Phone Wizards v Pacific Payphones

FEDERAL MAGISTRATES COURT OF AUSTRALIA

PHONE WIZARDS v PACIFIC PAYPHONES [2003] FMCA 131

TRADE PRACTICES – Allegations of misleading and deceptive conduct in negotiations for distribution agreement – whether representations were the cause of applicant’s loss – whether sufficient evidence to substantiate claim – referral of damages on cross claim to Registrar – where conduct of parties affects discretion in costs orders.

Trade Practices Act 1974 (Cth), ss.51A, 52, 82, 87
Fair Trading Act 1987 (NSW)
Federal Magistrates Court Act 1999, s.3(2)(a)
Federal Magistrates Court Rules, Part 18 Rule 18.01(1)

Horman v Distribution Group Limited [2002] FCA 219
Seabridge Australia Pty Limited v JLW (NSW) Pty Limited, 29 FCR 415

Applicant: PHONE WIZARDS PTY LTD

Respondent: PACIFIC PAYPHONES PTY LTD

File No: SZ 340 of 2002

Delivered on: 11 April 2003

Delivered at: Sydney

Hearing dates:

17 January 2003 & 10 March 2003

Last submissions received 1 April 2003

Judgment of: Raphael FM

REPRESENTATION

Counsel for the Applicant: Mr J R Connors

Solicitors for the Applicant: Tranter Layers

Counsel for the Respondent: Mr I C Duane

Solicitors for the Respondent: Somerville & Co

ORDERS

1. Application dismissed.

2. Judgment for the respondent on the cross claim with damages to be assessed.

3. Assessment of damages to be carried out by the Registrar pursuant to Part 18 Rule 18.01(1).

4. Costs reserved.  Parties to provide written submissions within seven days as to why the proposed orders for costs should not be made final.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SZ 340 of 2002

PHONE WIZARDS PTY LTD

Applicant

And

PACIFIC PAYPHONES PTY LTD

Respondent

REASONS FOR JUDGMENT

Introduction

1. The applicant in this matter describes itself as a local phone company.  According to its contemporaneous letterhead it dealt in new and used phone systems, telephone and computer cabling, call management systems, smart card payphones and radio and advertising on hold.  The respondent is a company which distributes a smart card payphone manufactured in France by a company known as Schlumberger.  A smart card payphone is a phone which is installed in a high use area such as a club or a service station and operates by the use of a card rather than cash. 

2. In or about June 1998 the respondent advertised in the Newcastle Herald seeking distributors for their payphones and smart cards.  The advertisement, which is exhibited to the affidavit of Mr Grant L’Green, is in the following form:

WANTED DISTRIBUTOR
For
New Generation Payphones
And Smart Card

Exclusive Distributorship

Newcastle and surrounding districts

Immediate cashflow make $200,000 plus p.a.

You need just $30,000 to get started in this

new exciting business.

Full training will be provided.   Sales experience

is required.

Enquiries

Phone [phone]

Or 0414 485 637

Fax [phone]

E-MAIL [e-mail]”

1. The applicant responded to the advertisement and over the next few weeks visited the respondents at their premises in Sydney where certain discussions took place.  The parties then entered into a Distribution Agreement for payphones and the purchase of smart cards. The applicant’s…