Case: Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd ( 2003) [2003] HCA 18 ; 214 CLR 51
Outcome: cited
From the opening of the case the statement of claim required clarification and particularisation of the damages sought in respect of each of the causes of action pleaded. In the closing submissions those damages were particularised under each head as follows: A. Unconscionable conduct K7,717,578. This amount was said to represent the difference between revenue that Fubilan earned under the OTML Contract and revenue that would have been earned had the respondents "withdrawn the P&amp;O tender". The calculation was said to be based on the evidence of Mr Campbell. B. Misleading or deceptive conduct (a) K1,072,981 representing management fees paid from February 2004 to December 2004 plus K587,782 representing management fees paid from January 2005 to August 2005, a total of K1,660.763; (b) A$1,824,000 from September 2005 to August 2009. These are management fees payable under the new management agreement that would not have been paid or be payable had the respondents' representations as to training been true. (c) K7,903,368 being K1,975,842 per annum from February 2004 to February 2008 for the loss of opportunity to cater to other sites in PNG. C. Breach of fiduciary duty. (a ) K7,717,578 representing the difference between the original tender rate and the contract rate.; (b) K10,915,503.48 being the value of a 15% rebate on total purchases by Compass Group (Australia) and Eurest for the period February 2000 to August 2005 constituted by K4,684,338.98 for purchases from Australia and K6,231,164.50 for purchases within PNG. The same sum is claimed in relation to the causes of action for negligence and breach of contract. D. Negligence (a) K7,717,578 being the difference between the original tender rates and the contract rates; (b) K10,915,503.48 being rebates retained by the respondents; (c) K3,987,091.07 being: (i) K816,735.79 for overpayment on stock in warehouse at the commencement of the contract; (ii) K2,844,456.00 for overpayment by Eurest on its invoices 1311 and 1312; (iii) K321,707.65 for the duty component to be deducted from the stock figure K1,798,329.30; (iv) K4,191.02 for an additional overpayment on invoice 1312. In the alternative to (i) and (iv) the applicants seek an account of profits on the basis that they do not have the original source documents used to enter MYOB data for the whole of the period from February 2000 to August 2005. This is said to be necessary if forensic analysis of payments allowed are to be conducted. That is to say the original purchase orders, invoices and payment documents should be obtained. (d) K65,808.90 fees and interest paid by MRSM to ANZ Bank on borrowing to fund purchase of the stock in the warehouse; and (e) K7,903,368 being K1,975,842 per annum from February 2004 to February 2008 for the loss of an opportunity to cater in PNG. This claim is in the alternative to the misleading or deceptive conduct claim. E. Breach of contract by retention of rebates. K10,915,503.48 being rebates retained. This cause of action is raised as an alternative to the claim for breach of fiduciary duty and for negligence. F. Breach of contract for expenses incorrectly charged . (a) K5,907,892.62 for expatriate salary expenses of Eurest from February 2000 to August 2005 that Eurest paid out of Fubilan's bank account; plus (b) the taking of an account for the expenses of Eurest's expatriate employees in relation to travel and accommodation. G. Eurest competing for catering business in the contract area K1,823,380 being K455,845 per annum for four years and, alternatively, the taking of an account. This claim is said to arise from the no compete clause 2.4(a)(ii) of the Management Agreement. H. Claim against Compass Group (Australia) The claim is made pursuant to the guarantee and indemnity said to be provided by Compass Group under cls 15.1(a)(i) and (ii) of the Management Agreement. The notice of demand relied upon in respect of the guarantee is exhibit 228. The claim is against Compass Group (Australia) for Eurest's breaches of the Management Agreement. The indemnity claim is said to be to the same effect, but not requiring a notice of demand. 507 Compass Group Plc is the company incorporated according to the laws of the United Kingdom which is the ultimate holding company of Compass Group (Australia) Pty Ltd. So much was admitted on the pleadings. In [5] of the statement of claim it was asserted that Compass Group (Australia) Pty Ltd was the agent of Compass Group Plc in relation to the dealings of each of the respondents with the applicants. 508 The Compass Group acquired Eurest in November 1999. There is however no evidence to suggest that Compass Group (Australia) Pty Ltd was acting as agent of the Compass Group Plc in relation to dealings with the applicants. The ill-conceived nature of the pleading so far as it relates to Compass Group Plc was illustrated by [19] of the statement of claim which asserted that all respondents "were, at all material times, aware of or ought to have been aware of, the International Management Requirement". This was a reference to OTML's requirement that the applicants appoint an internationally reputable firm to be their catering managers to manage and implement the OTML Contract before OTML would consider any proposal in relation to the contract. This requirement, as pleaded, was raised in 1998, the year before the Compass Group acquired Eurest. In [22] it is stated that: In or about mid 1999 the first, second and third respondents were aware of the pending incorporation of the first applicant ... Again, so far as Compass Group Plc is concerned this seems to make little sense. So too did the allegation that it made various representations to MRSM in November 1998 as pleaded in [49] and following. 513 The concept of unconscionable conduct as used in s 51AA was discussed by the High Court in Australian Competition and Consumer Commissioner v CG Berbatis Holdings Pty Ltd [2003] HCA 18 ; (2003) 214 CLR 51. The case was argued on the basis that it involved, as does this case, an allegation of unconscionable conduct comprising the knowing exploitation by one party of the special disadvantage of another. The idea of special disadvantage was propounded in Berbatis Holdings [2003] HCA 18 ; 214 CLR 51 as "... a disabling circumstance seriously affecting the ability of the innocent party to make a judgment in [that party's] own best interests". Gleeson CJ accepted that formulation as "... consistent with what the Act calls the unwritten law concerning unconscionable conduct, bearing in mind that the Act also allows for the development of the law from time to time" (at [5]). The Chief Justice went on to say, referring to the judgment of the Full Court of the Federal Court in Australian Competition and Consumer Commission v Samton Holdings Pty Ltd [2002] FCA 62 ; (2002) 117 FCR 301 that (at [11]): A person is not in a position of relevant disadvantage, constitutional, situational, or otherwise, simply because of inequality of bargaining power. Many, perhaps even most, contracts are made between parties of unequal bargaining power, and good conscience does not require parties to contractual negotiations to forfeit their advantages, or neglect their own interests.