Global AM Trading LLC ARBN 134 988 202 v Pan Macmillan Australia Pty Ltd ACN 001 184 014 [2012] NSWSC 1512

Supreme Court New South Wales

Medium Neutral Citation: Global AM Trading LLC ARBN 134 988 202 v Pan Macmillan Australia Pty Ltd ACN 001 184 014 [2012] NSWSC 1512 Hearing dates: 12.11.12, 13.11.12, 14.11.12 Decision date: 10 December 2012 Before: Nicholas J Decision: Pars 36, 37 Catchwords: CONTRACT - construction - agreement between publisher and service provider for sale and distribution of its publications - service provider required to invoice and deliver the publications to customers - service providers required to assume risk of bad debt for all sales of publications - whether risk extended to bad debts for sales for which the publisher was responsible - no question of general principle Cases Cited: Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99 Cordon Investments Pty Ltd v Lesdor Properties Pty Ltd [2012] NSWCA 184 Wilkie v Gordian Runoff Ltd Ltd [2005] HCA 17; (2005) 221 CLR 522 Category: Principal judgment Parties: Global AM Trading LLC ARBN 134 988 202 - plaintiff Pan Macmillan Australia Pty Ltd ACN 001 184 014 - defendant Representation: Counsel: R M Foreman - plaintiff B Coles QC/D Neggo - defendant Solicitors: Minter Ellison - plaintiff Macpherson & Kelley - defendant File Number(s): 12/97370

Judgment 1These proceedings concern the claim by the plaintiff (Global) against the defendant (Pan) for payment of the amount $909,835.78 alleged to be payable under a sale and distribution agreement made on 8 May 2008 (the agreement). 2The relevant background is uncontroversial and is summarised as follows. 3Global is a company incorporated according to the laws of the State of Missouri, United States of America. It is a related company of Andrews McMeel Publishing, LLC (Andrews McMeel), a publisher in the United States of America of: (a) general nonfiction trade, cookbook, gift, puzzle and humour books; and (b) calendars. 4Since about 1 January 2009 Andrews McMeel has conducted its business in Australia through Global, neither of which have warehouse or distribution facilities in Australia. 5In February 2007 Andrews McMeel issued a request for proposal (RFP) for what was called 'fulfillment services' and 'book trade sales representation' to Macmillan Publishing Services, a business division of Pan. The general manager of Macmillan Publishing Services is Mr Mark Haldane. Pan responded to the RFP and in due course Pan and Andrews McMeel executed the agreement on 8 May 2008. 6By a deed of variation dated 1 January 2009, Andrews McMeel and Pan agreed that all references to Andrews McMeel in the Agreement would be replaced by Global. It is agreed by the parties that nothing turns on the change of entity. 7Global publishes the books, calendars and other publications the subject of the agreement and ships them to Australia. These products are marketed to wholesalers and retailers in Australia and New Zealand. Pan invoices the purchasing wholesalers and retailers, delivers the products to them, and collects payment from them. 8The genesis of the current dispute lies in the February 2011 voluntary administration of the REDgroup Retail group of companies, which operated well-known bookstore chains in Australia including 'Angus & Robertson' and 'Borders'. Also relevantly within this corporate group was a business trading as 'Calendar Club'. Pan invoiced and delivered calendars to Calendar Club under the agreement. Calendar Club's effective insolvency resulted in a bad debt of $909,835.78. The central issue in the proceedings is which of the parties must bear the risk of the bad debt under the agreement.