Amalgamated Commercial Holdings Pty Ltd v Compas Pty Ltd & Anor
[2011] FMCA 116
•3 March 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| AMALGAMATED COMMERCIAL HOLDINGS PTY LTD v COMPAS PTY LTD & ANOR | [2011] FMCA 116 |
| INDUSTRIAL LAW – Contract law – independent contractors – principles of agency – disclosed principal & ostensible authority – security for costs – parties bound by pleadings – summary disposal – distinction between “complex cases” and necessary details of pleaded case. |
| Federal Court of Australia Act 1976, s.31A Federal Magistrates Act 1999, s.17A Independent Contractors Act 2006, ss.12, 16(1) Trade Practices Act 1974, s.6A Federal Magistrates Court Rules 2001, r.13.10 |
| Adnunat Pty Ltd v ITW Construction Systems Australia Pty Ltd [2009] FCA 499 G.E. Dal Pont, Law of Agency (Second Edition) (LexisNexis Butterworths, 2008) |
| Applicant: | AMALGAMATED COMMERCIAL HOLDINGS PTY LTD (TRADING AS) ALIGNITY CONSULTING |
| First Respondent: | COMPAS PTY LTD |
| Second Respondent: | AUSTRALIAN COMPETITION & CONSUMER COMMISSION |
| File Number: | CAG 39 of 2010 |
| Judgment of: | Neville FM |
| Hearing date: | 30 November 2010 |
| Date of Last Submissions: | 17 December 2010 (oral submissions); 21 & 23 February 2011 (written submissions) |
| Delivered at: | Canberra |
| Delivered on: | 3 March 2011 |
REPRESENTATION
| Solicitors for the Applicant: | (By leave) Mr Forsyth |
| Counsel for the First Respondent: | Mr Ward |
| Solicitors for the First Respondent: | Tetlow Tigwell Watch |
| Counsel for the Second Respondent: | Mr O'Donovan |
| Solicitors for the Second Respondent: | Australian Government Solicitor |
ORDERS
Pursuant to an Application filed 24th November 2010 by the Australian Competition and Consumer Commission, the Application filed by Amalgamated Commercial Holdings Pty Ltd trading as Alignity Consulting on 22nd June 2010 be dismissed.
The Applicant is to pay the Second Respondent’s costs either as agreed or taxed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT CANBERRA |
CAG 39 of 2010
| AMALGAMATED COMMERCIAL HOLDINGS PTY LTD (TRADING AS) ALIGNITY CONSULTING |
Applicant
And
| COMPAS PTY LTD |
First Respondent
| AUSTRALIAN COMPETITION & CONSUMER COMMISSION |
Second Respondent
REASONS FOR JUDGMENT
Introduction
In Three Rivers District Council v Governor and Company of the Bank of England (No.3) (“Three Rivers”),[1] which was cited with obvious approval by French CJ and Gummow J in their joint judgment in Spencer v Commonwealth,[2] Lord Hope said (internal citations omitted):
The method by which issues of fact are tried in our courts is well settled. After the normal processes of discovery and interrogatories have been completed, the parties are allowed to lead their evidence so that the trial judge can determine where the truth lies in the light of that evidence. To that rule there are some well-recognised exceptions. For example, it may be clear as a matter of law at the outset that even if a party were to succeed in proving all the facts that he offers to prove he will not be entitled to the remedy that he seeks. In that event a trial of the facts would be a waste of time and money, and it is proper that the action should be taken out of court as soon as possible. In other cases it may be possible to say with confidence before trial that the factual basis for the claim is fanciful because it is entirely without substance. It may be clear beyond question that the statement of facts is contradicted by all the documents or other material on which it is based. The simpler the case the easier it is likely to be to take that view and resort to what is properly called summary judgment. But more complex cases are unlikely to be capable of being resolved in that way without conducting a mini-trial on the documents without discovery and without oral evidence. As Lord Woolf said in Swain v Hillman, ... that is not the object of the rule. It is designed to deal with cases that are not fit for trial at all.
[1] [2003] 2 AC 1 at p.260-261 [95].
[2] (2010) 241 CLR 118 at pp.130 & 132 [21] & [26].
More summarily stated, Lord Hope may be taken, among other things, to distinguish between complex cases (e.g. as to matters of law, procedure and or facts) and the necessary detail that is the warp and woof of litigation.
Thus, for comparative purposes only, in Three Rivers itself, the original case was heard over seventeen days before Clarke J in the Commercial Court of the Queen’s Bench Division.[3] It then occupied a further fourteen days in the Court of Appeal, and then two separate periods in the House of Lords, each of which comprised five days. The case concerned, among other things, the tort of misfeasance in public office, the Bank of England’s regulatory functions, and a significant number of other matters, both factual and legal.
[3] The decision at first instance is reported at [1996] 3 All ER 558.
The case before this Court, which is obviously just as important to each of the parties as it was to the parties in the Three Rivers litigation, is currently listed for a two day trial in a few week’s time. Because the issues as between the Applicant and the First Respondent have now been resolved via mediation (the terms, or any detail, of which are unknown to the Court), the sole contest that remains is between the Applicant and the Second Respondent and concerns (a) whether or not there existed a contract between those parties, and if so, (b) did it come into existence by virtue of an [alleged] agency as between the Respondents.
The Second Respondent has (it has readily admitted) filed a [precautionary] cross-claim against the First Respondent, in essence to protect its position in the event that the Applicant succeeds in its remaining application against the Second Respondent in relation to breach of contract.
However, before the Court gets to the only substantive dispute that remains on foot, the Second Respondent has brought an application in which it seeks, in the alternative, the summary dismissal of the Applicant’s claim against it, or, if unsuccessful in this regard, an order for security for costs in a sum particularised in an affidavit affirmed by a ‘costs consultant,’ Mr R. Travers.
As well, the First Respondent has filed an application in a case by which it seeks the summary dismissal of the Second Respondent’s Cross Claim.
The reasons that follow deal with these three interlocutory applications, although the first and primary consideration is to the summary dismissal application by the Second Respondent against the Applicant in relation to what might be called the surviving agency/contract claim. At the hearing of these applications last November, all parties acknowledged that if the primary summary dismissal application succeeded, it would be unnecessary to deal with each of the other applications.
Unsurprisingly, some background is necessary. A preliminary warning should, perhaps, be given because, somewhat more so than usual, there are multiple parts to this litigation. Not all of them are as clear or as straight-forward as might be expected, or hoped.
Notwithstanding the degree of detail outlined in these reasons, upon consideration of (a) the pleadings, (b) the documentary evidence provided by the Respondents, (c) the lack of evidence provided by the Applicant, and (d) the formal resolution of the dispute as between the Applicant and the First Respondent, as I have mentioned, the scope of the issues remaining for determination is quite narrow and certainly confined. First I detail the case as pleaded by the Applicant, which is then followed by a thorough-going factual background. Only then is it appropriate to address the narrow factual and legal matters that remain in issue and address them in the context of the summary dismissal application(s).
The Applicant’s Case as Pleaded
By Application filed on 22nd June 2010, the Applicant company (“Alignity”) sought relief against the Respondents whereby the Applicant alleged that
(a)Compas, a labour hire/recruitment company, entered a ‘services agreement’ with Alignity pursuant to which Alignity’s alter ego, Mr Forsyth, would provide project management services to Compas’s ‘disclosed principal’, the ACCC;
(b)on behalf of the ACCC, Compas entered an agreement with Alignity on 9th April 2010 for Mr Forsyth’s services (“the Compas contract”); this agreement was made partly in writing, partly orally, and partly by conduct, in early April 2010. That agreement had a termination date of 30th June 2010. The services provided by Mr Forsyth to the ACCC [ultimately] occurred only between 13th and 19th April 2010;
(c)Compas terminated the ‘services agreement’ “on behalf of the ACCC”, on 19th April 2010;
(d)pursuant to the terms of that agreement, Alignity seeks payment of the Applicant’s discounted rate for the period of the agreement performed and the standard rate for the balance of the term remaining (19th April until 30th June); the amount claimed is $61,200 (plus GST);
(e)in the alternative, Alignity contends that it signed a contract with Compas on 16th April;
(f)also in the alternative, Alignity seeks relief under the Independent Contractors Act pursuant to which the Court is asked either to review the contract entered into with Compas (Alignity alleges that it was either unfair or harsh), or to set aside the Compas contract.[4]
[4] At the hearing of the three interlocutory applications on 30th November 2010, it was acknowledged by Counsel for the ACCC, and to which there was no demurrer, that, in the light of the resolution of the matters as between Compas and Alignity, the alternative ground raised under the Independent Contractors Act was now moot. See Transcript (30th November 2010) pp.5 & 6. See also p.25 of the same Transcript.
From the Statement of Claim, pars.4-6, the Alignity pleaded:[5]
[5] See also paragraphs numbered 1, 1.1 and 1.2 of the Further and Better Particulars of the Statement of Claim, filed on 17th September 2010.
4. By an agreement made between the Applicant and the First Respondent (as agent for a disclosed principal, the Second Respondent), the Applicant agreed to provide project management services to the Second Respondent (the agreement).
5. The First Respondent and the Second Respondent were both parties to the agreement with the Applicant since the First Respondent acted as agent for its disclosed principal, the Second Respondent.
6. The agreement was made partly orally, partly in writing and partly by conduct between the Applicant and the First and Second Respondents in the circumstances set out in paragraphs 6.1-6.3 below.
Particulars
6.1 In so far as the agreement was made orally, it was made by way of conversations at a meeting held at the Second Respondent’s business premises on or about 9 April 2010 between Guy Forsyth acting on behalf of the Applicant and Geoff Hunter and Fiona Urquhart of the Second Respondent. The conversation was to the effect that the Applicant was accepted to provide the services to the Second Respondent and was to commence providing the services on 13 April 2010.
6.2 In so far as the agreement was made in writing, it was contained in or is to be inferred from the following documents:
(a) Email from Guy Forsyth of the Applicant to Leslie Herbert of the First Respondent dated 9 April 2010 with the Applicant’s Conditions of Service (the Conditions) attached.
(b) The Conditions provided to the First Respondent on 9 April 2010.
(c) Email from Leslie Herbert of the First Respondent to Guy Forsyth of the Applicant dated 9 April 2010.
6.3 In so far as the agreement was made by conduct, the conduct consisted of or is to be inferred from the following acts or omissions:
(a) The provision of the Conditions to the First Respondent by email on 9 April 2010.
(b) The omission of the First Respondent or the Second Respondent to communicate non-acceptance or rejection of the Conditions prior to the commencement of provision of services by the Applicant to the Second Respondent on 13 April 2010.
(c) The Applicant’s provision of services to the Second Respondent from 13 April 2010 to 19 April 2010.
Factual Background
To speak generally, as alleged by the Respondents, there are two, and only two, distinct contracts involved in this dispute. For ease of reference they will be referred to as “the ACCC contract”, which refers to the contract between the First Respondent, Compas Pty Ltd (“Compas”), and the Second Respondent, the Australian Competition and Consumer Commission (“the ACCC”). The second contract will be referred to as “the Compas contract”, which refers to the contract between Compas and the Applicant, Amalgamated Commercial Holdings Pty Ltd (trading as) Alignity Consulting (“Alignity”). Mr Forsyth is the sole director and shareholder of Alignity.
Mr Forsyth’s services with the ACCC, which were provided through Alignity pursuant to the Compas contract, were terminated shortly after he commenced work with the ACCC in April 2010. It is in relation to that termination of contract that he primarily seeks relief. However, by virtue of certain conduct (particularised in [12] above), Alignity alleges that liability also attaches to the ACCC as the ‘disclosed principal’ of Compas.
For his part, in oral submissions on behalf of the Applicant, Mr Forsyth contended that it was for the Court to determine, at a final hearing, (a) what the actual contractual arrangements between the parties were, and this included (b) whether there was an “implied agency” as between Alignity and the ACCC, and/or (c) that all of the contractual arrangements evidenced by the extensive documentation formally before the Court could (or should), in fact, be abrogated.[6] Unfortunately, as Counsel for the ACCC protested, no such matters have been pleaded by Alignity.
[6] See the discussion at Transcript (30th November 2010) pp.22-24.
I agree with the ACCC’s submission that parties should be and, absent any application to amend (and no such application has been made in this case), are bound by them.[7]
[7] See, for example, Dare v Pulham (1982) 148 CLR 658 at p.664 (Murphy, Wilson, Brennan, Deane & Dawson JJ). In Banque Commerciale SA En Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279 at pp.288-299, immediately before citing from Dare v Pulham, Brennan J said: “When the pleadings bring the parties to the issue, the court’s function is to determine that issue and to grant relief founded on the pleadings unless the parties are allowed to alter the issues at the trial without amendment of the pleadings….” To repeat: that is not the case here. The pleadings have been closed for some time, and formal particulars provided by Alignity on 17th September 2010.
For the reasons that follow, in my view, there were only the two contracts to which I have referred – the ACCC contract, and the Compas contract. In my view, there is no evidence before the Court that could support a finding of an implied agency; however, there is positive evidence that this was clearly not the case.
As well, in my view, neither Alignity nor Mr Forsyth can resile from the documentary evidence before the Court (which includes documentary evidence from Alignity and Mr Forsyth), which supports the findings that
(a) there existed only the ACCC contract and the Compas contract (and the parties previously noted in relation to each of those contracts);
(b) if there is any agency, again according to Alignity’s own documents, it was only as between Compas and Alignity (the former as agent of the latter, principal);
(c) Compas had no actual authority to act for or on behalf of the ACCC so as to bind the ACCC to Alignity (or Mr Forsyth);
(d) there was no ratification by any of the Respondents that could reasonably be taken to suggest (or to represent) to Alignity (or to Mr Forsyth) that Compas was the agent of the ACCC; and
(e) there is no credible or reliable evidence of any action by which Compas could be taken to have been “clothed” with ostensible authority by the ACCC in relation to its dealings with Alignity (or Mr Forsyth).
In these circumstances, the application for summary disposal of the matter between Alignity and the ACCC should be granted. In more detail, the reasons for this conclusion are as follows.
The ACCC Contract: Compas is a provider of contract labour services to various Commonwealth departments. It provides those services pursuant to a head contract with the relevant department, and separate contracts between Compas and the nominated individual – in this case, Mr Guy Forsyth, who might be conveniently described as the alter ego of the Applicant, Alignity.
The Second Respondent, the ACCC, is a body corporate established by s.6A of the Trade Practices Act 1974.
The ACCC procures information and communication technology (“ICT”) using Centrelink’s panel of labour hire companies. When a ‘request for quotation’ is initiated, the usual practice of the ACCC is to email it to at least three (3) labour hire companies from the Centrelink panel.
By Deed of Standing Offer dated 1st November 2007, the ACCC entered into an agreement with Tarakan Consulting Pty Ltd (“Tarakan”) for ICT contractor services. A copy of that Deed is Annexure A to Ms Urquhart’s affidavit, affirmed 18th October 2010.[8] A copy of Tarakan’s acceptance, dated 20th July 2009, is Annexure B to Ms Urquhart’s affidavit. Ms Urquhart is the Director of the Corporate Support Centre, within the Corporate Services Division, of the ACCC. She is responsible for procurement of ICT for the ACCC.
[8] Ms Urquhart has affirmed only one affidavit, which has been filed in these proceedings. Unless otherwise required, all references should be taken to be to this affidavit, usually abbreviated to “Ms Urquhart’s affidavit.” The same is also true in relation to Mr Vassallo, of Compas, to whom reference is regularly made in these reasons. The same course is taken in relation to references to his affidavit. And similarly to Mr Forsyth’s affidavit, filed on 22nd June 2010.
A copy of the curiously undated but otherwise executed deed, by which Tarakan novated its contract with Centrelink (on behalf of the Commonwealth) to Compas, is Annexure C to Ms Urquhart’s affidavit.
By deed, dated 30th July 2009, Compas entered into a contract with the ACCC for the provision of labour hire services. A copy of that deed is Annexure A to Mr Vassallo’s affidavit, sworn 5th October 2010.
The Compas Contract: On 28th March 2010, Ms Urquhart issued a “request for quotation” (“RFQ”). This was sent to six (6) agencies on the panel to which I have referred. Compas was one of those agencies. A copy of that RFQ is annexure D to her affidavit.
Ms Urquhart further deposed in her affidavit (par.4) that the RFQ that ultimately involved Compas was one of several that was issued around that same time.
Following receipt of Ms Urquhart’s RFQ sent on 28th March 2010, on or about 29th March, Mr Vassallo, a director of Compas, distributed by email its own ‘request for quotation’ to a number of [now unidentified] service providers in relation to the RFQ from the ACCC. A copy of the Compas RFQ is Annexure B to Mr Vassallo’s 5th October affidavit.
The Compas RFQ set out the requirements of the position available at the ACCC, namely a “web project manager.” The duration of the contract was short term: it was to finish on 30th June 2010, but with a possibility of an extension. A response to the RFQ was required by 31st March. The “fee structure” simply stated: “hourly rates including GST inclusive rates.”
I pause here to note that the Compas RFQ clearly stated at the top of the document the following: “This Request for Quotation (RFQ) is issued in accordance with the Standing Offer entered into between the Customer and the Contractor dated 1 November 2007.” I stress the descriptors – “Customer” and “Contractor.”
Further, page 2 of Annexure B (the Compas RFQ) shows a section to be completed by Compas, and another to be completed by the “applicant”, in this case, Mr Forsyth. Under the heading “Schedule 12: Agency Quotation” of this page, the following is stated (for ease of reference, I have interpolated the respective entities, either Compas or the ACCC):
Compas Pty Ltd submits a Quotation in accordance with the Standing Offer entered into between the Customer [ACCC] and the Contractor [Compas] dated 1 November 2007 to supply the Services specified in Request for Quotation No. PMO-101-29. The Contractor [Compas] confirms that the terms and conditions specified in the Standard Contract Terms and the Customer’s [ACCC] Request for Quotation will apply in the event that this Quotation is accepted by the Customer [ACCC].
…
The Contractor acknowledges that no binding contract (express or otherwise) is created between the Customer and the Contractor until the parties execute a Work Order.
On 31st March, Mr Herbert, from Compas, submitted Mr Forsyth for the RFQ position at the ACCC.[9] It also happened that Mr Forsyth was submitted by Compas for another position with the ACCC, but which was later withdrawn.
[9] Annexure F to Ms Urquhart October 2010 affidavit contains Mr Herbert’s ‘submission’, presenting Mr Forsyth to the ACCC as an applicant for the advertised position. In the course of the material submitted to ACCC for its consideration, Mr Herbert recorded Mr Forsyth’s extensive experience in project management. It noted his project experience with the Department of Immigration, Alcatel Australia, the Department of Defence, the Royal Australian Navy, Telstra, Optus, and Australian Customs Service. It may be inferred from this significant array of organisations that Mr Forsyth is well versed in what might be described as recruitment processes and the formalities thereto. However, it is unnecessary to draw such, or any, inference in the circumstances.
Following discussions with Ms Urquhart of the ACCC, on or about 9th April, Mr Herbert, on behalf of Compas, contacted Mr Forsyth to inquire about his availability for an interview with the ACCC. An interview was arranged for later that day (9th April). Ms Urquhart and Mr Hunter, both from the ACCC, interviewed Mr Forsyth.[10]
[10] Mr Hunter is the Director of the Information Management and Technology Services Branch of the ACCC.
The notes of the interviews with the six (6) people interviewed for the position, including Mr Forsyth, are at Annexure I of Ms Urquhart’s affidavit. The other applicants for the position came from other recruitment organisations.
Ms Urquhart stated in her affidavit (par.9): “When I conducted these interviews I understood that the ACCC only had a contract with the nominating agency and not with the candidate, accordingly it was not our practice to discuss remuneration with the candidate. … It was a matter between the nominating agency and the candidate.”
It was agreed at the interview between Ms Urquhart, Mr Hunter, and Mr Forsyth, that the latter would commence work with the ACCC the following Tuesday. Ms Urquhart confirmed this situation with Mr Herbert from Compas by email. There followed some further correspondence between Compas and the ACCC regarding details of Mr Forsyth’s commencement times, and such matters. That correspondence is at Annexure J of Ms Urquhart’s affidavit.[11]
[11] See also Annexure D to Mr Vassallo’s affidavit.
Also on 9th April, Mr Forsyth emailed Mr Herbert at Compas in the course of which he said that his company’s (Alignity) ability to commence work at the ACCC’s offices was “most likely to depend on when they [the ACCC] have a contract in place with your Company [Compas].” Under cover of this email he attached Alignity’s ‘standard conditions of service.’[12]
[12] A copy of this email is Annexure C to Mr Vassallo’s affidavit of 5th October.
I observe only that there is no suggestion here of any contractual relationship between Alignity and the ACCC. Indeed, it is a reasonable interpretation of Mr Forsyth’s email that, as a matter of courtesy, he was advising – and nothing more than advising - the ACCC of the contractual difficulties he said he was experiencing with Compas.
For his part, in par.6 of his affidavit filed on 22nd June 2010, Mr Forsyth confirmed that on 9th April 2010 he sent a copy of Alignity’s “Conditions of Service” to Mr Herbert. In consequence of this action, and by virtue of him signing the Compas contract only after he commenced to work at the ACCC (and then under some sufferance or protest), Alignity (and Mr Forsyth) contends that the sending of these terms constituted a binding contract as between Compas and Alignity, and on the terms set out by Alignity.
It is important to note three things at this juncture. First, at no stage did Compas ever sign the Alignity “Conditions of Service.” It has never been pleaded, or even alleged, that Compas ever did so. For that matter, neither did the ACCC. Secondly, clause 37 of the Alignity Conditions of Service describes the ‘relationship between the parties.’ That clause refers to “the recruiter” and “the Contractor” and that the relationship of such entities shall be that of “agent and principal.” Thus, under Alignity’s clause 37, and the definition section of those conditions, the recruiter is Compas, and Alignity is the Contractor.[13] In highlighting this clause, albeit in a document that, in my view, does not determine or otherwise evidence a contract (or its terms) as between Alignity and Compas (for reasons explained later), I seek only to highlight that there is no mention, in any respect, of the ACCC.
[13] I leave to one side that there are, in fact, two clause 37s in the Alignity Conditions of Service.
Thirdly, sending the Alignity Conditions of Service to Compas was directly contrary to what was set out in the Compas Request for Quotation, to which I have earlier referred. In particular, and among other things, it failed to take account of “Schedule 12: Agency Quotation”.[14]
[14] See [28] – [31] of these reasons.
In relation to the forwarded Alignity ‘conditions of service’, Mr Vassallo confirmed that Compas had its own standard terms and conditions, and that they are, necessarily, in conformity with the obligations of Compas under its agreement with the ACCC, to which I have previously referred.[15]
[15] See Mr Vassallo’s October affidavit, par.9. He also observed that he had never experienced a contractor providing their own terms and conditions. Moreover, he said that he understood that it was common knowledge and standard practice to acknowledge that the Commonwealth [through any of its agencies or departments] had the bargaining power, in any event, to demand that its terms and conditions were the only ones, as it were, ‘on the table’ (my words, not those of Mr Vassallo).
Ms Urquhart sent the requisite ‘work order’ to Compas on 12th April. The work order, signed by both parties, is at Annexure K to her affidavit.[16]
[16] See, in particular, pp.132-136 of Ms Urquhart’s affidavit. The Work Order refers to the ACCC as the “Customer”, and to Compas as the “Contractor.” Among other provisions, the Work Order specifies (at par.3) that the “Specified Personnel must before commencing to provide the Services: Sign and return the ACCC’s “Deed of Understanding and Acknowledgement.” Mr Forsyth is named as the “Specified Personnel.”
Next of relevance is that, on 13th April, Mr Vassallo emailed Mr Forsyth a Compas contract with a request that it be signed and returned to him.[17]
[17] A copy of this email is Annexure G to Mr Vassallo’s affidavit.
Mr Vassallo deposed to seeing the 9th April email (referred to in [37] above) on Monday the 14th, following which he telephoned Mr Forsyth. He said that he informed Mr Forsyth that his ‘standard terms and conditions’ were not acceptable, that it contained the incorrect hourly rate, that it incorrectly stated it to be a contract with Tarakan (rather than Compas), and that the terms were, in any event, inconsistent with the requirements of the Commonwealth. Following this conversation, Mr Vassallo said that he emailed Mr Forsyth and requested various details from him in relation to Alignity, such as current workers compensation policy.[18]
[18] See Mr Vassallo’s affidavit, pars.10-12, and Annexure E to it.
Also on 14th April, Mr Forsyth emailed Ms Urquhart at the ACCC. In that email, Mr Forsyth relevantly stated:
I have provided a copy of my company’s conditions of service to the agent as the contract for engagement prior to commencing (copy attached). The agent has requested that their contract (provided yesterday) be signed as well but I have advised that there are several terms that are inconsistent with my conditions of service. Until these are resolved then I would suggest that the contract in place is as per the attached.
The Alignity standard terms attached to Mr Forsyth’s email to Ms Urquhart are signed only by Mr Forsyth. On the face of this email, according to Mr Forsyth at least, there remained significant terms to be resolved as between Alignity and Compas. In such circumstances, a question might be posed as to whether there existed, at or around this time of 14th April, a contract at all as between Compas and Alignity. Alternatively, it might be argued that there was a contract between those parties but with a number of terms still to be determined. As Lord Wright said in Scammell & Nephew Limited v Ousten:[19]
There are many cases in the books of what are called illusory contracts, that is, where the parties may have thought they were making a contract but failed to arrive at a definite bargain. It is a necessary requirement that an agreement in order to be binding must be sufficiently definite to enable the court to give it practical meaning. Its terms must be so definite, or capable of being made definite without further agreement of the parties, that the promises and performances to be rendered by each party are reasonably certain.
[19] [1941] AC 251 at pp.268-269.
A third alternative interpretation of Mr Forsyth’s email of 14th April is that Compas and Alignity had agreed, but only in so far as it was an agreement to agree further. If such a statement accurately reflected the position, it would not be an enforceable contract.[20]
[20] See, for example, the comments of Menzies J in Thorby v Goldberg (1964) 112 CLR 597 at p.607. Since the hearing in this matter, the Full Court of the Federal Court has delivered a detailed judgment which, in a number of respects, most helpfully traverses significant areas of the law in relation to the formation of contract. See Australian Securities and Investments Commission v Fortescue Metals Group Ltd [2011] FCAFC 19, and in particular [120] – [165] (Keane CJ), and [223] – [225] (Finkelstein J).
Because the matter, as previously noted, between Alignity and Compas has resolved, formally I do not need to make any ruling or determination on which view I should be minded to take of the ‘agreement’ as between those parties. However, it is important for the remaining contest between Alignity and the ACCC that I observe that in this correspondence from Mr Forsyth to the ACCC, there is not the slightest suggestion that there is any contractual relationship between Alignity and the ACCC. Indeed, he may be taken simply to be advising the ACCC (as he had previously done on 9th April)[21] that there were some – perhaps significant - outstanding issues between Alignity and Compas, and which did not involve the ACCC. Mr Forsyth was [again] advising the ACCC of these difficulties as a matter of courtesy.
[21] See [37] & [38] of these reasons.
Pausing here further, I note that in the interview notes of Ms Urquhart, to which I have earlier referred, there is no mention of any dissatisfaction or inquiry raised by Mr Forsyth with the terms and conditions that were plainly set out in the RFQ from Compas, dated 26th March 2010. I note again in this regard that the Compas RFQ clearly set out as its contractual touchstone the “Standing Offer entered into between the Customer and the Contractor dated 1 November 2007.”
For the purposes of the current applications I need not detail the ensuing correspondence between various persons at Compas and Mr Forsyth in relation to certain outstanding Alignity company details. They are set out in Mr Vassallo’s affidavit.
On 15th April, Mr Vassallo spoke with Mr Purrer, at the ACCC, in the course of which he advised that Mr Forsyth had still not signed the Compas contract, and that he was having some issues in relation to its termination provisions. Mr Purrer advised Mr Vassallo that if Mr Forsyth did not sign the contract by Friday of that week, he would have to leave the site until he had done so.[22]
[22] See Mr Vassallo’s affidavit, par.17.
By email dated 15th April to Mr Forsyth, Mr Vassallo detailed the range of issues outstanding. In the course of that email, Mr Vassallo confirmed the necessity for a contract to be signed with Compas. After noting a couple of matters that could be altered in the contract, Mr Vassallo stated: “We are not prepared to sign any other conditions that do not reflect our contract with ACCC.” He continued:
We cannot pay anything until we have a signed contract. If we cannot agree on a contract that you are prepared to sign, we just have to cancel our agreement with the ACCC. We have talked to the ACCC and made them aware of the potential. They want a quick resolution. But you need a quick resolution too because you need to know that you are going to be paid for any work you undertake.
In the same email, a copy of which is at Annexure H to Mr Vassallo’s affidavit, he offered that, if Mr Forsyth wished, he could deal with someone else at Compas.
Mr Forsyth responded to Mr Vassallo’s email, also by email dated 15th April. It is Annexure I to the latter’s affidavit. In the course of it, Mr Forsyth protested at Compas’s insistence on the provision of certain documents, upon some of which he protested further that Compas had no right to withhold payroll tax. He also stated: “The issue of whether Alignity Consulting pays me personally a salary is irrelevant. This is a business to business transaction.”
In my view, the ‘business context’ highlighted by Mr Forsyth is significant. No less significant is the fact that the narrative thus far makes plain that significant discussion was still being undertaken about certain terms of the contract as between Compas and Alignity, and also (at least so far as Mr Forsyth was concerned) in relation to the terms upon which he was to work at the ACCC.
Returning then to the historical narrative, but which continues to highlight what might be described as the ‘legal disturbance’ between the various parties, at a little length Mr Forsyth noted that the fundamental basis of the contract was the hourly rate of $100 plus GST. He averred that this was “reflected in our conditions of service.” He confirmed that he was aware that Tarakan had signed a contract with the ACCC but was not aware of its terms. The issue, for him, was the ACCC’s insistence, as he said, on provision of termination of the contract with him on 4 week’s notice. On this basis, he said that the contract “should be written as a 4 week contract renewable at each 4 weeks subject to renegotiation. If the ACCC wants to be able to immediately terminate then that should be available to both parties.”
My reference to ‘legal disturbance’ should be taken to be something of a short-hand expression of the lack of agreement between the parties regarding basic terms of Alignity’s engagement, and the provision of Mr Forsyth’s services to the ACCC. It would appear that the so-called disturbance was on a number of levels, but at least, and rather significantly so, as between Mr Forsyth and Compas.
Mr Forsyth also said in his email to Mr Vassallo that “it is a little late to be introducing terms into a contract that has already commenced” and that “we” “were given no indication prior to commencing work that your contract was required to be signed.”
I observe, more by way of comment than any formal finding that it strikes me as very strange that Mr Forsyth would seem to question the requirement that there be a contract between Compas and Alignity executed by both parties, (a) in the light of the Compas RFQ, and (b) in the light of the on-going contest regarding his terms of engagement to work at the ACCC.
Mr Vassallo responded briefly by further email of 15th April.[23] Without going into all the details, in it he advised Mr Forsyth that he was required to provide all the information sought, and that he was required to advise Compas “today” of his decision about the provision of required information so that Compas could advise the ACCC and “possibly provide a replacement.” Finally, Mr Vassallo confirmed that the contract, if signed by Mr Forsyth (on behalf of Alignity), would be with Compas and not Tarakan.
[23] See Annexure J to Mr Vassallo’s affidavit.
On 15th April, Mr Vassallo advised Ms Urquhart of the issues in relation to the contract with Mr Forsyth.
On 16th April, according to Mr Vassallo, following further discussion with the ACCC he spoke again with Mr Forsyth about the need to sign the Compas contract. According to Mr Vassallo, Mr Forsyth said, “OK, I will sign it and fax it back to you.” The copy of this signed and faxed document, said Mr Vassallo, was incomplete.[24] He advised Mr Forsyth of this and sent Mr Murphy of Compas to the ACCC offices, where Mr Forsyth signed the document.
[24] A copy of the incomplete contract signed by Mr Forsyth is Annexure L to Mr Vassallo’s affidavit.
A copy of the Compas contract, executed by Mr Forsyth, is Annexure M to Mr Vassallo’s affidavit. It is dated 13th April, but I take it, in the light of the above narrative of events and the incomplete contract executed and faxed by Mr Forsyth, that it should be taken as having an effective date of 16th April.
Of some moment, also on 16th April, Mr Forsyth signed a document entitled “Deed of Acknowledgment and Understanding.” Formally, the Deed relates to Mr Forsyth’s agreement to certain restraints in relation to the use of ACCC’s ‘confidential information’ and related matters. A copy of that Deed is annexed to Mr Hunter’s affidavit, affirmed on 18th October 2010 (and filed the same day). Mr Hunter is a Director within the ACCC’s Information Management and Technology Services Branch.
The ‘purposes’ (or recitals) to the Deed confirm, so far as is relevant for current purposes, the following (quoting directly from the Deed):
o The ACCC and Compas (‘the Contractor’) have entered into a contract pursuant for the provision of certain Services (‘Contract’).
o I will be engaged directly or indirectly by the Contractor in connection with the performance of the Contract.
o The Customer [the ACCC] … requires me to execute this Deed to Comply to ensure that the Confidential Information is protected by me.
I do not understand there to have been any suggestion by Mr Forsyth (or Alignity for that matter) that this Deed of 16th April which he signed was either inaccurate and or that it was entered into by him other than as part and parcel of his labour with the ACCC. This is to say that, whatever his concerns expressed in relation to Alignity signing the Compas contract, there is no suggestion that Mr Forsyth was coerced to sign the Deed.[25]
[25] In written submissions from Mr Forsyth in response to an inquiry from the Court emailed to all parties, post the hearing, he contended that this Deed was in fact another example of the control exerted by the ACCC in the engagement of Alignity, and that the “First Respondent [Compas] can effectively do nothing that is not dictated or mandated by the Second Respondent.” In my view, such submissions misconstrue the contractual obligations as between Compas and the ACCC. Similarly, the submission misunderstands the express terms of the Deed and the relationship between the ACCC and Mr Forsyth to which they refer.
If this be the case, one might ask, not unreasonably, and leaving to one side for the moment the terms of the Compas contract, and the ACCC contract, how or why this Deed does not accurately reflect the relationship between the parties, thus: that Compas is a “contractor”, rather than an agent of the ACCC, and that Mr Forsyth’s (and Alignity’s) contractual relationship is with Compas, and not with the ACCC?[26]
[26] Although not formally argued (or pleaded), it might also be said that Mr Forsyth is estopped from denying the statements of fact (and or law) set out in this Deed concerning the respective legal relationships of the parties.
At this further juncture, it is apt to note a number of matters from documents provided by Mr Forsyth. In my view, they are of some moment. The relevant matters are noted in two emails from Mr Forsyth to Mr Vassallo, both dated 19th April. The first bears a time of “4:05pm”; the second is timed as “4:32pm”.[27]
[27] These emails are at GF18 & GF20 to Mr Forsyth’s affidavit.
In the first of these emails, Mr Forsyth said (emphasis added):
If your firm does not want to continue to represent our company then we are willing to transition to another organisation. If you would like to assign your contract to our company then we are willing to do so, however, this is a negotiation between your Company and your client. We will become involved when you have made the necessary arrangements and sought consent.
After receiving a negative response from Mr Vassallo (see Annexure P to his affidavit), in the second of the emails to Mr Vassallo on 19th April, among other things, Mr Forsyth said:
… In the meantime I will investigate assignment of the contract. Please advise your contact point inside the ACCC.
A number of questions arise in the light of this email correspondence. They might include the following: how can Alignity (and Mr Forsyth) submit, on the one hand, that there exists a contract between Alignity and the ACCC, courtesy of the latter’s alleged agent Compas, but on the other, in this email correspondence, acknowledge that there is a separate contract between Compas and the ACCC which Alignity is prepared to have assigned to it? Put another way: why inquire about and confirm the readiness to assign Compas’s contract with the ACCC if, as pleaded, there [already] existed a contract between Alignity and the ACCC? It would be a needless and superfluous exercise – unless the emails were simply an acknowledgment and confirmation of the contractual reality between the respective parties. In my view, the emails state and confirm precisely this.
In my view, in addition to other matters noted in these reasons, the pleading by Alignity of a contract between the ACCC and Alignity, whether via any agency of Compas or not, is unsustainable in the light of the email correspondence from Mr Forsyth to Mr Vassallo. Having stated what he did in those emails, Mr Forsyth (on behalf of Alignity) cannot now plead a factual and or legal position that is completely at odds with his earlier statements. He cannot be permitted to resile from what he stated in correspondence with Compas: is estopped from doing so.
Again to return to the final part of the factual narrative, unfortunately, further difficulties ensued between Mr Forsyth and Compas, which is recorded in the affidavits of Ms Urquhart and Mr Vassallo.[28] I do not need to traverse the minutiae of those matters.
[28] See pars. 20-28 of Ms Urquhart’s affidavit, and pars.29-35 and the annexures thereto of Mr Vassallo’s affidavit. See also Annexures GF15 – GF 21 of Mr Forsyth’s affidavit.
In the course of a telephone conversation between Mr Purrer of the ACCC and Mr Vassallo of Compas on 19th April, Mr Purrer advised Mr Vassallo that, in the light of the failure of Alignity/Mr Forsyth to comply with certain contractual requirements regarding the provision of workers compensation insurance, the ACCC terminated its contract with Compas in relation to Mr Forsyth’s services.[29] In turn, Compas terminated its contract with Mr Forsyth.
[29] See the [almost] contemporaneous account of events by Mr Purrer in his email to Ms Urquhart, dated 20th April 2010, which is Annexure M to Ms Urquhart’s affidavit.
Procedural History
Pursuant to orders made on 19th July, a Statement of Claim was filed on 9th August, and ‘further and better particulars’ provided by the Applicant on 17th September 2010.
Over the opposition of Compas, pursuant to orders made on 16th August, leave was granted to Mr Forsyth to continue to appear on behalf of the Alignity.[30]
[30] Cf. Federal Magistrates Court Rules 2001, r.9.04, which provides that ‘except as provided by or under an Act or regulations made under an Act, or with the leave of the Court, a corporation may not start or carry on a proceeding otherwise than by a lawyer.’ Mr Forsyth is the sole director of the Applicant Company, Alignity. Among other things, he has an undergraduate degree in commerce and a post-graduate degree in corporate law. He has some further qualifications in project management. On the basis of his qualifications, which are set out in documents provided by Compas to the ACCC (at p.111 of Ms Urquhart’s affidavit), he does not have an under-graduate degree or other relevant qualifications that would entitle him to practise law. In the event that the matter was to proceed, more likely than not, on the basis of principles set out in Termi-Mesh Australia Pty Ltd v Josu Manufacturing Pty Ltd [1999] FCA 1241 (French J); Australian Competition and Consumer Commission v Dataline.net.au Pty Ltd [2004] FCA 1361 (Kiefel J); and Young v ICM Agriculture Pty Ltd (2009) 260 ALR 257 (Lindgren J), I would be minded to require the Applicant to be legally represented and to revoke the leave previously granted to Mr Forsyth. As well, Mr Forsyth has indicated that he has briefed Counsel to appear at any final hearing.
Compas filed its Response on 28th September, while the ACCC filed a Response, Defence and Cross-Claim on 6th October. The Cross-Claim sought damages for breach of contract, and an indemnity, from Compas. Among other things, the ACCC denied that there was any relationship of employment, agency or partnership between the Respondents.
Compas filed a Defence to the Cross-Claim on 21st October.
On 26th October, orders were made, among other things, listing the [then foreshadowed] summary dismissal application, and also otherwise listing the matter for a final hearing to commence on 21st March 2011.
On 5th November, the ACCC filed a Notice to Admit Facts and Authenticity of Documents. Alignity filed a Response to this Notice on 18th November.
On 9th November, Compas filed an Application in a Case seeking the summary dismissal of the Cross-Claim brought by the ACCC.
On that same day (9th November), pursuant to partial resolution at mediation (held on 21st October) of the matters before the Court as between Alignity and Compas, Alignity filed a Notice of Discontinuance in relation to its claim against Compas.[31]
[31] I have previously noted that the Court has no knowledge of any of the details of this mediated resolution of matters between Alignity and Compas.
On 24th November, the ACCC filed an Application in a Case in which it sought orders in the alternative: (a) that Alignity’s claim against the ACCC be summarily dismissed; or (b) in the event that the summary dismissal application did not succeed, security for costs in the sum of $24,446.50 be paid to the Registry of the Court and, in the absence of payment, the proceedings be stayed.
The summary dismissal application was heard on 30th November, at which time orders were made to allow for the filing of further written submissions. They were filed by Alignity on 13th December, by the ACCC on 14th December, and further submissions in Reply by Alignity on 17th December 2010. Since then, following further clarifying questions in writing by the Court, Mr Forsyth provided additional written submissions in reply on 22nd February, and the ACCC on 23rd February 2011. Given the resolution of Alignity’s claims against Compas, Compas understandably declined to make any submissions on the clarifying questions put by the Court.
The final part of these reasons proceeds as follows: (a) the summary dismissal applications by (i) the ACCC against Alignity, and (ii) by Compas against the ACCC; (b) the application for security for costs.
The Summary Dismissal Applications – General Principles
The principles in relation to a summary dismissal application, distilled from the case law and in the light of statutory and regulatory provisions, may be considered as follows.
The statutory basis upon which the Court exercises such a course is located in s.17A of the Federal Magistrates Act. That section states:[32]
[32] S.17A of the Federal Magistrates Act mirrors s.31A of the Federal Court of Australia Act 1976. Thus, the jurisprudence in relation to s.31A is relevant to the consideration of s.17A.
(1) The Federal Magistrates Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:
(a) the first party is prosecuting the proceeding or that part of the proceeding; and
(b) the Court is satisfied that the other party has no reasonable prospect of successfully defending the proceeding or that part of the proceeding.
(2) The Federal Magistrates Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:
(a) the first party is defending the proceeding or that part of the proceeding; and
(b) the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.
(3) For the purposes of this section, a defence or a proceeding or part of a proceeding need not be:
(a) hopeless; or
(b) bound to fail;
for it to have no reasonable prospect of success.
(4) This section does not limit any powers that the Federal Magistrates Court has apart from this section.
Rule 13.10 of this Court’s Rules also relevantly provides as follows:[33]
The Court may order that a proceeding be stayed, or dismissed generally or in relation to any claim for relief in the proceeding, if the Court is satisfied that:
(a) the party prosecuting the proceeding or claim for relief has no reasonable prospect of successfully prosecuting the proceeding or claim; …
[33] This Rule also provides for the summary dismissal of matters where they are considered to be frivolous or vexatious, or an abuse of process. In my view, no such considerations apply in this case.
Subject to more recent guidance from the High Court and the Federal Court, it is convenient to note here the following cases which otherwise, respectfully, provide a convenient and helpful touchstone for the applications currently before the Court. Thus: White Industries Australia Ltd v Federal Commissioner of Taxation, Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd, and the Full Court decision in Jefferson Ford Pty Ltd v Ford Motor Company of Australia Ltd.[34]
[34] White Industries Australia Ltd v Federal Commissioner of Taxation (2007) 160 FCR 298 (Lindgren J), Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd (2006) 236 ALR 720 (Rares J), and the Full Court decision in Jefferson Ford Pty Ltd v Ford Motor Company of Australia Ltd (2008) 167 FCR 372 (Finkelstein, Rares & Gordon JJ). In the latter case, see especially the six principles set out by Gordon J at [123] – [134]. I am also conscious of Finkelstein J’s more recent helpful, and direct, discussion of Jefferson Ford in Imobilari Pty Ltd v Opes Prime Stockbroking Ltd (2008) 252 ALR 41. See his “dialogue”, especially at [7] – [9], of the distinction between summary judgment and strike out applications. In a non-statutory context, see also the principles set out by Kirby J in Lindon v Commonwealth of Australia (No 2) (1996) 136 ALR 251 at [14].
It is helpful to note also the summary of principle by Sundberg J in Adnunat Pty Ltd v ITW Construction Systems Australia Pty Ltd.[35] At [37], his Honour said:
[37] In applying s 31A, the court does not conduct fact finding but must assess the strength of the allegations made by reference to the pleadings, affidavits and any other evidence adduced, in order to determine whether the claim is sufficiently strong to warrant a trial: see Jefferson Ford 167 FCR at [23] (Finkelstein J), [74] (Rares J) and [130] (Gordon J); see also Bradken Resources Pty Ltd v Lynx Engineering Consultants Pty Ltd [2008] FCA 1257 at [28] (Emmett J); Imobilari Pty Ltd v Opes Prime Stockbroking Ltd [2008] FCA 1920 at [6] (Finkelstein J). Ultimately, the court must consider whether there are any real, as opposed to fanciful, issues of fact or law that require proper determination at a trial.
o In assessing whether there are reasonable prospects of success, the court should draw all reasonable inferences (but only reasonable inferences) in favour of the non-moving party: see Jefferson Ford 167 FCR at [132] (Gordon J). Moreover, where the evidence on a summary judgment application is of an ambivalent character, there will be a real issue of fact and therefore reasonable prospects of success for the purposes of s 31A: see Boston 236 ALR at [45]; Jefferson Ford 167 FCR at [73] (Rares J) and [130] (Gordon J).
o The moving party bears the onus of persuading the court that its opponent has no reasonable prospects of success: see Jefferson Ford 167 FCR at [127] (Gordon J); Boston 236 ALR at [45]. However, where the moving party establishes a prima facie case for summary judgment, the opposing party must be able to point to “specific factual or evidentiary disputes that make a trial necessary”: see Jefferson Ford 167 FCR at [127] (Gordon J).
o As s 31A requires in effect a prediction as to the outcome of a claim, the court should be more reluctant to summarily dismiss a claim where real questions of fact and credit arise. In those cases, the court will not have all material evidence before it until trial, the credit of important witnesses will not have been tested and it will as a consequence be very difficult if not impossible to fairly assess the prospects of the claim: see Jefferson Ford 167 FCR at [20] (Finkelstein J); Dandaven v Harbeth Holdings Pty Ltd [2008] FCA 955 at [6] (Gilmour J).
[35] [2009] FCA 499.
Sundberg J’s remarks have been endorsed in subsequent cases, some of which are post the High Court judgment in Spencer v Commonwealth (noted below). Thus: Kenny J in Deputy Commissioner of Taxation v Southgate Investments Funds Limited, and Ryan J in Helal v McConnell Dowell Constructors (Aust) Pty Ltd.[36]
[36] Respectively, [2010] FCA 129 at [22], and [2010] FCA 1462 at [12]. See also the comments of Bennett J in Australian Competition and Consumer Commission and Another v Link Solutions Pty Ltd (CAN 126 049 214) and Others (No 2) [2010] FCA 919.
To these cases, the following important matters need to be considered. Most importantly, in Spencer v Commonwealth, the High Court considered further the principles and operation of s.31A of the Federal Court of Australia Act. Thus, French CJ and Gummow J said, at [24]: “The exercise of powers to summarily terminate proceedings must always be attended with caution.” Their Honours further advised, at [25] – [26] (internal citations omitted):[37]
[25] Section 31A(2) requires a practical judgment by the Federal Court as to whether the applicant has more than a "fanciful" prospect of success. That may be a judgment of law or of fact, or of mixed law and fact. Where there are factual issues capable of being disputed and in dispute, summary dismissal should not be awarded to the respondent simply because the Court has formed the view that the applicant is unlikely to succeed on the factual issue. Where the success of a proceeding depends upon propositions of law apparently precluded by existing authority, that may not always be the end of the matter. Existing authority may be overruled, qualified or further explained. Summary processes must not be used to stultify the development of the law. But where the success of proceedings is critically dependent upon a proposition of law which would contradict a binding decision of this Court, the court hearing the application under s 31A could justifiably conclude that the proceedings had no reasonable prospect of success.
[26] Where an application under s 31A requires consideration of apparently complex questions of fact, then the caution uttered by Lord Hope is relevant. The importance of those considerations is amplified if the case involves resolution of issues of law and fact, or mixed law and fact.
[37] See also the detailed observations by Hayne, Crennan, Kiefel and Bell JJ at [51] – [60]. See, too, the earlier comments of Gleeson CJ, Gummow, Hayne & Crennan JJ in Batistatos v Roads and Traffic Authority (NSW) (2006) 226 CLR 256 at p.275 [46] (internal citations omitted): “Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways, but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way." These remarks from Batistatos were cited with approval in Spencer at pp.131-132 [24].
To the above, I simply note the Full Court’s brief observation in Davis v Insolvency and Trustee Service Australia,[38] at [18]: “… we do not read Spencer as requiring that summary relief be withheld where there are factual disputes about matters which are not material to the resolution of the litigation.” Such is clearly the case here as between any factual or legal contest between Compas and Alignity because they have now been resolved and the proceedings between them discontinued.
[38] [2010] FCAFC 141. This judgment was delivered after oral argument but before the final written submissions were provided in the current proceedings.
Contentions & Resolution
At the hearing of the various interlocutory applications on 30th November, it was submitted by Counsel for the ACCC that “it is absolutely essential on the part of Amalgamated Commercial [Alignity] to establish that Compas was the agent of the ACCC. If they cannot establish that element of their statement of claim they cannot succeed against the ACCC.”
Respectfully, I agree.
Alignity’s claim against the ACCC is predicated upon Compas being an agent for the ACCC, and contracting with Alignity/Mr Forsyth precisely in that capacity. For the reasons that follow, and taking the best possible view of Alignity’s case, at each and every turn the plain reading of the relevant documents tell, as a matter of law, against Compas either (a) being an agent of the ACCC, or (b) acting in such a way as to allow or to lead Alignity/Mr Forsyth to consider that it had authority to act, and that it was so acting, as an agent for the ACCC. As well, in my view, the factual data is sufficiently cogent that Mr Forsyth is now not able to contend that Compas acted as an agent, of any kind, on behalf of the ACCC.
First, in the substantive proceedings against the ACCC, Alignity/Mr Forsyth bears the onus of establishing two things: (a) that a contract existed between Alignity and the ACCC, and (b) that Compas had the requisite authority to make the contract on behalf of the ACCC.
The early High Court decision of Lysaght Bros & Co Ltd v Falk, conveniently provides authority for the propositions in relation to ‘onus’ to which I have just referred. It also conveniently provides relevant principle in relation to an agent’s authority, to which further reference is made shortly. Griffiths CJ said:[39]
… when an action is brought by a plaintiff against a defendant on a contract, he must prove that the contract was made, and, if the contract was made by an agent, he must prove the authority of the agent to make it. That proof may be given in various ways, but the onus is upon the plaintiff to prove the agent's authority to make the specific contract sued upon. It may be done by showing that the agent had express authority to make that contract, or it may be done by giving evidence to show that primâ facie he had authority to make contracts of that kind. But in every case the question is: Had he authority in fact to make that contract? The most common case is, I think, that though the agent had not express authority to make the particular contract in question, he had been held out by his principal as having authority to make contracts of that kind. In that case the principal cannot say to a person who dealt with the agent on the faith of the holding out—"Oh, I gave secret instructions to my agent." The principal is not allowed to set that up by reason of estoppel. Having held out the agent as his agent to make contracts of that kind, he cannot set up, against a person dealing innocently with the agent on the faith of the holding out, that the agent has in fact gone beyond the limits of his authority.
[39] (1905) 2 CLR 421 at pp.427-428. Lysaght Bros v Falk was cited with approval by Brennan J in Legione v Hateley (1983) 152 CLR 406 at pp.452-453 for the following proposition: “A principal is not bound by an act of an agent who declares that he has no authority to bind him by that act.”
In my view, Alignity has not established either that a contract existed as between Alignity and the ACCC, or that Compas had the requisite authority to make the contract on behalf of the ACCC. Moreover, taking, at this stage, only Mr Forsyth’s emails with Mr Vassallo dated 19th April 2010, that correspondence establishes either or both that (a) there remained significant questions (at least according to Mr Forsyth) as between Alignity and Compas regarding his terms of engagement with Compas (and the ACCC), and/or (b) Alignity (and Mr Forsyth) acknowledged that there were two, distinct contracts, one between Compas and the ACCC, and a second contract, to which the only parties were Compas and Alignity. If that were not so, as I have previously asked, why would Mr Forsyth propose that the Compas/ACCC contract be assigned to Alignity?
Also, by his earlier signing of the Deed of Acknowledgement with the ACCC on 16th April, Mr Forsyth acknowledged (a) the prior contractual relationship between Compas and the ACCC (to which neither he personally nor Alignity were a party), and (b) that he was engaged by the ACCC [only] by Compas and not by the ACCC.
Secondly, in the context of the current summary dismissal application, the ‘onus’ question might best be considered as requiring the ACCC to establish sufficiently, either as a matter of fact and or as a matter of law, that there is no (or manifestly, or significantly, inadequate) evidence presented by Alignity to be able to establish that there was a relationship of agent (Compas) and principal (the ACCC) in the relevant dealings with Alignity, such that there is ‘no reasonable prospect of the Alignity claim against the ACCC succeeding.’. It was clearly on this basis that the ACCC put its submissions.[40] Indeed, as I have already noted, the ACCC contended that there was positive evidence to support its submission denying the existence of any agency between Compas and the ACCC, and therefore any contractual relationship (or liability) between the ACCC and Alignity (or Mr Forsyth).
[40] Formally, Compas supported the summary dismissal application by the ACCC against Alignity, but made no submissions in this regard.
For the purposes of establishing, without factual controversy, the contractual relationship between Compas and the ACCC, Counsel for the ACCC only relied formally on paragraphs 1-4 of Ms Urquhart’s affidavit, and paragraphs 14-15 of Mr Hunter’s affidavit, and the annexures referred to in those paragraphs. I have, of course, already referred often to both affidavits, and Ms Urquhart’s in particular. In his submissions, the annexed documents provided the totality of the contractual arrangements as between Compas and the ACCC.
The ACCC’s submissions were as follows.
In relation to the establishment of an agency relationship, such can be established by one of three ways: (a) express agreement; (b) ratification by the principal of the acts of an agent; or (c) the principal acting in a way that would mislead a third party as to the status and scope of the agent’s authority.[41]
[41] Generally, see G.E. Dal Pont, Law of Agency (Second Edition) (LexisNexis Butterworths, 2008); F.M.B. Reynolds, Bowstead & Reynolds on Agency, (Eighteenth Edition) (London: Sweet & Maxwell, 2006).
Summarily the ACCC submitted that
(a) the express terms of the contractual relationship clearly defined the relationship between Compas and the ACCC and stated unambiguously that the contract did not create a relationship of employment, agency or partnership;
(b) there was no ratification of any acts of Compas by the ACCC; and
(c) there were no acts (or omissions) by the ACCC which could have reasonably led Alignity to infer that Compas had relevant authority from the ACCC so as to establish a contractual relationship between Alignity and the ACCC.
Even more summarily, Counsel for the ACCC submitted:[42]
… at the point we have reached now where all of the evidence is in, there is no evidence that Compas was the ACCC’s agent and more than that, there is positive evidence that Compas was not the agent of the ACCC and contracted with Mr Forsyth as principal and could only contract with him as principal because it had no authority to contract on behalf of the ACCC.
[42] Transcript (30th November 2010) p.6.
I will deal with each of the arguments, for convenience, under the following headings: express agency; agency by ratification; and agency by representation or estoppel.
Express Agency: As to the ACCC contract, that is, as between the ACCC and Compas, it is sufficient to note the following from the unchallenged documents before the Court.
As already noted, there is a Deed of Standing Offer for ICT Contracting Services, dated 1st November 2007, to which the original parties were the Commonwealth of Australia represented by the Chief Executive of Centrelink (described as the “Customer”) and Tarakan Consulting Pty Ltd (described as the “Contractor”). That document is annexure A to Ms Urquhart’s affidavit.
Also as previously noted, that Deed was novated from Tarakan to Compas in 2009. That document, so far as is relevant, is also annexed to Ms Urquhart’s affidavit.
At page 3 of this Deed, the following “Background” is provided.[43] Thus:
i. The Customer [the Commonwealth and or one of its agencies] requires the provision of contract information and communication technology (“ICT”) personnel with relevant skills and experience from time to time.
ii. The Contractor [then Tarakan, subsequently Compas] has represented that it has the requisite personnel, skills, knowledge, resources, facilities and experience to be able to provide cost effective professional proposals to meet the Customer’s requirements if requested to do so.
iii. This Standing Offer set out the agreed arrangement in respect to the Contractor’s offer to provide Services and the terms and conditions relating to contracts for such services.
[43] In more traditional parlance this section of the Deed would more likely be considered part of the ‘recitals.’ Such matters are also the subject of some comment by the Full Court of the Federal Court in Australian Securities and Investments Commission v Fortescue Metals Group Ltd [2011] FCAFC 19, to which I have earlier referred, and in the paragraphs there cited. See footnote 20 of these reasons.
In the “Definition and Interpretation” section of the Deed of Standing Offer, “Request for Quotation” is defined as follows:
… means a written request from the Customer [the ACCC] to the Contractor [Compas] to provide a Quotation for the provision of Services pursuant to this Standing Offer, containing sufficient information concerning the Customer’s requirements to enable the Contractor to be able to reasonably provide that quotation….
Clauses 4.1 and 4.2 of the Deed of Standing Offer provide for the mechanics as to what is to transpire ‘when a customer issues a request for a quotation to a contractor.’ In this instance, as interpolated into the “RFQ”, the “customer” was the ACCC, and Compas was the “contractor.”
As submitted by Counsel for the ACCC, upon a ‘work order’ being issued, a fresh contract is created between the Commonwealth and the labour hire company for the services of the person which the labour hire company (the contractor) has proposed as capable of providing the services sought by the customer in question.
Certainly, clause 4.2 provides for the terms and conditions of the Deed of Standard Offer to be the terms and conditions for any contract entered into following a Request for Quotation and its acceptance, confirmed by a “Work Order.”
Clause 5 of the Deed of Standing Offer extends the offer, on exactly the same terms in the Deed, to “any other Australian Government Agency”, thereby including the ACCC.
Clause 31.12 of the Deed of Standing Offer states:
a. The parties must not represent themselves, and must ensure that their officers, employees and agents and subcontractors do not represent themselves, as being an officer, employee, partner or agent of the other party, or as otherwise able to bind or represent the other party.
b. This Contract does not create a relationship of employment, agency or partnership between the parties.
As a matter of construction, I accept the submission that, in relation to the ACCC contract as between the ACCC and Compas, there is no capacity or basis for any alternative argument which might suggest that Compas was an agent for the ACCC, or that Compas had any authority so to act on behalf of the ACCC. The precise terms of the documents before the Court, and the facts essentially common to the affidavits filed on behalf of all parties and taken at their highest in favour of Alignity (and Mr Forsyth), preclude any assertion of an express agency relationship between the ACCC and Compas.[44]
[44] Again I note that the submissions put by the ACCC in relation to “agency” were formally supported by Compas.
Agency by Ratification: In the light of what has already been traversed earlier in these reasons, it is sufficient, in my view, simply [again] to refer to and to consider the Deed of Acknowledgement and Understanding, signed by Mr Forsyth on 16th April 2010, which is annexed to Mr Hunter’s affidavit. As already noted, on the face of that Deed the respective relationships between the ACCC and Compas, on the one hand, and Compas and Mr Forsyth, on the other, are clearly defined and acknowledged. Mr Forsyth acknowledged that he “will be engaged directly or indirectly by the Contractor in the performance of the Contract.”
In my view, on the face of this Deed, there can be no scope for arguing that the ACCC ratified any act by Compas by which it asserted that it was acting, or had acted, as an agent for the ACCC in its dealings with Mr Forsyth (and Alignity), and that this was acknowledged by Mr Forsyth. Indeed, I accept also that in requiring the Deed to be signed, (a) the ACCC was denying any purported ratification of any action by Compas that it was the ACCC’s agent, and/or (b) holding out that Compas had any authority – express or implied – to act as its agent in any dealings with Alignity or Mr Forsyth.
Likewise, Mr Forsyth’s email correspondence with Mr Vassallo of 19th April further confirms that there was no contract as between the ACCC and Alignity. Otherwise, as I have noted already on a number of occasions, why would Alignity offer to have assigned to it Compas’s contract with the ACCC?
Agency by representation or estoppel:[45] Since shortly after the case was decided, the High Court has regularly endorsed the statements of principle by Diplock LJ (as his Lordship then was) in Freeman & Lockyer v Buckhurst properties (Mangal) Ltd in relation to the apparent or ostensible authority of an officer of a company dealing with a third party.[46]
[45] In the course of the hearing, Counsel referred to this argument under the general heading of “ostensible authority.”
[46] Freeman & Lockyer v Buckhurst Properties (Mangal) Ltd (1964) 2 QB 480 especially at pp.502-505. See, for example, Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd (1975) 133 CLR 72.
For current purposes, it is sufficient to note the following from Pacific Carriers Ltd v BNP Paribas.[47] At [36], the High Court summarised the legal position in relation to such matters in the following terms (internal citations omitted):
In Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd, and in Northside Developments Pty Ltd v Registrar-General, this Court followed and applied Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd as to the general principles concerning the apparent or ostensible authority of an officer of a company dealing with a third party. Where an officer is held out by a company as having authority, and the third party relies on that apparent authority, and there is nothing in the company's constitution to the contrary, the company is bound by its representation of authority. "The representation, when acted upon by the contractor by entering into a contract with the agent, operates as an estoppel, preventing the principal from asserting that he is not bound by the contract." It is not enough that the representation should come from the officer alone. Whether the representation is general, or related specifically to the particular transaction, it must come from the principal, the company. That does not mean that the conduct of the officer is irrelevant to the representation, but the company's conduct must be the source of the representation. In many cases the representational conduct commonly takes the form of the setting up of an organisational structure consistent with the company's constitution. That structure presents to outsiders a complex of appearances as to authority. The assurance with which outsiders deal with a company is more often than not based, not upon inquiry, or positive statement, but upon an assumption that company officers have the authority that people in their respective positions would ordinarily be expected to have. In the ordinary case, however, it is necessary, in order to decide whether there has been a holding out by a principal, to consider the principal's conduct as a whole.
[47] (2004) 218 CLR 451.
In Pacific Carriers at [38], the Court also noted those cases where (internal citations omitted)
… corporate administrative procedures under which an officer is armed with a document to which he or she can, by signature, impart an appearance of authenticity is a reminder of the wider principle of estoppel which may be relevant to a question of ostensible authority. The holding out might result from permitting a person to act in a certain manner without taking proper safeguards against misrepresentation.
According to the pleadings and the formal particulars in this case, Alignity asserts that Compas’s provision of its response to the ACCC’s ‘Request for Quotation’ (RFQ), which introduced or proposed for the ACCC’s consideration Mr Forsyth for the position at the ACCC and which had been advertised for tender to multiple labour hire business, constituted an agency relationship between Alignity and the ACCC.
Given the express terms of the RFQ, and the terms of the tender, I cannot and do not accept the submission that such action established an agency relationship between Alignity (or Mr Forsyth) and the ACCC.
In the light of the facts as outlined in these reasons, on no version of them could it be said, in my view, that any representation was ever made by Compas that it was the agent of the ACCC. The business circumstances and context tell against it at the outset. Compas introduced its principal, Alignity, to the ACCC for its consideration of Mr Forsyth as a candidate for a particular position, which had been offered for tender through a number of labour hire companies.
As well, Alignity’s own ‘conditions of service’ tell against any agency arrangement as between the ACCC and Alignity. The agency was between Alignity and Compas. And, the terms of the contract between the ACCC and Compas specifically precluded Compas from acting as the ACCC’s agent; i.e. the terms of that contract did not ‘clothe’ Compas with any relevant authority so as to be able to bind the ACCC to any third party, such as Alignity, and directly prohibited such action.
Mr Forsyth also submitted (as set out in the particulars in the Statement of Claim, and in the Further and Better Particulars) that an agency relationship was established between Alignity and the ACCC by virtue of an email which he sent to Mr herbert (of Compas) on 9th April under cover of which he sent Alignity’s Conditions of Service. It is difficult to see how an email from Alignity to an employee of Compas could constitute any form of contract as between Alignity and the ACCC.
Moreover, the same circumstance, namely an email from Mr Forsyth to Mr herbert of Compas on 9th April, cannot, on any account, constitute a representation by the ACCC that Compas was its agent and upon which Alignity acted.
Mr Forsyth also asserted in Alignity’s “Further and Better Particulars” (par.1.1(c)) that by Ms Urquhart’s email to Mr herbert of Compas of 13th April, the ACCC represented Compas as its agent to Alignity. In my view, the email in question did nothing more than request Compas, consistent with (a) the existing contractual arrangements between the ACCC and Compas, (b) the ACCC RFQ, (c) the Compas RFQ, and (d) the Work Order from the ACCC to Compas, to confirm that Mr Forsyth was to commence work at the offices of the ACCC, which in turn was consistent with the contractual relationship between Alignity and Compas.
Conclusion
To summarise the facts and conclusion I have reached in this matter, I will use Lord Hope’s taxonomy in Three Rivers to which I referred at the outset of these reasons. Thus, for ease of reference I set out, but separately so, each of the two categories of matters to which his Lordship referred that warranted or permitted a court to dispose of summarily. Thus the first category, Lord Hope described as follows:
… it may be clear as a matter of law at the outset that even if a party were to succeed in proving all the facts that he offers to prove he will not be entitled to the remedy that he seeks. In that event a trial of the facts would be a waste of time and money, and it is proper that the action should be taken out of court as soon as possible.
As a matter of fact and law, in my view, Alignity (and Mr Forsyth) is estopped from denying the distinct contractual relationships as between, on the one hand, the ACCC and Compas, and on the other hand, as between Compas and Alignity. These relationships as a matter of construction, as a matter of fact, and particularly in the light of documents generated and relied upon by Alignity (and Mr Forsyth), necessarily preclude the existence of any contractual relationship between Alignity and the ACCC via the agency of Compas.
The two distinct contractual relationships were acknowledged by Mr Forsyth, and on more than one occasion. He (and Alignity) cannot now be permitted to resile from those statements and acknowledgment.
Lord Hope’s second category is as follows:
… it may be possible to say with confidence before trial that the factual basis for the claim is fanciful because it is entirely without substance. It may be clear beyond question that the statement of facts is contradicted by all the documents or other material on which it is based.
In my view, as pleaded and particularised by Alignity (and Mr Forsyth), in my view, “it is clear beyond question that the statement of facts is contradicted by all the documents [and] other material on which it is based.”
In Spencer v Commonwealth French CJ and Gummow J enjoined courts to form a “practical judgment” in summary disposal applications, together with the extensive range of other matters to which their Honours referred. Having regard to all of those matters, and forming a ‘practical judgment’ of the facts and documents put before the Court, and having regard to the principles set out in particular by the Full Court of the Federal Court in Jefferson Ford and by Sundberg J in Adnunat, in my view, there is no reasonable prospect of Alignity’s claims against the ACCC succeeding. No agency relationship existed between those parties, and likewise there was no contractual relationship between them. Accordingly, there can be no successful claim for any breach of contract as between Alignity (and Mr Forsyth) and the ACCC. In such circumstances, the relief sought by the ACCC under s.17A of the Federal Magistrates Act should be granted. It is so ordered, with costs to be agreed or taxed.
In reaching the conclusion I have, it is unnecessary to deal with the security for costs application, or the summary dismissal application of the ACCC’s cross-claim against Compas.
I certify that the preceding one hundred and thirty-nine (139) paragraphs are a true copy of the reasons for judgment of Neville FM
Date: 3 March 2011
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