Airport City Hotels Services Pty Ltd v Grand National Concierge Pty Ltd (No 2)

Case •

[2014] NSWDC 290

•

10 October 2014

No judgment structure available for this case.

District Court


New South Wales

Medium Neutral Citation: Airport City Hotels Services Pty Ltd v Grand National Concierge Pty Ltd (No 2) [2014] NSWDC 290
Hearing dates:23, 24, 25 September; 1, 2 October 2014
Decision date: 10 October 2014
Jurisdiction:Civil
Before: P Taylor SC DCJ
Decision:

(1) Judgment for the plaintiff against the defendant in the sum of $280,985.79 inclusive of interest.
(2) Dismiss the cross-claim.
(3) The defendant pay the plaintiff's costs of the statement of claim.
(4) The cross-claimant to pay the costs of the cross-defendants.

Catchwords: CONTRACT – airport transfers – level of sales commission – oral conversations – variation of contract – construction of terms – guarantee of ticket sales
Legislation Cited: Civil Procedure Act 2005, s 100
Evidence Act 1995, s 43
Cases Cited: Aberford Holdings Pty Ltd trading as Carpet Cleaners Warehouse v Awad [2013] NSWDC 303
Agricultural & Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570
Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603
Masters v Cameron (1954) 91 CLR 353
Painaway Australia Pty Ltd v JAKL Group Pty Ltd [2011] NSWSC 205
RT & YE Falls Investments Pty Ltd v State of New South Wales [2001] NSWSC 1027
Watson v Foxman (1995) 49 NSWLR 315
Category:Principal judgment
Parties: Airport City Hotels Services Pty Ltd (plaintiff/second cross-defendant)
Grand National Concierge Pty Ltd (defendant/cross-claimant)
Raquel Barkho (first cross-defendant)
Representation:

Counsel:
Mr P Finch (plaintiff/second cross-defendant)
Mr A Radojev (defendant/cross-claimant)
(first cross-defendant)

Solicitors:
Bryan Killalea (defendant/cross-claimant)
File Number(s):2012/208845

Judgment

1. INTRODUCTION

  1. Grand National Concierge Pty Limited ("National Concierge") arranges accommodation and transport for travellers at Sydney Airport. Airport City Hotels Services Pty Limited ("Sydney Shuttle") transports passengers between city hotels and the airport. In December 2011 National Concierge and Sydney Shuttle entered into an agreement whereby National Concierge sold tickets to customers entitling them to ride on the shuttle buses of Sydney Shuttle. Sydney Shuttle in these proceedings sues for what it says is the appropriate share of the ticket moneys.

2. BACKGROUND

  1. Since prior to 2006 Sydney Shuttle has operated a fleet of small buses that shuttled passengers from Sydney Airport to hotels and other locations in the city and from hotels and other locations in the city to Sydney Airport. Some hotels sold tickets to customers to enable them to utilise Sydney Shuttle's buses.

  2. From about mid-2010 the defendant, National Concierge, operated a concierge desk within the Sydney International Airport terminal building, where it arranged accommodation for travellers and transport between the airport and hotels.

  3. On 30 December 2010 Sydney Shuttle and National Concierge entered into two agreements. The first of the agreements was pursuant to a document called a Supplier Contract. It named the supplier as Raquel Barkho, although it listed the Australian Business Number ("ABN") of Sydney Shuttle, and also included Sydney Shuttle's email.

  4. The document was signed by Raquel Barkho and Anthony Binns ("Tony Binns"), the Manager of Operations of National Concierge, and was dated by both of them with the date "30/12/2010". Oddly, Ms Barkho signed in the place for National Concierge; Mr Binns signed in the place for the printed name of the supplier and printed his name in the place where the supplier was to sign. Plainly enough, those particular aspects of the contract were not given a great deal of attention at the time of signing.

  5. The filed defence indicated an issue in respect of whether Sydney Shuttle was a party to that contract. That issue was not pressed during the proceedings, seemingly, at least in part, because the uncertainty about the identity of the relevant party evaporated once Sydney Shuttle and National Concierge agreed to an extension of the agreement.

  6. The Supplier Contract was on the letterhead of National Concierge and was evidently drafted by it. It also stated, "Effective Date of contract: 30/12/2010" and "Duration of contract: 3 months to 30/3/2011". It categorised the goods to be supplied by the supplier for National Concierge as "Transport". Importantly, it stated "Commission/price payable to GNC: 25% of Supplier's Charges...(the 'Price'…)". It also contained provision for "Terms of payment" and contained a tick against Option A that read, "GNC takes all Revenue, keeps Price and remits balance to Supplier each...fortnight".

  7. The Supplier Contract also contained a second page signed by both Mr Binns and Alex Barkho, the manager of Sydney Shuttle and father of Raquel Barkho. Those terms, insofar as they are relevant to the matter in dispute, read as follows:

"The Contract

1. These terms and conditions and the material, information and further terms and conditions contained or referred to on the other side of this page constitute a contract between GNC and the Supplier for the supply by the supplier to GNC of the services mentioned overleaf. [I note that there are no other terms overleaf although it appears that this "other side of this page" is a reference to the first page to which I have earlier made reference].

2. Should there be any inconsistency between these terms and conditions and the information, terms and conditions overleaf, those overleaf shall prevail.

3. These terms and conditions and the information, terms and conditions overleaf comprise the whole of the contract between GNC and the Supplier, and GNC and the Supplier acknowledge that no other conditions, warranties or representations apply to the contract.

4. This contract shall prevail over any inconsistent terms and conditions contained or referred to in the Supplier's quotation, proposal, confirmation of order, acknowledgement, specification, delivery note and/or any other documentation given by the Supplier.

5. This contract may be varied only by written instrument signed by an authorised officer of GNC and of the Supplier

Orders & suppliers

6. From the Effective Date of this contract GNC may give orders or introductions to the Supplier to provide services to GNC Customers, and the Supplier will supply the services and ancillary goods to the GNC Customers in accordance with this contract.

7. The Supplier will accept GNC's orders or introductions unless the Supplier has no capacity to allow it to provide the services, in which case it will arrange promptly for the services to be provided by a competitor of the Supplier.

8. GNC may give orders or introductions to competitors of the Supplier.

9. GNC does not undertake to give any minimum orders or introductions to the Supplier

...

15. The Supplier will allocate sufficient personnel and other resources to ensure that it is able to comply with its obligations under this contract.

...

19. As consideration of GNC's introduction to the Supplier of GNC customers, GNC is entitled to receive from the Supplier the commission/price stated overleaf plus GST [the 'Price']. The price will not change without the prior written agreement of the parties. The Supplier authorises GNC to collect from each of the GNC customers, in advance, either (i) all of the revenue as defined below [in which case GNC will keep the Price and remit the balance of the Revenue to the Supplier as per Option A overleaf]; or…

Termination

22. A party may terminate this contract immediately by giving written notice to the other party at any time after the happening of any of these events: (i) the other party commits a material breach of any term of this contract, and where the breach is capable of remedy the other party has been notified in writing of the breach and has not rectified it within 30 days of receipt of such notice; or…

24. Termination of this contract will have the effect of terminating any advertising or similar agreement between GNC and the Supplier, at which time all moneys owing by the Supplier to GNC under such agreement will be due and payable immediately.

Miscellaneous

25. Any notice or other communication under this contract required to be in writing may be served on a party personally or by mailing or emailing it or having it delivered to the party's address as stated overleaf…"

  1. Some of the witnesses in the proceedings swore affidavits that the contract contained a third page, a document created by Sydney Shuttle giving information about when its services ran, their frequency, ticket prices, contact numbers and the like. It was not a signed document, and in the course of the proceedings, National Concierge accepted that it was not part of the signed Supplier Contract.

  2. Thereafter, until March 2011, apparently National Concierge sold tickets and Sydney Shuttle provided rides in accordance with the Supplier Contract.

  3. The second agreement entered on 30 December 2010 was an advertising order. It also was on National Concierge letterhead, and it read as follows:

"12 Month Advertising Order

Acknowledgement

Grand National Concierge Pty Ltd ('GNC') will provide Advertiser with advertising services within its retail travel centre at Sydney International Airport, Terminal 1 - Arrivals Hall. Advertiser will provide the agreed advertising material before the relevant deadlines. This or any Advertising Order agreed between Grand National Concierge Pty Ltd (GNC) and Advertiser is subject to and incorporates the GNC Advertising Terms and Conditions, which are subject to change without notice from time to time."

  1. The document was signed on behalf of "Advertiser" by Raquel Barkho and dated 15 December 2010, and signed on behalf of National Concierge by Roger Pockley and dated 27 October 2010. The evidence, not disputed, was that Alex Barkho, acting on behalf of Sydney Shuttle, provided the signed document with the signed Supplier Contract to National Concierge on 30 December 2010. Thus, the advertising order contract occurred on 30 December 2010, a date after the Material Deadline Date in the advertising order.

  2. The " GNC Advertising Terms and Conditions" were not annexed to the advertising order, nor were they otherwise in evidence. Some 13 months later another advertising related document came into existence that did have "Grand National Concierge Pty Ltd ('GNC') Advertising Terms and Conditions", but it remained uncertain whether those terms were the applicable terms and conditions in December 2010. No submission was made to the effect that they were.

  3. On 17 March 2011, Sydney Shuttle provided National Concierge with a cheque for $2,750 in respect of advertising. This is an amount equal to the payment of two months of the monthly rate recorded in the 12-month advertising order.

  4. On 30 March 2011, a conversation occurred between Tony Binns, Carmelo Mark Musumeci ("Mark Musumeci") and Alex Barkho about the Supplier Contract, to the following effect:

"Musumeci

'Alex, the contract is due to expire and we wanted to know whether you are happy to continue providing the service you have been providing for the past three months?'

Barkho

'Yes, I am happy to continue on the terms that we have agreed previously.'"

  1. Thus, the parties' arrangement was extended on the same terms. The sale of tickets by National Concierge and the provision of rides on shuttle buses by Sydney Shuttle continued as previously.

  2. During the latter part of 2011 there were further oral discussions between the parties. The content of these discussions and whether they operated to materially alter the agreement were matters in dispute. What did change was that on about 19 December 2011 National Concierge commenced to operate a further concierge desk at the Domestic T2 Terminal of Sydney Airport, and Sydney Shuttle provided rides between the city and the airport to customers to whom National Concierge had sold tickets from that Domestic Terminal concierge desk.

  3. In early January 2012, the month after the 12-month period covered by the advertising order referred to previously, a document was created headed "2012 ADVERTISING RENEWAL ALEX'S SYDNEY SHUTTLES" on National Concierge letterhead. This document was alleged to record an agreement for the 2012 calendar year whereby each one-way ticket sold would generate 50 cents of advertising revenue. The document was signed by Mr Pockley on 10 January 2012 but unsigned on behalf of Sydney Shuttle. Mr Pockley gave evidence that at a meeting with Mr Barkho on 10 January 2012 he gave Mr Barkho a copy of the document and said:

"'This is how we propose to restructure the advertising. We are going to change it from a per month fee payable by you from your income to a per ticket fee payable directly by the customer. This will work out better for us and better for you.' Mr Barkho looked at the proposal and appeared to read through it. He then said words to the effect of: 'That looks fine.' I said: 'Can you get a signed copy back to me asap, please?' He said: 'Sure.'"

  1. The document had attached to it the "Grand National Concierge Pty Ltd ('GNC') Advertising Terms and Conditions", which included the following provisions:

"in an Advertising Order, the sole liability of GNC and exclusive remedy of Advertiser shall be limited to placement of the advertisement at a later time in a comparable position until the total advertising time agreed in that Advertising Order is delivered…GNC aggregate liability under this agreement for any claim is limited to the amount received by GNC from Advertiser for the Advertising Order giving rise to the claim…

14. Cancellations: Except as otherwise provided in a particular Advertising Order, an Advertising Order may not be cancelled by Advertiser other than by giving GNC prior written consent and agreement by Advertiser to pay the Agreement Total detailed in the Advertising Order and any additional early cancellation charges.

15. Construction: No term or condition other than those set forth in the Standard Terms (including any Advertising Order) relating to advertisement scheduling and pricing shall be binding on GNC unless in writing and signed by duly authorised representatives of the parties. In the event of any inconsistency between the Advertising Order and the other Standard Terms, the other Standard Terms shall prevail. This Agreement constitutes the entire agreement between the parties concerning the subject matter hereof and supersedes all prior and contemporaneous agreements and communications, whether oral or written, between the parties relating to the subject matter hereof."

  1. Mr Barkho did not sign the document.

  2. Sometime before 19 March 2012 Mr Barkho, perhaps more than once, expressed his displeasure about the payments he was receiving. Sydney Shuttle thereafter ceased, from about 19 March 2012, to provide rides for National Concierge and National Concierge ceased to sell Sydney Shuttle tickets. The existing Supplier Contract was thus terminated on about that date.

  3. Prior to the trial National Concierge prepared a schedule setting out figures relating to sales, commissions and payments, and the like, for the monthly periods from the end of 2010 through to March 2012. The schedule also divided up those monthly totals between the T1 International Terminal and the T2 Domestic Terminal. The schedule included a column of the sales for each of the monthly periods at the terminals, which totalled $826,890.78. The schedule included monthly figures for "GNC Commission" which totalled $294,735.10.

  4. The GNC Commission exceeded 25% of the total sales. For the months up to and including 19 October 2011, commissions recorded amounted to precisely 25% of the total sales. But from 20 October 2011 until 18 March 2012 the amount of monthly commission recorded in the schedule represented 40% of the monthly total sales.

  5. The schedule contained two columns headed "Deductions". The first Deduction column was denoted "Advertising". It did not include the amount of $2,750 paid by cheque referred to earlier, but recorded figures equivalent to $1,375.20 per month for 11 months in the 2011 calendar year. The advertising column also recorded larger amounts in 2012, in respect of each terminal. National Concierge submitted that these larger amounts were entitled to be deducted by it pursuant to an agreement arising from the conversation between Mr Pockley and Mr Barkho in January 2012. The amounts recorded in this schedule totalled $31,382.62.

  6. The second column under the heading, "Deductions", was denoted "Penalties". It included amounts said to be owing to (and retained by) National Concierge by Sydney Shuttle on account of the number of tickets sold or customers transported by Sydney Shuttle, a matter to which I need to return.

  7. The schedule also showed total payments of $369,885.96. It was accepted between the parties that National Concierge had made these payments to Sydney Shuttle. A payment was made every month or two in 2011, in the months of February, March, April, May, July, August, October and December, and in 2012, in February and March, then one further payment on 30 March 2012 after the contract had ended.

  8. The final column in the schedule purported to record the total tickets sold, although it was common ground that the schedule recorded the purchase of a return journey as a single ticket.

  9. When a person purchased a return journey from the concierge desk, they would receive two tickets or vouchers, one of which was marked "return". The two vouchers in respect of a return journey would enable the customer to journey from the airport terminal to the city, by presenting the first ticket or voucher when boarding the shuttle bus, and to return from the city to the airport subsequently, by presenting the voucher marked "return" when boarding.

3. ISSUES

  1. The principal issues between the parties were:

  1. Did the parties, by an oral agreement or agreements or oral variation to the agreement on about 20 October 2011, increase the commission that National Concierge was entitled to retain from 25% of sales to 40% of sales.

  2. Did Sydney Shuttle give (or have) a guarantee or guarantees in respect of ticket sales or provision of transport, and what was the nature of any guarantee.

  3. Were the advertising agreements entered and what is the effect of them.

  1. There were some other issues initially raised that seemed to be resolved by the conclusion of the hearing. At some stage in 2011, perhaps about May, after the other major transport provider used by National Concierge went out of business, Sydney Shuttle was given the exclusive rights to transport National Concierge customers. Thereafter National Concierge sold only Sydney Shuttle tickets until March 2012.

  2. National Concierge filed a cross-claim for damages arising out of an alleged repudiation by Sydney Shuttle of the Supplier Contract. This matter received no attention in submissions. I infer that National Concierge accepted that the supplier agreement when extended after March 2011 became an agreement terminable at will, and that Sydney Shuttle had terminated the agreement in March 2012.

  3. The question of whether and in what circumstances oral conversations can alter the written terms of a contract or can create a contract in the absence of writing, when a written contract is envisaged, has been the subject of discussion in a number of cases. I refer to RT & YE Falls Investments Pty Ltd v State of New South Wales [2001] NSWSC 1027 at [50] - [57] and Painaway Australia Pty Ltd v JAKL Group Pty Ltd [2011] NSWSC 205 at [239], see also Masters v Cameron (1954) 91 CLR 353.

  4. It is sufficient to note that oral conversations alone are unlikely to give rise to an immediately binding contract in circumstances where the parties have manifested an intention to have their agreement embodied in a formal, executed contract. Clear and compelling evidence is needed, because the existence and nature of the agreement is affected by the difficulties of recalling past conversations with precision, see Watson v Foxman (1995) 49 NSWLR 315 at 318-319. Written documents that record oral conversations or refer to them might assist a party to establish that the conversations constituted a contract.

4. OBJECTIVE EVIDENCE

  1. It was not in dispute that National Concierge sold tickets, was obliged to account for some of the sale proceeds to Sydney Shuttle and that it made payments on certain agreed dates of certain amounts.

  2. However, it is also clear that National Concierge did not honour the agreement in making payments to Sydney Shuttle. The Supplier Contract obliged National Concierge to remit Sydney Shuttle's share of the proceeds fortnightly. However, the sale proceeds were accounted to Sydney Shuttle on a monthly basis, and then sometimes several weeks, even months, after the moneys were collected.

  3. No satisfactory explanation of that breach by National Concierge was provided. There was a suggestion that a fortnightly accounting was impracticable or perhaps even impossible. However, documentary evidence that the amount to be accounted to Sydney Shuttle in respect of sales for August 2011 was determined by 1 September 2011 suggests the contrary. Stewart Tennent, who prepared the relevant document, in oral evidence attempted to distance himself from the date of the document. However, I found the date of the document preferable to his oral evidence about the date given more than three years after the event. His assertion that the date was incorrect was unpersuasive.

  4. The continual late payments were the cause of complaint by Mr Barkho and appear to have prompted his termination of the Supplier Contract. They may also have manifested in National Concierge an unwillingness to be bound by the agreement or the terms of the agreement, which may have justified termination for cause if that were necessary. However, as the cross-claim was not pressed in closing submissions the entitlement of Sydney Shuttle to terminate the agreement was not in dispute.

  5. Sydney Shuttle was able to and did provide rides to those customers who bought tickets.

  6. Post-contractual conduct may be evidence of the existence of the agreement but is not evidence of the construction of its terms: see Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603 at 615 [10], 616 [13] and Agricultural & Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570 at 582 [35].

  7. Thus, the conduct of the parties, National Concierge selling tickets and Sydney Shuttle transporting passengers, evidence that they continued to have an agreement after March 2011. Similarly, the circumstance that the same arrangement existed at the Domestic Terminal, T2, after about 19 December 2011 manifests that there was an agreement between National Concierge and Sydney Shuttle in respect of the Domestic Terminal.

  8. There were, apart from the written agreements that I have mentioned, no written communications between the parties after 30 December 2010 until after the termination of the agreement in 2012. There are no emails or letters sent by either party to the other, no facsimiles and no covering letters when, or if, accounts were provided. Apart from the written agreements the dealings between the parties were entirely oral.

  9. There were internal documents of National Concierge. National Concierge created accounts that were said to have been supplied to Mr Barkho. The date of the supply was not identified, nor the precise circumstances of the supply of accounts. Rather, there was evidence by Mr Musumeci to this effect: "Copies of the defendant's records which I gave to Alex Barkho at various meetings are annexed hereto and marked severally 'A', 'B', 'C', 'D', 'E', 'F', 'G', 'H', 'I' and 'J'."

  10. Mr Barkho denied receiving any of those documents. In the course of the denial in respect of document A, Mr Barkho also said the words, "I don't remember". In context, I did not think this should be taken as colouring to any extent his denial of receiving the documents.

  11. Those internal accounts were largely undated. They purported to record figures in respect of the number of tickets sold and indicated in the mind of National Concierge, the level of commission payable and the nature of the alleged guarantee. But the evidence that they were provided to Mr Barkho I found to be unpersuasive.

  12. One important document was an email sent by Mr Musumeci to Alexander Avramides ("cc" to Stewart Tennent) dated Thursday, 20 October 2011, 12.39pm. This was two days after an alleged meeting between Mr Musumeci, Mr Avramides, Mr Pockley and Mr Binns of National Concierge, and Mr Barkho of Sydney Shuttle. The email stated:

"Hi Guys,

Alex from Sydney Shuttle has agreed with the following,

1 way tickets - $16.00each

40% commission for ticket

Return tickets - $28.00

40% commission per ticket

Alex's Sydney Shuttle are the exclusive shuttle bus operator and have a guarantee of 1000 tickets per week during summer and 700 tickets per week during the winter which is from May to July.

I have notified the staff of the price change and this agreement starts from today.

If you have any questions, please feel free to contact me.

Cheers,

Musa".

5. ORAL EVIDENCE

  1. Mr Musumeci, Mr Avramides, Mr Binns and Mr Pockley deposed in affidavits to a meeting on 18 October 2011 between the four of them on behalf of National Concierge, and Mr Barkho on behalf of Sydney Shuttle. The accounts in the affidavits of Mr Musumeci and Mr Avramides are effectively identical. That is, the conversation that runs for about a page and a half in the affidavits is identical except for one line, which contains a minor difference and a typographical error. The accounts given by Mr Binns and Mr Pockley are somewhat different.

  2. The effect of the conversation on 18 October 2011, according to National Concierge, was that Mr Barkho on behalf Sydney Shuttle agreed to a new commission rate of 40% (previously 25%), agreed to guarantee 1,000 ticket sales per week by National Concierge at the International Terminal and, from the time that the National Concierge desk opened at the Domestic Terminal in December 2012, agreed to guarantee 2,000 ticket sales per week from the Domestic Terminal. The conversation suggested that the reason for Mr Barkho agreeing to these increased obligations and reduced share of ticket sales was because Sydney Shuttle would become the exclusive shuttle bus supplier of National Concierge at the Domestic Terminal, T2, so that National Concierge would not sell tickets for other shuttle bus operators. However, it was common ground that Sydney Shuttle became the exclusive shuttle bus supplier of National Concierge months before this conversation.

  3. Mr Barkho denied any such conversation. He denied that he had ever agreed to increase the commission to 40% and denied that he had given a guarantee of the number of tickets National Concierge would sell.

  4. Mr Barkho's credit was attacked in a number of ways.

  5. First, he gave evidence about his daughter being a director of Sydney Shuttle, whereas the Australian Securities and Investments Commission ("ASIC") records did not disclose that she was a director. It was not altogether clear whether those records contained the complete history of the past directors of Sydney Shuttle. But in any event, Mr Barkho's evidence was to the effect that his daughter's role was to generate business for Sydney Shuttle by visiting the city hotels, and he seems to have inferred that that made her a director. I was not persuaded that Mr Barkho's evidence that she was a director was intended in his mind to evidence that she was a director in the formal sense or on ASIC's records.

  6. This brings me to the second matter impacting upon Mr Barkho's credit, his command of the English language. It was evident during his oral evidence that he did not have a ready familiarity with the language. That unfamiliarity was exacerbated when he was considering documents. His answers sometimes contained concessions, but a number of times he seemed to manifest some misunderstanding of what he was being asked. On my observation of Mr Barkho, a person who is familiar with English and who was conversing with Mr Barkho would necessarily have observed that he would be unable to understand any complicated concepts conveyed by the English language, and that he might misinterpret what is being conveyed to him.

  7. National Concierge also submitted that Mr Barkho's memory was faulty. This submission had some force. On a number of occasions Mr Barkho's evidence manifested errors in his recollection, although on some of these occasions he might not properly have understood the question to which he was responding. He was not favoured with and did not seek the assistance of an interpreter.

  8. In his affidavit of 29 January 2014, Mr Barkho said this:

"Advertising

23 I refer to Exhibit D [the payment schedule] and the Column headed 'Advertising'. The plaintiff never agreed to pay advertising, is unaware of what if any advertising the Defendant did, never was consulted about advertising, and has never been given an account of advertising expenditure."

  1. However, in oral evidence Mr Barkho conceded that he had agreed to pay advertising for 12 months at a rate of $1,250 per month. The following exchange occurred:

"Q. You agreed to pay $1,250 a month, didn't you?

A. For the small tile, yes. On one advertising was small tile. We was overcharged but we still did it to help the company [apparently National Concierge].

Q. You agreed to pay or your company agreed to pay $1,250 per month.

A. Per month, yes.

Q. For 12 months; that's correct, isn't it?

A. Yes."

  1. In respect of the January 2012 discussion regarding advertising, Mr Barkho also made a concession of a short-term agreement.

  2. Whilst Mr Barkho's evidence seems inconsistent with paragraph 23 of his affidavit, quoted above, it may be explained by noting that paragraph 23 referred to the charges that are contained in the schedule rather than the advertising agreements. If so, his evidence is less than clearly expressed.

  3. One final attack on Mr Barkho's credit came at the close of reply submissions. National Concierge sought to rely upon the terms of Sydney Shuttle's original statement of claim in the Local Court. Mr Barkho verified that statement of claim. The significant paragraph was paragraph 9. It said:

"9 The Defendant agreed to pay a price per ticket which was varied during the period.

a.The price per ticket was $12 'adult one-way' or $1,200 per book, $9.80 per 'adult return' ticket or $980 per book $650 per book. ,and child $6:50 each way or $650 per book for the period Jan 2011 to August 2011.

b.The price per ticket was $9:80 'adult one-way' or $980 per book, .$8:40 per 'adult return' ticket or $840 per book for the period August 2011 to September 2011.

c.The price per ticket was $9:30 'adult one-way' or $930 per book, $8:40 per 'adult return' ticket or $8:40 per book and child $6:50 each way or $650 per book for the period September 2011 to March 2011." [Mistakes in original.]

  1. National Concierge conceded that paragraph 9 of that statement of claim was never put to Mr Barkho in cross-examination and also that the requirements of s 43 of the Evidence Act 1995 were not satisfied. Mr Barkho was never given an opportunity to explain what was meant by the quoted paragraph. In those circumstances, it was contended by Sydney Shuttle that I should not allow it into evidence or take it into account at all.

  2. National Concierge relied on the paragraph solely for the purpose of establishing that the figure $9.30 referred to in subparagraph 9c was also contained in the January 2011 advertising agreement document, and therefore Mr Barkho must have seen that document, which he had denied seeing. In fact, Mr Barkho denied reading or (perhaps) receiving the document, but did not deny seeing it.

  3. The paragraph could conceivably have relevance in a broader context. On the assumption that ticket prices did not decline it indicated that Mr Barkho and National Concierge understood that the commission amount and thus the commission rate increased over time, since the amount per ticket he received decreased.

  4. However, the terms of paragraph 9 refer to what National Concierge had "agreed" to and the price it would pay for a ticket. The paragraph did not disclose the means by which the price was varied, and whether it was pursuant to a contractual variation or some assertion by National Concierge.

  5. Section 43 of the Evidence Act 1995 raises a concern as to whether I am entitled to give the content of paragraph 9 of the original statement of claim any weight. In any event, because of its form and because it was not put to Mr Barkho, I was cautious about giving it any significant weight.

  6. Taking all these matters into account, I was not persuaded that Mr Barkho was giving his evidence dishonestly. He made a number of concessions in respect of the advertising agreements and in other matters, which indicated to me that when he understood a question he did his best to answer it honestly.

  7. As to the credit of the defendant's witnesses, the accounts, as I have said, of Mr Avramides and Mr Musumeci were identical. None of Mr Avramides, Mr Musumeci, Mr Binns or Mr Pockley made notes of the alleged conversation. In preparing their affidavits they were plainly recounting a conversation that had occurred, if it occurred at all, approximately three years previous. That mere lapse of time without notes causes me to doubt the accuracy of the conversation recorded in the affidavits. I refer to the principles well known in Watson v Foxman (1995) 49 NSWLR 315 at 318-319 about recollections of oral representations. The fact that Mr Avramides' and Mr Musumeci's recollections of an alleged detailed conversation three years ago, without any notes to assist, were identical renders that version less, rather than more, satisfactory. I refer to my comments on a similar subject matter in Aberford Holdings Pty Ltd trading as Carpet Cleaners Warehouse v Awad [2013] NSWDC 303 at [57]-[69], [80], [81].

  8. Mr Musumeci was asked in the witness box to give his unaided recollection of the conversation. It was significantly different. It is useful to compare the accounts.

  9. Mr Musumeci's affidavit version of the conversation is as follows:

"26 On or about 18 October 2011 I attended a meeting held at Sydney Airport with Mr Barkho representing the plaintiff and Alexander Avramides, Mark Musumeci, Tony Binns and myself representing the defendant. A conversation took place using words [to] the following effect:

Avramides

'Grand National Concierge hopes to open another customer desk at the airport in Terminal 2. I'm told that you want to be our sole supplier there as well as at the International Terminal.'

Barkho

'That's correct.'

Avramides

'You've said you could do 2000 sales there each week. Would you be prepared to commit to that, like you're doing at T1?'

Barkho

'Yes I can do that if I'm the exclusive at T2. There's plenty of business at T2.'

Avramides

' What about our commission. Are you willing to pay the same commission rate as at T1? 40%?'.

Barkho

'Yes, no problem. Same as at T1.'

Avramides

'So, we appoint you our exclusive shuttle-bus operator from T2. Your weekly sales from T1 are 2000, on top of the 1000 from T1, and all sales from both terminals [will] be at a commission rate of 40%. Is that correct?'

[Barkho]

'Yes.'

Avramides

'You're happy with that.'

Barkho

'Yes.'

Avramides

'Congratulations. We've got an agreement.'"

  1. Mr Musumeci's version of the conversation given in the witness box is as follows:

"Q. I wonder if you could just give me your best recollection of what was said during that meeting?

A. Okay, so in that meeting there was myself, Mr Avramides, Tony Binns and Roger Pockley.

Q. Yes, is that it?

A. Yes, that's right.

Q. The four of you.

A. Have I said Mr Barko? And we spoke about the opportunity of

Q. Who spoke?

A. Mr Avramides spoke to Mr Barko with the opportunity of

Q. What did he say?

A. Saying that, you know, there was something coming up at T2 to for the concierge desk, T2 opening up and for him to be the shuttle supplier for both terminals at T1 and at T2 and there was a they did speak about commission.

Q. Did someone say something?

A. Yes, Mr Avramides mentioned it to Mr Barko.

Q. What did Mr Avramides say?

A. He mentioned there was a guaranteed number T1, 1,000 tickets.

Q. Do you remember what he said about that 1,000 tickets?

A. It was guaranteed 1,000 tickets per week at 40% commission. Any unsold tickets at also 40% commission.

Q. I'm sorry.

A. Any unsold tickets at 40% commission.

Q. Was anything else said?

A. Then he started talking about the fleet.

Q. Who?

A. Basically Mr Avramides.

Q. Mr Avramides said something.

A. Yep, to Mr Barko in regards to his fleet and whether he can

Q. What did he say?

A. He just basically wanted to know whether he can cope with the two terminals T1 and T2.

Q. Do you remember what he said?

A. Basically the words of, "How many buses do you have?" He had 13 buses.

Q. Sorry, who did? Did someone say something?

A. That's right. Mr Barko.

Q. Mr Barko said he had 13.

A. Thirteen buses and if he did get T2, if he did get the business at T2.

Q. Who's speaking?

A. Mr Barko. If he did get T2 he would invest in more buses.

Q. Anything else?

A. Mr Avramides said there was going to be a guarantee at T2 as well.

Q. There's going to be a guarantee

A. A guarantee number of tickets at terminal 2 of 2,000 tickets.

Q. Anything else said?

A. That's all I remember."

  1. Mr Barkho's conversation is more limited in his oral account, and the context of the guarantee is uncertain. Some difference in recollection is not unexpected. But the differences illustrate that it would be unwise to accept the terms in the affidavit of the unaided recollection of a conversation three years ago as being an accurate recording.

  2. Mr Pockley and Mr Binns also gave recollections of the conversation that were different to some degree. In large measure, Mr Pockley's, Mr Binns' and Mr Musumeci's oral recollections in the witness box do not give unqualified support for the guarantee alleged to have been made by Mr Barkho. Their words do not indicate that Mr Barkho was guaranteeing sales by National Concierge, and leave open the possibility that National Concierge was giving the guarantee.

  3. Two days after the alleged conversation the email quoted earlier was sent from Mr Musumeci to Mr Avramides. The terms of the email do not sit comfortably with the existence of the deposed conversation. The email does not suggest that Mr Avramides was present, or that it happened two days earlier. Further, the content of that email does not mention at all the guarantee about 2,000 tickets at the T2 Domestic Terminal. It also mentions a reduced guarantee at the International Terminal of 700 tickets during winter, a matter not referred to in the witnesses' accounts.

  4. The email does not specify the content of the guarantee. If anything, the terminology in the email suggests that the guarantee may well have been in favour of Mr Barkho, that Sydney Shuttle was the beneficiary of a guarantee rather than the party undertaking the obligation.

  5. Although I am troubled by the complete identity of the versions of Mr Musumeci and Mr Avramides in their affidavits, I am not prepared to find that their evidence was given dishonestly. But I do not accept that the conversation recorded in their affidavits is accurate.

6. CONCLUSIONS

  1. I turn now to my conclusions in respect of the various issues in the proceedings.

(a) Advertising agreement

  1. The advertising order was signed by authorised persons and sets out certain terms. However, the agreement obliges National Concierge to provide a "Full Screen" advertisement. There is no evidence that this was ever provided or that any material enabling a full screen advertisement was supplied by Sydney Shuttle. There was evidence that National Concierge advertised shuttle services in about January 2011. But Sydney Shuttle was not then the exclusive supplier to National Concierge, and Sydney Shuttle was not referred to in the advertisement. The advertisement was not advertising Sydney Shuttle but was advertising National Concierge's ability to sell shuttle transfers from the airport to the city. In doing so, National Concierge was utilizing not only bus rides provided by Sydney Shuttle, but by its competitors.

  1. Mr Barkho gave oral evidence of what was supplied by National Concierge. He was not challenged on this account. He said that he paid $1,250 per month for a "tile". It was not clear what a "tile" was. I infer that it was some advertisement on a board of some type. It was not suggested that a tile was the same as a "Full Screen" and there was no evidence to this effect. The precise nature of a "Full Screen" and a "tile" was not explained.

  2. On the day of the agreement, 30 December 2010, Ms Raquel Barkho wrote to National Concierge seeking information about how the advertising material was progressing. The record is silent as to any response. For one reason or another no material was provided and no screen advertisement was ever supplied by National Concierge. Did that relieve Sydney Shuttle of an obligation to make the monthly payment? It did not make payment by direct debit, in accordance with the obligations stated in the advertising order.

  3. Mr Barkho conceded in his oral evidence, quoted above, an agreement to pay $1,250 per month for a tile for one year. This supports the entitlement of National Concierge to that amount. On the balance of probabilities National Concierge was entitled to retain those funds in respect of advertising.

  4. However, the payment of $2,750 by Sydney Shuttle needs to be taken into account. It left owing ten monthly payments inclusive of GST of $1,375, or a total of $13,750 for the full year. National Concierge is entitled to a credit in respect of this amount pursuant to the 2010 Advertising Order.

  5. The second advertising agreement was not signed and ultimately Mr Barkho refused to sign it. I do not regard the conversation recorded by Mr Pockley, even if it was entirely accurate, which I doubt, as sufficient to establish the existence of an agreement. To say that a document "looks fine" in circumstances where a signature is expected is not sufficient to create a binding agreement. Mr Pockley was led to give evidence in reply that he went through the entirety of the agreement with Mr Barkho. Whilst I doubt this occurred, given that Mr Pockley did not refer to it in his affidavit, if it did it would have alerted Mr Barkho and Mr Pockley to terms that provided that any agreement was ineffective to bind National Concierge until the document was signed. That weakens any claim to a binding agreement.

  6. Yet, also in respect of this matter, Mr Barkho made some concessions. He accepted that for a period of two weeks National Concierge was going to take 50 cents for each ticket in respect of advertising, and he had agreed to that. There was one suggestion that it might have been for four weeks, but the weight of this evidence suggests two weeks.

  7. The document National Concierge relied upon to establish a 2012 advertising agreement shows that the contribution of 50 cents from each ticket comprised 30 cents by Sydney Shuttle and 20 cents by National Concierge. This is a matter not reflected in the payment schedule. In my view, the proper course is to allow the two-week deduction as agreed to by Mr Barkho. I do not think that the agreement document unsigned by him in evidence supports any other agreement.

  8. For the two weeks from 10 January 2012 there were approximately 140 tickets per day sold. The summation of all the tickets sold in that two-week period times 30 cents totals $622.80, and I propose to add that amount to the advertising that National Concierge is entitled to be paid. The unpaid amount, leaving aside amounts deducted by National Concierge, is thus the amount of $14,372.80.

(b) The guarantee and the commission

  1. Mr Barkho denies that he ever agreed to 40% commission. Yet there is the email document dated 20 October by Mr Musumeci that refers to a 40% commission. In addition, there are the internal accounting documents of National Concierge, which adopt a 40% commission.

  2. Although I accept the honesty of the evidence of the witnesses on both sides in general terms, I have, as I have said, significant questions about their recall or reliability. However, I am persuaded on the balance of probabilities that the matter of a 40% commission was discussed. The most reliable record that I think exists in respect of the content of that discussion, indeed perhaps the only record, is the email of Mr Musumeci of 20 October 2011.

  3. That email indicates that the question of the 40% and the guarantee were linked.

  4. Counsel for National Concierge strongly resisted the possibility of the guarantee being in favour of Sydney Shuttle on the basis that the Court should not, but would need to, interpolate the word "given" into the sentence in the email in order to suggest that National Concierge "have given a guarantee". However, this is a misreading of the text. It is apparent that the interpolation of the word "given" is precisely what is needed for National Concierge to have the benefit of a guarantee by Sydney Shuttle.

  5. The email suggests that the obligation on Sydney Shuttle is to allow 40% commission but is to receive the benefit of being the exclusive shuttle bus operator and "have a guarantee of 1000 tickets per week". In other words, the guarantee is to the benefit of Sydney Shuttle. This seems to make some sense because it gives a reason as to why Mr Barkho may be willing to increase the commission retained by National Concierge from 25% to 40%. At the time National Concierge was making about 700 sales a week. With a guarantee of 1,000 tickets at 60% commission, Sydney Shuttle would receive revenue similar to or greater than the amount it would receive if it retained 75% of the proceeds of 700 tickets.

  6. In addition, the wording of the Local Court statement of claim relied upon by National Concierge carries with it the suggestion that the defendant was paying for the tickets. This would have the same effect as guaranteeing the sale of the tickets supplied by Sydney Shuttle. If National Concierge purchased them at the time of supply, then, so far as Sydney Shuttle is concerned payment in respect of those tickets is guaranteed.

  7. Sydney Shuttle makes no claim in this regard, and says only that it is entitled to 75% of ticket revenue from sold tickets.

  8. I return to the need for clear and compelling evidence that the parties intended to enter into a binding agreement by means of these oral discussions. The following matters of context are relevant. The parties have entered into written agreements containing terms that require or demand a written agreement in order to be binding on the parties. The advertising agreement was ineffective until a signed supplier agreement was entered. These matters establish that the parties had agreed that only agreements in writing would be binding. Of course this does not stop the parties from entering into an oral agreement, but it must be taken into account in assessing whether in their oral discussions they entered into an agreement.

  9. In addition, Mr Barkho said in his affidavit repeatedly that he told National Concierge:

"My daughter Raquel is a director. She signs all contracts. I hardly ready [sic read] English and my understanding of English is very limited. She was brought up and educated here. It is very difficult for me to understand. Everything has to be in writing."

  1. Aside from the reference to a "director", considered above, Mr Barkho was not challenged on these paragraphs. Thus, Mr Barkho was saying "Everything has to be in writing" and National Concierge, by their use of written agreements and by the terms of those agreements requiring signed written documents, was saying the same thing.

  2. As I indicated, my observations of Mr Barkho in the witness box, led me to conclude that similar observations would also have been made by the various persons representing National Concierge when they dealt with Mr Barkho, namely, that he had a limited ability to understand English. In the context of the undisputed statements of Mr Barkho, and the agreed written terms, it was obvious to any observer of the conversations involving Mr Barkho that there was a real possibility that Mr Barkho did not intend to enter into an agreement without it being in writing, and also, even more importantly, that the parties may be reaching different understandings about the nature of any consensus.

  3. I think this may have happened in respect of the guarantee. Whilst National Concierge may have thought that Mr Barkho was guaranteeing that National Concierge would sell a set number of tickets, Mr Barkho was rather giving the assurance that he had the ticket books and shuttle bus capacity to service that number of customers. He may have also thought that he was the beneficiary of a guarantee.

  4. In these circumstances, recollections of the words of a conversation three years earlier is not sufficient to satisfy me on the balance of probabilities that any agreement was entered by that conversation.

  5. Mr Avramides suggested that written agreements were not a common practice with his company, and the need for the written agreements arose out of a lack of previous dealings by National Concierge with Sydney Shuttle. I do not accept this evidence. It is inconsistent with the 2012 advertising order that was required to be signed (even though Sydney Shuttle and National Concierge had a history of dealings), and with the standard terms of the various written agreements which provided that the parties were not to be bound unless they were signed.

  6. National Concierge submitted that it was not disputed that the parties did enter two oral agreements, one in respect of the extension in March 2011 of the Supplier Contract, and a second extending the application of that agreement to the Domestic Terminal. The Supplier Contract on its face does not apply only to the International Terminal. But there was no obligation by that agreement for Mr Barkho to have shuttle buses operating from the Domestic Terminal. So I do accept that there was an oral extension to the agreement to apply it to the Domestic Terminal and an oral extension beyond the three-month initial term. Yet in my mind, these oral agreements or amendments are of a different nature entirely to that alleged by National Concierge. They are also not in dispute.

  7. The oral agreements alleged by National Concierge import not only a substantial diminution in Sydney Shuttle's agreed commission but also a promise by Sydney Shuttle about National Concierge's business. The alleged agreements are further complicated by the undoubted difficulty in determining the effect of the guarantee, not only as to whom it would benefit, but also as to how it would operate.

  8. As an example, National Concierge treated the guarantee of ticket sales as not distinguishing between single and return purchases, even though a return purchase entitles the customer to two tickets. The more likely construction of a guarantee of tickets, at least if Sydney Shuttle is providing the guarantee, is one in respect of the number of vouchers or journeys. National Concierge treated a return ticket purchase (which entitles a person to two vouchers or tickets) as one ticket in its calculation of payments and "Deductions" for "Penalties". But if a return purchase was to be treated as two tickets Sydney Shuttle has complied with the asserted guarantee in respect of the International Terminal, so far as the evidence reveals.

  9. Other matters of context are relevant.

  10. Firstly, immediately before the asserted guarantee National Concierge was selling about 700 tickets a week at the International Terminal. For Sydney Shuttle to guarantee, effective immediately, 1,000 ticket sales a week by National Concierge, with National Concierge to receive commission on all these tickets would create a greater detriment to Sydney Shuttle's revenue than even the increase of the commission rate to 40%. Sydney Shuttle would immediately be "liable to pay" (in fact, compelled to allow a deduction for) commission on 50% more tickets than National Concierge was then selling.

  11. Secondly, the suggestion that Sydney Shuttle would guarantee the sales by National Concierge is odd. There would need to be compelling evidence to persuade me that it would have been the subject of an agreement. It would mean that National Concierge would have no incentive to sell any tickets, as it would collect a minimum or fixed level of income from the ticket guarantee. Sydney Shuttle, on the other hand, had no real control over the sale of tickets by National Concierge at the airport terminals.

  12. There is also the difficulty of calculating how much a ticket is worth for the purposes of a guarantee. National Concierge attributed to unsold tickets the ticket price of a single adult fare, which is the highest price per single journey, greater than a child's fare, group fares or return fares. Yet if a ticket is "unsold" the commission on the revenue is necessarily zero, whatever be the rate of commission. There was no evidence of any discussion between the parties on the amount payable in respect of unsold tickets pursuant to the guarantee. That is another reason against a concluded agreement.

  13. Another complicating feature of the guarantee is that there is no evidence of when the guarantee would be reconciled. For example, in the month of October 2011 Sydney Shuttle exceeded the 500 ticket guarantee asserted by National Concierge for the first three weeks of the month, but for the last two weeks after the guarantee was said to come into effect Sydney Shuttle failed to meet the asserted 1,000 seat guarantee. The tickets sold exceed the summation of the weekly ticket guarantees for the month. Yet National Concierge sought to impose a penalty on the basis that a weekly reconciliation precluded the surpluses from earlier weeks being set off against the deficiencies of later weeks.

  14. Given the interrelationship between the guarantee and the 40% commission, in all the circumstances I am not persuaded that a concluded agreement was reached in respect of them.

  15. In my view, the proper finding in this case is that the terms of the written contract were not varied in the manner asserted and Sydney Shuttle remained entitled to be paid 75% of the commission of the sales in accordance with the signed agreement of December 2010, extended in March 2011 until its conclusion in March 2012. National Concierge had no entitlement to the amounts listed as penalties in the schedule. Sydney Shuttle is entitled to 75% of the total sales less the amount already paid. That net sum is $250,281. From this entitlement in Sydney Shuttle should be deducted the $14,372.80 that I have found National Concierge is entitled to retain by means of or pursuant to the advertising agreements. This leaves an amount of $235,909.33 that is payable by National Concierge.

  16. There is no specific claim for interest made in the statement of claim. Interest is allowable under s 100 of the Civil Procedure Act 2005. There may have been a question about interest during the course of the agreement, given that the $359,000 approximately that was paid to Sydney Shuttle was invariably late, sometimes months late. However, I do not propose to award any interest in respect of that delay. But I do propose to award interest on the $235,909.33 that I have calculated to be payable.

  17. The bulk of the unpaid amount accrued after 1 January 2012 and by late March 2012. In my view, the proper calculation should award interest on the whole sum from 1 February 2012, given that a substantial part of that amount would have accrued interest from an earlier date, but some of it would not. In the result, there is $45,076.46 of interest. The total amount owing is $280,985.79.

  18. The orders of the Court shall be:

  1. Judgment for the plaintiff against the defendant in the sum of $280,985.79 inclusive of interest.

  2. Dismiss the cross-claim.

  3. The defendant pay the plaintiff's costs of the statement of claim.

  4. The cross-claimant to pay the costs of the cross-defendants.

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Decision last updated: 05 March 2015

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