Zaknic Pty Ltd v Svelte Corporation Pty Ltd

[1996] FCA 768

CATCHWORDS

Damages - measure - whether double recovery would occur if damages payable under s 82 of the Trade Practices Act not reduced

Costs - apportionment - whether possible to achieve with any precision - whether appropriate to attempt

ZAKNIC PTY LIMITED v SVELTE CORPORATION PTY LIMITED & ORS.
No. NG 216 of 1994

CORAM:Lehane J

PLACE:Sydney

DATE:21 August 1996

IN THE FEDERAL COURT OF AUSTRALIA  )
NEW SOUTH WALES DISTRICT REGISTRY  )
GENERAL DIVISION  )            No. NG 216 of 1994

BETWEEN:ZAKNIC PTY LIMITED

(A.C.N. 003 803 496)  Applicant

AND:SVELTE CORPORATION PTY LIMITED

(A.C.N. 056 992 877)  First Respondent

HARRY SIALEPIS  Second Respondent

CRYPTA FUELS PTY LIMITED

(A.C.N. 010 036 512)  Third Respondent

ROBERT JOSEPH HAGAN  Fourth Respondent

HARRY SIALEPIS  First Cross-Claimant

SVELTE CORPORATION PTY LIMITED

(A.C.N. 056 992 877)   Second Cross-Claimant

CRYPTA FUELS PTY LIMITED

(A.C.N. 010 036 512)  First Cross-Respondent

ROBERT JOSEPH HAGAN        Second Cross-Respondent

DES MITCHELL  Third Cross-Respondent

CORAM:Lehane J

PLACE:Sydney

DATE:21 August 1996

MINUTE OF ORDERS

THE COURT ORDERS:

1. Judgment for the applicant against each of the first and second respondents in the sum of $821,884.

1. Judgment for the applicant against the second respondent in the sum of $229,044, such amount to be in addition to the amount referred to in Order 1.

1. Judgment for the applicant against each of the third and fourth respondents in the sum of $709,197.

1. That the respondents pay the applicant's costs: such liability to be joint and several.

1. Judgment for the cross‑respondents against the cross‑claimants on the cross‑claim.

1. That the cross‑claimants pay the cross‑respondents' costs on the cross‑claim: such liability to be joint and several.

NOTE:           Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA  )
NEW SOUTH WALES DISTRICT REGISTRY  )
GENERAL DIVISION  )            No. NG 216 of 1994

BETWEEN:ZAKNIC PTY LIMITED

(A.C.N. 003 803 496)  Applicant

AND:SVELTE CORPORATION PTY LIMITED

(A.C.N. 056 992 877)  First Respondent

HARRY SIALEPIS  Second Respondent

CRYPTA FUELS PTY LIMITED

(A.C.N. 010 036 512)  Third Respondent

ROBERT JOSEPH HAGAN  Fourth Respondent

HARRY SIALEPIS  First Cross-Claimant

SVELTE CORPORATION PTY LIMITED

(A.C.N. 056 992 877)   Second Cross-Claimant

CRYPTA FUELS PTY LIMITED

(A.C.N. 010 036 512)  First Cross-Respondent

ROBERT JOSEPH HAGAN        Second Cross-Respondent

DES MITCHELL  Third Cross-Respondent

CORAM:Lehane J

PLACE:Sydney

DATE:21 August 1996

EXTEMPORE REASONS FOR JUDGMENT

LEHANE J:   The applicant has handed up short minutes of order intended to give effect to the judgment which I delivered on 14 August 1996.  Two issues arise; one relates to the calculation of the damages payable by the first and second respondents in relation to the claim against them under the Trade Practices Act 1974; the other relates to the apportionment of costs.

As to the former, I suggested in my judgment that it might be that the damages payable by the first and second respondents under section 82 of the Trade Practices Act should be reduced by reference at least to the damages actually recovered from the third or fourth respondent, or both of them. The basis on which I made that suggestion was that to do otherwise might involve an element of double recovery.

Mr Harris for the applicant has submitted that it would be wrong to reduce the damages payable by the first and second respondents on that account.  Mr Hockey who appears for the first respondent has not sought to oppose that submission.  The second respondent, who is affected also, is bankrupt and, as has been the case throughout these proceedings, is not represented before me this morning.

Mr Harris' submission is in essence very simple and it has two aspects.  One is that if neither of the groups of respondents (as they may be described for convenience) had breached any duty to the applicant then the applicant, having paid the purchase price for the service station, would have had the benefit both of the lease over its term and of ownership of a service station whose value would have been substantially as represented; therefore, Mr Harris submitted, contrary to my tentative suggestion the applicant would properly have had both the cake and the eating of it.

The other aspect of the submission is that it is clearly established that the measure of damages in a case such as this is to be ascertained, in broad terms, by deducting from the price paid the value of the property acquired, and the only evidence as to the value of the
service station was that of Mr Wiley whose evidence I have accepted.  In particular it has been put to me, and Mr Hockey concedes, that the basis on which Mr Wiley valued the property - that of vacant possession ‑ was not challenged either by other expert evidence or in argument. 

I think in those circumstances, and given that this issue does not affect the liability of the third or fourth respondent (and despite the absence of the second respondent), it is appropriate for me in this respect to make the orders sought by the applicant; and on that basis there is then no controversy as to orders 1, 2, 3, 5 and 6 as set out in the short minutes handed up this morning.

That leaves order 4.  That order as proposed is that the respondents pay the applicant's costs, that liability to be joint and several.  The order in that form is again not opposed on behalf of the first respondent.  It is however opposed by the third and fourth respondents who have suggested a form of order which, as expressed, would impose a several liability as between the first and second respondents on the one hand and a several liability as between the third and fourth respondents on the other.

It emerged during submissions that that is not precisely what the alternative version was intended to achieve.  The intention was, in fact, an apportionment between the two groups of respondents, that is to say the first and second on the one hand and the third and fourth on the other, of the applicant's costs based upon an assessment of the relative proportions
of those costs to be attributed respectively to the claims against the first and second respondents and the third and fourth respondents.

In my view such an apportionment would be extremely difficult to achieve with any precision.  And if one considers the matter, as one must for these purposes, from the point of view of the applicant and the recovery of its costs against the unsuccessful respondents, it is clear that the greater part of the proceedings related to its claims against the third and fourth respondents, which were substantially more difficult and complex than those against the first and second respondents.  That might not be obviously so simply from a reading of the pleadings, but as the case developed it turned out that way as a matter of fact.

The other matter that has to be borne in mind is one of the consequences of the order which had effect until late in the proceedings; that these proceedings, and what I have called the Crypta proceedings, be heard together and that evidence in one be, subject to certain exceptions, evidence in the other.  In my view the difficulty of making an apportionment between the two groups of respondents would be substantially exacerbated by the fact that a good deal of what happened at the hearing had to do not with the claims of the present applicant against either of the present groups of respondents, but with claims of the third and fourth respondents against the first and second respondents in the Crypta proceedings.

If I make the orders as Mr Harris has sought them that will not, of course, determine questions as between the two groups of respondents or indeed as between the respondents individually as to their respective obligations to contribute to any costs which are finally certified on taxation.  In all those circumstances it seems to me that it would be inappropriate to attempt any apportionment.  Once I reach that conclusion, I do not think that the adoption of the formula suggested by the third and fourth respondents would make any substantial difference to the result that would follow were I to adopt the version of order 4 suggested on behalf of the applicant.  All that would happen, it seems to me, is that a further element of confusion would be introduced in this already somewhat confused case.

Accordingly, in my view the appropriate orders to make are those set out in the short minutes which the applicant has handed up.  I should add only that the calculations which are attached to those orders as a schedule have evidently been made commencing with the principal amount of the damages which I have held to be payable and applying for the appropriate periods the rates of interest which I have held to be applicable.

I therefore make the orders set out in paragraphs 1 to 6 inclusive of the short minutes of order handed up by the applicant this morning, which I have initialled and dated and which I shall place with the papers. 

I certify that this and the preceding 5 pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Lehane.

Associate:

Dated:  21 August 1996

Heard:  21 August 1996

Place:  Sydney

Decision:  21 August 1996

Appearances: Mr C M Harris of counsel instructed by Robert A Harper & Co appeared for the applicant.

Mr C J Hockey of counsel instructed by Galloways Solicitors appeared for the first respondent/second cross‑claimant.

Mr A Kalmath of Stewart Levitt & Company appeared for the third and fourth respondents/first and second cross‑respondents.