Sekisui Rib Loc Australia Pty Ltd (ACN 008 040 800) v Rocla Pty Ltd (ACN 000 032 191) (No 2) - [2012] SASCFC 39

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court: Civil)
SEKISUI RIB LOC AUSTRALIA PTY LTD (ACN 008 040 800) v ROCLA PTY LTD (ACN 000 032 191) & ANOR (No 2)
[2012] SASCFC 39
Judgment of The Full Court
(The Honourable Justice Sulan, The Honourable Justice David and The Honourable Justice Peek)
18 April 2012
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - CONSTRUCTION AND INTERPRETATION OF CONTRACTS
PROCEDURE - COSTS - GENERAL RULE - COSTS FOLLOW THE EVENT
PROCEDURE - JUDGMENTS AND ORDERS - IN GENERAL
Dispute over the terms in which the orders following the decision of Sekisui Rib Loc Australia Pty Ltd v Rocla Pty Ltd & Anor [2012] SASCFC 21 should be entered - whether the Rocla Sub-licence ought to be rectified - what proportion of costs should be borne by Plastream to reflect their role at trial and on appeal.
Held: Rectification of ancillary documents granted - Plastream to bear 10 per cent of the costs and Rocla 90 per cent to reflect their respective roles in the trial and the appeal - SRLA to pay Rocla's costs relating to damages, the quantum of which is to be determined by a taxing Master.
Rowan v Cornwall (No 6) [2002] SASC 234; Trade Practices Commission v Nicholas Enterprises Pty Limited (No 2) (1979) 28 ALR 201, considered.

SEKISUI RIB LOC AUSTRALIA PTY LTD (ACN 008 040 800) v ROCLA PTY LTD (ACN 000 032 191) & ANOR (No 2)
[2012] SASCFC 39
Full Court: Sulan, David and Peek JJ
SULAN J:

This is a dispute over the terms in which this Court should make orders and costs following the decision in Sekisui Rib Loc Australia Pty Ltd (ACN 008 040 800) v Rocla Pty Ltd (ACN 000 032 191) & Anor.[1]
[1] [2012] SASCFC 21.
Background:
The background to the matter concerns various contracts between the appellant, Sekisui Rib Loc Australia (‘SRLA’), the first respondent, Rocla Pty Ltd (‘Rocla’), the second respondent, Plastream Pipe Technologies Pty Ltd (‘Plastream’) and Caliber Australia Pty Ltd (‘Caliber’).
Rocla entered into a business sale agreement with SRLA, Plastream and Caliber for the purchase by Rocla of the Caliber business (‘the BSA’). Upon entering into the BSA, the parties entered into various ancillary agreements including:
(a)a real property licence granted by SRLA to Rocla for the occupation of a portion of SRLA’s premises (‘Real Property Licence’);
(b)a supply agreement between SRLA and Rocla for the supply by SRLA of the SRP strip (‘Supply Agreement’); and
(c)a sub-licence granted by Plastream to Rocla to use SRP technology in Australia and New Zealand other than for the purpose of Pipe Rehabilitation (‘Rocla Sub-licence’).
These agreements were separate instruments, which were annexed to the BSA.
A conditional agreement was also entered into, which provided that SRLA would licence to Rocla the SRP technology, on terms materially the same as the Rocla Sub-licence, in the event that the Master Licence was terminated. This was known as the Mirror Licence.
On appeal there existed three primary issues before this Court. First, the characterisation of the BSA, and the interpretation of its structure. Second, whether the option was validly exercised. Third, whether rectification ought to be granted.
The appeal was allowed in respect of each issue.
First, with respect to the structure and characterisation of the BSA, this Court concluded that the BSA contemplated the inclusion of any schedule or annexure to it, namely the Real Property Licence, the Supply Agreement and the Rocla Sub-licence. It was found that any variation made to any one of these scheduled agreements would need to be agreed, in writing, by all parties to the BSA.
Second, the option in dispute afforded Rocla, pursuant to the Rocla Sub-licence, an option to purchase from Plastream a ‘Complete Plastream Line’. The option was exercisable within the first 20 months of the Term of the agreement. The date for exercising the option was purportedly varied by Rocla and Plastream, without the consent of SRLA, who was not a party to the Rocla Sub-licence. However, the exercise of the option was a pre-requisite for SRLA to supply SRP to Rocla pursuant to the Supply Agreement. It was put by SRLA that it was inconceivable that two parties, acting unilaterally, could vary the obligations of a third party, for an indefinite period, without their consent.
The Court found that the trial Judge erred in holding that the parties were free to unilaterally vary the provision for the time in which the option could be exercised. It considered that without the consent of SRLA to the variation, strict compliance with the time limit in which to exercise the option was required.
The third issue involved an order for rectification of the Rocla Sub-licence, and the Mirror Licence, sought by SRLA. The order sought involved the insertion of a comma between the words ‘replacement’ and ‘lining’ in clause 3.5(a) of each licence.
At trial, the trial Judge was of the view that a typographical or word processing error had occurred in the process of the preparation and settling of the documents, and that the comma in clause 3.5(a) was omitted as a result. He did not, however, order rectification, on the ground that no live issue existed between the parties.
The Full Court considered that the trial Judge erred in this respect. The Court agreed with the trial Judge’s finding of facts, forming the view that on the evidence the subjective intention of the parties was to insert the comma between the words ‘replacement’ and ‘lining’. Consequently, the Court concluded that the order for rectification should have been granted.
Orders to be made:
The issue before the Court now is the exact terms of the orders that should be made. Drafts of the proposed orders were submitted by SRLA and Rocla. Plastream does not object to the draft orders proposed by SRLA. Rocla, however, disputes three of the proposed orders, namely order 7, 9 and 13.
Order 7 states:
The SRP Technology Licence Deed dated 22 August 2008 in fact executed by Plastream and Rocla in the form of the eighth schedule to the BSA (‘the Rocla Sub-licence’) be rectified by the insertion of a comma between the words ‘replacement’ and ‘lining’ appearing in clause 3.5(a) of the Rocla Sub-licence.
Mr Giles, for Rocla, contends that though the consequence of the Full Court judgment is that the BSA must be rectified, it does not follow that the Rocla Sub-licence or the Mirror Licence needs to be rectified. It is put that these ancillary agreements are of no juridical effect, and as such any rectification of these documents would serve no purpose.
In my view, if it be the case that the BSA is to be rectified via the eighth and fifteenth schedules, I can see no reason not to grant an order for rectification of all documents, so to avoid any disputes at a later date. This would ensure that there exists no inconsistency between the executed documents, and the documents annexed as schedules to the BSA. There is no prejudice to Rocla in taking this course.
I turn now to the proposed order 13, which is disputed by Rocla. Order 13 states:
As and from 22 August 2010, Rocla has not had, and Rocla does not currently have, any licence to use and apply the ‘SRP Technology’ the subject of the Rocla Sub-licence, whether pursuant to the Rocla Sub-licence or otherwise.
It is submitted by Mr Giles that SRLA does not require a declaration to vindicate its rights as against Rocla, as the reasons of this Court give full effect to SRLA’s rights. He points to events occurring after the judgment in the appeal was reserved, and the dispute that has now ensued between Rocla and Plastream. The submission rests upon a compromised position of Rocla in the dispute with Plastream, should the above declaration be made.
In support of the application Mr Giles relies on an affidavit of Simon Walter Johnson sworn on 27 March 2012. The affidavit exhibits correspondence between the parties. Counsel for SRLA objected to the Court receiving the affidavit on the ground of its relevance to issues determined on this appeal. The affidavit and related correspondence supports Mr Giles submission that there are issues arising between the parties consequent upon the Court’s judgment and that if a declaration is made in the terms sought it may have unfair consequences to the determination of these issues.
The affidavit is relevant. I would admit it for the purpose of demonstrating that there are unresolved issues which have arisen between Rocla and Plastream and the making of a declaration may have unforseen consequences to the resolution of these issues.
Counsel for SRLA was unable to articulate any necessity for the making of a declaration in the terms sought by SRLA. He submits that in an abundance of caution, the Court ought to make the declaration.
I do not consider it necessary for this Court to make a positive declaration in the above terms. On appeal SRLA did not seek a positive declaration in the terms that are now sought. I accept the submission of Mr Giles that the Full Court’s reasons give full effect to the rights of SRLA, and the Court need not act any further in this respect.
Costs:
SRLA submits that Rocla ought to pay SRLA and Plastream’s costs of the trial and the appeal, pursuant to proposed order 9.
Following the trial, the following order was made by the trial Judge on 13 May 2011 in relation to an adjournment of the matter:
The Second Defendant [SRLA] pay the Plaintiff’s [Rocla] and the First Defendant’s [Plastream’s] costs of the proceedings including reserved costs, provided that the costs of the adjournment thrown away on 29 November 2010 shall be adjusted so that Rocla bears 30% of Plastream’s costs and has its own costs of the adjournment reduced by 30%.
SRLA does not seek to disturb this order and submits that any order for costs should be made subject to this qualification.
The starting point is that SRLA should have its costs of the trial and appeal. The first issue is whether both Rocla and Plastream should be ordered to pay those costs. Both Rocla and Plastream actively opposed the appeal in relation to all grounds. Plastream made short written and oral submissions in support of Rocla’s submissions.
It is contended by Rocla that Rocla and Plastream should be ordered to pay the costs of the appeal jointly and severally. The same submission is put in respect of the trial. Mr Giles submits that Plastream actively opposed all of the relief SRLA has now obtained. He says that the only part of the trial in relation to which it did not take an active position against SRLA was the damages case on which Rocla succeeded.
Counsel for Plastream submits that the role of Plastream in the dispute, the factual controversy at trial, and the issues that were agitated on the appeal by Plastream were limited. During the trial, it is argued that Plastream played only a passive role. No evidence was adduced by them, and only limited submissions were made. Reliance is placed on the matter of Rowan v Cornwall (No 6)[2] where it was held that an unsuccessful party may bear less of a costs burden where they played a more limited role at trial.
[2] [2002] SASC 234, [17].
I accept that the starting point is that where there are multiple unsuccessful parties, costs should be ordered against them jointly and severally.[3] However, I consider this a case in which it is appropriate to apportion the costs order so to reflect the limited role of Plastream in the litigation. I observe that Plastream was initially joined as a defendant at first instance by Rocla. It was, therefore, brought into the litigation. It did not institute a claim or crossclaim. Plastream’s role in the litigation was a result of the dispute between Rocla and SRLA. It played a subsidiary role. I consider that Plastream should bear 10% of the costs and Rocla 90% to reflect their respective roles in both the trial and the appeal.
[3] Trade Practices Commission v Nicholas Enterprises Pty Limited (No 3) (1979) 28 ALR 201, 210.
The second issue that arises is the costs of SRLA’s cross-claim at trial which was only partially successful. This claim related to damages. It is submitted by Rocla that SRLA ought to pay the costs of the damages issue in the cross-claim, in which it was unsuccessful. The issue of damages was not raised on appeal. It is the submission of SRLA that apportionment is not appropriate in these circumstances. It is contended that the issue of damages occupied only approximately one day of the nine-day trial, and those witnesses who were cross-examined were not only attending on the question of damages, but on the rectification issue also. Rocla contends that the issue of damages occupied a greater time than that submitted by SRLA.
I consider that SRLA should pay Rocla’s costs relating to the damages issue at trial. In these circumstances it is appropriate to refer the question of the apportionment of costs in respect of the issue of damages to the taxing Master for further determination.
The court makes the following orders:
1.   The appeal is allowed;
2.   The declarations made on 12 May 2011 in the following terms:
‘1. A declaration that clause 11.1 of the SRP Technology Licence Deed was varied such that the words ‘at any time within the first 20 months of the term’ were replaced by words to the effect of ‘on or before 21 May 2010’.
‘2. A declaration that the Plaintiff gave notice to the First Defendant in accordance with clause 16 of the SRP Technology Licence Deed on or before 21 May 2010 and consequently exercised the option in clause 11 of the SRP Technology Licence Deed.’
be set aside;
3.   The declaration made on 13 May 2011 in the following terms:
‘1. ‘the Termination Date’ in clause 2.25 of the Supply Agreement for Steel Reinforced Profile between the Plaintiff and the Second Defendant dated 22 August 2008 is the date that the Plaintiff completes the acquisition of a Complete Plastream Line in accordance with the option granted to it under the SRP Technology Licence Deed.’
be set aside;
4.   The order of the trial Judge made on 13 May 2011 that:
‘2. The Second Defendant supply SRP to the Plaintiff pursuant to the Supply Agreement until the Plaintiff completes the acquisition of a Complete Plastream Line in accordance with the option granted to it under the SRP Technology Licence Deed.’
be set aside;
5.   The orders of the trial Judge as to costs be set aside;
6.   The Business Sale Agreement (‘BSA’) dated 22 August 2008 between the plaintiff (‘Rocla’), the first defendant (‘Plastream’), the second defendant (‘SRLA’) and Caliber Australia Pty Limited be rectified by the insertion of a comma between the words ‘replacement’ and ‘lining’ appearing in clause 3.5(a) of each of the SRP Technology Licence Deeds comprising the eighth and fifteenth schedules respectively to the BSA;
7.   The SRP Technology Licence Deed dated 22 August 2008 in fact executed by Plastream and Rocla in the form of the eighth schedule to the BSA (‘the Rocla Sub-licence’) be rectified by the insertion of a comma between the words ‘replacement’ and ‘lining’ appearing in clause 3.5(a) of the Rocla Sub-licence;
8.   The SRP Technology Licence Deed dated 22 August 2008 in fact executed by SRLA and Rocla in the form of the fifteenth schedule to the BSA (‘the Rocla Mirror Licence’) be rectified by the insertion of a comma between the words ‘replacement’ and ‘lining’ appearing in clause 3.5(a) of the Rocla Mirror Licence; and
9.   Subject to the order of Anderson J that:
The costs of the adjournment thrown away on 29 November 2010 shall be adjusted so that Rocla bears 30% of Plastream’s costs and has its own costs of the adjournment reduced by 30%
which stands, the following orders as to costs are:
a)As to the costs of the appeal Rocla is to pay to SRLA 90% of the costs to be taxed. Plastream is to pay 10% of SRLA’s costs of the appeal to be taxed. As between Rocla and Plastream, each party is to bear its own costs.
b)As to the trial, Rocla is to pay to SRLA 90% of the costs relating to all issues other than damages. Plastream is to pay 10% of SRLA’s costs relating to all issues other than damages. As to the issue of damages, SRLA is to pay Rocla’s costs of that issue.
c)The question of the time spent at trial on damages and other issues is to be referred to a Master.
AND THE COURT DECLARES that:
10. Rocla was bound to seek the consent of SRLA to any variation of the terms of the Rocla Sub-licence and no such consent was in fact sought by Rocla or given by SRLA;
11. Clause 11 of the Rocla Sub-licence was not validly amended or varied;
12. The Option in clause 11 of the Rocla Sub-licence was not exercised by Rocla and cannot now be exercised by Rocla;
13. SRLA’s obligations to supply Steel Reinforced Profile to Rocla pursuant to the Supply Agreement dated 22 August 2008 came to an end on 22 August 2010.
DAVID J: I agree with the orders proposed by Sulan J. I have nothing further to add.
PEEK J: I agree with the orders proposed by Sulan J and with his reasons.