Baan Australia Pty Ltd v George Weston Foods Ltd [2000] NSWSC 504

New South Wales Supreme Court

CITATION : Baan Australia Pty Ltd v George Weston Foods Ltd [2000] NSWSC 504 CURRENT JURISDICTION: Equity Division Commercial List FILE NUMBER(S) : SC 50217/97 HEARING DATE(S) : 15, 16, 17 and 18 May 2000 JUDGMENT DATE : 8 June 2000

PARTIES : Baan Australia Pty Limited (Plaintiff/Cross Defendant) George Weston Foods Limited (Defendant/Cross Claimant) JUDGMENT OF : Bergin J

COUNSEL : AJL Bannon SC/AJ Payne (Plaintiff/Cross Defendant) S Finch SC/D Studdy (Defendant/Cross Claimant) SOLICITORS : Clayton Utz (Plaintiff/Cross Defendant) Gilbert & Tobin (Defendant/Cross Claimant) CATCHWORDS : Separate determination of questions pursuant to Part 31 Rule 2 of the Supreme Court Rules - Whether terms to be implied into Agreements for licence and support of Software. BP Refinery (Westernport Pty Ltd) v Hastings (1977) 180 CLR 266 Byrne v Australian Airlines Ltd (1995) 185 CLR 410 CASES CITED : Peters American Delicacy Co Ltd v Champion (1928) 41 CLR 316 Hamlyn & Co v Wood & Co (1891) 2 QB 488 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337. DECISION : Terms not Implied. All questions answered No.

THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST

BERGIN J

THURSDAY 8 JUNE 2000

50217/97 - BAAN AUSTRALIA PTY LIMITED v GEORGE WESTON FOODS LIMITED

JUDGMENT

Background 1 This matter involves the determination of a number of separate questions pursuant to Part 31 Rule 2 of the Supreme Court Rules. The questions relate to matters arising from a dispute between the parties in respect of the termination of Agreements into which they entered in December 1996. 2 George Weston Foods Ltd (GWF) owns and operates a number of subsidiaries and divisions through which it manufactures and distributes a variety of food products. 3 Prior to 1996 GWF operated a computer network linking each of its divisions which was not capable of processing a large volume of transactions in and between those divisions. The divisions operated individual and discrete computer and software systems. 4 GWF made a decision in late 1995 to replace and upgrade its computer system with a new wide area computer network (WAN) which has been referred to in the proceedings as an Enterprise Resource Planning System comprising software and hardware (ERP) 5 Baan Australia Limited (Baan) is a wholly owned subsidiary of BaanNV, a company incorporated under the laws of the Netherlands. Baan supplies and distributes software including a software known as Baan IV(b) (the Baan software). 6 On 10 May 1996 GWF issued a request for proposal document (RFP) to a number of software suppliers including Baan. On 29 May 1996 Baan responded to the RFP (the RFP response). On 1 July 1996 Baan provided GWF with notes of explanation relating to what it described as its "proposal for your organisation" (the RFP Explanation). 7 During the period July 1996 to September 1996 the representatives of GWF and Baan met at what has become known between the parties as the functionality presentations. It is claimed that during the course of those presentations certain representations were made about the Baan software. 8 In the course of its business Baan published Sizing Guides. The particular guide relevant in this case was issued in December 1996. (Ex B7) 9 During late October and early November 1996 representatives of GWF travelled overseas on site visits. From the report in relation to those visits (Ex 15) it is apparent that none of the sites visited were operating the Baan software. One of the sites visited was operating a version of the Baan software at a Beta site which was in situ to test for any operational difficulties in a "live environment" (Tr.64). 10 On 3 January 1997, the parties executed two agreements dated 31 December 1996, the Software Licence and Support Agreement (the SLSA) and the Professional Services Agreement (the PSA). Schedule A to the PSA refers to a Statement of Work as a mutually agreed document that outlines a set of services to complete a defined scope of work. Schedule A provided that a Statement of Work would be "annexed and will be part of" the PSA. The Statement of Work was signed on 22 August 1997 (Ex B4). 11 In October 1997 Baan was refused access to GWF's premises and on 12 November 1997 GWF, by letter from its solicitors Gilbert & Tobin to Baan's solicitors Clayton Utz, terminated the SLSA and PSA immediately. 12 Pursuant to the SLSA GWF was required to pay a licence fee of $6,101 million. This fee was to be paid in two instalments, the first $3,505,500, which has been paid, and the second on 31 December 1997, $2,595,500 which has not been paid. A maintenance fee of $610,100 was paid by GWF for 1997 but the 1998 maintenance fee of $915,150 has not been paid. 13 Pursuant to the PSA, GWF agreed to pay a fee of $5,191 million. Without descending into the particular detail of the instalments by which such fee was to be paid, the amount not paid is $2,933,270 together with an amount of $250,000 in respect of some modifications. 14 Baan commenced proceedings on 1 December 1997 in what was then known as the Commercial Division of this Court seeking damages for GWF's alleged wrongful repudiation of the SLSA and the PSA. GWF, by way of cross claim, sought damages for breach of contract (the contract case), contravention of ss 52 and 53 of the Trade Practices Act 1974 (Cth) (the representations case), and negligence.