levels" is in the same category. If it occurred at all, which I do not accept, in context it could readily refer to booking the appropriate projected TARPS.

55. Eighthly, the documentary material relied upon by Mr Hanna about the projected TARPS in the booking did not support the pleaded term of 520 to 560 TARPS. The order required approximately 40% of the advertising funds to be spent in nine regional television markets. In eight of those nine markets, the projected TARPS for the campaign ranged between 295 and 422 TARPS, substantially below the level alleged in the pleading. Thus, the TARPS targets to which Mr Hanna's evidence referred were, in eight of the nine regional markets, well under the alleged promised levels pleaded in the cross-claim.

56. Ninthly, such an oral term, a promise that Rapid Media would ensure that projected TARPS would be achieved in the campaign, sits very uncomfortably with the express written terms that contemplate that Rapid Media and MediaCom are agents which book for Natvia advertising spots with the media proprietors, that the price is fully payable "prior to the commencement of any media activity", that if the advertising medium ceases business, Rapid Media would "arrange a proportionate refund or negotiate to offer alternative space" (and thus, not be liable for lost profits) and that:

"In the event that a media proprietor engaged by RAPID MEDIA on behalf of the client does not fulfil their contractual arrangements as per the advertising order/broadcast agreement, the client agrees that it is the media proprietor and not RAPID MEDIA who is the party that will be pursued for compensation."

57. Natvia submitted that the cross-claim by it was not a claim for compensation, but, in my view, the claim against Rapid Media for damages for breach of contract would comfortably fall within the terms of Rapid Media being “pursued for compensation".

58. Tenthly, there is no documentary support for such a term, no records or file notes of any conversation alleged by Mr Hanna, and no emails that refer either directly or indirectly to such a term. There are some emails from Rapid Media to Channel 9 seeking make-good TARPS once the actual figures were shown to be lower than the projected TARPS, but none of the emails suggest that Rapid Media was in breach of an agreement because of the lower TARPS, a matter to which I will return.

59. Eleventhly, Natvia did not tender the whole of the "New You" written contract. The Court was unable to evaluate the alleged oral term against the whole contract. The parties’ pleadings appear to agree that the only contractual document was a two-page Master Advertising Order containing attached terms and conditions. The order itself did not identify any obligations on Rapid Media. The obligations were recorded on a "media plan and spot list Version #1, dated 15th November 2013" as stated on the face page of the Master Advertising Order. That media plan was not in evidence, although an earlier version than Version #1, a version dated 14 November 2013 and covering only five of the six weeks of the campaign, was in evidence. The 14 November 2013 version of the media plan had various details about advertisements to be placed. It bore Channel 9 markings indicating that it was a Channel 9 document, and it stated, "To be read in conjunction with our Terms and Conditions of Sale". That document was also not in evidence.

(ii) Breach of any TARPS term

60. Natvia relied upon documents identifying, "Cost Per Tarp" and a "TARP requirement if applicable". It also relied upon Mr O'Connor's evidence that TARPS are critical to a client's decisions and that he would expect a client to rely upon projected TARPS, that sometimes TARPS are bought, and that the projected TARPS were "promised by the network to be delivered". This last point is significant. None of the matters point to Rapid Media being responsible for delivery of the actual TARPS.

61. Trent Collett, Mr Hanna's expert, reported that TARPS "are to be ‘made good’ by the supplier at no extra cost to the agency [that is, Rapid Media or MediaCom] or the client [that is, Natvia]. It is the broadcaster's responsibility to meet the TARP goals". This responsibility on the supplier is confirmed by cl 13 of the terms and conditions, which I have quoted above, in the ninthly point. Mr Hanna himself said that Mr O'Connor was "basically our media buyer for our company". On that approach, Mr O'Connor might have had a responsibility to maximise projected TARPS, but the seller of the TARPS, if TARPS are bought, is the media company which would thereby be responsible for the delivery of actual TARPS.

62. Mr Hanna also relied on the evidence of Rapid Media's employees, including Mr O'Connor, regarding dealings with Channel 9 to secure make-good TARPS. Those dealings, recorded in various emails, speak of "chasing you guys [Channel 9] to rectify under-deliveries from the campaign" and "the clients [sic] not letting us off the hook". Emails from Mr Hanna in March 2010 confirm this concern. Although the emails indicate that Natvia may have had a TARPS entitlement, they also indicate that it was the media company who would ultimately supply any TARPS shortfall. Rapid Media asking the media company what "they [the client] are getting [presumably from the media company] to resolve this under delivery" indicates a supply by the media company.

63. Certain emails from Rapid Media to Channel 9 state "we have under-delivered". The “we”, in context, may refer to both Rapid Media and Channel 9. Mr O'Connor explained this as a form of negotiating technique to put some pressure on Channel 9 which, it appears, ultimately did achieve significant make-good value for Natvia. I could find no suggestion in any document that Rapid Media would need to purchase additional spots to make-up the TARPS not supplied by the media company. How tight the obligation on the media company to make-up the lost TARPS was unnecessary to determine and also difficult to assess without the whole contract which, as I mentioned, was not in evidence.

D. MAKE-UP TARPS

64. “Make-up” or “make-good” TARPS result from additional advertising spots being provided by the media network to make-up for the deficit in actual TARPS compared to the projected TARPS in a media campaign. The existence of make-up TARPS strictly does not arise on Natvia's pleaded case of breach of contract since Natvia alleges that the breach occurred in the "New You" campaign when there was a deficit in the TARPS, immediately when the projected TARPS are not achieved rather than when make-good TARPS were not provided. The lower than expected ratings for Channel 9, resulting in an under delivery of TARPS on the “New You” campaign, constituted the breach Natvia alleged against Rapid Media.

65. Somewhat inconsistently, Natvia alleged the need for make-up TARPS under the Instalment Agreement. No make-up TARPS were provided after the date of that agreement. However, the existence of earlier make-up TARPS may be relevant to any damages to Natvia were it otherwise able to establish liability.

66. The only evidence of the level of make-up TARPS provided in relation to the "New You" campaign was provided by Channel 9 in an email to Mr O'Connor. The email asserted that billboard advertisements in mainland metropolitan centres of $80,474 in value and also $40,612 of make-good bonus airtime delivering 344.1 TARPS free of charge to Natvia. This total of $121,086 bonus airtime was "$81,086 over the original commitment of $40,000". The "New You" campaign achieved 2,165 TARPS across the major metropolitan areas, being 80.1% of the projected TARPS of 2,703. As the cost of the metropolitan campaign was $161,554 plus GST, the proportionate cost of 80.1% is $129,404.75, a difference of $32,149.25 from the original cost. Thus, the offer of $40,000 advertising services more than compensates for the deficit value of the diminished TARPS and $121,086 of make-good bonus airtime and billboard advertisements value is almost 400% of the deficit.

67. Finally, the evidence of a TARPS deficit was said to be proved by a document which described the deficit as "negotiated and agreed make-good TARPS". This itself is evidence, although of uncertain value, that make-good TARPS were provided as "agreed".

68. Natvia raised a number of arguments against this analysis.

69. First, Natvia submitted that the email correspondence from Channel 9 was poor evidence of the make-good TARPS. Yet Natvia did not object to or seek any limitation on the admission of the evidence. The email was clearly a business record under ss 48(1)(e) and 69(1) of the Evidence Act 1995 and the hearsay representations in the document were not inadmissible under s 69(3). There may have been better evidence available. It was not before the Court. It was open to any party to obtain better records if it so chose. As Natvia bore the onus of proof in respect of damage for breaches alleged in its cross-claim, I was not satisfied that any adverse Jones v Dunkel inference could be drawn against Rapid Media.

70. Secondly, Natvia noted that only 344.1 TARPS were made up in the metropolitan areas whereas there was a TARPS deficit of 538 in the "New You" campaign. Strictly speaking, this is correct although it results at least in part from the circumstance that there were no TARPS figures available for the billboard advertisements, which comprised two-thirds of the bonus make-good value delivered. If the value of the billboard advertisements was proportional to the TARPS in the same ratio as the remaining make-good value delivered bore to the make-good TARPS, the total make-good TARPS would be about twice the deficit.

71. Moreover, it is an inappropriate exercise to conflate TARPS across the five metropolitan centres since the number of people in the target audience represented by a TARP varies between metropolitan centres. A TARP in Sydney has a higher value and represents more viewers than a TARP in Adelaide. One TARP is equal to "1% of the available TV audience of the selected demographic at the time of broadcast" according to Mr Collett, the expert retained by Mr Hanna. The available TV audience varies among the metropolitan areas. Here the selected demographic appears to be primarily "grocery buyers" and secondarily "women 25 and over". How those two demographics together are assessed in calculating TARPS in this case was not explained.

72. A comparison of the TARPS specific to each city shows that the largest deficit was in Adelaide, which might be supposed to be the smallest mainland metropolitan viewing audience of the five mainland state capitals. Thus, although the TARPS deficit would remain (ignoring the billboard advertisements), it would nevertheless be less. Also, it appears that TARPS are not always the relevant or primary determinant of an advertisement's coverage. Mr Collett referred to coverage as well as TARPS being significant. The documentary evidence indicated that costs per TARP vary significantly between television programs, even in a particular metropolitan audience, presumably because other demographic sectors have value. The beneficial reach of a campaign appeared to depend on more matters than merely the level of TARPS (in the selected demographic).

73. There was no make-up TARPS provided in the regional centres. Natvia, on its calculations of the deficit, appeared to disown its pleaded claim of an entitlement to 520 TARPS as the projected TARPS averaged about 350 across the regional centres. If there is no pleaded term applicable to the regional centres, then there can be no obligation to meet the projected TARPS for the regional centres. Furthermore, four of the regional centres had no actual TARPS achieved figures "available", so the evidence did not allow any certain calculation as to whether there was a TARPS deficit across the regional areas.

74. Any uncertainty about the level of make-good TARPS provided must be viewed against Mr Hanna's own concessions. On 8 May 2014 Mr Hanna emailed to Rapid Media:

"thank you for your assistance in getting CH9 to give ads and banners to make up for the missed TARPS…

…your support is appreciated."

75. A sentiment of appreciation is repeated by Mr Hanna in October 2014. Further, there is no evidence of any complaint about the level of make-good TARPS in the six months prior to the Instalment Agreement, nor in the period thereafter until after the commencement of proceedings.

76. In all the circumstances, I am not satisfied that there was an ultimate shortfall in the number of actual TARPS compared to the projected TARPS when the make-good TARPS and billboard advertisements are considered.

E. DAMAGES

77. As Natvia has failed to establish a pleaded TARPS term, Natvia has no entitlement to damages. Nevertheless, I propose to make some brief comments in relation to quantum.

78. In its cross-claim at [18], Natvia claimed damages of:

"(a) $317,812.40 for the New You and Sochi Ad Campaigns, the consideration for which has wholly failed.

(b) $536,794 in lost net profit for the 2013/2014 financial year."

79. There was no evidence of lost profits and these amounts were abandoned by Natvia at trial. In their place, Natvia claimed the cost of the Sochi campaign being $112,696, or alternatively, $58,542.51 being the proportion of the projected TARPS in the "New You" campaign that was not delivered.

80. As to the cost of the Sochi campaign, this cannot be included as an item of damages. The item of the expense was not in contest but it could only be a proper measure of loss if there was no revenue generated by the expense. Since there was no evidence about revenue, I cannot conclude that the expense produced any loss, let alone a loss equivalent to the entire expense.

81. Further, there was no satisfactory evidence that the expense of the Sochi campaign would not have been incurred if the projected TARPS in the "New You" campaign had originally been delivered. As the level of achieved TARPS from the "New You" campaign was unknown until March 2013, by which time the Sochi campaign had been ordered and delivered, it seems unlikely that the delivery or otherwise of the TARPS for the "New You" campaign was material to the decision to order the Sochi campaign. Mr Hanna, in a non-responsive answer in cross-examination, stated, "I should never have booked it [the Sochi campaign] because there was a problem with the New You campaign that wasn't disclosed”. Given my rejection of Mr Hanna's evidence, the ambiguity of this answer and the absence of any other evidence, I was not satisfied that the TARPS deficit on the "New You" campaign was the cause of booking the Sochi campaign.

79. Finally, the expense of the Sochi campaign was not claimed in the cross-claim as part or all of the damages of the "New You" campaign.

80. The primary focus of Natvia's claim for damages in its closing submissions was for a proportion of the fees to be refunded because of the TARPS deficit. Natvia submitted that the make-good TARPS should not be considered in the reduction of damages because, on Natvia's case, the original deficit constituted a breach and MediaCom had not proved any profits were made by Natvia by reason of the make-good TARPS. This argument might have some force if Natvia had proved a lost profit from the TARPS deficit, but it did not. Rather, Natvia asserted that as it could not prove its loss, it was at least entitled to recover the additional expense (on the TARPS shortfall). Reference was made to David Securities Pty Ltd v Commonwealth of Australia (1992) 175 CLR 353 although I do not see the application of that case to the circumstances before me. Some support for Natvia’s argument may be found in McRae v Commonwealth Disposals Commission (1951) 84 CLR 377. But if a proportion of the expense based on the initial TARPS shortfall is an appropriate measure of damages, then the make-good TARPS must also be an appropriate measure of the extent by which damages were reduced.

81. In any event, as I was not satisfied that there was any shortfall, Natvia is not entitled to any setoff. The cross-claim must be dismissed.

F. INTEREST

85. Natvia made instalment payments at a level of 50% of what was required, from October 2014 to October 2015. It is therefore appropriate to calculate the interest on the whole of the remaining unpaid debt of $183,762.17 from 1 May 2015, approximately halfway through the period of the payments, to today. Interest for this period is $25,271.71.

G. COSTS

86. The parties have requested that I reserve the question of costs.

H. ORDERS

87. The orders of the Court are:

1. Judgment for the plaintiff in the sum of $209,033.88 being principal of $183,762.17 and interest of $25,271.71.

2. Judgment for the cross-defendant on the cross-claim.

3. Costs of the proceedings reserved.

4. Parties to contact my associate within 14 days with agreed convenient dates in respect of any argument concerning costs.

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Decision last updated: 11 May 2018