Adelaide Nut Distributors Pty Ltd v Plus Sales Pty Ltd [2012] QCATA 4

CITATION: Adelaide Nut Distributors Pty Ltd v Plus Sales Pty Ltd [2012] QCATA 4 PARTIES: Adelaide Nut Distributors Pty Ltd t/as Yummy Snack Foods (Applicant/Appellant) v Plus Sales Pty Ltd (Respondent) APPLICATION NUMBER: APL336-11 MATTER TYPE: Appeals HEARING DATE: On the papers HEARD AT: Brisbane DECISION OF: Richard Oliver, Senior Member DELIVERED ON: 13 January 2012 DELIVERED AT: Brisbane ORDERS MADE: 1. Leave to appeal granted. 2. The decision of the Tribunal made on the 8 August 2011 is set aside and instead the applicant must pay the respondent the sum of $6,050.00 by 28 February 2012. 3. The application is remitted to the minor civil disputes jurisdiction for damages for failing to give three months notice to terminate the contract to be assessed. CATCHWORDS: Minor Civil Dispute – where failure to give three months notice to terminate the contract in accordance with its terms – where term of the contract open ended – whether the notice provision is enforceable – where damages for failing to give required notice unliquidated – where damages need to be assessed Queensland Civil and Administrative Tribunal Act 2009, s 142(3) QUYD Pty Ltd v Marvass Pty Ltd [2009] -- 1 of 7 -- 2 1 Qd R 41 Cachia v Grech [2009] NSWCA 232 Glenwood Properties Pty Ltd v Delmoss Pty Ltd [1986] 2 Qd R 388 McIver Bulk Liquid Haulage Pty Ltd v Fruehauf Australia Pty Ltd [1989] 2 Qd R 577 R v Clarke (1927) 40 CLR 227 Amos v Citibank Ltd BC9601842 Regent v Millett (1976) 133 CLR 679 Masters v Cameron (1954) 91 CLR 353 Hadley v Baxendale (1854) 2 CLR 517 PMB Australia Ltd v MMI General Insurance Ltd (No 2) [2001] QSC 339 Silver Fox Company Pty Ltd (as trustee for The Baker Family Trust) v Lenard’s Pty Ltd (No 4) BC200408719 APPEARANCES and REPRESENTATION (if any): This matter was heard and determined on the papers pursuant to s 32 of Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act). REASONS FOR DECISION [1] Adelaide Nut Distribution and Plus Sales entered into a written account management agreement, at the latest, on 5 October 2009. The document sets out each party’s responsibilities and obligations under the account management agreement. The agreement identifies the accounts that will be managed by Plus Sales, and sets out its responsibility in trade negotiations, promotional submissions, business reviews etc. [2] The agreement provides that upon Plus Sales performing its obligations under the agreement Adelaide Nut Distribution will pay it $5,500 per month plus GST. Payment is to be made on the 7th day after the close of the month when Adelaide Nut Distribution provides sales value data for each payment. [3] The agreement does not have any end date but can be terminated on certain conditions by either party. If it is to be terminated by Adelaide Nut Distribution, it must provide information to Plus Sales which includes the sales performance and/or lack of integrity or misconduct by Plus Sales, if that is relied upon. There is an obligation on Adelaide Nut Distribution to provide clear written evidence of any complaint and to give Plus Sales a reasonable opportunity to respond to those complaints. If negotiations fail then “each party must give three months notification of their intent to terminate this agreement”. [4] The agreement includes some mechanism for review after a three month period with the intention that a revised agreement will be prepared -- 2 of 7 -- 3 depending upon performance. This is set out under the heading “Payment Structure”. [5] The commencement date is somewhat uncertain. It is dated 30 September 2009 and signed by Mr Rogerson on behalf of Adelaide Nut Distribution and was signed by Brad Maltby, on behalf of Plus Sale, on 5 October 2009. It seems1 there was delay in the start date of the agreement from 1 November 2009 to January 2010 by mutual agreement. Mr Maltby, who gave evidence at the hearing, conceded that the account management did not commence until January 2011 and continued through to the end of March. Plus Sales was paid for the work undertaken in January and in February but not March. [6] On 26 March 2010 Mr Rogerson, who was the then Chief Executive Officer of Adelaide Nut Distribution wrote to Mr Maltby, by email, and said:- “As discussed with you today I am terminating our agreement effective immediately on the following basis.” [7] The email then sets out six points upon which, it is contended, the immediate termination was justified. [8] Adelaide Nut Distribution did not pay the monthly fee for March 2010. Mr Maltby made a claim for March as well as for a further three months because Adelaide Nut Distribution did not give three months notice of terminating the agreement as was required under the agreement. [9] Adelaide Nut Distribution did not pay and therefore, Plus Sales commenced a proceeding in the minor civil disputes jurisdiction of the Tribunal claiming $24,200 ($6,050 + GST by 4 months). Plus Sales relied on the agreement to claim the amount payable for March on the basis that this sum is payable for the work done by it in March. The balance of the claim is, as I have said, for the failure to give the three months notice. [10] Adelaide Nut Distribution made a number of complaints in their response to the application which included the fact that Mr Rocco Agostino, the Managing Director, was not aware of the agreement and that Mr Rogerson did not have authority to bind the company and Plus Sales did not commence the account management services under the contract contrary to the provisions that it was supposed to commence on 1 November 2009. The provision concerning “review of the agreement” after three months meant that the termination provisions were not applicable. Finally, it alleged that Plus Sales was deceptive because they did not give Adelaide Nut Distribution a full copy of the agreement. [11] The matter came on for hearing before a Tribunal Adjudicator on 8 August 2011 and after hearing evidence from both parties he ordered that Adelaide Nut Distribution pay to Plus Sales $24,200 plus filing fees and search fees. The total judgement amount was $24,500.65. 1 Affidavit of David Rogerson sworn 8 April 2011. -- 3 of 7 -- 4 [12] From that decision, Adelaide Nut Distribution has filed an application for leave to appeal or appeal. Leave is necessary as this is an appeal from a minor civil dispute matter.2 [13] The question whether or not leave to appeal should be granted is usually addressed according to established principles: Is there a reasonably arguable case of error in the primary decision?3 Is there a reasonable prospect that the applicant will obtain substantive relief?4 Is leave necessary to correct a substantial injustice to the applicant caused by some error?5 Is there a question of general importance upon which further argument, and a decision of the appellate court or tribunal, would be to the public advantage?6 Debt or liquidated demand [14] Although the total amount claimed is $24,200, this was made up of $6,050 being a debt or liquidated demand for the March payment and $18,150 being damages for breach of contract. Quantification of the latter damages by Sales Plus is, as I have said, the loss of three monthly payments. [15] The contention by Adelaide Nut Distribution that this Tribunal does not have jurisdiction to make that award of damages for breach of contract is misguided. The Tribunal, under the definition of minor civil dispute, has jurisdiction to hear and decide a minor civil dispute7 that not only includes a claim to recover a debt or liquidated demand, here, $6,050 but also a claim for damages arising out of a contract between two or more traders.8 The definition draws no distinction between a debt or liquidated demand or unliquidated damages. [16] There can be no doubt that the Tribunal has jurisdiction to determine this dispute which includes awarding damages for breach of contract.9 [17] I agree with the submissions of Sales Plus that this ground of appeal has no merit. Natural justice and procedural fairness [18] It is troubling that Sales Plus did not give a copy of Mr Rogerson’s affidavit to Adelaide Nut Distribution prior to the hearing. The evidence of Mr Rogerson was critical to not only establishing that there was an agreement 2 QCAT Act, s 142(3). 3 QUYD Pty Ltd v Marvass Pty Ltd [2009] 1 Qd R 41. 4 Cachia v Grech [2009] NSWCA 232 at 2. 5 QUYD Pty Ltd v Marvass Pty Ltd [2009] 1 Qd R 41. 6 Glenwood Properties Pty Ltd v Delmoss Pty Ltd [1986] 2 Qd R 388 at 389; McIver Bulk Liquid Haulage Pty Ltd v Fruehauf Australia Pty Ltd [1989] 2 Qd R 577 at 578, 580. 7 QCAT Act, s 11. 8 QCAT Act, s 12(4)(c): see also definition of minor civil dispute. 9 Price v Schofield [2010] QCATA 40; Investing in Property Pty Ltd v Reality Software Pty Ltd [2010] QCAT 456. -- 4 of 7 -- 5 between the parties, but also establishing that commencement of the agreement had been delayed by mutual agreement until January 2010. It was also relevant to establishing he had authority to enter into the agreement on behalf of Adelaide Nut Distribution. [19] The justification for this conduct is also of concern because Mr Maltby was worried that the evidence might be “turned around to me as well in some form or another, because I don’t want to send it through in good faith.”10 Had the affidavit been handed over prior to the hearing it may well have saved time and assisted Adelaide Nut Distribution in realizing that it was on tenuous ground in some of the points it raised in the hearing. [20] Ms Carbone, who represented Adelaide Nut Distribution, was certainly taken by surprise and although I find this did deny Adelaide Nut Distribution some procedural fairness, in the end it was not sufficient to warrant granting leave to appeal for the following reasons. Firstly, I am satisfied that the agreement is sufficiently certain for it to stand alone. It has the necessary ingredients for a contract which fairly describes the obligations of either party, and the consideration to be paid for the performance of those obligations. The written contract is signed by both parties.11 Mr Rogerson's evidence that he had authority to enter into the agreement and he extended the commencement date is consistent with the evidence in the possession of Adelaide Nut Distribution. That evidence includes the email terminating the agreement from Mr Rogerson who described him as Chief Executive Officer. The fact that this is confirmed in his affidavit and that he says he had authority does not add very much to the case. Mr Maltby dealt with him as the Chief Executive Officer and clearly, and I agree with the learned Adjudicator on this point, the position itself clothed him with sufficient ostensible authority to enter the agreement and bind the company. If that is in fact not the case then, inter se, Adelaide Nut Distribution have rights against him. [21] Secondly, I also agree with the learned Adjudicator’s conclusion that the agreement, in its terms, had been performed by both the parties.12 Both in January and February 2011 invoices were rendered and payment was made by Adelaide Nut Distribution. This not only gives certainty to the fact of the agreement having been made, it also leads to the conclusion, as found by the learned Adjudicator, that the performance of the agreement did not start until January. [22] Once again, I agree that the learned Tribunal Adjudicator did not fall into error in concluding that there was an agreement between the parties although I am of the opinion the terms and conditions of the agreement were wholly within the written agreement which properly reflected the oral agreement made between Mr Rogerson and Mr Maltby.13 10 Transcript page 9 line 40. 11 Cheshire and Fifoot’s Law of Contract 9th ed. Paragraph 1.16. 12 Regent v Millett (1976) 133 CLR 679. 13 Masters v Cameron (1954) 91 CLR 353. -- 5 of 7 -- 6 The termination clause [23] The learned Adjudicator found that there was an express term requiring three months notice which had been agreed to by the parties. This is clear on the face of the document. It is unambiguous and there is no reason to go behind the agreement of the parties. The learned Adjudicator was correct in coming to this view. This is supported by the absence of a conclusion date for the contract. It is an ongoing agreement and in fairness to both parties, reasonable notice of an intention to terminate is unremarkable. This gives the parties sufficient time to put their affairs in order and in particular, Adelaide Nut Distribution to make arrangements for another account manager to take over from Plus Sales if necessary. By unilaterally terminating the contract on 26 March 2010 without observing the termination provisions, Adelaide Nut Distribution breached the contract. Is the contract invalid? [24] For the reasons stated above, I have come to the conclusion that the contract is valid and although the learned Adjudicator made references to an oral agreement with the written document reflecting the terms of that oral agreement, this does not result in error. Further, in so far as he concluded that there might be some invalidity to the open nature of the contract, that is it doesn’t have a concluding date, that was dealt with on the basis that appropriate notice need be given for either party to terminate at any time into the future. This observation does not impugn his decision. Damages [25] Although the contract makes provision for notice of intention to terminate it does not make any provision for liquidated damages for failing to give the appropriate notice. The damages for failing to give notice is unliquidated and therefore the damages must be assessed. The damages should be assessed on the basis of what might be considered as fairly and reasonably arising from the breach.14 [26] To simply award three months at the monthly rate does not take into account any cost savings that might be incurred by Sales Plus in not having to perform the terms of the contract. [27] What Plus Sales is entitled to is any damages for loss of profit for that three month period. It may well be that the loss of profit is the same as the monthly invoice cost but this would be unlikely. One could reasonably expect that Plus Sales, a company, would incur costs in running its business and those costs need to be offset against the income to be received from Adelaide Nut Distribution in order to determine net profitability.15 14 Hadley v Baxendale (1854) 2 CLR 517; PMB Australia Ltd v MMI General Insurance Ltd (No 2) [2001] QSC 339. 15 Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 80. -- 6 of 7 -- 7 [28] In this respect, I am of the opinion that the learned Adjudicator did fall into error. One can appreciate that in the time constraints imposed on the learned Adjudicator in hearing this matter with its inherent complexities in a busy minor civil dispute list the subtlety of properly assessing damages may have been overlooked by reason of the urging of the parties. This is particularly so where parties are self represented. At face value, the simplistic approach is three months loss of income for failing to give the appropriate notice but this simplistic approach is not consistent with principle. [29] It was necessary for Plus Sales to put some evidence before the learned Adjudicator so he could properly assess the true loss as a result of the breach of contract. This was not done. [30] As this is an error of law, leave to appeal must be granted and the appeal allowed. The matter is referred back to the minor civil dispute jurisdiction for an assessment of damages arising from Adelaide Nut Distribution’s failing to give the notice pursuant to the agreement. -- 7 of 7 --