COFP Pty Ltd v Dhanush Infotech Pty Ltd [2015] QCA 1

SUPREME COURT OF QUEENSLAND CITATION: COFP Pty Ltd v Dhanush Infotech Pty Ltd [2015] QCA 1 PARTIES: COFP PTY LTD ACN 113 550 137 (appellant) v DHANUSH INFOTECH PTY LTD ACN 134 619 926 (respondent) FILE NO/S: Appeal No 2031 of 2014 DC No 2364 of 2011 DIVISION: Court of Appeal PROCEEDING: General Civil Appeal ORIGINATING COURT: District Court at Brisbane DELIVERED ON: 3 February 2015 DELIVERED AT: Brisbane HEARING DATE: 21 November 2014 JUDGES: Holmes, Fraser and Morrison JJA Separate reasons for judgment of each member of the Court, each concurring as to the order made ORDER: The appeal is dismissed with costs. CATCHWORDS: PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PROCEDURE UNDER UNIFORM CIVIL PROCEDURE RULES AND PREDECESSORS – SUMMARY JUDGMENT – where the appellant brought proceedings against the respondent for moneys owed for services rendered and damages for breach of contract – where the primary judge gave summary judgment for the respondent on the basis that any agreement had been made not with the respondent but a related company – where the appellant appealed, submitting that documents relied on by the respondent as constituting the agreement were false – where no such contention was made before the primary judge – where the terms of the documents were consistent with the appellant's statement of claim – where, whatever the status of those documents, the appellant had produced no evidence of an agreement with the respondent – whether the primary judge erred in giving summary judgment APPEAL AND NEW TRIAL – PROCEDURE – QUEENSLAND – POWERS OF THE COURT – FURTHER EVIDENCE – where the appellant sought leave to adduce -- 1 of 8 -- 2 further evidence regarding which company the appellant had contracted with – whether leave should be granted to adduce the further evidence Uniform Civil Procedure Rules 1999 (Qld), r 293(2) COUNSEL: D Munro, appeared in his capacity as director of COFP, on behalf of the appellant B Kidston with R Haddrick for the respondent SOLICITORS: D Munro, appeared in his capacity as director of COFP, on behalf of the appellant Mahoneys Law for the respondent [1] HOLMES JA: The appellant brought proceedings against the respondent for moneys owed for services rendered and damages for breach of contract. Those proceedings were defended on the basis that any agreement had been made not with the respondent, but with another company, Dhanush Academy of Technology and Management Pty Ltd (DATAM). The respondent succeeded in obtaining summary judgment, against which this appeal is now brought. The appellant’s sole director, Mr David Munro, appeared on its behalf at first instance and here. The statement of claim [2] The statement of claim made the following allegations. The appellant had agreed with the respondent, on or about 15 February 2010, that the latter would hire the services of the appellant’s servant or agent, David Munro, as chief executive officer of a company to be incorporated. The appellant would be paid $140,000 for providing Mr Munro’s services for two years. In consideration of Mr Munro’s services, the respondent would pay the appellant $40,000 “for use of its intellectual property as specified on NTIS website ‘scope of registration’”. In accordance with that part of the agreement, $40,000 was paid. The company, DATAM, was incorporated on 17 March 2010, as envisaged by the contract, and Mr Munro worked as its consultant chief executive officer from 15 February 2010 until 11 January 2011. The respondent had repudiated the contract by dismissing Mr Munro or allowing DATAM to do so. The appellant was owed $61,561.64 for services already rendered and $78,438.36 as damages for breach of contract. The defence [3] The respondent admitted in its further amended defence that Mr Munro had worked as the chief executive officer of DATAM, but alleged that while there were discussions between a Mr Gupta and Mr Munro, those discussions contemplated the execution of formal documents. The agreement made was constituted by three written agreements (referred to as the “Formal Agreements”): a letter of intent to purchase a business made between DATAM as buyer and David Munro as seller; an agreement between DATAM and David Munro dated 15 February 2010, referred to as “the CEO agreement”; and an agreement between DATAM and the appellant made on 25 May 2010, referred to as “the services agreement”. [4] If the earlier discussions had resulted in a binding agreement, it was varied by the Formal Agreements. To the extent they were entered prior to DATAM’s registration (on 17 March 2010), they were subsequently ratified by the company’s paying the purchase -- 2 of 8 -- 3 sum of $40,000 for the business and making payments to Mr Munro under the CEO agreement. The amounts sought to be recovered in the proceedings were payable under the CEO agreement made between Mr Munro and DATAM, so that the appellant had no standing to sue and was suing the wrong defendant. The respondent’s evidence on the summary judgment application [5] The respondent brought an application for summary judgment on 9 December 2013, supported by an affidavit of Mr Murthy, a director of the respondent. That affidavit deposed to what was said to have been a conversation between Mr Munro and Mr Gupta, an officer of the respondent, who is now dead. According to Mr Murthy’s affidavit, Mr Gupta proposed that DATAM would be incorporated; that it would purchase a registered training organization from Mr Munro; that it would appoint him as chief executive officer of its financial planning business for two years; and that the consideration for the business would have two components, $40,000 for the acquisition of the business and $140,000 for Mr Munro’s remuneration as chief executive officer. [6] Mr Murthy annexed two emails from Mr Gupta to Mr Munro, dated, respectively, 15 January 2010 and 15 February 2010. The first thanks Mr Munro for their meeting and says that Mr Gupta is working on the letter of intent. The second addresses Mr Munro and Mr Neville Smith (a director of DATAM on its incorporation) and proposes an offer of payment of various amounts: $5,000 to be paid immediately, $35,000 to be paid in instalments, and monthly payments of $3,000 to Mr Munro, together with fees according to student enrolments up to an amount of $140,000. [7] Mr Murthy also annexed signed copies of the Formal Agreements. The letter of intent is expressed to be a confirmation of the parties’ intentions as to a potential transaction between DATAM as buyer and Mr Munro as seller, the terms including DATAM’s acquisition of the appellant’s business and its appointment of Mr Munro as chief executive officer of a financial planning business unit, with the consideration for the business consisting of components of $40,000 as payment for the acquisition of the business and $140,000 “for remuneration as chief executive officer”. DATAM is to pay Mr Munro a retainer fee, to end once the total payment reaches the figure of $140,000. All payments are to cease if DATAM stops operating as a business. The letter of intent is said to be binding once signed by each party. It bears what appears to be the signature of Mr Munro, above the appellant’s name, and that of Mr Smith as director of DATAM. No date is visible under the signature of Mr Smith on the copy, and the date under what appears to be Mr Munro’s signature is not legible. [8] The CEO agreement is dated 15 February 2010 and sets out the conditions of engagement of Mr Munro as chief executive officer of the financial planning business unit of DATAM. Among other things, it says that he is to be paid as per the schedule specified in the letter of intent. The CEO agreement appears to be executed by Mr Munro and by Mr Gupta on behalf of DATAM, with both signatures witnessed by Mr Smith. [9] The services agreement is made between the appellant and DATAM. By it, the appellant agrees to provide services and resources “described in the Scope of registration of NTIS website at 25/5/2010 to this agreement” to DATAM for the consideration of $40,000 previously agreed. (The evidence did not show what the services and resources described on the website were.) In the same agreement, DATAM agrees to deliver programs “through an exclusive arrangement with [the appellant]” -- 3 of 8 -- 4 and to carry out its training services in accordance with Australian Quality Training Framework standards. The document appears to be signed by Mr Munro for and on behalf of the appellant and by Mr Smith as director of DATAM. The signatures are dated 21 May 2010. [10] The respondent’s solicitor filed an affidavit to which he annexed a copy of a letter dated 5 April 2011 from the appellant to the managing director of DATAM, apparently signed by Mr Munro. It makes similar allegations to those in the statement of claim, but they are addressed to DATAM, not the respondent. It asserts an agreement for the hire of Mr Munro’s services to DATAM; an agreement that he would act as chief executive officer of DATAM; and an agreement that the appellant would be paid $40,000 for the use of intellectual property and $140,000 for the provision of Mr Munro’s services. The letter acknowledges the payment of $40,000 and demands the payment of $140,000 on the basis that $21,000 is owed pursuant to the “consultancy agreement” and $119,000 is owed as damages, because the appellant has lost the benefit of its contract. The appellant’s evidence on the summary judgment application [11] Mr Munro filed an affidavit for the purposes of the summary judgment application. He deposed that the appellant was incorporated to operate as a training organization, offering courses in financial planning. He disputed the conversation which Mr Murthy alleged had occurred between him and Mr Gupta. His account was that Mr Smith contacted him in about December 2009 about the possible sale of the appellant’s business. The proposal was discussed at a meeting of Mr Munro, Mr Smith and Mr Gupta. [12] According to Mr Munro, Mr Gupta advised him that he was a director of the respondent, which was interested in starting a training organization in Australia. They discussed the price for “them” to purchase the appellant’s business. Mr Smith suggested a sale price of $40,000, together with a contract in which Mr Munro took on the position of chief executive officer for two years at the rate of $70,000 per annum. All three men concurred that the figures were fair. [13] Mr Munro said he regarded the agreement as “substantially completed” at that meeting, although Mr Gupta said he would send a letter of intent. There was no mention that DATAM would be incorporated or involved in the transaction, or that it would employ him. It was now in liquidation and had no assets. Mr Munro agreed that he had received the emails annexed to Mr Murthy’s affidavit. He did not mention the Formal Agreements in his affidavit. The submissions on the summary judgment application [14] Counsel for the respondent on the summary judgment application referred to the three Formal Agreements, each signed by Mr Munro. In particular, Mr Munro had not disputed that he entered the CEO agreement. It was he who suffered the loss when payment was not made under that agreement, not the appellant. In the course of the application, counsel for the respondent submitted that DATAM’s bank statements showed that it had made payments to Mr Munro under the CEO agreement. He offered to take the primary judge to the relevant statements, but his Honour responded: “I’m not interested in what can be said in defence of that.” -- 4 of 8 -- 5 Subsequently, it was admitted that the submission was wrong, as was the pleading that DATAM had made payments to Mr Munro under the CEO agreement. There were payments made by DATAM to Mr Munro, but the respondent could not say that they were made under the CEO agreement. [15] Mr Munro’s position at the summary judgment application seems to have been that he, on the appellant’s behalf, had made an oral agreement with Mr Gupta acting on the respondent’s behalf, and the Formal Agreements were of no real effect. In his written submissions he said that he had signed the letter of intent as the appellant’s director. It was unconnected with the contract between the appellant and the respondent. By the time it was signed, the appellant had already provided its intellectual property to the respondent. There had been other offers in letters of intent, copies of which he annexed to his submissions. He had completed a services agreement in January 2010. There would have been no prospect that DATAM could provide the services referred to in the agreement it relied on. [16] Mr Munro acknowledged that the CEO agreement was between him and DATAM and not the appellant. He asserted, however, that it was made in the expectation that the respondent would pay all expenses. DATAM had no resources and never traded. He was never its chief executive officer because it did no business and it had no financial planning division. He had never been paid by it. In the course of Mr Munro’s oral submissions, the primary judge asked him to look at the CEO agreement which the respondent had put in evidence. Mr Munro agreed that he had signed it; he said that he had done so in the knowledge that he was contracted by the respondent to do the work. He signed because he “knew that it was a nonsensical arrangement”. He would have signed the agreement with anyone in order to perform the work. [17] Mr Munro explained the sending of the letter of demand to DATAM on the basis that his barrister had suggested it. The company was not then in liquidation. The respondent’s lawyers had done the same thing; having made a claim on DATAM which went unpaid, they had referred it to the respondent and been paid. The implication was that he was entitled to expect the same. [18] The primary judge explained that what was being put against Mr Munro was that he had sued the wrong defendant. Tellingly, he responded: “That may well be, but I have got written references to DIPL [Dhanush Infotech Pty Ltd] paying all of the expenses: my expenses, anybody else’s expenses.” He said he had wanted to put in a statutory declaration from someone who had served as an officer of both DATAM and the respondent to the effect that the latter would pay all the expenses, but he had not had time to get it signed. He went on to say that Mr Gupta and Mr Murthy and other company officers knew that payment was guaranteed by the respondent “for all the work done in respect of Dhanush Academy.” He would not have gone into an agreement without that guarantee. One could infer from that exchange that Mr Munro was content to sign agreements with DATAM so long as the respondent was meeting the costs. [19] The primary judge gave summary judgment against the appellant. His reasons, it must be said, were not extensive, but they conveyed what was behind his decision: -- 5 of 8 -- 6 “It seems to me that sympathetic as one might be to Mr [Munro] and the view that he’s formed about the way he was treated by those natural persons who represented a constellation of companies, the proceedings today appear to me to be proceedings in which the plaintiff has, by reference to the documents which are common ground, indicate that the wrong defendant has been brought to court in respect of these proceedings. In that regard, I propose to make an order that bring [sic] these proceedings to an end. Some [summary] judgment will be given for the defendant.” The submissions on appeal [20] The appeal ground contained in the appellant’s notice of appeal was as follows: “Judge Griffin has erred in his decision to grant the application for “summary judgment” as, DSN Murthy, in his sworn affidavit, has falsely defined “a signed service agreement” when, in fact, it is an “outsource agreement” and Mr Kidston relentlessly pursued an extremely unsound argument based on this false definition and has seriously misled Judge Griffin into believing an “Outsource Agreement” was a service contract when it clearly is not. This outsource agreement has no consequence what so ever to the application “wrong plaintiff, wrong defendant”. [21] Mr Munro took a different tack on appeal from that taken below. He asserted that all three copies of the Formal Agreements which the respondent had relied on in the summary judgement application, were “obviously false”. Asked why he had not deposed to that effect before the primary judge, he said that he was not able to say whether they were genuine or not because he knew nothing of them. It was not up to him to say that the documents were false; he was not the one had supplied them to the court. On the other hand, he acknowledged that he had expressly agreed that he had signed the CEO agreement; he said he had “no trouble with that document.” [22] Mr Munro said that the services agreement, which was the subject of his ground of appeal, was a copy of one of his documents. To establish that, he sought to put before the court an agreement between the appellant and another company not concerned in the proceedings, which was in similar terms to the services agreement. (As with other documents Mr Munro wanted to rely on, it was treated as the subject of an application for leave to adduce evidence.) Mr Munro pointed out that the services agreement which the respondent had tendered provided for DATAM to provide training services; he asserted that it could not do that, because it was not a registered training organization. [23] Mr Munro maintained that he had signed a services agreement, which was not the one before the court, which did not contain the provision for the appellant to provide services and resources “described in the scope of registration on NTIS website” for the consideration of $40,000. Although the statement of claim pleaded that the sum of $40,000 had been paid in accordance with an agreement struck in February 2010 for the use of the appellant’s intellectual property “as specified on NTIS website ‘scope of registration’”, the $40,000 had in fact been paid for material which the respondent had received in January 2010, before the agreement was signed. [24] Mr Munro had issued a subpoena for the respondent to produce the original letter of intent. He had had the opportunity to inspect the document produced in compliance -- 6 of 8 -- 7 with the subpoena, but maintained that it was not an original document. Although the document produced (dated 15 April 2010) purported to be signed by Mr Smith, it was not Mr Smith’s signature. He, however, had found a letter of intent on his computer, which he sought to put before the court. It was signed by him, but he did not think it had ever been signed by anyone on behalf of the respondent. It is dated 24 February 2010, and it refers to a “potential transaction” between the appellant as buyer and Mr Munro as seller, which once DATAM was operating would automatically be presumed to be with that company. [25] Mr Munro made some submissions about the fact that he had not been paid for any work as a chief executive officer and the respondent’s (subsequently corrected) statement to the contrary at first instance. He sought to tender some items of correspondence which conceded the failure to pay salary and acknowledged DATAM’s lack of funds. Rather unhelpfully for his argument, they referred to payment (or the lack of it) by DATAM. In any event, the primary judge expressed himself uninterested in whether payments under the CEO agreement could be demonstrated; and, plainly enough, the issue was not whether those payments were made but who was liable to pay them. Conclusions [26] Mr Munro’s (and consequently the appellant’s) primary difficulty is that, whatever one makes of the Formal Agreements, he cannot point to any evidence of an agreement with the respondent. His only sworn evidence consisted of the affidavit put before the primary judge. In it, he did not in fact depose to any agreement; what he said was that there was a discussion of “them” buying the business and whether a suggested price and rate of payment was fair. Although Mr Munro deposed in that affidavit that as far as he was concerned, “the deal was substantially completed”, he identified no statement by either of the other men present which would amount to an agreement, let alone the specification of parties to it. Indeed, he acknowledged that Mr Gupta indicated that he would send a letter of intent. Even on Mr Munro’s submissions, he plainly considered that negotiations were not at an end with that conversation: he executed a letter of intent and, on his account, a version of a services agreement. [27] It should be said, too, that Mr Munro has not given any convincing explanation for why at first instance he took no issue with the genuineness of the three Formal Agreements. His submissions and affidavit and the appellant’s pleadings have at various points, been at odds. In his affidavit, he said that there was no mention that DATAM would be incorporated or involved in the transaction, and there was nothing said to the effect that it was proposed he be employed by DATAM. In his submissions, he said that Mr Gupta had mentioned DATAM as an Indian entity but did not mention its incorporation in Australia, and there was no suggestion of his being chief executive officer of the company when the agreement was made. The appellant’s statement of claim, in contrast, pleaded an agreement that he would be employed as the chief executive officer of a company subsequently incorporated as DATAM and alleged that he had worked in that capacity for 11 months. [28] The services agreement, which Mr Munro in this court denied signing, was consistent in its terms with the pleading in the statement of claim as to the agreement to pay $40,000. The letter of intent which Mr Munro sought to adduce, signed only by himself, was also consistent with that relied on by the respondent. The only difference was that Mr Munro’s version, which bore the date 2 March 2010, -- 7 of 8 -- 8 contained in its introduction the stipulation that the “potential transaction” would be with the respondent as buyer until DATAM began operating, at which point it was automatically presumed to be with it. The version relied on by the respondent bore a date after the incorporation of DATAM and was, not surprisingly, expressed to be made with that company. [29] The further evidence which Mr Munro sought leave to adduce, if anything, tended to support the view that he and the appellant contracted with DATAM; it certainly did not advance matters for the appellant. I would refuse leave to adduce it. [30] Mr Munro may well believe, as he deposed in his affidavit for the purposes of the summary judgment hearing, that he had on behalf of the appellant made an agreement with the respondent, but there is a complete absence of any evidence on which a court could objectively conclude that such an agreement existed. The Formal Agreements indicate that any contract was with DATAM, not the respondent. In those circumstances, the appellant had no prospect of succeeding in the action it had brought against the respondent, and a trial would have been fruitless. The primary judge made no error in giving summary judgment for the respondent under rule 293(2) of the Uniform Civil Procedure Rules 1999. [31] I would dismiss the appeal with costs. [32] FRASER JA: I agree with the reasons for judgment of Holmes JA and the order proposed by her Honour. [33] MORRISON JA: I have read the reasons of Holmes JA and agree with those reasons and the order her Honour proposes. -- 8 of 8 --