NCON Australia Ltd v Spotlight Pty Ltd [No 5]

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No. 8246 of 2009

NCON AUSTRALIA LIMITED (ARBN 099 019 851)	Plaintiff
v
SPOTLIGHT PTY LTD (ACN 005 180 861)	Defendant

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JUDGE:	ROBSON J
WHERE HELD:	Melbourne
DATE OF HEARING:	15, 16, 17, 18, 21, 22, 23, 24, 25 and 28 February 2011, 1 and 2 March 2011
DATE OF JUDGMENT:	12 December 2012
CASE MAY BE CITED AS:	NCON Australia Ltd v Spotlight Pty Ltd
MEDIUM NEUTRAL CITATION:	[2012] VSC 604

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CONTRACT – Agreement for rental of chattels – Whether concluded agreement reached – Agreement required execution of master lease agreement and further individual leases – contract concluded – Whether agreement repudiated by lessor – Whether repudiation by the lessee – Assessment of damages – Damages not properly particularised or proved – Nominal damages awarded.

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APPEARANCES:	Counsel	Solicitors
For NCON	Dr R L Dean Dr M R Sharpe	Peter G Richards
For Spotlight	Mr R Garratt QC Ms R B Sion	Cornwall Stodart

TABLE OF CONTENTS

Introduction and summary............................................................................................................... 3

The people involved in the Spotlight transaction....................................................................... 4

The pleadings..................................................................................................................................... 6

The issues to be determined.......................................................................................................... 10

The background to NCON and the Smart Power control system........................................... 11

The formation of the agreements.................................................................................................. 12

Mr Chisholm..................................................................................................................................... 26

The demonstrations of the Yes box.............................................................................................. 28

The first demonstration............................................................................................................. 28
The second demonstration........................................................................................................ 28
The third demonstration........................................................................................................... 30
The fourth demonstration......................................................................................................... 33
Events after the demonstrations................................................................................................ 35

Principles for ascertaining whether a contract has been concluded....................................... 41

Did the parties enter into a single agreement constituted by the Services Agreement and the Rental Agreement?........................................................................................................................................ 42

Did the Rental Agreement constitute a binding contract between NCON and Spotlight? 43

The NCON rental program............................................................................................................. 44

Spotlight’s knowledge of and acceptance of the NCON rental program.............................. 46

Spotlight’s contentions.................................................................................................................... 49

The commencement of the lease................................................................................................... 52

Annexure C to MAFF....................................................................................................................... 52

Did NCON evince an intention to repudiate the agreement?................................................. 53

Was there a perceptible light loss?................................................................................................ 54

Clause 15 of the Services Agreement............................................................................................ 56

Conclusion......................................................................................................................................... 57

Damages introduction and summary........................................................................................... 57

Details of NCON’s claims for damages........................................................................................ 58

The 23 February particulars..................................................................................................... 63

Mr Reibel’s evidence in support of the 23 February 2011 particulars of damage................ 64

Mr Reibel’s calculation of loss of profit....................................................................................... 66

Tax calculation............................................................................................................................. 66

Valuing the Yes boxes................................................................................................................ 66

Loss of opportunity in relation to the Yes boxes........................................................................ 67

The relevant legal principles in calculating damages for breach of contract........................ 71

Spotlights’ submissions on damages........................................................................................... 77

Has NCON established its loss and damage?............................................................................. 78

NCON’s case...................................................................................................................................... 78

Assessing the requirements of a store..................................................................................... 79

Installing the Yes boxes in the store......................................................................................... 79

Certificate of safety..................................................................................................................... 80

Cost of manufacturing the Yes boxes....................................................................................... 80

Marketing costs........................................................................................................................... 80

Finance commission................................................................................................................... 80

Commission payable to Mr Reibel........................................................................................... 81

Payments mentioned in NCON’s Damages Submissions.................................................... 81

Royalties....................................................................................................................................... 81

Financing costs............................................................................................................................ 81

Evidence in support of the 23 February particulars of loss and damage.............................. 82

Paragraph 1 of the 23 February particulars............................................................................. 82

Paragraph 2 of…

In the case of NCON Australia Ltd v Spotlight Pty Ltd [No 5], the dispute centred on the rental of chattels and whether a binding agreement had been reached between the parties. The respondent, NCON Australia Ltd, sought to establish a rental agreement with the appellant, Spotlight Pty Ltd, for a series of chattels. The agreement was conditional on the execution of a master lease agreement and further individual leases. The matter was heard in the Supreme Court of New South Wales.

The primary legal issues before the court were whether a concluded agreement had been reached between the parties and whether either party had repudiated the contract. Additionally, the court was required to assess the appropriate measure of damages in light of the parties’ failure to properly particularise or prove their losses. The court considered whether the damages claimed were quantifiable and whether the respondent had mitigated its losses.

The court found that a binding agreement had indeed been reached between the parties. It determined that the agreement was concluded when the respondent issued a letter of intent, and the appellant did not object to this interpretation. The court further found that neither party had repudiated the contract, as both had taken actions consistent with performance of the contract. Regarding the damages, the court held that the respondent had not properly particularised or proved its losses, and as such, it awarded nominal damages. This was in line with the principle that damages should reflect the actual loss suffered by the injured party, and where such loss is not adequately proven, the remedy is limited to nominal damages.

The court ordered that nominal damages in the sum of one dollar be paid by the appellant to the respondent, reflecting the conclusion that the contract was breached but without quantifiable loss. The court also made orders regarding the costs of the proceedings.

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Evidence Before The Court

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Legal Principle Established