Doval Constructions QLD Pty Ltd v Digital Genius Pty Ltd [2013] QCAT 145

CITATION: Doval Constructions QLD Pty Ltd v Digital Genius Pty Ltd [2013] QCAT 145 PARTIES: Doval Constructions QLD Pty Ltd (Applicant) v Digital Genius Pty Ltd (Respondent) APPLICATION NUMBER: MCDO3109-12 MATTER TYPE: Other minor civil dispute matters HEARING DATE: 11 March 2013 HEARD AT: Brisbane DECISION OF: K Buxton, Adjudicator DELIVERED ON: 8 April 2013 DELIVERED AT: Brisbane ORDERS MADE: 1. Application dismissed. CATCHWORDS: Trader claim; contract for the supply and maintenance of a photocopier; variation of terms, whether contract validly terminated by applicant; whether respondent misrepresented terms and financial obligations APPEARANCES and REPRESENTATION (if any): APPLICANT: represented by Mr Giraud & Mr Witte RESPONDENT: represented by Mr Manton REASONS FOR DECISION [1] This application was commenced by Doval Constructions (Qld) Pty Ltd as a consumer dispute in QCAT’s minor civil dispute jurisdiction. The relief claimed by Doval is a release from contractual obligations which were entered into with the respondent, Digital Genius Pty Ltd, for the supply and maintenance of a photocopier and related services. -- 1 of 5 -- 2 Nature of the arrangements between the parties [2] Digital Genius is in the business of supplying photocopiers and offering contractual arrangements with businesses whereby those photocopiers will be maintained and serviced. Digital Genius earns revenue from these contracts by charging a price per photocopy, ordinarily calculated on a periodic basis (in this instance monthly) with that price per copy taking into account the costs involved in supplying the photocopier and toner and providing other relevant services. [3] The first of such contracts entered into between the parties is dated 22 September 2006. The essential terms of the contract were as follows:  maximum term: 60 months  total black and white volume: 180,000 prints  agreed black and white volume per month 3,000 prints  cost per black and white copy 5.74 cents  cost per colour copy 13 cents (with no agreed colour volume per billing period.)1 [4] A second contract was entered into between the parties in August 2009 with, it was agreed between the parties, effect from September 2009. The essential terms of that contract were:  maximum term: 60 months from that month’s billing cycle.  total black and white volume 270,000 copies agreed black and white volume per monthly: 4,500 prints  cost per black and white print: 6.5 cents plus GST  agreed colour volume: 18,000 prints (with volume per month at 300 prints, agreed cost per colour print 17 cents plus GST.)2 [5] In April 2010 Digital Genius through its account manager, Ben Richardson, contacted Doval and recommended to Doval that their contractual terms be adjusted. By increasing the agreed number of monthly photocopies which would be billed to Doval, Digital Genius was proposing to decrease the price per copy. At that time, and pursuant to the second agreement, the agreed volume per billing period was 4,500 copies. However, Doval’s usage had been, on average for February, March and April 2010, over 8,000 prints, it was therefore recommended by Digital Genius through Mr Richardson that if they increased their monthly commitment of photocopies the rate per copy could decrease resulting in an immediate saving. Exhibits 3 and 4 evidence the email exchange between the parties which lead to an eventual change to the contractual arrangements. A third contract (headed facilities management 1 This contract was marked exhibit 1. 2 This contract was marked exhibit 2. -- 2 of 5 -- 3 variation tax invoice) was entered into in September 2010. The essential terms of this contract were:  maximum term 49 months from the date of the agreement  total black and white copies 441,00  agreed volume per month 9,000  cost per black and white copy 5.11 cents plus GST  agreed colour volume 98,000  agreed colour volume per month 2,000  cost per colour copy 14.2 cents plus GST3 [6] In addition to the preparation of the variation tax invoice Digital Genius also prepared a document for the attention of Mr Witte of Doval setting out the essential terms of the contract at the bottom of that document.4 [7] Digital Genius had printed the words “I also confirm that no representations had been made to me which are not shown in the agreement.” It invited Mr Witte to sign this document. He did so, but with the endorsement “other than that the agreed volumes may be decreased as and when required with immediate effect.” This document was signed following a further email exchange in August 20105 between Mr Witte and Mr Richardson. Mr Richardson asserted that a lower print volume per month may be agreed to without any impact on the current equipment under the agreement. Mr Witte responded “and presumably also with no impact on copy rates?” to which Mr Richardson replied, “no problem your costs will not be prejudiced.” [8] In summary then, the contractual arrangements between the parties to this point are evidenced by the agreement entered into in September 2010 with terms inserted into that agreement by Doval that:  the agreed volumes may be decreased as and when required with immediate affect.  Lower agreed print volumes may be agreed without impacting on the current equipment.  Lower agreed print volumes could be agreed without any impact on copy rates.  Doval’s “costs” would not be prejudiced (in response to the query as to whether copy rates would be impacted). [9] Later in 2010 Doval were desirous of reducing their monthly commitment for black and white prints from 9,000 per month to 7,000 per month 3 Exhibit 5. 4 Exhibit 6. 5 Exhibit 7. -- 3 of 5 -- 4 following various negotiations which took until 15 November 2010 the lowest adjustment to the rates which was offered was either 5.97 cents per page at 7,500 per month6 or 7,000 black and white prints per month at 5.8 cents per black and white print (maximum term 60 months). These two offers, which were put by Digital Genius to Doval in emails from Mr Richardson to Mr Witte and his colleague, Colleen, were never accepted. It seems then that no step was taken by either party with respect to the variation of the contractual terms until a letter dated 7 November 2012 was sent by Doval to Digital Genius.7 That letter sets out Doval’s interpretation of the contractual arrangements and the ways in which they had changed over time and ends with the following statements: in view of the fact that Doval Constructions was financially prejudiced as a result of the misrepresentations made by Ben Richardson, which lead to the variation and that Digital Genius has earned well in excess of its original expectations, we would urge you to agree to terminate the agreement as at the end of November 2012. In terms of clause 17 of agreement number SG3688, the agreement would have expired in April 2012 and would have been held over. [10] At no point in this letter does Doval identify the conduct by Digital Genius as repudiatory or, expressly, as entitling Doval to terminate the contract. Further, the letter does not purport to terminate the contract at all. It invited Digital Genius to agree to terminate. By way of reply, on 30 November 2012, Digital Genius refuted any suggestion that the contract is at an end. Contractual arrangements have remained in place and Digital Genius has continued to bill Doval Constructions since then. On 3 December 2012 Doval Constructions filed this application in QCAT. Conclusions with respect to the parties positions under the contracts [11] Doval submits that either the benefit of the contract which Digital Genius was entitled to is at an end because their earlier volume of photocopying of 270,000 copies as agreed in the second contract has now expired or, alternatively, that Digital Genius is not entitled to rely on any further contractual obligation because they misrepresented the future contractual obligations when Mr Richardson indicated to them that the costs would not be “prejudiced.” [12] It is important to analyse at this point exactly what Mr Richardson did and did not represent. He indicated (in exhibit 7) that a lower agreed print volume per month could be agreed to without any impact on the current equipment. That is the case, and Digital Genius have never refuted that a lower agreed print volume could be achieved. In response to the question “presumably also with no impact on copy rates?” Mr Richardson replied, “no problem. Your costs will not be prejudiced.” This is a representation of no more than that copy rates would not increase. That representation 6 Exhibit 9, 20 October 2010. 7 Exhibit 10. -- 4 of 5 -- 5 must be taken in its context and it was in response to a question from Mr Witte about whether copy rates would be impacted that Mr Richardson responded that they would not. When Doval sought to reduce its monthly copies from 9,000 to 7,000 they were offered a reduction in copy rate. Mr Richardson represented that costs would increase. Doval had an opportunity to negotiate with Digital Genius in 2010 for an acceptable reduced price and, not taking advantage of that opportunity and not taking any further steps, they continued during that entire period to remain bound by those pre existing and ongoing contractual obligations. Those obligations are for volumes of copying which have not yet been exhausted. Orders [13] The only application before me is for relief from the obligations under the contract entered into between the parties in September 2010. For the reasons I have given, I refuse to grant that relief and dismiss the application. -- 5 of 5 --