Axis (Aust) Pty Limited v Flight Centre Travel Group Limited [2022] QDC 97

DISTRICT COURT OF QUEENSLAND CITATION: Axis (Aust) Pty Limited v Flight Centre Travel Group Limited [2022] QDC 097 PARTIES: Axis (Aust) Pty Limited ACN 133 452 427 (plaintiff/applicant) v Flight Centre Travel Group Limited ACN 003 377 188 (defendant/respondent) FILE NO: 2372/16 DIVISION: Civil PROCEEDING: Application ORIGINATING COURT: Brisbane District Court DELIVERED ON: 4 May 2022 DELIVERED AT: Brisbane District Court HEARING DATE: 11 April 2022. JUDGE: Byrne QC DCJ ORDERS: 1. The plaintiff’s application to strike out the counterclaim is refused. 2. By consent, the parties are to undertake mediation, in terms of the draft order provided 13 April 2022. 3. The plaintiff is to pay the defendant’s costs of the strike out application, on the standard basis. CATCHWORDS: PROCEDURE – BREACH OF CONTRACT – APPLICATION TO STRIKE OUT A COUNTERCLAIM - where the plaintiff entered into an agreement for the supply of goods with the defendant – where the plaintiff alleges that the defendant improperly terminated the agreement and otherwise acted unconscionably – where the plaintiff commenced proceedings and the defendant pleaded a counterclaim in response – where the counterclaim ultimately alleged that a separate agreement by a third party with the plaintiff had been entered into by the third party as an agent of the defendant - where that agreement had been reached one month before the third party entered into an agreement with the defendant wherein they were stated to be contractors independent of each other – where the plaintiff has applied to strike out the counterclaim on the basis that there could not have been an -- 1 of 7 -- 2 LEGISLATION: CASES: agency between the third party and the defendant – whether the doctrine of privity of contract applied. Evidence Act 1995 (Cth) Uniform Civil Procedure Rules 1999 Coco v Ord Minnett Ltd [2012] QSC 324, [18] – [19] Equititrust Limited v Tucker (No. 2) [2019] QSC 248 General Steel Industries Inc v Commissioner for Railways (NSW) [1964] 112 CLR 125 Parberry and Ors v QNI Metals Pty Ltd [2018] QSC 240 Sino Iron Pty Ltd v Palmer [2014] QSC 259 Teheran Europe Co Ltd v S. T. Belton (Tractors) Ltd [1968] 2 QB 545 COUNSEL: Mr. S. McCullough (director of the plaintiff) for the plaintiff. Mr M.J. Kollrepp (sol) for the defendant. SOLICITORS: Self-represented. Kollrepp Law for the defendant. Introduction [1] On 17 June 2016 the plaintiff commenced proceedings against the defendant, and another, for breach of contract and other claims. The proceedings have not moved swiftly, and the present application is to strike out the entirety of a counterclaim pleaded by the defendant in its Second Amended Defence. Legal Principles [2] The application is brought pursuant to rule 171 of the UCPR. Although not clearly articulated, it appears that the plaintiff, who was represented by its sole director, relies primarily on paragraph (a), but also paragraphs (d) and (e) of the rule. [3] The nature of the discretion to be exercised differs depending on the paragraph relied on.1 Where reliance is placed on paragraph (a), that paragraph and rule 293 serve cognate purposes,2 although it is likely that the threshold for a strikeout application is lower than that for summary judgement.3 1 Coco v Ord Minnett Ltd [2012] QSC 324, [18] – [19] 2 Parberry and Ors v QNI Metals Pty Ltd [2018] QSC 240, [150] 3 Sino Iron Pty Ltd v Palmer [2014] QSC 259, [13]; Parberry, ibid. -- 2 of 7 -- 3 [4] The power to strikeout a pleading is to be used sparingly and only in a clear case where the lack of a cause of action is clearly demonstrated.4 A relevant consideration in the exercise of the discretion is whether, in the circumstances, effectively the same issue would still be litigated at trial even if the application were to succeed.5 The pleadings and the present issue [5] By its Third Amended Statement of Claim (“TASOC”), the plaintiff has pleaded three separate causes of action, with the first containing three alternative bases. It is only necessary to deal broadly with each cause of action, albeit in more detail for the second than the other two. [6] The first cause of action claims $225,000 for breach of contract, alternatively a claim in quantum meruit for $208,000, alternatively a claim in quantum meruit for $157,000. It is sufficient for present purposes to note that the defendant denies the existence of a binding agreement between the parties and denies liability for both claims in quantum meruit. [7] The second cause of action alleges misleading, deceptive and unconscionable conduct. These pleadings deserve more attention than the other causes of action. [8] The plaintiff alleges that on or about 1 October 2015 the plaintiff entered into a “services agreement” to provide certain goods and services to the defendant. It further alleges that on or about 4 December 2015, a third party, “AllClear”, separately entered into an agreement with it for the manufacture and delivery of items known as FC57 ticket wallets, which would have borne the name of the defendant. AllClear paid $91,250 (plus GST) as a deposit, with the same amount outstanding as the balance owing. [9] The plaintiff alleges that on 1 January 2016, that is about one month after the order was placed and the deposit paid, the defendant and AllClear entered into a services agreement between them, wherein the parties to it were declared to be independent contractors, and it also declared that neither party could act as the agent of the other. [10] The plaintiff pleaded that on or about 10 April 2017 the defendant terminated the agreement with the plaintiff, and demanded repayment of the $91,250 (plus GST) which it said had been paid for the production of the ticket wallets. [11] The plaintiff asserts that the defendant engaged in deceptive and misleading conduct when it claimed that the set-off in the termination notice was grounded in an agency agreement that did not exist, and that it acted unconscionably in continuing to assert the existence of the agency arrangements, including in the present proceedings, when, inter alia, it did not disclose the existence of the written agreement with AllClear in a timely manner. The plaintiff claims $208,000 under this claim. 4 General Steel Industries Inc v Commissioner for Railways (NSW) [1964] 112 CLR 125 5 Equititrust Limited v Tucker (No. 2) [2019] QSC 248, [18] -- 3 of 7 -- 4 [12] Relevantly, the defendant pleaded, in part, that AllClear was acting as its agent when the order was placed and the $91,250 (plus GST) was paid, that the plaintiff had failed, refused or neglected to supply the FC57 ticket wallets and that the defendant had reimbursed AllClear for the money paid. The defendant asserted that the plaintiff had been unjustly enriched in the circumstances. [13] The third cause of action was a claim for just under $208,000 for unconscionable conduct in relation to the use of a new and improved ticket wallet design said to have been developed by the plaintiff and wrongly appropriated by the defendant. The defendant denies liability. [14] The defendant has also pleaded a counterclaim in respect of the earlier mentioned sum of $91,250 (plus GST) it says was paid by AllClear as its agent. Evidence on the application [15] Affidavits from the plaintiff’s sole director, the solicitor for the defendant and the in- house legal counsel for the defendant, Mr Gavras-Moffat, were read. The latter deponent was also cross examined. [16] The affidavits of the first two deponents deal with aspects of the course of the long history of this matter. I need not detail their contents presently, but will make brief reference to them later. [17] The affidavit of Mr Gavras-Moffat asserted that the services agreement with AllClear was to the affect that AllClear would “act as a supplier and agent of the defendant in relation to the supply of marketing and associated products… to the defendant”.6 It also stated, in effect, that notwithstanding the clause defining the parties as independent contractors, the defendant and All Clear expanded the scope of the contractual arrangement “to one of agency in their dealings with the plaintiff, which the plaintiff was fully aware of at the time”.7 [18] This affidavit also exhibited a copy of the services agreement between the defendant and AllClear. A provision therein8 provides that the agreement, “supersedes any prior agreement or understanding between the parties”. It also provides that any amendment of the agreement will be of no force unless in writing and signed by an authorised representative of each party.9 [19] Of relevance for present purposes, under cross-examination Mr Gavras-Moffatt: (1) stated there was no written variation or amendment to the services agreement (with AllClear); 6 Affidavit of Christopher Gavras-Moffatt filed 10 January 2022, paragraph 4 7 Affidavit of Christopher Gavras-Moffatt filed 10 January 2022, paragraph 12. 8 Clause 21.4. 9 Clause 21.6. -- 4 of 7 -- 5 (2) asserted that the statement at paragraph 4 of his affidavit was evidenced by a course of conduct and was not in writing; (3) asserted that the fact that AllClear was refunded the deposit monies was not required by the written agreement, but was in accordance with standard practice; (4) understood that prior to refunding the deposit to AllClear, an email had been received by the defendant requesting that occur; and (5) the fact that the refund had been made caused the pleading of the counterclaim. Consideration [20] The primary contention advanced by the plaintiff is that the counterclaim cannot succeed because the defendant is not a party to the contract, as evidenced by the agreement between it and AllClear, and hence the doctrine of privity of contract defeats the counterclaim. This clearly raises the sufficiency of the allegation of an agency agreement as pleaded by the defendant. [21] That issue falls for determination in the context of rule 171(1)(a) of the UCPR, thus requiring consideration of whether the counter claim discloses a reasonable cause of action. That is a less demanding standard than satisfaction that the counter claim has no real prospect of success, as would be required by an application under rule 293. [22] Put another way, it is not my function here to determine finally if an agency agreement was in place, but rather to determine if there appears to be a reasonable cause of action available to the defendant. [23] Much energy was expended at the hearing about whether an agency did, or could, exist in light of the terms of the services agreement. But, in my view, that is all of marginal relevance at best. The order was placed and the deposit paid about one month before the defendant and AllClear entered into the services agreement. The issue is whether there is a reasonable cause of action alleging that there was an agency in existence between the defendant and AllClear about one month prior to the entry into the services agreement. There is no material in the application to make that not a reasonably arguable assertion. [24] It is convenient to note that, although not on oath or affirmation, the plaintiff denied knowledge of any agency arrangement from the Bar table. If AllClear was an agent, it does not matter in the present circumstances if the arrangement was disclosed to the plaintiff, or not.10 [25] I accept that aspects of Mr Gavras-Moffatt’s testimony potentially puts the attitude of the defendant as to its compliance with the terms of the services agreement in a bad light, particularly as to its apparent belief it can vary the agreement contrary to its express terms. However, for the reasons stated, I consider that the existence of the 10 Teheran Europe Co Ltd v S. T. Belton (Tractors) Ltd [1968] 2 QB 545. -- 5 of 7 -- 6 services agreement is of marginal, if any, relevance in a practical sense. Even if it were otherwise, I would not strike out the counter claim as the issue material to the counter claim will in any event be litigated as part of the plaintiff’s second claim and the response to it by the defendant. [26] In so far as the plaintiff submits that the counter claim should be struck out because it is frivolous and vexatious and lacks merit, I do not accept that to be the case for the reasons outlined above. [27] The other affidavits earlier referred to largely relate to allegations of delay in various aspects of the litigation, including the pleading of the counterclaim in its present form, and allegations of delayed disclosure of the services agreement between the defendant and AllClear. It appears that the plaintiff suggests that matters of this nature should also ground a successful strike out application of the counter claim because the manner in which the litigation has been conducted by the defendant concerning the counter claim amounts to an abuse of process. [28] I cannot accept that proposition. It is sufficient to note that the counter claim in its presently pleaded form was contained in the second amended defence which was filed in response to the plaintiff’s TASOC. It is true that the counter claim as presently pleaded did not appear in earlier forms of the defence, however a counter claim did which revolved around allegations of the deposit monies having been paid, albeit it was said at that stage that it had been paid by the defendant. Any delay on the part of the defendant is not of such a nature as to ground a successful strike out application, and seems to be the unfortunate by-product of litigation which is proceeding far too slowly. [29] Further, the plaintiff contends that Mr Gavras-Moffatt’s affidavit should be excluded through the application of s 135 of the Evidence Act 1995 (Cth). The first difficulty is that the Commonwealth Evidence Act is of no application to these proceedings. In any event, while, in my opinion, Mr Gavras-Moffatt’s affidavit is irrelevant I would not exclude it at this time. Any application of that nature can be made at the trial, if any, and once the issues are better refined. Costs [30] Costs should follow the event. Rule 171 enlivens a discretion to order their payment on the indemnity basis. The application was misconceived, but I do not perceive it to have been brought out of malice or otherwise without bona fides. I suspect it was brought by a self-represented litigant in a misguided but legitimate attempt to gain an advantage in this long-running litigation. That would not ordinarily provide a basis for indemnity costs. [31] Further, the defendant sought to defend the allegations on a similarly misguided basis. In that respect it did not assist with the speedy disposition of the matter. In any event, it has only sought costs of the application on the standard basis. -- 6 of 7 -- 7 [32] The plaintiff should pay the defendant’s costs of the application on the standard basis. Alternative dispute resolution [33] As earlier noted, the proceedings have been long-running. It is apparent that there are differences of opinion between the parties as to the legitimacy, or otherwise, of certain conduct by each party. Mediation has been proposed by both parties at different stages, but it has never been conducted. Given that the present application could not resolve the whole of the proceedings, I proposed that the Court might order attendance at mediation regardless of the outcome of the application. Both parties have agreed as to the terms of an order which has been provided in draft form. The appropriate order is that that mediation occur in terms of the draft order. -- 7 of 7 --