Kooee v Primus Essay

The delivered judgments of the strict interpretation of contractual terms in England and Wales High Court and NSW Court of Appeal have contradicted business commonsense particularly to the Kooee Communications Pty Ltd & Anor v Primus Telecommunications Pty Ltd [2008] NSWCA 5 which implicated the application of business principle efficacy only in circumstances of ambiguity of words and/or phrases (Horne 2008).Kooee, the First Appellant, was owned by the SP Telemedia Ltd, the Second Appellant. Kooee entered an agreement with the Primus where it was agreed that Primus will be providing the telecommunications services under the name of Kooee and paying 8% revenue. However, SP Telemedia engaged in an agreement with the B Digital Ltd to sell the shares of Kooee; where B Digital will be replacing Primus as the new provider.

In 2005, Kooee and Primus made a separation deed. Collection and retention of outstanding debts will be held by Kooee in exchange of the lump sum payment to Primus. However, there were misunderstandings on which payments shall be calculated. The proceeding was initiated by Primus in the Equity Division against Kooee and SP Telemedia heard by Einstein J. In February 2007, Einstein J questioned about the set off, costs, and the interest on outstanding payments (NSW Court of Appeal 2008).In response to this, Kooee made an appeal regarding the calculation for Primus outstanding debts. Primus filed a cross-appeal for the costs order made by Einstein J and the period where interests should run on payments. The issues for appeal are: whether there was a mistake in the rejection of Kooee’s construction of ‘net debtors’; if there are errors on using the extrinsic evidence as bases for the construction of the contract; and whether primus should be entitled for interests in ‘collections’, ‘migration costs’, and ‘revenue share’.

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The judgment was released in February 2005 where Giles JA allowed the appeal of Kooee but dismissed the cross appeal of Primus. The judgment of Einstein J in favour to Primus for $2, 647, 832 and that Kooee should pay 75% cost proceedings was rejected. Instead Primus was entitled only for $1,391,040.

Tobias JA agreed in both judgments of Giles JA for allowing the appeal of Kooee and dismissing the cross-appeal of Primus and of Basten JA for rejecting the costs judgment and the issues on migration costs and revenue share made by Einstein J (NSW Court of Appeal 2008).The calculation of the amount payable for the net debtors was described as having “strong aura of commercial unreality” or “unambiguous but unrealistic”. Basten JA based that conclusion from the Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70 where the High Court of Australia decided that the court should not rewrite contractual provisions, notwithstanding the commercial consequences, to comply with the business commonsense where the words in the contract are clear and unambiguous. The decision signified that courts should not be held responsible for rewriting contracts for the reason that the construction is commercially unrealistic (Horne 2008).BibliographyNSW CA (2008) Kooee Communications Pty Ltd & Anor v Primus Telecommunications Pty Ltd [2008] NSWCA 5. New South Wales Court of Appeals.

SC 50004/06 ed. New South WalesHorne, G. (2008) When Commonsense Makes No Sense. Wotton Kearney Insurance Lawyers.