Cellarit Pty Ltd v Cawarrah Holdings Pty Ltd

1. [1]

   McCOLL AP: The appellant, Cellarit Pty Ltd (Cellarit), was unsuccessful in defending District Court proceedings brought by Cawarrah Holdings Pty Ltd (Cawarrah) and Crusader Pty Ltd (as trustee for the Storch Superannuation Fund) (Crusader) to recover excess amounts of commission they contended Cellarit had charged them. Her Honour Judge Gibb awarded Cawarrah damages (including pre-judgment interest) of $102,143.87 and Crusader damages (including pre-judgment interest) of $223,564.32 and ordered Cellarit to pay their joint and several costs of the proceedings. [1]

2. [2]

   Cellarit appeals against her Honour’s decision pursuant to s 127(1) of the District Court Act 1973 (NSW).

3. [3]

   For the reasons that follow, I would uphold the appeal. In the course of the hearing, the respondents contended that even if the appeal was successful, they were nevertheless entitled to a lesser judgment consequent upon Cellarit’s failure to challenge a finding upon which part of the judgment was based and in respect of a matter about which the primary judge made no findings. In due course they sought leave to rely upon a draft notice of cross-appeal to achieve that end. Subject to that cross-appeal being amended in order to comply with the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), I would allow that cross-appeal to the extent I explain in my reasons.

4. [4]

   Cellarit facilitates the storage, logistics and sale of wine on behalf of its customers through an e-commerce website.

5. [5]

   Mr Scott Witt is a director of Cellarit which he had founded in 1999.

6. [6]

   Mr Richard Storch is the sole director of Cawarrah and Crusader. From around 1980 to 2001, Mr Storch was the director of a company which operated a diamond wholesaling business based in Sydney. Prior to 2006, he collected bottles of wine which he stored in a cellar at his home. By around 2006 he estimated he would have had more than 1,000 bottles of wine in his cellar.

7. [7]

   As at 2006, Mr Storch and Mr Witt had been friends for some decades. [2] Mr Storch knew that Mr Witt operated a wine storage and sales business.

8. [8]

   Cawarrah and Crusader were customers of Cellarit by oral agreement first made in 2006 (2006 contract). [3] They used, and paid for, Cellarit’s services until May 2016 after the commencement of the present proceedings. [4] For convenience, and unless the context otherwise dictates, I shall refer to the respondents collectively as “Cawarrah”.

9. [9]

   At all relevant times, Cellarit earned its profits relevantly for present purposes by charging its customers both a buyer’s and seller’s commission on bottles of wine it stored for them, the sale of which it facilitated through its website.

10. [10]

    The buyer’s commission was included in the price of wine advertised for sale by one of Cellarit’s customers. The effect of a 10% buyer’s commission, for example, on a bottle of wine sold for $100 meant that Cellarit deducted $10 before accounting to its customer, the vendor. Mr Witt gave evidence that while the rate of buyer’s commission had increased over time, it had never been discounted for any vendor.

11. [11]

    The seller’s commission was also calculated on the price of wine advertised for sale by one of Cellarit’s customers. Once again, on the sale of a bottle of wine for $100, a seller’s commission of 10% meant that Cellarit deducted another $10 before accounting to the customer. Mr Witt gave evidence that the seller’s commission had increased over time, but had been reduced for individuals or groups of vendors.

12. [12]

    Accordingly, where a vendor, at face value, sold a bottle of wine for $100, taking into account the two commissions, the vendor received $80.

13. [13]

    In 2006, Cellarit’s standard buyer’s and seller’s commissions were each 10%. It was common ground that at the inception of the 2006 contract, Mr Witt agreed to reduce the rate of seller’s commission Cawarrah was charged. Quite what was said by Mr Witt and Mr Storch respectively in making that agreement was a matter of controversy. Nevertheless, from the inception of the contract in September 2006, Cellarit charged Cawarrah a total commission of 15% which the primary judge found was made up of 10% buyer’s commission and 5% seller’s commission. Commencing in 2008 Cellarit increased both its commission rates and continued to do so periodically while continuing to give Cawarrah a discounted seller’s commission, until 2016, by which time (and after a substantial falling out between them) it was charging Cawarrah standard rates.

14. [14]

    The controversy between the parties turned principally on whether the 15% rate of seller’s commission charged in 2006 bound the parties for the entirety of their relationship (the fixed-term case) or whether, as Cellarit contended, the parties agreed that Cellarit would at its discretion provide a discount on the rate of seller’s commission it charged Cawarrah, and that it was entitled to vary that rate in the exercise of that discretion, the first such variation having been made in October 2008 (the variation case).

15. [15]

    Cawarrah’s case, which was accepted by the primary judge, was that pursuant to the 2006 contract and for the duration of its indefinite term, Cellarit was entitled to charge Cawarrah “mates’ rates” commission of 15%, made up of 5% seller’s commission and 10% buyer’s commission. [5]

16. [16]

    On 1 October 2008 Cellarit notified Cawarrah in writing that the commission payable for both buyer’s and seller’s commission would rise by 1% on and from that date. Cellarit then began charging Cawarrah commission of 16.5% made up of buyer’s commissions of 11% and seller’s commission of 5.5%. As I have said, there were subsequent increases in the rate of seller’s commissions Cellarit charged Cawarrah in 2010, 2011, (3 increases in) 2012, and 2014, until 2016, by which time Cawarrah was receiving no discounts on seller’s commissions. Mr Storch complained about the 2008 increase, but Cawarrah and Crusader continued to use Cellarit’s services following that increase and all subsequent increases until 2016 almost two years after these proceedings were commenced.

17. [17]

    Cellarit contended unsuccessfully at trial that the increases in the rates of seller’s commission were permissible contract variations. It argued it could be inferred that Cawarrah had assented to those increases from the facts that from 1 October 2008 until May 2016, a period of 7¾ years, Cellarit sent Cawarrah a total of approximately 172 monthly account statements/invoices relating to wine sales, each of which charged Cawarrah and Crusader respectively seller’s commission exceeding 15% and each of which they “paid”, in the sense that the commissions said to be due were debited from their monthly invoices. During this period, Cawarrah also delivered thousands of bottles of wine to Cellarit for storage and on-sale.

The pleaded cases

1. [18]

   On the hearing of the appeal, Cawarrah’s principal opposition to Cellarit’s complaint that the primary judge had erred in rejecting its variation case was that that case had not been run at trial. Accordingly, it is necessary to examine the pleadings and the conduct of the trial closely. [6]

2. [19]

   On 24 December 2014 Cawarrah commenced proceedings against Cellarit in the District Court of New South Wales. As commenced, Cawarrah sought repayment of $136,858.36 allegedly paid pursuant to misrepresentations concerning the acquisition of shares in Cellarit. In an amended statement of claim filed on 10 August 2015, Cawarrah pleaded a term to the effect of that ultimately found to have been agreed, albeit that it was alleged that it was a term of an oral contract, made “[d]uring or about 2003.”

3. [20]

   It was not until their second further amended statement of claim (SFASC), filed on 19 July 2016, that Cawarrah alleged it was a term of a contract made in 2006 that Cellarit would charge each plaintiff “a total commission of 15% in relation to any sale or purchase of wine by either of the plaintiffs which was facilitated by [Cellarit]” (15% fixed-term).

4. [21]

   In paragraphs 13 and 14 of the SFASC, Cawarrah pleaded that, in breach of the 2006 contract, Cellarit had charged them, or had purported to charge them, a total commission of more than 15% in relation to sales and purchases of wine by either of them which it facilitated. Paragraph 15 pleaded that by reason of the breaches, Cawarrah had suffered loss or damage. Particulars of the damages were said to be found in an affidavit of a Mr Walton which was not reproduced in the appeal books. [7]

5. [22]

   Rather, at trial Cawarrah said its particulars of damage were to be found in a Schedule of Issues and Damages dated 29 August 2017 (Schedule), the day before the commencement of the trial. The Schedule took the form of a narrative setting out the quantum of Cawarrah and Crusader’s respective claims, depending upon the primary judge’s findings. In addition there were two tables attached to the narrative, relating to each plaintiff, purporting to quantify elements of the various sums the subject of the narrative. I refer in more detail to the Schedule below.

6. [23]

   Cellarit denied the 2006 contract contained the fixed 15% term Cawarrah pleaded. Although its amended defence (filed in court with leave on 31 August 2017, the second day of the trial) to the SFASC could not be regarded as a model of pleading, paragraph 6(b) pleaded that, between the inception of the contract in September 2006 and 1 September 2009, it was a term of the contract that Cellarit “would at its discretion from time to time give the [respondents] a discount on the standard seller’s commission charged by it on the sale of wine by either [respondent], and did so give the [respondents] a discount of 50% of the standard seller’s commission during the said period …”

7. [24]

   In its amended defence, in paragraph 7, Cellarit pleaded that the 2006 contract was varied from 1 September 2009. The essence of the variation was to the effect that, provided one of either Cawarrah or Crusader (or an associated person or entity) bought shares in Cellarit, Cellarit would give Cawarrah a shareholder’s discount of 1% off the standard seller’s commission charged on the sale of wine for each $5,000 invested in shares (2009 variation). Cellarit further pleaded that, pursuant to that agreement, Cawarrah agreed to buy $150,000 worth of shares, which amount was paid in four instalments, but that in March 2014 Cawarrah asserted that they would not buy those shares and sought repayment of the $150,000. Accordingly, Cellarit pleaded in paragraph 7(e) that in or around May – June 2014 there was an agreement to set aside the 2009 agreement and “the shareholder’s discount was, in accordance with that agreement, after notice to the plaintiffs, reversed by the defendant” (2014 variation).

8. [25]

   In paragraph 10 of its amended defence, pleading to paragraph 13 of the SFASC, Cellarit admitted it had charged Cawarrah a total commission of more than 15% in relation to sales and purchases of wine by both plaintiffs facilitated by it, but said that, as to the sales of wine, it was entitled to do so by reason of the facts and matters alleged in paragraph 7 and, as to purchases of wine, that it charged buyer’s commission as pleaded in paragraph 6 of the amended defence. In defence to paragraphs 14 and 15 of the SFASC Cellarit denied breaching the 2006 contract or the loss and damage Cawarrah pleaded.

9. [26]

   Paragraph 12 of the amended defence pleaded an estoppel based on each increase in the rate of the seller’s commission Cellarit charged Cawarrah, allegedly with their knowledge and agreement, from October 2008 to May 2014, at which date, as I have said, the amount charged was raised to Cellarit’s standard rate. In its particulars of the estoppel claim, Cellarit relied upon each invoice it had supplied Cawarrah as identifying the commission rates for the forthcoming month. It pleaded that Cawarrah was free to terminate its services at any time but, having been informed of the rate increases, chose to continue with Cellarit’s services and to pay the commission charged.

10. [27]

    In their reply filed on the third day of the trial, 1 September 2017, in paragraph 1(a) – (d), Cawarrah admitted in response to paragraph 6 of Cellarit’s amended defence that during the period 1 September 2006 to September 2009, Cellarit gave them discounts of “approximately 50% off the then standard seller’s commission” charged on the sale or purchase of wine by either plaintiff, being 15% from September 2006 to September 2008, and 16.5% from September 2008 to September 2009, but pleaded that to the extent the commission exceeded 15% it was a breach of the 2006 contract. Particulars of the loss or damage for the breach were cross-referenced to paragraph 6 of the Schedule.

11. [28]

    In paragraph 1(e) Cawarrah pleaded in the alternative that if it was a term of the 2006 contract that Cellarit would, at its discretion from time to time, give them a discount off the standard seller’s commission rate, Cellarit had breached that term by purporting to reverse discounts previously given (reversals issue) and purporting to charge Cawarrah commissions other than those it indicated were being charged (overcharging claim). This paragraph was cross-referenced to paragraph 7 of the Schedule.

12. [29]

    In paragraph 2 of the reply, Cawarrah also raised the reversals issue in reply to the alleged 2009 variation pleaded in paragraph 7 of the amended defence, denying that the agreement said to underpin the 2009 variation was made, but pleading that, if the 2006 contract was varied in 2009 as alleged, that variation did not permit Cellarit to make the reversals referred to in subparagraph 7(e) of the amended defence and that by making those reversals Cellarit breached the varied contract. This paragraph was cross-referenced to paragraph 8 of the Schedule.

13. [30]

    In paragraph 3 of the reply, Cawarrah raised a number of argumentative matters said to support the proposition that paragraph 12 was liable to be struck out, which, on its face, constituted cavilling with the ruling the primary judge had made when giving Cellarit leave to amend its defence. The paragraph was never pursued, and the primary judge in due course determined the estoppel plea, albeit adversely to Cellarit.

The Schedule

1. [31]

   In the Schedule, Cawarrah identified the “real issues” for determination as being:

2. [32]

   In subparagraphs 6(a)(i) and 6(b)(i) of the narrative part of the Schedule, Cawarrah and Crusader respectively identified the quantum of their claims for damages, if the 2006 contract was found to have contained the 15% fixed-term, as identified in paragraph 1(a), as being that sum set out in column M of the table relating to the respective plaintiff. Column M was headed “Difference between actual commission and commission @ 15% ($).”

3. [33]

   In paragraphs 6(a)(ii) and 6(b)(ii), Cawarrah and Crusader respectively sought to recover the sum of reversals of discounts previously given. Cawarrah’s subparagraph 6(a)(ii) was cross-referenced to pages 396 and 440 of the trial Court Book which are pages 560 and 604 of the Blue Book in this Court. Crusader’s subparagraph 6(b)(ii) was cross-referenced to pages 473 and 510 of the trial Court Book which are pages 1125 and 1162 of the Blue Book in this Court.

4. [34]

   Those pages identified Cellarit invoices to Cawarrah and Crusader respectively on which were recorded, in May 2014, reversals of “Shareholder Discounts (seller’s commission through to 19 May 2014), [8] “Shareholders Discounts (storage)” and, in December 2014, reversals of “All Remaining Shareholders Discounts”.

5. [35]

   Paragraph 7 of the Schedule proceeded, first, on the premise that the Court had found the proper construction of the contract was as indicated in paragraph 1(b), but had answered question 2 “no”.

6. [36]

   In subparagraphs 7(a)(i) and 7(b)(i) of the Schedule, Cawarrah and Crusader respectively sought to recover in debt or as damages amounts calculated as the difference “between the commissions said to have been charged by Cellarit from time to time and the commissions actually charged”. These subparagraphs were cross-referenced to column P of the two tables attached to the Schedule. This related to what I refer to later in these reasons as the overcharging claim.

7. [37]

   Column P was headed “Difference between Commission @ Witt rates and actual commission”. The “Witt rates” were, in turn, clearly derived from Table A annexed to an affidavit of Mr Witt sworn on 12 August 2016. Table A set out Cellarit’s standard rates of buyer’s and seller’s commissions during the period 2008 to the termination of Cawarrah’s and Crusader’s relationships with it and the commissions Mr Witt said it had charged each during the same period.

8. [38]

   Subparagraphs 7(a)(ii) and 7(b)(ii) of the Schedule duplicated subparagraphs 6(a)(ii) and 6(b)(ii) relating to the reversals issue.

9. [39]

   Paragraph 8 of the Schedule proceeded, again, on the premise that the Court had answered questions 1(b) and 2 “yes”, but question 3 “no”. In that event, Cawarrah and Crusader sought to recover in subparagraphs 8(a) and (b) only the amounts previously claimed in subparagraphs 6(a)(ii) and 6(b)(ii) in relation to the reversals issue.

Formation of the contract

1. [40]

   Mr Storch’s evidence about the conversation which led to the 2006 contract as set out in his 29 April 2016 affidavit was:

2. [41]

   In his evidence-in-chief, Mr Storch corrected the last sentence to read:

3. [42]

   According to Mr Storch, there followed meetings and discussions about commission rates before a meeting at a coffee shop in Double Bay during which Mr Storch recounted the following conversation as having taken place:

4. [43]

   Mr Witt denied that the conversations Mr Storch recounted had occurred. His evidence about the first conversation which led to the 2006 contract as set out in his affidavit of August 2016 was that he explained to Mr Storch how Cellarit operated, the process of lodging wine, how to list wine for sale and other general information related to what Mr Storch wanted to know about storing and selling wine with Cellarit. The conversation continued:

5. [44]

   Mr Witt recalled a further conversation with Mr Storch during which he said to him:

6. [45]

   In his affidavit in response, Mr Storch denied Mr Witt’s version of the conversation. He agreed Mr Witt said words to the effect of those set out in [44], but repeated that Mr Witt said “yes, 15% is fine” in response to Mr Storch’s query at the coffee-shop meeting, “Are you happy with 15% total commission? Will you be happy with that from now on?”

7. [46]

   In late August/early September 2006, Cawarrah formalised its oral contract with Cellarit by completing an online registration form by reason of which its details were entered on Cellarit’s database. [10] In order to submit the form, it had to agree to Cellarit’s terms and conditions by ticking a box on the online form. As at 2006, Cellarit’s terms and conditions included:

8. [47]

   As I have said, Crusader commenced using Cellarit’s services in 2008. Crusader’s contract was also formalised by it completing an online registration form on 13 June 2008 received by Cellarit. [11] The first invoice issued to Crusader for the month of June 2008 followed the same format as those issued to Cawarrah. [12]

9. [48]

   The primary judge found Mr Storch to be a direct and frank witness, honest and reliable and, in general, accepted his evidence. [13] Cellarit contended that Cawarrah’s case as to a fixed rate of commission was implausible, among other reasons, because of the lengthy period between October 2008 and 2016, during which Mr Storch received, without complaint, 172 monthly account statements or invoices relating to wine sales, each of which charged a commission exceeding 15%. The primary judge held that this otherwise “inexplicable” inertia could be explained by depression which “afflicted him for more than a decade, and reached a particularly acute phase in the middle of the relevant periods”. [14]

10. [49]

    The primary judge described Mr Witt as a “complex witness” who professed a firm recollection, but contradicted himself in various ways. Her Honour found that it “would be unfair to treat Mr Witt as a completely unreliable witness”, observing that:

11. [50]

    Nevertheless, the primary judge concluded Mr Witt was unreliable in some respects. Accordingly, her Honour rejected his evidence, particularly where it was contradicted by a reliable source or document. [15] Despite this, the primary judge did not refer to any aspect of Mr Witt’s evidence critical to the appeal which her Honour concluded was contradicted by a contemporaneous document.

12. [51]

    The first issue the primary judge determined was the agreement the parties had made as to the rate of commission Cellarit would charge Cawarrah, an issue her Honour correctly stated had to be determined in accordance with the objective theory of contract. [16]

13. [52]

    As I have said, Cawarrah’s case was that “[i]t was a [fixed] term of the Contract that [Cellarit] would charge the relevant Plaintiff a total commission of 15% in relation to any sale or purchase of wine by either of the Plaintiffs which was facilitated by [Cellarit]”. [17] Cellarit’s case, in short, was that, while it agreed to give Cawarrah a 50% discount on the rate of seller’s commission, that discount was on the rate of seller’s commission as it was at any point in time.

14. [53]

    A number of matters were common ground. First, that the 2006 contract was made in about August/September 2006. [18] Second, that Cawarrah knew prior to making the 2006 contract that Cellarit operated a wine storage and sales business and charged 10% buyer’s commission and 10% seller’s commission for its services. The primary judge held that that “common knowledge shaped the backdrop to their negotiations.” [19] Third, that “the bargain was struck orally, and that there were various terms about which there is no dispute that were not discussed at all, which may be described shortly as the standard trading terms.” [20] Fourth, that “the parties specifically and separately negotiated the amount to be paid by [Cawarrah] to [Cellarit] by way of commission.” [21]

15. [54]

    Although, according to the primary judge, the parties concurred that there was an agreement in 2006 about a 15% charge for commission, there was “a divergence as to the precise words used”. [22] To the extent there was disagreement between the parties as to the effect of the 2006 conversations insofar as the commission rate was concerned, the primary judge appeared to resolve it both in the section of her judgment dealing with “[t]he terms of the admitted 2006 contract” [23] and, too, in the part headed “[t]he price term in the 2006 contract as pleaded by the plaintiffs”. [24]

16. [55]

    Cellarit’s commission rates were set out in its schedule of rates published from time to time to which its terms and conditions referred. The primary judge held that the one point upon which the parties agreed was that in 2006, there was no agreement that Cawarrah should pay commission in accordance with that schedule. Rather, “[t]hat term was expressly varied by agreement between the parties.” [25]

17. [56]

    The primary judge accepted the italicised parts of Mr Witt’s account of the conversation set out above (at [43]) as her Honour repeated them in both sections of her reasons without criticism, observing that there was “broad agreement about that discussion”. [26]

18. [57]

    The divergence between the parties as to the precise words used was that, whereas Mr Storch recalled an express agreement to a fixed 15% commission, Mr Witt recalled only discussion about a 5% seller’s rate and no express simultaneous mention of the buyer’s rate. [27]

19. [58]

    Even allowing for the effect of the passage of time on both witnesses’ recollections, the primary judge held that some points were certain:

20. [59]

    Insofar as Cellarit relied for its variation case on Mr Witt’s comment that the figures shown on its website were “the current charges and commissions, but of course they’re not set in stone, they can change”, the primary judge held the word “current” could have either or both of two meanings. Either “that the rates may (or will) vary from time to time or over time” or “that different rates may be offered to different customers or in different circumstances.” [29]

21. [60]

    The primary judge held that:

22. [61]

    In respect of the coffee-shop conversation, the primary judge held that the “parties are effectively ad idem as to the term”. [31] On this approach, Mr Witt’s statement that he would reduce the (standard 10%) seller's commission to 5% without adjusting the standard buyer’s commission of 10% produced a total commission of 15%. [32]

23. [62]

    In a section of her reasons dealing with Cellarit’s “alternative contention as to the terms of the 2006 contract”, the primary judge rejected Cellarit’s case that, as counsel for Cellarit submitted, “what objective business people in the positions of Mr Storch and Mr Witt would take from these utterances is that at the defendant’s discretion the defendant would reduce the seller's commission, that would otherwise be payable, by 50%.” [33]

24. [63]

    In the primary judge’s view, that submission did not reflect “[Cellarit’s] pleaded term, which allows for an unspecified ‘discount off the standard seller’s commission charged by it on the sale of wine’ at [Cellarit’s] discretion from time to time.” In her Honour’s view, on “the pleaded formulation, the availability of discount varies, not the rate of the seller's commission” and “Mr Witt said nothing about ‘discounts’ per se (save for the offer of halving the rate), varying or variable rates, or Cellarit’s discretion at all”. In this context, the primary judge repeated, in substance, her earlier conclusion that use of the word “current” and that “rates ‘are not set in stone’ [are] far too subtle to embody a term objectively determined to the effect that the rates that [Cellarit] would charge Mr Storch/the plaintiffs would vary from time to time.” [34]

25. [64]

    Accordingly, her Honour held that Cellarit was not entitled to vary its rates and charges, including seller’s commission, from time to time and that for it to have done so was a breach of contract. [35]

26. [65]

    The primary judge then turned to a section of her reasons headed “A contract with a fixed price term: payment of 15% commission”. In this respect, her Honour held that “[t]he parties struck a very simple bargain, exactly as the plaintiffs pleaded”: “[b]oth sides recall that the price agreed was 15% commission, whether that be characterised as 10% (buyer’s commission) plus one half of the seller’s 10% or a flat figure of 15%.” Accordingly, her Honour found that the contract was struck as Cawarrah pleaded, with the price term a fixed 15% commission.” [36]

27. [66]

    This finding is the subject of the first, third and fourth grounds of appeal.

28. [67]

    In addition to the oral agreement, Cellarit relied upon its standard online terms and conditions which it contended were incorporated in the 2006 contract when each of Cawarrah (in 2006) and Crusader (in 2008) completed the online registration form. The primary judge found that Cawarrah and Crusader “obviously accepted … [Cellarit’s] terms and conditions without further (or any) enquiry.” Her Honour also held that the printed standard terms gave Cellarit the right to vary its charges from time to time. However, her Honour found that those terms were not presented to, nor seen by, either Cawarrah or Crusader, before contract and, accordingly, held that they did not form part of the agreement between the parties. [37] This finding is the subject of the second ground of appeal.

29. [68]

    The primary judge then turned to the term of the contract. In this respect her Honour held (footnote added): [38]

30. [69]

    The finding that the 2006 contract was for an indeterminate period and for a fixed price, but not the finding that the contract was terminable on reasonable notice, is the subject of the first, third and fourth grounds of appeal. There was no notice of contention challenging the finding that the 2006 contract was terminable on reasonable notice.

31. [70]

    The primary judge then turned to a section of her reasons dealing with Cellarit’s “unilateral increase in the rates charged in 2008”.

32. [71]

    On or about 1 October 2008, Cawarrah received an email from Cellarit advising that both the buyer’s and seller’s commission rates were to increase by 1%. Mr Storch arranged a meeting with Mr Witt in or around late 2008 or early 2009 at which he protested about the proposed increase, and saying “[you] had a deal with me”, but to no avail. Mr Witt told him he had “increased the rate for all my customers. I had to, otherwise I would have gone broke.” [40]

33. [72]

    The primary judge accepted that Mr Witt had explained the reason for the increase to Mr Storch, that Cawarrah continued trading using Cellarit’s services despite knowing of the rate increases, and that, in doing so, they gave up protesting and paid the bills containing the increased rates as they arrived. The primary judge rejected Cellarit’s submission that Cawarrah’s conduct demonstrated their assent to the rate increases and that Cellarit could “charge what it liked and alter the rates at will.” [41] Her Honour also held, that a reasonable person in the parties’ position would not have thought consensus had been reached just because Mr Storch gave up voicing his disagreement. [42]

34. [73]

    Her Honour found, as appears uncontroversial, that Cellarit charged Cawarrah a 5% seller’s commission on the price paid for any given bottle of wine (exclusive of the buyer’s commission) from the inception of the 2006 contract until the invoice issued for the month of October 2008. The seller’s commission rose in the October 2008 invoice to 5.5% of the price paid inclusive of the buyer’s commission. At the time the standard seller’s commission was 11%.

35. [74]

    Crusader had been charged a 5% seller’s commission up to (and including) August 2008 and was charged a 5.5% seller’s commission in September 2008. [43]

36. [75]

    The buyer’s commission rose to 11% at the same time. [44]

37. [76]

    The primary judge found, as was apparently common ground, that the “charging methodology” also changed in 2008 leading to a separate increase in the seller’s commission to slightly higher than 5.5%, as the sellers (Cawarrah) were also paying a percentage of the buyer’s commission. [45]

38. [77]

    The primary judge held that the rate changes were “entirely unilateral”, a point her Honour found Cellarit largely conceded in submissions. [46] This was, in fact, Mr Witt’s evidence, it being his contention that, “like any business”, he did not need to obtain Cawarrah’s explicit consent to increasing the commission rates in October 2008, or at all. [47] Her Honour held that the “unilateral” variation was a breach of contract. [48]

39. [78]

    This finding is also the subject of the first, third and fourth grounds of appeal.

40. [79]

    There was an issue at trial as to whether there had been an agreement between the parties in terms of the 2009 Agreement Cellarit pleaded in its amended defence, which Cawarrah denied. The primary judge found that no shares were issued to Cawarrah. [49] Nor, as was apparently common ground, did Cawarrah receive a shareholder’s discount as Cellarit had pleaded. [50] The primary judge rejected Cellarit’s contention that the 2009 Agreement had been made. [51] This finding is not the subject of any direct challenge on appeal. However, evidence given on this issue is relevant to the reversals issue.

41. [80]

    Mr Witt gave evidence that in September 2009 Mr Storch told him he would probably invest $100,000 in Cellarit. Pursuant to that statement, he contended, Mr Storch paid $50,000 to Cellarit in January 2010 in consequence of which Cellarit “began to receive a 10% discount on their storage fees” commensurate with the $50,000 invested. Mr Witt also said that in February 2010, Mr Storch told him that he had decided to increase his shareholding investment in Cellarit to $150,000, but was having difficulty raising the $100,000 balance for the shares. Because of that difficulty, Mr Witt contended, Mr Storch asked him whether he was “willing to withhold my wine sales proceeds from my Super Account”, [52] the implication being that the amounts to be withheld would constitute the $100,000 due in respect of the additional investment in Cellarit.

42. [81]

    Mr Witt said that, consequent upon that conversation, he debited $25,000 from Crusader’s account in March and August 2010, and a further $50,000 in November 2010 on each occasion itemising the entry on Crusader’s invoice as “Payment via issue to you of $25,000 [$50,000 in November 2010] of Cellarit shares”.

43. [82]

    Mr Witt also alleged that in about May 2010 Mr Storch asked for a full discount on seller’s commission, consistent with his agreement to take $150,000 worth of shares and that he agreed with that request although Mr Storch had not “paid for [the] shares in full”.

44. [83]

    In due course, in 2015, Mr Storch took proceedings on Cawarrah’s behalf to recover the $50,000 given to Cellarit, which he contended was advanced by way of a loan in January 2010 (loan-recovery proceedings). [53] Those proceedings were resolved when Cawarrah accepted Cellarit’s offer of compromise of $55,000 in late 2016. [54]

45. [84]

    At trial, Cellarit also contended that when Cawarrah told it in March 2014 that they would not purchase any shares in Cellarit, Cawarrah sought repayment of the $150,000, being the $50,000 Mr Storch paid in January 2010 and the $100,000 debited against Crusader’s account. Cellarit contended that led, in or around May and June 2014, to an agreement to set aside the 2009 Agreement and that, in accordance with that agreement after notice to Cawarrah, Cellarit reversed the shareholders’ discounts of 30% off the seller’s commission Cawarrah had received since September 2009 (2014 reversals). [55] Cawarrah denied any such agreement had been made.

46. [85]

    The primary judge considered the evidence concerning Cellarit’s contention that there was an agreement in 2014 to set aside the 2009 agreement as an assertion of variation. [56] Mr Storch denied that there was any such variation as he denied that either he or Cawarrah had agreed to purchase any shares in the first place.

47. [86]

    In the course of the loan-recovery proceedings, there was an exchange of emails between Mr Witt and Mr Walton, who was described as an agent assisting Mr Storch, and who was apparently mediating the dispute concerning the $50,000. In the course of that exchange, in April 2014, Mr Walton advised Mr Witt that Mr Storch “does not wish to proceed with his share purchase”, a proposition with which Mr Witt agreed. In turn, on 20 May 2014, Mr Witt proposed that “reversal entries to the May Cellarit accounts … will reflect [the] non-purchase of Cellarit shares”. [57]

48. [87]

    In a follow up email dated 1 June 2014 (reversals email) sent to Mr Walton and copied to Mr Storch, to which the primary judge referred, [58] Mr Witt attached documents relating to each of Cawarrah’s and Crusader’s accounts, pointing to them as noting the adjustments off their accounts having regard to Mr Storch’s failure to purchase Cellarit shares. The amounts referred to were, in relation to Cawarrah, the figures shown in its May 2014 invoice (Blue 560) for “Reverse Shareholder Discounts” of $23,793.53 and “Reverse Shareholder Discounts (storage)” of $3,797.96. Insofar as Crusader was concerned, its May 2014 invoice (Blue 1125) recorded “Reverse Shareholder Discounts” of $66,873.37 and “Reverse Shareholder Discounts (storage)” of $17,006.34 as having been adjusted off its accounts. The same invoice also showed a credit of $100,000, recorded as “Reverse debit payments for Cellarit shares”. [59]

49. [88]

    Mr Witt described the adjustments as being in Mr Storch’s favour “as an act of goodwill and/or in lieu of any interest amounts [Mr Storch] feels are owing …”. In addition to the “goodwill”, the reversals email pointed out that Cellarit had left all discounts in place from 1 September 2009 through to 1 February 2010, that is to say six months of shareholder’s discounts and, too, had not reversed seller’s commission discounts which exceeded shareholder discounts for the period 1 September 2009 to 19 May 2014. Cellarit reserved the right “to revert to the less favourable treatment of adjustments and/or vary [Cawarrah’s/Crusader’s] fees at any time prior to the conclusion of the Deed of Settlement and/or if [Cawarrah/Crusader] ceases to continue as a Cellarit customer.”

50. [89]

    The primary judge held that the “reversals” Mr Witt proposed in the 20 May 2014 email were not agreed. [60] Rather, in her Honour’s view, Cellarit implemented the “reversals” unilaterally as appeared from the 1 June 2014 email and issued invoices which “removed the benefit of the various discounts that had governed the charging in the previous years and charged the [respondents] slightly more than the sums that were notionally returned to them.” This led to “[m]ore than $100,000 … levied in fresh charges, which were called ‘reversals’.” [61]

51. [90]

    Cellarit submitted that Cawarrah and Crusader bore the onus of proof in establishing the breaches of contract in relation to the reversals issue. After referring to this submission, her Honour observed:

52. [91]

    The primary judge rejected Cellarit’s submission that the reversals constituted performance on its part of an agreed 2014 variation of the 2009 agreement. [63] Her Honour held “[t]here was no relevant agreement at all”. Rather, her Honour described the reversals as “just another peculiarity in [Cellarit’s] charging regime”. Her Honour found that the reversals were relevant to the calculation of Cawarrah’s loss in that they identified “various charges levied and payments made by [Cellarit]”. [64] However, her Honour did not make a finding on the issue raised in Cawarrah’s reply that the reversals were a breach of the 2006 contract whether made as Cawarrah contended, or varied as Cellarit contended. This appears to have been because, in her Honour’s view, the “reversals” formed part of Cawarrah’s “contentions as to the quantification of the losses flowing from [Cellarit’s] breach of the contract”. [65]

53. [92]

    Cellarit also sought to rely upon a contention that Cawarrah was estopped from complaining about the variations to the commission rates. The primary judge rejected that submission. [66] It was the subject of the sixth ground of appeal, which Cellarit did not press.

54. [93]

    In a summary of her findings, the primary judge concluded that Cawarrah’s contractual claim was made out in full. Her Honour found that there was an agreement that Cawarrah would be charged a fixed rate of commission of 15%, that Cellarit charged more than that amount and that Cawarrah’s loss and damage was the difference between the sum which should have been paid at the contractual rate of 15% and the sum actually paid, plus interest. [67]

55. [94]

    As I have said, the primary judge did not make any finding as sought in Cawarrah’s reply that the reversals were a breach of contract, nor did her Honour’s reasons expressly address the overcharging claim.

56. [95]

    Her Honour directed the parties to bring in short minutes of order to give effect to her findings, albeit that her Honour also reserved for further submissions quantification of the judgment sum. [68]

57. [96]

    The parties were unable to agree about the orders which should be made. The matter returned to Court before the primary judge on 6 and 13 November 2017 apparently for argument about quantification of the contractual damages, issues of costs and a stay application pending appeal. Orders were made on 13 November 2017 on the basis, finally, of short minutes of orders with “agreed figures as to the quantification of the respective judgment sums, without prejudice to the defendant’s rights”.

58. [97]

    The judgment in Cawarrah’s favour was for $102,143.87 including pre-judgment interest. The judgment in Crusader’s favour was for $223,564.32 including pre-judgment interest.

59. [98]

    The grounds of appeal contend that the primary judge erred in:

    1. (1)

       finding that a binding oral agreement was made in 2006 between Cellarit and each of Cawarrah and Crusader which included a term that Cellarit would charge each of them 15% commission on wine sales, comprised of a seller’s commission of 5% and a buyer’s commission of 10%.

    2. (2)

       finding that Cellarit’s printed standard terms (which the trial judge found gave Cellarit the right to vary its charges from time to time) did not form part of the parties’ agreement.

    3. (3)

       finding that the binding oral agreement that the trial judge found was made in 2006 continued to govern the parties’ business dealings and was not varied in the period from October 2008 to May 2016.

    4. (4)

       failing to find that, looking objectively at the whole of the parties’ business relationship and not only what was said when the relationship was first formed, the parties by their conduct from October 2008 to May 2016 made new agreements or varied the terms of their agreement relating to the commission. The notice of appeal identified aspects of the relationship relied upon in this respect, generally relating to the increases in commission rates over that period and the continued relationship between the parties notwithstanding the higher commission rates.

    5. (5)

       finding that Cawarrah and Crusader paid Cellarit’s invoices under protest.

60. [99]

    Cawarrah did not file a notice of contention or a cross-appeal prior to the appeal hearing. Nevertheless, in their written submissions, Cawarrah contended that, even if the appeal was successful, they were entitled to judgment in their favour in an amount representing the 2014 reversals. Cawarrah contended that as Cellarit did not pursue the primary judge’s rejection of the 2014 variation case on appeal, the reversals were a breach of the 2006 contract, as, even if Cellarit was entitled to vary the rate of seller’s commission at its discretion, the contract could not sensibly be construed as permitting the reversal of discounts which had already been given.

61. [100]

    Cawarrah also contended in their written submissions that they would be entitled to a further $25,669.42 in damages in relation to the overcharging claim.

62. [101]

    On these two bases, Cawarrah contended it remained entitled to a judgment in its favour of $41,220.23 exclusive of pre-judgment interest and Crusader contended that it remained entitled to a judgment in its favour of $118,489.01, again, exclusive of pre-judgment interest. They sought to rely on the calculation of those amounts as set out in the Schedule.

63. [102]

    Counsel for Cellarit, who did not appear at trial, identified its primary grounds of appeal as grounds 3 and 4. However, ground 1 concerning the terms of the 2006 contract involves substantially the same principles of law concerning the construction of contract (save as to the variation issue) such that it is convenient to set out Cellarit’s submissions on these three grounds together.

64. [103]

    As to ground 1, Cellarit submits that the primary judge erred in finding that a binding oral agreement was made in 2006 which included a term that Cellarit would charge Cawarrah a fixed 15% commission on wine sales, comprised of seller’s commission of 5% and buyer’s commission of 10%.

65. [104]

    Cellarit contends that the departure between the parties’ versions of the 2006 conversations which took place approximately 11 years before the witnesses gave evidence about them concerned whether the commission rate was agreed to be fixed at 15% (Mr Storch), or was agreed to be a 50% discount on seller’s commission, amounting to a total commission of 15% as at 2006, but subject to change over time (Mr Witt). Resolution of this issue turned on the precise words used in the conversations.

66. [105]

    Cellarit submits that the evidence was not sufficiently cogent to justify the primary judge being satisfied, in accordance with s 140 of the Evidence Act 1995 (NSW), that the price term for which Cawarrah contended was made out. Rather, Cellarit contends that the primary judge should have found that the Court could not be satisfied that an oral term for a fixed 15% commission as alleged by Cawarrah was agreed in 2006, having regard to the subtleties as between each party’s version and the passage of time which it contended gave rise to “serious difficulties as to the reliability of” the precise words used in the conversations. In its oral submissions, Cellarit also pointed to the varying and inconsistent accounts of the term alleged to have been agreed in Cawarrah’s correspondence and earlier versions of the pleadings and to the absence of contemporaneous documents to assist Cawarrah’s version. Cellarit also relied on the fact that Cawarrah agreed to its terms and conditions when completing the online registration forms which, as the primary judge held, contained an express term permitting Cellarit to vary its charges from time to time.

67. [106]

    As to grounds 3 and 4, Cellarit submits that the primary judge erred in finding that the oral agreement made in 2006 continued to govern the parties’ business dealings and was not varied in the period from October 2008 to May 2016 and that, in so finding, her Honour failed to look objectively at the whole of the parties’ relationship, but, rather, focused only on what was said and done when the relationship was first formed.

68. [107]

    Cellarit submits that when the whole of the parties’ long trading relationship was considered, and common sense applied, it could not conceivably be concluded that a reasonable person in the parties’ respective positions would think that the 15% commission term the primary judge found was orally agreed in 2006 continued to apply until 2016. It contends it was sufficient for this Court to allow the appeal to find that the 2006 contract was varied in 2008 when the seller’s commission rate was increased for the first time, an increase which the Court should also find was assented to by Cawarrah at the very least by their conduct in continuing to trade with Cellarit. This was because, once it was accepted the 2008 increase was a permissible variation, there was no suggestion that there was any agreement, whether express or implied, to revert to the 2006 commission rate.

69. [108]

    Cellarit argues that in determining the terms of the contract, the primary judge failed to pay any, or any sufficient, regard to a number of matters.

70. [109]

    First, the informal manner in which the oral agreement was made in 2006. Cellarit submits that the informality of those circumstances made it easier to infer that the parties had objectively varied a term of the contract by their subsequent course of dealings.

71. [110]

    Second, the length of time of the parties’ dealings and the number of times Cellarit consistently charged more than 15% seller’s commission with Cawarrah’s knowledge. In this context, Cellarit submits that an important step in the course of the parties’ dealings were the decisions made by Cawarrah voluntarily to continue to use its services, despite, on their contention, there being no contractual obligation to do so, and knowing that Cellarit had increased its seller’s commission rates above 15% as evidenced by the 172 monthly account statements/invoices sent over the period of their relationship. Cellarit complained that the primary judge gave no weight to this important factor. It criticised the primary judge’s finding that consensus as to increased rates was not reached “just because Mr Storch gave up voicing his disagreement”.

72. [111]

    Third, Cellarit submits that Mr Witt’s statement to Mr Storch in October 2008 to the effect that Cellarit had increased the rate for all customers, “otherwise [Cellarit] would have gone broke”, indicated its unwillingness to continue with the arrangement that had existed since 2006. In those circumstances, Cellarit contends the increased commission could be regarded either as a variation of the 2006 contract, or the termination of that agreement and the entry into a new agreement with the increased commission rate, like the previous one, terminable at will.

73. [112]

    Fourth, Cellarit submits that the discussions between the parties relating to the rate increases were an objective indication that the 2006 Contract was replaced by an agreement for a higher commission from soon after October 2008 and, in any event, well before 2016.

74. [113]

    Cellarit points to the following matters:

75. [114]

    In short, Cellarit submits that from the time of the October 2008 increase, Cawarrah never asserted it was agreed in 2006 that the seller’s commission rate was, or should be, 15%. Cellarit also pointed out that this claim was not even made when the proceedings were commenced. Rather, a term to similar effect, albeit alleged to have been made in 2003 was not pleaded until the further amended statement of claim filed in November 2015 about 12 months after the proceedings were commenced, during which period Cawarrah continued to use Cellarit’s services and pay the higher seller’s commission rates.

76. [115]

    Fifth, Cellarit submits that the primary judge failed to pay any, or any sufficient, regard to the fact that the 2006 Contract was terminable by either party, acting unilaterally, at any time and without cause (subject only to reasonable notice). In this context, Cellarit argues that the significance given by her Honour to the rate increases being unilateral acts was “misconceived” having regard to the fact that the 2006 contract could be terminated by a unilateral act of either party, at any time and without cause. Cellarit argues that that circumstance made it easier to infer that the parties had by their subsequent course of dealings objectively replaced some or all of the terms of the 2006 contract.

77. [116]

    Ground 2 overlaps with ground 1 insofar as Cellarit contends that when Cawarrah and Crusader completed the online registration form, they would have ticked the box indicating they agreed to Cellarit’s terms and conditions. Accordingly each was bound by those terms and conditions, one of which gave Cellarit the right to vary its charges from time to time.

78. [117]

    Cellarit submits that the primary judge erred in finding that its standard terms did not form part of the parties’ agreement, but were post-contractual. It argued that there was no mention at the time of the 2006 oral contract of the identity of the customers – an essential element of any binding agreement –until the online registration forms were completed. Accordingly, Cellarit submits her Honour should have held that that completion of the online registration form was not post-contractual, but was a step in the making of a contract, by reason of which its standard terms, which gave it the right to vary its charges from time to time, were incorporated into the 2006 contract.

79. [118]

    Although the primary judge’s finding [69] that Cawarrah paid Cellarit’s invoices under protest did not appear to have played any part in her Honour’s reasoning in upholding the claim that the 2006 contract, as found to have been made, governed the whole of the parties’ course of dealing, Cellarit submits, in any event, that this finding was not supported by the evidence of Cawarrah’s payment of 172 monthly invoices without protest and was contrary to her Honour’s finding that after the October 2008 rate increase Cawarrah “gave up protesting” and continued trading with Cellarit.

80. [119]

    Counsel for Cawarrah, Mr Robertson, who appeared at trial, and on appeal with Mr R Raffell, submits as to ground 1, that Cellarit’s complaint that the primary judge could not be satisfied having regard to the passage of time of the “precise words used in [the] conversations” said to constitute the 2006 contract, misunderstood her Honour’s findings. They argue that her Honour properly acknowledged that the “precise words” supporting her findings about the 2006 Contract’s fixed 15% rate “were necessarily faded by time and tinged by hostilities over the years.” [70] Nevertheless, her Honour found there was a “surprising degree of conformity in the recollections” of the parties’ principals, that the “divergence” in the words recalled was “minimal” [71] and, indeed, that she would have reached the same conclusion had she accepted Mr Witt’s evidence. [72] Her Honour also considered matters of credit, reliability, context and background and correctly determined on an objective basis that the term of the 2006 contract for which Cawarrah contended had been established. Accordingly, Cawarrah submitted no appealable error had been identified in this respect.

81. [120]

    Cawarrah also submits that Cellarit’s submission that the primary judge should have held that no binding agreement could have been made before Cawarrah and Crusader respectively completed an online registration form, had not been raised at trial. They argue such a contention was inconsistent with Cellarit’s case at trial that the parties concluded a contract during or about 2006, having regard to the evidence that the online registration form was not completed until 2008 and then only in respect of the Crusader agreement.

82. [121]

    Cawarrah contends that had the terms and conditions case been raised at trial, they could have met it by leading evidence from Mr Storch, or cross-examining Mr Witt as to Cellarit’s assertion that the names of contracting parties were first communicated when Mr Storch later entered them in the online registration form.

83. [122]

    In any event, Cawarrah submits that, even if ground 1 is open, it would not lead to the appeal being allowed because the primary judge held that the Cellarit’s “standard schedule of rates and charges” was “irrelevant as a matter of contractual construction”. [73] This was because, on Cawarrah’s submission, it was common ground at trial that Cellarit would not charge in accordance with a “schedule of rates as published from time to time”, rather than, on Cellarit’s case, give Cawarrah a discount “off the standard seller’s commission charged by [it]” as determined at Cellarit’s “discretion from time to time”. [74]

84. [123]

    As to grounds 3 and 4, Cawarrah submits that it was not part of Cellarit’s case at trial that the 2006 contract was varied or replaced by another contract entitling Cellarit to charge higher commissions than originally agreed. They contend the closest Cellarit came to making such a point was in its estoppel claim, which was rejected by the primary judge, and is not raised on appeal.

85. [124]

    Rather, Cawarrah submits that Cellarit contended at trial that it was a term of the contract (at least until 1 September 2009) that it “would at its discretion from time to time give [Cawarrah] a discount off the standard seller’s commission charged by it on the sale of wine … but no other discounts.”

86. [125]

    Accordingly, on Cawarrah’s case, they contend, the steady increases on Cellarit’s part in the commission it charged them from about 2008 until 2016, at which time Cawarrah was receiving no discount on Cellarit’s standard commission, constituted a breach of the contract sounding in damages as awarded by the primary judge.

87. [126]

    On Cellarit’s case, Cawarrah accepts, the increase in the commission rates did not constitute a breach because it had a “discretion” to charge whatever commission it wished.

88. [127]

    However, Cawarrah argues it is not open to Cellarit on appeal to complain that the primary judge failed to find that “the parties by their conduct from October 2008 to May 2016 made new agreements or varied the terms of their agreement”. Had such a case been argued at trial, Cawarrah submits they would have sought to meet it by leading evidence that there was no fresh consideration to support a variation or replacement of the 2006 contract and there had been no “meeting of minds” of the kind necessary to constitute a further contract. Cawarrah’s written submissions did not otherwise address the variation issue.

89. [128]

    In oral submissions, and in the event the Court rejected its submissions concerning the way the trial was conducted, Cawarrah argued that the primary judge was correct to proceed on the basis that there was no relevant consensus of a kind which might be regarded as a variation of the original agreed contract in 2006. They point to the advantages the primary judge enjoyed having seen the witnesses, and also relied on her Honour’s findings about their respective credibility. They also submit that the primary judge was entitled to reject Cellarit’s mutual assent case and find, rather, that Mr Storch was “hampered by his depression, which has afflicted him for more than a decade, and reached a particularly acute phase in the middle of the relevant periods [which] explains … his episodic inertia”. [75] They repeat the submission that there was no consideration for any varied contract.

90. [129]

    Cawarrah also argues that if, and to the extent that, Cellarit sought to argue at trial that the 2006 contract was unilaterally terminable on reasonable notice pursuant to an implied term of the kind discussed in Crawford Fitting v Sydney Valve & Fitting, [76] they would have sought to prove (and sought a finding) that no such notice (reasonable or otherwise) was given.

91. [130]

    Once again, Cawarrah contends that ground 2 was inconsistent with the position which was admitted on the pleadings and should not be entertained.

92. [131]

    Second, Cawarrah contends that even if Cellarit’s “standard terms” were incorporated into the 2006 contract, the aspect of those terms which permitted it to charge commissions in accordance with a “schedule of rates as published from time to time” was inconsistent with the parties’ specific agreement that different rates other than those in the “schedule of rates” would be charged. Accordingly, Cawarrah repeated its submission that the primary judge correctly held that the “schedule of rates” was “irrelevant as a matter of contractual construction”. [77]

93. [132]

    Cawarrah agreed with Cellarit that whether or not commissions were paid (or deducted) “under protest” played no part in any aspect of the primary judge’s reasoning challenged on appeal. Accordingly they contended this Court need not consider it.

94. [133]

    Cawarrah submits that even if the appeal is allowed, they are still entitled to a judgment in their favour, albeit in a lesser amount than that awarded by the primary judge.

95. [134]

    This contention is first based on the reversals issue. Cawarrah notes that Cellarit does not challenge the primary judge’s rejection of Cellarit’s contention that the 2014 reversals were effected in accordance with an agreement between the parties struck in 2014. [78] Cawarrah contends it is plain the reversals were effected in breach of contract. It argues that, even if Cellarit was entitled to vary the commission rates at its discretion, such a contract could not sensibly be construed as permitting it to “reverse” discounts which had already been given.

96. [135]

    Accordingly, should the appeal be allowed, Cawarrah submits that it is entitled to a judgment in the amount of $41,220.23 (exclusive of pre-judgment interest) and Crusader is entitled to a judgment in the amount of $118,489.01 (exclusive of pre-judgment interest) with effect from the date of the primary judge’s orders.

97. [136]

    Additionally, Cawarrah submits that it is entitled to a further $25,669.24 in respect of the overcharging claim. This amount is said to constitute damages to reflect the fact that Cellarit charged a higher commission than that which according to Mr Witt’s evidence in Table A it had determined to charge “at its discretion from time to time”. This submission is cross-referenced to sub-paragraphs 7(a)(i) and 7(b)(i) of the Schedule. It is based on the premise that the amount claimed is the difference between the commissions that would be payable at the rates in Table A and the commissions actually charged as set out in column P of the Schedule.

98. [137]

    In a footnote to those submissions, Cawarrah submits that the figures in the attachments to the Schedule were agreed, referring to the trial transcript at page 10, and, in any event, were proven by the Cawarrah/Crusader invoices which were tendered, referring to a passage in the transcript where the primary judge asked then counsel for Cellarit whether there was any issue about those invoices, as to which he responded in the negative.

99. [138]

    Finally, Cawarrah submits that whatever be the outcome of the appeal, costs should be reserved and the parties should be directed to make written submissions on those issues as they may wish to rely on without prejudice communications should the appeal be allowed. They also contend the Court should order monies paid into Court by Cellarit as part of a stay regime should be paid out to them or their solicitors.

100. [139]

     Cellarit’s reply submissions effectively join issue with Cawarrah’s submissions concerning grounds 1 – 4. In particular, it contends that all the issues the subject of its grounds of appeal had been raised at trial.

101. [140]

     Insofar as the incorporation of the terms and conditions were concerned, Cellarit submits that the need to complete the online registration form in order for the business relationship to commence was referred to during Mr Witt and Mr Storch’s discussions concerning the relationship and, further, that the identity of Cawarrah and Crusader as the contracting parties was first revealed when the online registration form was completed.

102. [141]

     It was on that basis, Cellarit contends, that the primary judge ought to have found that its standard terms and conditions were incorporated in the respective contracts between the parties. Cellarit submits that as the standard terms and conditions stated that the client agreed to pay charges in accordance with its schedule of rates as published from time to time, a reasonable bystander considering the conversations and that provision would have understood the agreement as to price was not one as to a fixed total commission of 15% but, rather, an agreement that Cellarit would give Cawarrah a 50% discount on the seller’s commission rate published from time to time.

103. [142]

     Insofar as Cawarrah submits that even if the appeal was allowed, they were nevertheless entitled to judgment in relation to the 2014 reversals, Cellarit submits that, assuming that submission could be entertained notwithstanding the absence of any notice of contention or cross-appeal, the reversals issue concerned six reversals totalling $134,040.90 of shareholders’ discounts that had been given to Cawarrah in the period from 2010 to 2014. Cellarit argues that only two of the reversals ($90,666.90 in total) were stated to be of discounts to seller’s commission. The other four were said to be reversals of either shareholder discounts to storage charges or shareholder discounts without identifying whether they related to commission charges or storage charges (or some other charges), whereas the claims made in the proceedings relate to commission charges.

104. [143]

     Cellarit drew attention to a passage in the transcript which followed the delivery of judgment in which submissions were made about the quantification of Cawarrah’s damages. In the course of those submissions, the question arose as to whether in calculating those damages (being the difference between the sums that should have been paid at the contractually fixed rate of 15% for commission and the total sums actually paid), [79] rebates on storage charges should be taken into account. The primary judge made it clear that Cawarrah had not complained about rebates on storage and that the only matter being dealt with was commission.

105. [144]

     Accordingly, Cellarit submits that, at best, only the sum of $90,666.90 was potentially the subject of Cawarrah’s reversals claim.

106. [145]

     Cellarit submits, however, that even if the reversals claim is open, the primary judge did not determine that claim, nor make findings of fact about it which needed to be made in order to determine it.

107. [146]

     In particular, Cellarit submits that the primary judge did not make findings in relation to conversations Mr Witt said he had with Mr Storch concerning giving shareholders’ discounts on storage fees and seller’s commission from about September 2009 to May 2010; Mr Witt’s evidence that after Mr Storch paid $50,000 to Cellarit, Cawarrah began to receive a 10% discount on their storage fees commensurate with that investment; the fact that Cellarit gave information to Cawarrah referring to shareholders qualifying for discounted rates on storage fees and seller’s commissions; and other correspondence referring to discounts on storage rates and the circumstances in which the 2009 agreement for which Cellarit had contended came to an end and the reversals were effected.

108. [147]

     Cellarit submits, in summary, that there was evidence from about February 2010 that it applied discounts to Cawarrah’s charges (including storage charges) on the basis that Mr Witt believed they had agreed to become shareholders in Cellarit and had paid money for that purpose. When it became apparent in 2014 that they did not wish to proceed with any purchase of the shares, Cellarit reversed the shareholders’ discounts which had been given.

109. [148]

     While Cellarit accepts that the primary judge rejected its contention that the 2014 reversals had been implemented in accordance with an agreement made with Cawarrah in that year, it argues that that decision did not determine the question whether Cellarit was otherwise entitled lawfully to reverse the shareholder discounts to the seller’s commission having regard to the evidence upon which it relied to the effect that those discounts were given on the basis that Mr Storch had purchased, or agreed to purchase, shares in Cellarit, but had later indicated that he did not wish to proceed with that investment.

110. [149]

     Accordingly, Cellarit submitted that if the Court was minded to entertain Cawarrah’s alternative claim, it should remit the reversals claim, albeit limited to the reversals of shareholder discounts to seller’s commission totalling $90,666.90, to the District Court for determination. Given the credit findings the primary judge made, Cellarit contends that any remitter should be to a judge of the District Court other than the primary judge.

111. [150]

     Insofar as Cawarrah submits that, in addition to the reversals claim, they were entitled to a further $25,669.24 said to be consequent on the overcharging of commission, Cellarit submits that was not a matter determined by the primary judge, that Cawarrah had not identified any evidence that higher commission was charged and that, to the extent Cawarrah sought to rely upon columns N – P in the Schedule, contrary to Cawarrah’s contention, those figures were not agreed at trial. It pointed to a passage in the transcript in which the primary judge made it clear to the parties that the Schedule had to be made good on the evidence.

112. [151]

     Cellarit submits that the calculations in columns N – P appear to be based on a comparison between Table A and commission rates Cawarrah paid as revealed in monthly invoices. It suggests one possibility for what the author of the Schedule appears to suggest was overcharging were rebates which had not been brought into account. Cellarit also submits that Table A was merely evidence from Mr Witt as to the commission Cellarit had charged. It submits that if Cellarit had charged more than was recorded in Table A, which Cellarit contends had not been demonstrated and was denied, the result was merely that Mr Witt had given incorrect evidence to that extent. However it submits that the conclusion Cawarrah were entitled to be reimbursed for overcharging did not follow.

113. [152]

     Finally, Cellarit submits that the money it paid into Court was explicitly stated to be paid “as security for costs” of the appeal and not as security for the judgment below. Accordingly, Cellarit contends that the Court should not order that that money be paid out to Cawarrah unless and until there is a relevant costs order made and quantified, whether by agreement or assessment.

114. [153]

     At the end of the hearing, in consequence of matters raised by the parties’ oral submissions, the Court gave directions concerning the making of further written submissions addressing the following issues.

115. [154]

     First, the parties were required to address the question of how, if at all, Table A to Mr Witt’s affidavit of August 2016 to which I earlier referred (see [37]) could be reconciled to the Schedule (reconciliation issue).

116. [155]

     Second, Cawarrah was directed to identify any passages in the transcript in which Mr Witt (or any witness for Cellarit) was cross-examined about the rates of seller’s commission shown in the Schedule (cross-examination issue), or identify any documents in the Blue Books they contended were relevant to the rates of that seller’s commission. Leave was also given to provide, if necessary, an explanatory note not longer than 3 pages.

117. [156]

     Third, Cellarit was required to identify any passages in the transcript (or identify any documents in the Blue Books) it contended were relevant to the rates of seller’s commission shown in the Schedule. Again, leave was given to provide, if necessary, an explanatory note not longer than 3 pages.

118. [157]

     Fourth, Cawarrah was required to identify the basis for the alternative orders they sought in relation to the reversals and overcharging issues, including preparing a draft cross-appeal, contingent on the outcome of the main appeal, seeking to support the claim for the alternative orders.

119. [158]

     The reconciliation of Table A to the Schedule arises in relation to the overcharging claim.

120. [159]

     Cellarit submits in its post-hearing submissions that the Schedule did not demonstrate that it overcharged either Cawarrah $12,837.63 or Crusader $12,831.61 (they being the totals in column P in respect of each) or any amount in this respect.

121. [160]

     Cellarit contends that the primary reasons this Court should not accept the overcharging claim are that Mr Witt was not cross-examined about the alleged inconsistencies between Table A and the commission rates recorded in the Schedule, that the Schedule was acknowledged at trial to be in the nature of a submissions only and should have been, but was not, proved and that it purported to express an expert opinion apparently based upon an analysis of Cellarit invoices, but was not supported by a report from a suitably qualified expert evidence such as would comply with s 79 of the Evidence Act.

122. [161]

     In its post-hearing submissions, Cawarrah addressed the cross-examination issue, but not the admissibility issue. However, at trial, as I have said, Cawarrah contended the tables attached to the narrative Schedule could be made good the invoices in Blue 2 and 3: Black 9. In this Court, Cawarrah said that “by reference to the invoices themselves” what was in contest was whether or not what was actually charged were the amounts on the right-hand side of Table A. They argued that what was charged was explicable from the invoices which the Schedule sought to summarise by way of submission. They did not expressly address Cellarit’s submission that the Schedule was in the nature of opinion evidence which needed to be supported by an expert’s report.

123. [162]

     Each party also sought to undertake the exercise of analysing column P, albeit by surmising to what apparent discrepancies between it and Table A might be attributable.

124. [163]

     Cellarit sought to analyse column P to submit that amounts recorded as minimal for the period from October 2008 to May 2010 could be attributed to rounding differences, and that in respect of the period June 2010 to April 2012 when, again, the amounts recorded were small, the explanation might be the introduction of a minimum buyer’s and seller’s commission fee from 1 June 2010. For the period May 2012 to September/November 2015 when the amounts in column P became larger depending upon whether Cawarrah or Crusader was referred to, Cellarit suggested that may reflect the fact that from May 2012 onwards rates of commission actually paid (column J) were greater than amounts of commission payable at the rates described in Table A (column O). However, Cellarit submits that it is apparent that the author of the Schedule failed to undertake a like-for-like comparison because for the period from May 2012 to May 2016, the commission payable after allowing for a 1.5% rebate on account of seller’s commission (column O) had been compared with commission that was in fact paid before allowing for the 1.5% rebate that was in fact given (column J).

125. [164]

     In response to Cellarit’s submissions concerning the possible reasons for the asserted discrepancies in column P, Cawarrah first submits that, to the extent Cellarit contends that some differences between Table A and the Schedule of Damages could be attributed to rounding differences, even if that were the case, taking that into account would only reduce their overcharging claim by approximately $95. Second, to the extent Cellarit asserts that a reason for differences between June 2010 and April 2012 may have been its introduction of a minimum buyer’s and seller’s commission of $2.20 per 750ml bottle, Cawarrah submits that would not assist as, if such a fee was charged, there was no agreement to do so and that would have been done in breach of contract. Third, Cawarrah contended that Cellarit’s “like-for-like” submission was not correct as invoices showed rebates which were provided were rebates against storage charges rather than seller’s commission and were irrelevant to the allegation about overcharging seller’s commission.

126. [165]

     Cellarit responded to these submissions by pointing out that they overlooked the fact that it was Cawarrah and Crusader which bore the onus of demonstrating the overcharging claim.

127. [166]

     In any event, Cellarit submits that it was plain from the invoices at Blue 304 –306 and 787 – 792 that a minimum commission rate of $2.20 each per 750ml bottle was introduced from 1 June 2010 and that that circumstance more probably than not explained the differences identified in column P for the period June 2010 to April 2012.

128. [167]

     Cellarit also submits that the Court would reject Cawarrah’s submission that the 1.5% rebates referred to in Table A were rebates against storage charges and were therefore irrelevant to any comparison between commissions actually charged and those Cellarit was entitled to charge. Cellarit argues that that submission misses the point that in respect of the period from May 2012 to November 2015 the Schedule included the 1.5% rebate when calculating the commission payable, but excluded it when calculating the commissions paid so that the differences in column P reflected a flawed comparison.

129. [168]

     Cellarit also points out that when Mr Witt sent Mr Storch an email on 3 April 2012 he referred to the “1.5% storage credit for wine sold” when identifying the “effective rate” of seller’s commission. Cellarit also submitted that there could be no doubt that the commission rates listed in the right-hand column in Table A in respect of the period from May 2012 on were commission rates after deducting the 1.5% storage credit (rebate).

130. [169]

     Counsel for Cawarrah concedes he did not cross-examine Mr Witt regarding what they contended were inconsistencies between Table A and column K in the Schedule (the column which purported to show the actual total commission paid by Cawarrah and Crusader in most instances from June 2010, in a manner inconsistent with that shown on Table A). Column K was clearly the basis for the comparative exercise summarised in column P as the difference between Mr Witt’s rates and the actual commission paid.

131. [170]

     Cawarrah submits that the decision not to cross-examine Mr Witt was a forensic one made because the defences they understood to have been raised by Cellarit’s pleading in paragraph 12 were “estoppel defences and not allegations of contractual variations or replacements”. Having regard to a concession Cawarrah contends Mr Witt made in cross-examination that Cellarit had not relied on any alleged “agreement” or “convention”, that defence was, as the primary judge ultimately found, “doomed to failure on the facts”. Accordingly counsel for Cawarrah submitted that it was unnecessary to explore by cross-examination the reasons “for the divergences between the estoppel pleaded and rates applied and charges levied at the time”, referring to an observation to this effect by the primary judge. [80]

132. [171]

     In this context, Cawarrah sought to re-agitate the issue debated at length during the appeal as to whether Cellarit had run at trial a case that the 2006 contract had been varied from October 2008 to provide for different commission rates. They sought to contend that, if that was the case the primary judge considered, her Honour had erred in doing so in a manner in which led to them suffering procedural unfairness. They sought leave to file a notice of contention to advance such an argument supported by further lengthy submissions concerning that issue. Neither the notice of contention nor the further submissions in its support should have been advanced without the Court’s leave. [81]

133. [172]

     Cellarit points out that, although there was no cross-examination of Mr Witt or any witness it called about the seller’s commission shown in the Schedule, Mr Witt was cross-examined about Table A; but there was nothing which was put to him which suggested that it was inaccurate. It contends the commission rates Mr Witt set out in Table A as those Cawarrah and Crusader were respectively charged were reflected in the invoices in evidence and in the Schedule. Cellarit submits that absent any cross-examination of Mr Witt to challenge Table A, or give him an opportunity to address any alleged discrepancies between that Table and the Schedule, Cawarrah’s overcharging claim should be rejected.

134. [173]

     Cellarit also opposed the Court granting Cawarrah leave to file a notice of contention. It pointed out that the absence of any notice of contention (or cross-appeal) claiming that the primary judge erred in considering and determining its variation case (in the manner of which it complained in appeal grounds 3 and 4) had been noted in its reply submissions. It submitted that Cawarrah should not be given the opportunity to seek to agitate the principal grounds of the appeal after the substantive appeal hearing.

135. [174]

     Cellarit repeated and expanded its contention that appeal grounds 3 and 4 were open on the basis of its amended defence and the conduct of the trial.

136. [175]

     Insofar as the reversals claim is concerned, Cawarrah contends that Cellarit accepted when judgment was entered that they were entitled to the benefit of the reversal of all the shareholders’ discounts, and as I understand their submission, accordingly it was not open to Cellarit to resile from that concession in this Court. In this respect it referred to subparagraphs 6(a)(ii) and 6(b)(ii) in the Schedule.

137. [176]

     To the extent that Cellarit contends that Cawarrah cannot complain about the reversals described as “Reverse All Remaining Shareholder Discounts” of $791.20 in Cawarrah’s case, and $21,777.69 in Crusader’s case, Cawarrah submits that Cellarit conceded at trial that the reversals should be brought into account in their favour in the judgment sum. They did not point to any transcript, or other document, in which such a concession was made.

138. [177]

     Further, to the extent Cellarit submits that Cawarrah cannot complain about the reversals because it is not clear whether they were in relation either to seller’s commission or storage fees, Cawarrah submits that the reversals were either wholly, or almost wholly, concerned with seller’s commissions and not storage fees. This was because, in short, Cawarrah submitted that the miscellaneous reversals were additional adjustments identified in the reversals email (see [87] above), which had not been made at the time of that email. Accordingly, Cawarrah contends that the reference to “Reverse all Remaining Shareholder’s Discounts” must be a reference to the discounts foreshadowed in the reversals email. Having regard to the detail referred to in that email, Cawarrah suggests that the component for the remaining shareholder’s discounts which could pertain to storage discounts could, at best, be reduced by $169.71 in Cawarrah’s case, and $1,752.20 in Crusader’s case.

139. [178]

     Cellarit disputes Cawarrah’s submission that amounts shown in the Schedule were agreed figures for “reversals” on which the judgment sums at trial were calculated. It also notes that Cawarrah now contends for judgment in respect of the reversals for different, and lower, figures than those sought in the Schedule.

140. [179]

     To the extent that Cawarrah and Crusader submit that the entry “Reverse All Remaining Shareholder Discounts” in the invoices set out on Blue 604P and Blue 1162E were reversals of seller’s commission or reversals of storage discounts, Cellarit submits that given Cawarrah had the onus of demonstrating this proposition, the Court would only find that two of the reversals totalling $90,666.90 had been demonstrated to be reversals of discounts of seller’s commission.

141. [180]

     Nevertheless, even in relation to reversals totalling $90,666.90, Cellarit repeated the submission in its reply submissions that the primary judge had not determined that claim nor made findings about facts which needed to be determined in order to decide it.

142. [181]

     Cawarrah did not concede that it was required to file a notice of cross-appeal to retain a judgment for a lesser sum than that entered at trial, whether in relation to the reversals issue or the overcharging claim. This was because, it contended, it did not wish to seek the discharge or variation of the decision below or part of the decision below. [82] Rather, it argued, it was sufficient it contended that different relief would flow from a successful appeal by Cellarit.

143. [182]

     In the event the Court took a different view, Cawarrah contingently sought leave to file a notice of cross-appeal, submitting a draft of the proposed document.

144. [183]

     The substance of the draft notice of cross-appeal is that the primary judge should have held that Cellarit breached the contract even as varied or replaced on and from October 2008 (and as at each date on which the seller’s commission was increased) by charging commissions different to those it was entitled to charge even under those varied or replaced contracts.

145. [184]

     The orders proposed in the draft notice of cross-appeal seek to have the orders made by the primary judge on 13 November 2017 varied in a manner which would entitle Cawarrah to judgment in the sum of $37,422.36 plus pre-judgment interest with effect from 13 November 2017. In Crusader’s case, the orders made on 13 November 2017 would be replaced with a judgment for $101,482.67 plus pre-judgment interest, again to take effect on and from 13 November 2017.

146. [185]

     In the post-hearing submissions, those amounts were calculated in Cawarrah’s case as $12,837.63, being the amount set out in column P of its table attached to the Schedule and $24,584.73, being the sum of the May 2014 reversals in relation to seller’s commission and the December 2014 reversals of “All Remaining Shareholder’s Discounts”.

147. [186]

     In Crusader’s case, those amounts were calculated as $12,831.61, being the amount set out in column P of its table attached to the Schedule and $88,651.06, again being the sum of the May 2014 reversals in relation to seller’s commission and the December 2014 reversals of “All Remaining Shareholder’s Discounts”. Insofar as each of the reversals figures are concerned, the amounts attributable to the reversal of storage commissions have been deleted on the basis that this was apparently conceded by Cawarrah and Crusader below and brought into account in the judgment sum.

148. [187]

     Cellarit did not oppose Cawarrah being given leave to file the contingent notice of cross-appeal, however it submitted that the cross-appeal should be dismissed for the reasons given in its reply submissions, in its reconciliation submissions and in its submissions concerning the overcharging claim.

The 2006 contract

1. [188]

   Although Cellarit advanced grounds 3 and 4 as its primary grounds of appeal, logically, as I have said, ground 1 concerning the terms of the 2006 contract should be considered first.

2. [189]

   In considering the question of the terms of the 2006 contract, it was necessary for the primary judge to determine objectively what each party by their words or conduct would have led a reasonable person in the position of the other party to believe, taking into consideration the language used by Mr Witt and Mr Storch, the circumstances the 2006 contract addressed and the commercial purpose or objects it secured. [83] References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. [84] Evidence of the parties’ statements and actions reflecting their actual intentions and expectations is inadmissible. [85]

3. [190]

   As Kiefel, Bell and Gordon JJ explained in Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd, [86] “[i]n a practical sense, this requires that the reasonable businessperson be placed in the position of the parties. It is from that perspective that the court considers the circumstances surrounding the contract and the commercial purpose and objects to be achieved by it.”

4. [191]

   Because the contract between the parties was oral, save as to the standard terms and conditions if incorporated, determining its terms was a question of fact and consideration of surrounding circumstances and post-contractual conduct was permissible to identify its terms. [87]

5. [192]

   In considering a commercial contract such as the 2006 contract, a court is entitled to approach the task of construction by giving the parties’ agreement a businesslike interpretation on the assumption that they “intended to produce a commercial result” and so as to avoid it “making commercial nonsense or working commercial inconvenience”. [88] A “commercial construction is more likely to give effect to the intention of the parties.” [89]

6. [193]

   I accept, as Cellarit submitted that, having regard to the length of time and the intervening events between the inception of the parties’ commercial relationship in 2006 and when they had to seek to recall their original conversation in proceedings commenced 8 years later in 2014, it was necessary to have regard to the passage of time to test the reliability and weight of Mr Storch and Mr Witt’s recollections of the critical events, particularly in the absence of some reliable contemporaneous record or other satisfactory corroboration. [90]

7. [194]

   As McLelland CJ in Eq emphasised in Watson v Foxman, “[o]rdinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions of self-interest as well as conscious consideration of what should have been said or could have been said”.

8. [195]

   Nevertheless, as the primary judge found, there was “remarkably little divergence between the competing narrations of the agreement on price in about August 2006”, [91] and the “words that Mr Storch recalls match what Mr Witt says was the essence of his offer with remarkable precision.” [92] Those factors support the view that the passage of time had not dimmed the men’s recollections at least in this respect. [93] In such circumstances, I would not accept Cellarit’s submission that the evidence was not sufficiently cogent to justify the primary judge being satisfied, in accordance with s 140 of the Evidence Act, that the price term for which Cawarrah contended was made.

9. [196]

   Section 140 reflects the observations in Briginshaw v Briginshaw [94] concerning the civil standard of proof that: [95]

10. [197]

    Section 140 is a mandatory statutory requirement, which not only reflects the common law as stated in Briginshaw v Briginshaw, but also as explained and applied in subsequent authority. [96] Section 140(2), in particular, picks up the statement I have quoted from Dixon J’s reasons in requiring the court to take into account the nature of the cause of action or defence, the nature of the subject matter of the proceedings and the gravity of the matters alleged.

11. [198]

    Without in any way detracting from the importance of the issues in this case, a controversy about the terms of a contract to store wine may not be seen to be alleging misconduct at all, let alone of the nature of that to which Dixon J was referring. [97] Moreover, having regard to the degree of uniformity between the parties’ accounts of the conversations, it might be said that this was not a case of inexact proofs or indefinite testimony. Although the primary judge did not refer to s 140, in my view it cannot be said that her Honour fell into error in making findings as to the terms of the critical conversations.

12. [199]

    Rather, in my view, it was the inferences her Honour drew from the parties’ conversations which concern me. It is open to this Court, indeed the Court is required in exercising its rehearing function, to draw its own inferences and conclusions, while bearing in mind that the court has neither seen nor heard the witnesses, and should make due allowance in this respect. [98]

13. [200]

    Mr Witt informed Mr Storch about the “standard” or “current” charges and commissions, and told him “of course they’re not set in stone, they can change.” This was confirmed when Mr Witt told Mr Storch he would give him “mates’ rates”. Both men were at one in saying that Mr Witt had said he would “reduce the current seller’s commission of 10% down to 5%”. To the extent Mr Storch qualified the latter statement by Mr Witt, it was to assert that he also recalled the latter saying “yes, that is fine” in response to Mr Storch’s query at the coffee-shop meeting, “Are you happy with 15% total commission? Will you be happy with that from now on?”, a conversation Mr Witt denied.

14. [201]

    The critical point at which the primary judge rejected Cellarit’s contention as to the term of the 2006 contract is found in her Honour’s consideration of Cellarit’s submission that Mr Witt’s reference to “current charges and commissions” which are “not set in stone [and] can change” meant the rates could vary from time to time. Insofar as the reference to “current” was concerned, her Honour drew a distinction between that expression bearing the meaning to the reasonable person “that the rates may (or will vary) from time to time or over time” or “that different rates may be offered to different customers or in different circumstances.” [99] In the primary judge’s view, the objective bystander would have understood the words to have the latter meaning because in the same conversation Mr Witt told Mr Storch he would give him “mates’ rates”.

15. [202]

    For my part, these two interpretations are not relevantly distinct. Both, in my view, objectively, import the notion that Cellarit’s rates were flexible and could be varied at Mr Witt’s discretion as circumstances changed, whether those circumstances were the mere passage of time, increased overheads militating increased rates to maintain profitability or, most probably, a combination of the two. That is the clear connotation of rates being “current”, in the sense of something being offered at a point in time, but not for all time.

16. [203]

    Quite why Mr Witt’s reference to “mates’ rates” detracted from the proposition that it was a matter for Cellarit’s discretion as to what different rates it offered different customers from time to time was not explained. In my view a reasonable businessperson in the parties’ position would understand the reference to “mates’ rates” to be to a benefit available at the offeror’s discretion. Such reasonable businesspeople would recognise that ignoring economic circumstances such as those I have identified in favour of making a discounted rate available to “mates” for an indeterminate time would be a certain road to ruin. Contrary to Mr Witt’s statement, it would mean the rates were “set in stone”.

17. [204]

    The primary judge also found that Cellarit’s contention concerning the meaning of “current charges and commissions” and “current seller’s commission” was “too subtle to convey the express message to a reasonable person in Mr Storch’s position (or any objective bystander) that these and any rates offered to the plaintiffs can and will vary from time to time.” [100] Once again, there was no elaboration on why the ordinary English meaning of the expression “current” would be lost on a reasonable businessperson.

18. [205]

    The primary judge also rejected a submission by Cellarit that, objectively understood, businesspeople would understand the conversations between Mr Storch and Mr Witt to mean that at Cellarit’s discretion it would reduce the seller’s commission by 50%. The primary judge rejected that submission as not reflecting the term pleaded in Cellarit’s amended defence that it would “at its discretion from time to time give the plaintiffs a discount off the standard seller’s commission charged by it on the sale of wine by either plaintiff.” In her Honour’s view, “[o]n the pleaded formulation, the availability of discount varies, not the rate of the seller’s commission.” [101]

19. [206]

    In my view, the primary judge’s approach to this issue failed to reflect the proposition that in pleadings where any spoken words are referred to, the effect of those words must, so far as material, be stated; and the precise terms of those words need not be stated, except so far as those terms were themselves material. [102] Cellarit’s case as pleaded was that it had a discretion as to what discounts it would give the respondents off the standard seller’s commission. The fact that in 2006 it discussed that discount in terms of 50% off that commission was not, in my view, a material term. Pleading it in those terms would have confined Cellarit’s case as to the percentage discount it would offer from time to time and would have been inconsistent with its major premise.

20. [207]

    In my view it was sufficient for Cellarit to plead the effect of the term of the contract for which it contended from September 2006 as set out in paragraph 6(b) of its amended defence.

21. [208]

    Further, to say that “Mr Witt said nothing about ‘discounts’ per se” which the primary judge then acknowledged could be a reference to his offer to “halv[e] the rate”, [103] failed to reflect a businesslike approach. The same could be said of the primary judge’s conclusion that Mr Witt’s statement that the rates were “not set in stone” as being “too subtle” to convey objectively the meaning that Cellarit would change the rates it charged Cawarrah from time to time. [104]

22. [209]

    Nevertheless, I accept that “[d]ifferent minds might respond in different ways to the evidence given at the trial”. [105] In resolving a controversy as to the terms of an oral agreement, the primary judge enjoyed an advantage both in evaluating Mr Storch and Mr Witt’s credibility and had the benefit of understanding the “feeling” of a case which an appellate court, reading the transcript, cannot always fully share. [106] Although I would have reached a different conclusion as to the objective effect of Mr Witt’s words, I cannot say that the primary judge’s evaluative conclusion concerning them was “glaringly improbable” or “contrary to compelling inferences”. [107]

23. [210]

    Further, although the primary judge did not appear to place weight upon it, Mr Storch said that at the end of the coffee-shop meeting, Mr Witt said, “yes, that is fine” in response to Mr Storch’s query, “Are you happy with 15% total commission? Will you be happy with that from now on?” Although Mr Witt denied that conversation, it would be consistent with her Honour’s credibility findings to prefer Mr Storch’s evidence in this respect. Moreover, as counsel for Cellarit frankly conceded, Cellarit’s conduct for the next two years in charging Cawarrah 15% commission was consistent with that term having been agreed. That conduct throws light upon, and forms part of the context for evaluating, the meaning of the parties’ agreement. [108]

24. [211]

    Accordingly, I would reject ground 1 of the notice of appeal.

25. [212]

    The next issue is Cellarit’s variation case.

26. [213]

    The first question in respect is to determine Cawarrah’s submission that Cellarit’s variation case was not run at trial.

27. [214]

    I accept that it “would be inimical to the due administration of justice if, on appeal, a party could raise a point that was not taken at the trial unless it could not possibly have been met by further evidence at the trial.” [109] Cawarrah placed great emphasis on the pleadings in contending the variation case had not been run at trial. However, “while pleadings and particulars are frequently decisive in determining whether a party is seeking to raise a new point on appeal … [they] are not conclusive. To determine whether a party is raising a new point on appeal, it is ‘necessary to look to the actual conduct of the proceedings’.” [110]

28. [215]

    Nevertheless, Cellarit’s amended defence to the SFASC (para 6(b)) expressly identified the agreement between the parties as including a term that “between its inception in September 2006 and 1 September 2009 [Cellarit] would at its discretion, from time to time give the [respondents] a discount on the standard seller’s commission charged by it on the sale of wine by either [respondent], and did so give the [respondents] a discount of 50% of the standard seller’s commission during the said period …”.

29. [216]

    That pleading, which is clearly the basis for the variation case, was also run at trial. Mr Witt gave evidence to that effect and was cross-examined about his understanding that, as at October 2008 (the first time after its inception the seller’s commission rate was increased), Cellarit had a unilateral discretion to increase the fees. [111]

30. [217]

    Moreover, at trial, after referring to paragraph 6(b) of the amended defence, Cawarrah explained to the primary judge that “the real contest between the parties is, when Mr Witt says, ‘I’ll give you mates rates’, does that mean I can charge you whatever I feel like whenever I want, and I can change it whenever I want at my discretion from time to time; or does it mean what I say it means, which is, 15% …”. The primary judge clearly understood the case Cellarit was advancing was one of contractual variation, indeed, as at every date referred to in paragraph 12 of the amended defence. [112]

31. [218]

    In the course of a lengthy interrogation of counsel for both parties which occurred over the first two days of the trial, the primary judge asked counsel for Cellarit how the estoppel case pleaded in paragraph 12 of the amended defence worked.

32. [219]

    He explained that it was based on the proposition that the contract was varied when the commission rates were increased and Cawarrah continued to trade with Cellarit in full knowledge of the variation. The primary judge squarely put to counsel that what he was “really pleading [now] is a contractual variation” to which he agreed.

33. [220]

    Counsel also accepted her Honour’s analysis of the case as first depending on a finding of contractual variations throughout the agreement, as well as estoppel.

34. [221]

    Further, in its written outline of submissions at trial, prepared at the conclusion of the evidence, Cellarit identified as the second issue whether the 2006 agreement was “that [Cellarit] would at its discretion give [Cawarrah] a discount of 50% on the applicable seller’s commission from time to time”, as issue 3 whether [Cellarit] was entitled to vary its rates and charges, including seller’s commission from time to time and, as issue 4, the “increase of the seller’s commission in October 2008 and its effect on the terms of the 2006 contract.”

35. [222]

    It is true that issue 2 departed slightly from the paragraph 6(b) pleading. It is also true that Cawarrah cavilled with the framing of issue 2 contending, rather, that Cellarit’s case was “that the agreement in 2006 was that [Cellarit] ‘would at its discretion from time to time give [Cawarrah] a discount off the standard seller’s commission charged by it on the sale of wine by either plaintiff, but no other discounts’”. [113] Although counsel for Cellarit at trial pressed for a finding that the term was that Cellarit would “at its discretion give the plaintiffs a discount of 50%”, [114] a more general discretion was sufficient, in my view, to encompass the case Cellarit advanced both at trial and in this Court.

36. [223]

    Cellarit’s written submissions at trial concerning issue 4 also squarely put the case it has advanced on appeal. In those submissions, Cellarit proceeded on the premise that there may have been confusion about the precise terms of the 2006 contract. This premise assumed that Mr Storch left the Double Bay meeting or meetings with the view that there had been an agreement of 15% total commission (a view Cellarit contended was not objectively supported by the evidence), while Mr Witt proceeded on the premise that Cawarrah would be charged half the seller’s commission as that rate was from time to time. Cellarit conceded that both parties would be vindicated in their respective beliefs in looking at the statements and tax invoices it issued to Cawarrah after August 2006.

37. [224]

    However, Cellarit then contended that the position changed in or about October 2008 when Mr Storch received the email advising of the increase in the standard seller’s commission and a concomitant increase in Cawarrah’s rates. The written submissions continued that, having regard to Mr Storch’s decision that Cawarrah should continue to trade on the terms discussed at the meeting during which he unsuccessfully sought to dissuade Mr Witt from the increase in the seller’s commission rate, it was open to the Court to find that a reasonable person would conclude that there had been a manifestation of mutual assent to the increased commission rate.

38. [225]

    I should add that Cawarrah was also on notice from paragraph 12(a) – (f) of the amended defence that Cellarit was contending that the increases in the seller’s commission, on each of the dates of which Cawarrah complained, was with Cawarrah’s “knowledge and agreement”.

39. [226]

    I accept that paragraph 12(a) – (f) was part of a paragraph pleading an estoppel case but, in my view, again it put Cawarrah on notice that Cellarit was asserting an agreed variation in the seller’s commission rate.

40. [227]

    Cellarit also drew the primary judge’s attention to Brambles Holdings Ltd v Bathurst City Council [115] and Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd, [116] each case concerning the circumstances in which a finding may be made “that contracts exist even though it is not easy to locate an offer or acceptance”, resolution of which turns on determining whether there is “mutual assent”. The submission was then made that it was clear that Cawarrah had manifested an agreement to the increased seller’s commission rate in accordance with Cellarit’s contention by continuing to trade with it.

41. [228]

    The primary judge dealt with that issue, including consideration of Brambles, [117] in the part of her reasons addressing the issue of “[t]he defendant’s unilateral increase in the rates charged in 2008”, [118] albeit that her Honour concluded that “there was no agreement at all. Mr Storch simply gave up protesting and paid the bills as they arrived.” [119] Her Honour also considered in this context McHugh JA’s reasons in Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd, another case dealing with the circumstances in which a contract may be inferred from conduct. [120]

42. [229]

    Further, prior to the trial Cawarrah identified in the Schedule as issue 1(b) whether Cellarit was entitled to “charge the relevant plaintiffs such commission as it chose to charge at its discretion from time to time”, referring to paragraph 6(b) of the defence.

43. [230]

    Cawarrah’s complaint that the variation case was not run at trial, in my view, does not withstand scrutiny. Indeed, the primary judge quoted Cawarrah’s submissions addressing Cellarit’s contention that “the plaintiffs agreed to various rates changes”, concluding the increases were unilateral, and rejected Cellarit’s contention that Cawarrah’s conduct in continuing to trade manifested assent to the increases. [121]

44. [231]

    In my view it is open to Cellarit to conduct the variation case on appeal.

45. [232]

    Contractual variation requires a mutual intention to vary the existing contractual terms and consideration. [122] Consideration can be found in the mutual abandonment of existing rights, the conferment of new benefits by each party on the other, or the incurring of liability to an increased detriment. [123]

46. [233]

    When the parties to an existing contract enter into a further contract by which they vary the original contract, they have made two contracts. In some cases, it may be material to determine whether the effect of the second contract is to bring an end to the first contract and replace it with the second, or whether the effect is to leave the first contract standing, subject to the alteration. [124] In this case, nothing turned on the characterisation of the agreement made on and from 1 October 2008 if it had been varied as Cellarit contended.

47. [234]

    In the ordinary course the silent acceptance of an offer is generally insufficient to create any contract. Nevertheless, as I have indicated in considering the question of whether the variation case was run at trial, the silence of an offeree in conjunction with the other circumstances of the case may indicate assent to an offer. [125] The “ultimate issue is whether a reasonable bystander would regard the conduct of the offeree, including his silence, as signalling to the offeror that his offer has been accepted”. [126]

48. [235]

    In this context, it is accepted that a lengthy and consistent course of dealing, together with a failure to object to a contractual term in issue, can be relied upon to imply assent to the incorporation of a term. [127]

49. [236]

    I would accept Cellarit’s submission that it may be inferred from Cawarrah’s conduct in 2008, that the 2006 contract was varied on and from the date on 1 October 2008 that it increased the rate of seller’s commission. Looking at the parties’ whole relationship, [128] in my view, the court should infer that Cawarrah agreed to the 2008 variation having regard to its conduct in continuing to trade with it after the commission rates were increased, particularly in circumstances where, as the primary judge found, the 2006 contract was terminable on reasonable notice. [129]

50. [237]

    Mr Storch may have protested the raise and sought relief from it, but Mr Witt rejected his entreaties. This was not a case where mere silence indicated acceptance of a variation. Rather, it was a case of positive conduct on the part of both Cawarrah and Crusader in continuing to use Cellarit’s services and pay the increased commission price over the term of the ensuing 8 years, notwithstanding the six commission rate increases during that period. In those circumstances, in my view, the reasonable bystander would regard Cawarrah’s conduct as signalling to Cellarit that the offer to trade at the higher commission rates had been accepted.

51. [238]

    Consideration for the variation was provided by Cawarrah foregoing the benefits of the 2006 contract and, too, by Cawarrah continuing to incur liability for the increased seller’s commission in exchange for using Cellarit’s services.

52. [239]

    In my view, the primary judge erred in failing to determine this issue by reference to an objective consideration of the parties’ conduct. Rather, the primary judge referred to her assessment of Mr Storch as having “simply” given up protesting or “voicing his disagreement” and paid the bills. Although her Honour referred to the authorities dealing with inferring when the legal criteria of a contract had been fulfilled and to whether “mutual assent [had] been manifested”, [130] her Honour failed to apply those principles.

53. [240]

    I should deal with Cawarrah’s submission, and possibly the primary judge’s finding, [131] that Mr Storch’s conduct over 8 or so years in paying the increased seller’s commission could be attributed to his depression and that that, in some manner, detracted from a conclusion that there was mutual assent to the increases. In my view that proposition cannot be sustained. There was no evidence that Mr Storch’s psychiatric condition in 2008 (assuming for present purposes he had such a condition, of which there was no objective evidence) was known to Cellarit. On the objective facts, Cawarrah was manifesting, albeit reluctantly, assent to the increases in the seller’s commission rate.

54. [241]

    On one view, the effect of the 2008 variation was that henceforth it became/became apparent as a term of the 2006 contract (if it had not been previously) that Cellarit was entitled at its discretion unilaterally to increase the rate of seller’s commission. On this submission, as Cellarit submits, that variation made in 2008 governed the subsequent increases in the seller’s commission. The alternative, and in my view equally available conclusion, is that the 2006 contract was varied each time the rate of seller’s commission was increased and Cawarrah continued to trade using Cellarit’s services.

55. [242]

    Accordingly, in my view, contrary to the primary judge’s conclusion, none of the increases in commission rates on and from 1 October 2008 constituted a breach of contract.

56. [243]

    Although, as I have said, nothing turns in this case on the characterisation of the agreement made on and from 1 October 2008, in my view, it is apparent that the “manifest intention of the parties” was not that the 2006 Contract “should be wholly rescinded and replaced by a new agreement, but that the rights and liabilities under, and the mode of performance of, the [2006 Contract], should be varied in certain respects.” [132]

57. [244]

    The 2008 variation dealt with only one part of the parties’ agreement: the rate at which seller’s commission was charged. Save as to the increase in the rate of seller’s commission, nothing in the original storage agreement was altered. [133] The 2006 contract continued, but, following the 2008 variation, was supplemented by the agreement reached that the seller’s commission rate could be raised at Cellarit’s discretion.

58. [245]

    I would uphold grounds 3 and 4 in the notice of appeal.

59. [246]

    Having regard to my conclusion on grounds 1, 3 and 4, it is unnecessary to deal with the question whether Cellarit’s standard terms and conditions were incorporated in the 2006 contract (ground 2). However, I would point out that contrary to Cawarrah’s submissions, the primary judge accepted Mr Witt’s evidence that Mr Storch completed an online registration form for Cawarrah in late August or early 2006, and for Crusader in June 2008, albeit that her Honour also held each was post-contractual. [134]

60. [247]

    Nor is it necessary to deal with the complaint that the primary judge erred in finding Cawarrah paid the invoices with increased seller’s commission “under protest” (ground 5). The latter finding does appear implausible having regard to the lengthy period Cawarrah traded with Cellarit after the first increase in 2008 and the occasions on which Mr Storch referred to increased commission rates without demur. Even if he had complained from time to time about the increased rates, such complaints, or even protests, would not be sufficient to avoid a conclusion that there was assent to those rates in the light of the continued trading.

Necessity for a cross-appeal

1. [248]

   In my view it was necessary for Cawarrah to file a cross-appeal if they wished to contend they were entitled to a judgment notwithstanding success by Cellarit on the principal appeal.

2. [249]

   A respondent who wishes to seek the discharge or variation of the decision below (or part of the decision below) may file and serve a notice of cross-appeal: UCPR 51.17. In the event of Cellarit’s success, Cawarrah and Crusader nevertheless seek to vary the decision below by having judgment in their favours for lesser amounts than the judgments entered by the primary judge.

3. [250]

   As is apparent from Cawarrah’s submissions as to the amounts for which each respondent contends it should be entitled to retain a judgment in its favour, Cawarrah contends that each is entitled to a finding that Cellarit breached the 2006 contract both in respect of the reversals issue and the overcharging claim. Contrary to the way these issues appeared to be expressed in the course of oral submissions, Cawarrah claimed to be entitled to recover those amounts whether or not the appeal was upheld.

4. [251]

   Accordingly, as the draft notice of cross-appeal recognises, Cawarrah needed a finding that the primary judge should have held Cellarit breached the 2006 contract on bases other than those in which her Honour found in their favour on the fixed-term issue and an order giving effect to that finding.

5. [252]

   “Decision” in UCPR 51.17 is defined widely in UCPR 51.2. [135] It includes “a judgment, order, verdict, opinion, direction or determination”. Accordingly, it would have been open to Cawarrah to file a notice of cross-appeal complaining, at least, about the primary judge’s failure to find the reversals, which her Honour found were not effected pursuant to any agreement, were effected in breach of the 2006 contract. [136] For the reasons given below, the position is less clear in relation to the overcharging claim.

6. [253]

   Cawarrah should have filed any notice of cross-appeal within 14 days of the filing the notice of appeal: UCPR 51.17(2)(b)(i). They need an extension of time to rely on the notice of cross-appeal. Cellarit has not opposed the filing of the notice of cross-appeal on that basis. I would extend the time for filing a notice of cross-appeal as, in my view, for the reasons given below, one of the matters Cawarrah complains about in this respect was the subject of dispute, albeit to a more limited extent than Cawarrah submits, and finding, at trial.

Form of the notice of cross-appeal

1. [254]

   I would not give Cawarrah leave to file a notice of cross-appeal in the form of the draft submitted after the hearing. Rather than being a cross-appeal, which, like a notice of appeal, sets out the part of the decision below appealed from and briefly, but specifically, the grounds relied on in support of the cross-appeal (cf UCPR 51.18 which applies to a notice of cross-appeal: UCPR 51.3), the draft document is an argumentative document which seeks to perpetuate Cawarrah’s complaint that Cellarit did not conduct the variation case at trial.

2. [255]

   This was entirely misconceived, not merely because of its argumentative nature, but also because the purpose of the notice of cross-appeal was to retain that part of the judgment relating to the reversals and the overcharging issue. Those issues were raised, as I have said, in Cawarrah’s reply. They were independent of the variation case on which Cellarit has succeeded as was apparent from the alternative ways Cawarrah put its claims in the Schedule and their description of these claims at trial as fallbacks.

3. [256]

   Counsel for Cawarrah acknowledged during the appeal hearing that, rather than being in their reply, the reversals issue should have been pleaded in a third further amended statement of claim. In addition, he submitted that Cawarrah was entitled to recover the amounts reflected in the overcharging claim even if Cellarit was entitled to charge the varied commission rates. Both claims, accordingly, were independent of the 15% fixed-term claim.

4. [257]

   In addition, the draft notice of cross-appeal is deficient in that the only ground of appeal seeks an order that the primary judge should have held Cellarit breached the contract in respect of the overcharging claim. There is no ground of appeal in relation to the reversals issue, even though the orders sought seek relief in relation to both issues.

5. [258]

   Cawarrah sought to explain the proposed single ground of appeal as covering both the overcharging claim and the reversals issue. This cannot be the case. Each claim was separately pleaded in the reply, turned on different facts and should be the subject of a separate ground of appeal.

6. [259]

   Accordingly, while I am of the view that a cross-appeal which included a ground of appeal that the primary judge should have held the reversals of seller’s commission in May 2014 was a breach of the 2006 contract should succeed, such an order should not be made unless a notice of cross-appeal which complies with the rules is filed.

The reversals issue

1. [260]

   The reversals issue was clearly agitated both on the pleadings and in the evidence at trial. Cellarit relied upon the reversals in its amended defence, while Cawarrah pleaded in paragraphs 1(e) and 2(b) of their reply that the reversals were a breach of the 2006 contract.

2. [261]

   At the end of the trial, the parties provided written submissions. As originally drafted, Cawarrah’s outline of oral closing submissions did not address the reversals issue identified in the reply. Cellarit drew attention to this in its written submissions, pointing out the onus was on Cawarrah to establish the breaches for which they contended. Having regard to the absence of submissions on the issue, Cellarit assumed it had been abandoned.

3. [262]

   Cawarrah then prepared an amended outline of oral closing submissions which protested that the reversals claim had not been abandoned. They contended that a finding that Cellarit was not entitled to “reverse” the discounts previously given entitling them to damages to that extent was open even if the Court found in Cellarit’s favour as to the term of the 2006 contract and/or the 2009 variation. They referred to the reply at [6] and [7], paragraphs which did not exist in that document, and which I assume were intended to refer to paragraphs 1 and 2. They also referred to paragraphs [6] and [7] in the Schedule. They did not address any evidence concerning the reversals.

4. [263]

   The amended outline of oral closing submissions also set out the findings and orders Cawarrah asked the Court to make. Relevantly, Cawarrah asked the Court to find that the parties did not conclude an agreement in or around May and June 2014 as alleged in paragraph 7(e) of the amended defence. There was no submission, however, that the Court should find that in making the reversals which were the subject of that pleaded agreement, Cellarit breached the 2006 contract as Cawarrah contended in their reply. However, equally, there was no submission that in the event the primary judge found in Cawarrah’s favour on the 15% fixed-term case, that her Honour should find it was a breach of the 2006 contract for Cellarit to charge commissions in excess of that amount.

5. [264]

   In oral submissions on 26 September 2017, Cawarrah outlined the claim for damages for breach of the 15% fixed-term as being quantified in two ways. First by reference to the difference between the commission Cawarrah paid over and above 15% from 1 October 2008 to the relevant date set out in the tables attached to the Schedule and the 15% commission it should have paid. Second, Cawarrah submitted it also needed a finding in its favour that it was entitled to the reversal figures set out in the narrative part of the Schedule on the basis that some of the discounts it had been given had been reversed by Cellarit. It was submitted that once the primary judge had made findings on the critical issues her Honour should direct the parties to bring in short minutes of orders which would set out the quantification of Cawarrah’s entitlement, depending upon her Honour’s findings. Cawarrah conceded that if Cellarit’s 2014 agreement case was made good thus entitling it to reverse discounts previously given, they must lose on the reversals issue.

6. [265]

   The extent to which evidence concerning the reversals issue was addressed in oral submissions was limited. In terms of establishing what it contended was the 2014 agreement to reverse shareholders’ discounts, counsel for Cellarit drew the primary judge’s attention to the email from Mr Witt to Mr Storch (copied to Mr Walton) dated 20 May 2014, written in response to Mr Storch’s proposal about resolving the dispute which had arisen concerning investing in Cellarit shares. In particular, it addressed Mr Storch’s demand that $100,000 Cellarit had debited to Crusader’s account be repaid to “Storch Super” by advising that “reversal entries to the May Cellarit account (to be emailed to you on 1 June) will reflect your … non-purchase of Cellarit shares”.

7. [266]

   Cellarit’s counsel also drew attention to the 1 June 2014 reversals email, which, as was foreshadowed in the 20 May 2014 email, advised Mr Storch that the “previously recorded shareholder discounts of 30%” had been “adjusted off” Mr Storch’s accounts. As I have explained (see [86] – [88] above), the invoices to which Mr Witt referred in the reversals email showed the reversal of both seller’s commission discounts and storage discounts.

8. [267]

   The primary judge referred to both these emails. However, as I have said, the December 2014 invoices recording “Reverse All Remaining Shareholder Discounts” in each respondent’s account were not referred to in either written or oral submissions, or in the primary judgment. They were reflected in the quantum of the amount each respondent sought to recover for reversals in the narrative Schedule. Cawarrah does not submit that Mr Witt was cross-examined about these reversals to link them to the reversals referred to in May – June 2014. Rather, in submissions which do not appear to have been made to the primary judge, they invite this Court to infer the December 2014 reversals were those foreshadowed in the reversals email and, implicitly, were the subject of the primary judge’s finding about the May 2014 reversals.

9. [268]

   In my view, the Court should not accede to that submission. It is apparent that the way Cellarit charged fees was highly complex. The charging regime was largely accepted by Cawarrah until 2015. Cellarit’s contention at trial was that the May 2014 reversals were effected pursuant to an agreement in 2014. Cawarrah’s reply put that in issue by reference to the Schedule which, as I have said, was partly quantified by reference to the December 2014 invoices. However, in my view, it did not make good that quantification on the evidence.

10. [269]

    As Cellarit submits, Cawarrah bore the burden of proving that none of the reversals in respect of which it sought to recover were permissible within the 2006 contract. It could not prove the December 2014 reversals were effected in breach of that agreement without expressly putting that proposition to Mr Witt, or by adducing evidence which supported an inference to that effect on the balance of probabilities. In my view that inference is not open.

11. [270]

    Having regard to this conclusion, and to Cawarrah’s concession that the reversals of storage discounts were not included in the calculation of the judgment sum, in my view the only reversals this Court can find that were effected in breach of the 2006 contract were the reversals of seller’s commission effected in May 2014. It was those reversals, which the primary judge held were not agreed but, rather, were implemented unilaterally.

12. [271]

    As I have said, her Honour also accepted that the reversals were relevant to the calculation of Cawarrah’s loss. They could not be relevant unless they were consequent upon a breach by Cellarit of the 2006 contract. In my view, that was the logical consequence of the primary judge’s finding that there was no agreement that Cellarit could implement the reversals. Her Honour ought to have made that finding in order to found an order in Cawarrah’s and Crusader’s respective favours that they recover the amounts by reason of which they asserted they had suffered loss and damage consequent upon the reversals.

13. [272]

    I do not accept Cellarit’s submission that the primary judge did not consider the evidence it complains was relevant to the reversals issue. That evidence was the material upon which Cellarit relied to seek to make good the 2009 variation case and, in turn, to justify the 2014 reversals. Her Honour rejected that case. If that is not the case, then I would add that, apart from the matters to which I have referred, Cellarit did not either plead, or rely in its written or oral submissions on, any other evidence from Mr Witt purporting to support the reversals. Accordingly, in my view, there is no warrant for remitting the reversals issue for further consideration.

14. [273]

    In my view, prima facie, this Court should conclude that Cellarit breached the 2006 contract in effecting the May 2014 reversals insofar as they related to seller’s commissions, but not otherwise. Thus the amount of any judgment in Cawarrah’s and Crusader’s favours should not reflect either the storage charges of the December 2014 reversals.

15. [274]

    However for the reasons which follow, it would be premature to make that order on the current and proposed state of the pleadings in this Court.

The overcharging claim

1. [275]

   The position as to the overcharging claim is less clear although it, at least, is the subject of the ground of appeal in the draft notice of cross-appeal.

2. [276]

   Although the overcharging claim appears to have been pleaded (albeit in the reply), the primary judge did not deal with it as a discrete issue, no doubt because neither Cawarrah’s written or oral submissions at the conclusion of the trial addressed it. However, in the amended outline of oral closing submissions, as I have said, Cawarrah drew attention, relevantly, to paragraph 7 of the Schedule in which each plaintiff sought to recover the amount of commission they contended, by reference to the attached tables, Cellarit had overcharged them.

3. [277]

   To the extent her Honour made express findings as to breach, it is tolerably apparent that those findings related specifically to the specific variations of the commissions charges above 15% commencing on 1 October 2008 and notified on the invoices pleaded in the amended defence. This was the first variation her Honour held to be in breach of contract. [137] Her Honour’s earlier finding of breach [138] was a more general finding, not related to any specific variation, but in a context where her Honour appeared to be referring to the pleaded variations set out in the amended defence.

4. [278]

   Cellarit contends that the tables were relied upon by way of submission only, purported to be an expert opinion and were not proved by a report from a suitably qualified expert.

5. [279]

   The tables upon which Cawarrah sought to rely to support the overcharging claim were attached to the Schedule and were identified in sub-paragraphs 7(a)(i) and 7(b)(i) of the Schedule as based on column P. They were clearly advanced in contradiction of Table A to Mr Witt’s affidavit of August 2016 in which he set out Cellarit’s standard rates of buyer’s and seller’s commission during the period 2008 to the termination of Cawarrah’s relationship with it and the commissions he said it had charged Cawarrah during the same period.

6. [280]

   Although not the subject of any explication by their author, it is apparent that the author of the Schedule tables based the analysis there set out on the invoices Cellarit issued to each respondent, in Cawarrah’s case, from October 2008 to September 2015, and in Crusader’s case, from October 2008 to May 2016 of which 172 or so were in evidence.

7. [281]

   There were 14 columns on each respondent’s table, alphabetically identified, in respect of which Cawarrah sought to rely upon column P to quantify the overcharging claim. Column P sought to set out the “Difference between Commission @ Witt rates and actual commission”. It appeared to be derived in part from Columns N and O in the same box in the Schedule. Column N was described as setting out “Total commission payable @ Witt rates (1 CB, tab 7, 10)”. Under that heading were set out what appeared to be the percentage commission rates Mr Witt had deposed in Table A that Cellarit had charged the relevant plaintiff between October 2008 and September 2015 in the case of Cawarrah and between October 2008 and May 2016 in the case of Crusader. Column O set out “Commission @ Witt rates” and set out what appears to have been a calculation of the amount of commission presumably based on the commission rate in column N. Against those amounts appeared the symbol either “-$” or “$”. Those symbols were not explained. While not explained in either table the “actual commission” was presumably derived from column K headed “Actual Total Commission Paid”. The “Witt rates” were, in turn, clearly derived from Table A.

8. [282]

   At trial, Cawarrah contended the tables attached to the narrative Schedule could be made good by tendering the invoices in Blue 2 and 3: Black 9. Cellarit did not undertake any exercise at trial of attempting to explain the discrepancies between Table A and the ultimate contention Cawarrah relied on for the overcharging claim in column P. It did not contend that the figures in the tables were not extracted from the monthly invoices sent to each respondent. A comparison of the invoices Cellarit pointed to in its submissions with the figures said to be derived from the invoices indicated the figures were accurately reproduced or calculated.

9. [283]

   Evidence of an opinion is not admissible to prove the existence of a fact about the existence of which the opinion was expressed: s 76(1), Evidence Act (opinion rule). The opinion rule does not apply to evidence of an opinion of a person that is wholly or substantially based on that person’s specialised knowledge based on the person's training, study or experience: s 79(1), Evidence Act.

10. [284]

    “Opinion” is not defined in the Evidence Act. “In the law of evidence, ‘opinion’ means any inference from observed or assumed facts”: [139] That is not a description readily attributable to the tables. Rather than constituting inferences, they more appear to be a factual summary of the voluminous invoices in evidence and, I accept, to some extent an analysis of them. They were capable of being prepared by a person with mathematical skills possessed by many members of the community who would not be regarded as an “expert”. Although they were not tendered, the tables could be used as a summary as I have said. The opinion rule did not apply to them because they did not purport to be opinion in the sense that word is understood in the law of evidence.

11. [285]

    Equally, although no doubt a laborious exercise, it would not have been a complicated exercise, for those in Cellarit’s camp on whose business records the tables were based, to examine them and identify inaccuracies, if any. Mr Witt could have given such evidence if necessary.

12. [286]

    This leads into Cellarit’s next complaint, that the overcharging claim could not be allowed because Mr Witt was not cross-examined about the purported discrepancies between the commission rates in Table A and the rates set out in column P of the Schedule tables

13. [287]

    What is customarily referred to as the rule in Browne v Dunn, [140] requires an opposing party “to put to an opponent’s witness in cross-examination the nature of the case upon which it is proposed to rely in contradiction of [the witness’s] evidence”. [141] The rule in Browne v Dunn is one of practice or procedure and also a rule of professional practice based upon general principles of fairness, designed to achieve not only fairness to a witness, but also a fair trial between the parties. [142]

14. [288]

    However, Beazley P explained in NU v NSW Secretary of Family and Community Services, [143] the corollary of the rule is that “if a witness is on notice of the allegation upon which a party intends to rely and is on notice that his or her evidence is contested on that issue, the rule does not mandate that the witness be cross-examined on the matter.” Also of relevance is her Honour’s application of Campbell JA’s statement in Masterton. [144]

15. [289]

    In addition, although Cawarrah bore the legal burden of proof in relation to the overcharging claim, once they had established a prima facie case that they had been overcharged in the manner set out in the invoices as summarised in the tables, Cellarit bore “an evidential burden to advance in evidence any particular matters with which (if relevant) [Cawarrah] would have to deal in the discharge of their overall burden of proof”. [145]

16. [290]

    This was particularly the case, having regard to the principle in Blatch v Archer, that “… all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted.” [146] Having regard to the complexity of Cellarit’s charging regime (see [268] above), Cellarit was in a far better position than Cawarrah to demonstrate and/or explain any errors or discrepancies, if any, between the invoices and their purported summary in the tables than Cawarrah.

17. [291]

    To the extent Cellarit sought to do so by way of submission in this Court, rather than evidence at trial, I would not accept its submission. The most substantive submission concerned the large discrepancies which appeared from 2012 to September/November 2015 between the rates of commission Cellarit said it had charged each plaintiff, and the amount the tables identified from the invoices. As Cawarrah submitted, the rebates to which Cellarit pointed related to storage charges, not seller’s commission. Accordingly, I would allow the overcharging claim. The primary judge should have held that, in breach of the 2006 contract, Cellarit charged Cawarrah and Crusader charged a higher commission than that which according to Mr Witt’s evidence in Table A it had determined to charge “at its discretion from time to time”.

Notice of contention

1. [292]

   The draft notice of contention was provided without leave.

2. [293]

   I have already referred to the proposition articulated in Bale v Mills that “[t]he parties and their legal representatives [have] no right … to place before the court without prior leave further material after an appeal has been heard” (see [173]).

3. [294]

   To that should be added in relation to Cawarrah’s application to file a notice of contention seeking formally to agitate the question whether the variation case was open to Cellarit, as further explained in Bale v Mills, [147] and subject to the Court’s leave, that:

4. [295]

   The application to file a notice of contention should be rejected.

5. [296]

   The consequence is that the appeal has succeeded, but, subject to filing a notice of cross-appeal in proper form, Cawarrah and Crusader should be successful on their cross-appeal.

6. [297]

   However, it is appropriate that written submissions be made concerning both the costs of the trial and the appeal (including the cross-appeal) as well as to the disposition of the monies Cellarit paid into court as security for the costs of the appeal.

7. [298]

   I propose the following orders:

   1. (1)

      Appeal allowed.

   2. (2)

      Set aside the orders made by the Court below on 29 September 2017 and 13 November 2017.

   3. (3)

      Grant the respondents an extension of time in which to file a notice of cross-appeal

   4. (4)

      Direct the respondents to file and serve a notice of cross-appeal within 7 days of judgment which complies with UCPR 51.18 and contains grounds seeking findings of breach of contract in relation both to the reversals issue and the overcharging claim.

   5. (5)

      Subject to compliance with order (4), enter verdict and judgment for Cawarrah Holdings Pty Ltd in the sum of $36,631.16, plus pre-judgment interest at the rates referred to in Practice Note DC (Civil) No 15, such judgment to take effect on 13 November 2017.

   6. (6)

      Subject to compliance with order (4), enter verdict and judgment for Crusader Pty Ltd (ACN 094 092 734) in the sum of $79,704.98 plus pre-judgment interest at the rates referred to in Practice Note DC (Civil) No 15, such judgment to take effect on 13 November 2017.

   7. (7)

      Costs reserved.

   8. (8)

      Direct Cellarit Pty Ltd to file and serve within 7 days of the delivery of these reasons, submissions as to the orders for which it contends in relation to the costs of the trial, of the appeal and of the disposition of the monies paid into Court on account of its security for costs such submissions not to exceed 5 pages;

   9. (9)

      Direct Cawarrah Holdings Pty Ltd and Crusader Pty Ltd (ACN 094 092 734) to file and serve within 14 days of the delivery of these reasons submissions as to the orders for which they contend in relation to the costs of the trial, of the appeal and of the disposition of the monies paid into Court on account of its security for costs such submissions not to exceed 5 pages;

   10. (10)

       Direct Cellarit Pty Ltd to file and serve within 7 days of the receipt of the respondents’ submissions referred to in paragraph (9) above any reply to those submissions such submissions not to exceed 3 pages.

8. [299]

   MACFARLAN JA: I agree with McColl AP.

9. [300]

   LEEMING JA: I have had the very considerable advantage of reading the judgment of McColl AP in draft. I agree with the orders proposed by her Honour, and in very substantial measure with her Honour’s reasons. These reasons presuppose familiarity with, and do not reproduce, the factual and procedural background and the parties’ submissions.

The appeal – main grounds

1. [301]

   I agree with McColl AP that grounds 3 and 4, which amounted to the gravamen of the appeal, are made out, and I agree with her Honour’s reasons on those grounds. The period in question was from October 2008 (when Cellarit first increased its commissions by a total of 1.5%) until May 2016 – more than a year after proceedings had been commenced in the District Court. Throughout the whole of that time, each month, Cellarit had charged a particular amount of commission, for the most part advising rate (both buyer’s and seller’s commission) it was charging, and deducting those amounts from the proceeds remitted from the respondents’ bank accounts. The position might have been different, given the manner in which Cellarit notified its clients of the changed commissions, were this litigation about three or six or perhaps even nine months’ commissions. But throughout the entire period, which exceeds seven years, the respondents each month instructed Cellarit to sell dozens of bottles of their wine, and in each case this occurred. The commissions charged fluctuated from time to time. This is a clear case for the application of the principles stated by McHugh JA in this Court in Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1985) 5 BPR 11,110 and Heydon JA in Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61, and more recently in Kriketos v Livschitz [2009] NSWCA 96. Not every contract requires individually articulated offer and acceptance. The primary judge was correct to say that there was no express assent by Mr Storch on behalf of the respondents to the increased commissions. But there was unequivocal conduct, namely, continuing to instruct Cellarit to sell those companies’ wine, which can be referable only to the commission that was to be charged from time to time.

2. [302]

   Against this, the respondents maintained that it was outside the pleaded case. The pleadings in their final form on behalf of Cellarit left much to be desired. The pleader seems to have conflated the notion of a series of agreements between the parties between October 2008 and May 2014 with an estoppel (not to mention a failure to identify what the nature of that estoppel was). But the amendments were allowed at the commencement of the trial, and on the basis that particulars were requested and provided as to each of those agreements. Further, the primary judge appears to have proceeded on the basis that those various agreements as a matter of contract were in play before her. There is no other plausible explanation for her Honour’s articulation of the issues at the commencement of her judgment (“The defendant contends that there was a series of contracts and estoppels in the years following”) and the references at pp 21-22 to the contentions that the plaintiffs had agreed to various rate changes and the reference to Brambles and Integrated Computer Services. It is true that the plaintiffs/respondents consistently treated the amended defence as a claim in estoppel. That does not deny that the questions of contract, which were alleged to have been (somewhat irregularly) the premises of the estoppel claim, were in issue.

Remaining grounds of appeal

1. [303]

   I turn to the minor grounds, the resolution of which does not affect this Court’s orders. Like McColl AP, I would reject ground 1. I agree with her Honour’s reasons for doing so, save that I do not say that I would have reached a different conclusion from the primary judge (cf [209]).

2. [304]

   I would also reject ground 2. No evidence was provided as to how the Cellarit printed terms became incorporated into the contract. At best, there was a recreation (some ten years after the event) of the registration which Mr Storch is said to have completed in 2006 and 2008 respectively for each plaintiff company. Even then, it is not established that in some binding contractual way the terms and conditions including that upon which Cellarit relied, were incorporated. And, even if that were so, the proffered terms and conditions referred only to Cellarit’s “schedule of rates as published from time to time”, and I did not understand that the identity of that schedule or where it was published to have been proven.

3. [305]

   The parties in substance agreed that ground 5 led to no consequences. That ground asserted that there was error in finding that the invoices were paid under protest. The parties’ agreement on this issue was correct: the finding played no part in the formulation of her Honour’s orders. It follows that this is not a proper ground of appeal. There is no occasion to deal with a complaint which is not material to the orders made by the court below. Appeals lie from orders, not findings: Live Board Holdings Ltd v Cody Live Pty Ltd [2017] NSWCA 302 at [38].

The cross-appeal and other post-hearing matters

1. [306]

   Success on the appeal means that it becomes necessary to deal with a contingent cross-appeal, supplied with leave after the conclusion of the hearing, and supported by written submissions. I agree with what McColl AP has said, rejecting the respondents’ submissions to the contrary, as to the need for a cross-appeal and its form. I also agree with her Honour that the draft notice of contention should not have been supplied to the Court without leave after the hearing.

2. [307]

   There are two issues which arise on the cross-appeal. Both are directed to amounts of money which the respondents contend they are entitled to retain notwithstanding Cellarit’s success on the appeal. They may be referred to as “reversals” and “overcharges”. I deal with each in turn.

3. [308]

   The claims for reversals were amounts of $24,584.73 in the case of Cawarrah and $88,651.06 in the case of Crusader. Each of those claims comprised the sum of two items described as “reversals” but which more accurately might be described as debits in the account imposed by Cellarit following the decision not to invest in the business. In the case of Cawarrah, the 1 June 2014 invoice recorded an entry “Reverse Shareholder Discounts (seller’s commission through to 19 May 2014)” in the amount of $23,793.53 while the 1 January 2015 invoice included an entry “Reverse All Remaining Shareholder Discounts” of $791.20. The sum of those amounts is $24,584.73.

4. [309]

   In the case of Crusader, the invoices of the same days and with the same descriptions were in the amounts of $66,873.37 and $21,777.69. The sum of those amounts is $88,651.06.

5. [310]

   I do not disagree with what McColl AP has written in relation to the reversals. These amounts were in issue at trial. It was for Cellarit to justify an entitlement to increase its clients’ indebtedness by one-off transactions of $24,584.73 and $88,651.06. Although it was said this reflected the reversal of a discount following the decision not to acquire Cellarit shares, it remained necessary for Cellarit to demonstrate an entitlement at law (either contractual or, conceivably, non-contractual) such that the discount actually granted previously was contingent upon the Cellarit share transaction proceeding, and would be reversed in the event that the Cellarit transaction did not proceed. This Cellarit has failed to do. Indeed, it was rejected by the primary judge.

6. [311]

   This claim was for $25,669.24 (being amounts of $12,837.63 and $12,831.61 said to have been overcharged by Cellarit to Cawarrah and Crusader respectively).

7. [312]

   These claims turned on the percentage amounts which Mr Witt said were charged from time to time as commission. The amounts ranged from 15% to 23.5%. Those amounts were annexed to his affidavit, and although they were addressed in cross-examination, it was not suggested that they were incorrect.

8. [313]

   In evidence at trial and occupying more than 1000 of the 1239 pages of blue appeal books containing documentary evidence were the invoices from August 2011 until May 2016. Those invoices identified amounts of wine which were sold and commissions charged. Attached to the submissions below was a schedule which was more complicated than it need have been (to be fair, it was directed to other purposes too, including the 15% fixed commission case) but which reproduced actual sales (column “D”) and actual total commission paid (column “J”). The schedule also contained a column reproducing Mr Witt’s rates (column “N”), a column representing the product of actual sales and Mr Witt’s rates (column “O” = “D” x “N”) and a column for the difference between the actual total commission paid and the commission which would have been charged at Mr Witt’s rates (column “P” = “J” – “O”).

9. [314]

   The schedules contain about 180 rows, but as best I can see each of the entries in columns D and J correspond to actual amounts found on the invoices for each month. Significantly, in an appeal where both parties have demonstrated a willingness to argue about minutiae, it was not submitted that there was inaccuracy in those columns of the table.

10. [315]

    The totals of the differences between the commission actually charged and paid, and the commissions chargeable at Mr Witt’s rates for the sales actually made, add to the amounts of $12,837.63 and $12,831.61 claimed.

11. [316]

    Cellarit maintained that the comparison reflected in the schedule was invalid because it was between apples and oranges. Its senior counsel observed, correctly, that the entries up to May 2012 scarcely matter – they are around $200, which is de minimis. His submission was that from May 2012 the schedules did not reflect a 1.5% rebate on commission. The submission was illustrated with examples. However, the amounts exemplified did not appear on their face to be rebates on commission. Those amounts were described in the contemporaneous documents as storage rebates. (The example singled out in written submissions was an amount of $108.70 at Blue 404J. However, the $108.70 is not 1.5% of the gross sales for that month, rather, it reverses the charge for storage at 404E, and indeed at 405D it is described as “Loyalty Storage Credits Discount”.)

12. [317]

    In further submissions supplied after the hearing, the appellant said that:

13. [318]

    I do not agree. No submission was made as to what the “relevant” cross-examination might have been. I do not understand there to have been dispute about the rates which Mr Witt said he was entitled to charge, or the amounts of wine sales actually made and commission actually charged as recorded in the invoices. It is quite plain that the entitlement to commission was in issue in this litigation. I see no reason why the respondents should be prevented from holding Cellarit to the commissions which it held itself out as being entitled to charge.

14. [319]

    It was also said that the respondents have not pointed “to any documents in the Blue book which enable the Court to conclude that the calculations in the Respondents’ Schedule at Black 438FF contains a reliable calculation of discrepancies between the commission rates set out in Blue 58 and the actual commission rates that the Respondents paid”. Again, I do not agree. As I have sought to point out above, the respondents pointed to the actual commission rates annexed to Mr Witt’s affidavit and the actual sales and actual commission rates as set out in Cellarit’s invoices, and calculate a $25,669.24 overcharge.

15. [320]

    True it is that for the period which matters, from May 2012 until 2016, the actual commission charged is approximately 1.5% more than the rates annexed to Mr Witt’s affidavit. It is possible that that is a consequence of the complex way in which the charges and rebates were brought to bear. But if that be the explanation, I see no occasion for Cellarit to benefit from its own complexity, in circumstances where its entitlement to commission was at all times in issue. Hence I would also accede to this aspect of the cross-appeal.