Curtis v Fujitsu General (Aust) Pty Ltd
[2015] VCC 1429
•19 May 2015
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
GENERAL LIST
Case No. CI-14-02521
| PAUL BRENDAN CURTIS and DEBRA BERYL CURTIS | Plaintiffs |
| v | |
| FUJITSU GENERAL (AUST) PTY LTD (ACN 001 229 554) | Defendant |
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JUDGE: | HIS HONOUR JUDGE MACNAMARA | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 11, 12 March, 13, 14, 15, 16, 17 April & 1 May 2015 | |
DATE OF JUDGMENT: | 19 May 2015 | |
CASE MAY BE CITED AS: | Curtis & Anor v Fujitsu General (Aust) Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2015] VCC 1429 | |
REASONS FOR JUDGMENT
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Subject: Claim for commission
Catchwords: Claim for breach of contract to pay commission; formation of contract; significance of particular email setting out terms; scope of contractual entitlement; economic duress constituted by threat to cancel contract without notice; new contract binding despite duress because of Plaintiffs’ affirmation; contract entitles Plaintiffs to commission on benefits to defendant beyond simple refunds.
Cases Cited:TA Sundell & Sons Pty Ltd v Emm Yannoulatos (Overseas) Pty Ltd (1955) 56; SR (NSW) 323; Wigan v Edwards (1973) 1 ALR 497; Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40; Electricity Generation Corporation trading as Verve Energy v Woodside Energy Ltd [2013] WASCA 36; Furphy v Nixon (1925) 37 CLR 161; Smith v William Charlick Limited (1924) 34 CLR 38; Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596; Crawford Fitting Co v Sydney Valve and Fittings Pty Ltd (1988) 14 NSWLR 438; New South Wales Cancer Council v Sarfaty (1992) 28 NSWLR 68; Pao On v Lau Yiu Long [1980] AC 614; North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd [1979] QB 705; Caratti v Deputy Federal Commissioner of Taxation (1993) 93 ATC 5192; (1993) 27 ATR 448; Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd, (1991) 22 NSWLR 298; County Securities Pty Limited v Challenger Group Holdings Pty Limited [2008] NSWCA 193; Geebung Investments Pty Ltd v Varga Group Investments (No 8) Pty Ltd (1995) 7 BPR 14,551; Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570; Whitworth Street Estates (Manchester) Ltd v James Miller & Partners Limited [1970] AC 583; Babsari Pty Ltd v Wong [2000] 2 QdR 576; Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 VPR 11; Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337; Shevill v Builders Licensing Board (1982) 149 CLR 620;
Judgment: Plaintiffs entitled to commission on benefits to defendant beyond simple refunds.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr P.M. Bornstein | Hendersons Legal |
| For the Defendant | Mr A. Manos | Baker & McKenzie |
HIS HONOUR:
Background
1 Fujitsu General (Aust) Pty Ltd, the defendant in this proceeding, is a subsidiary of a Japanese corporation. It markets the Japanese parent’s consumer electrical products in Australia through the usual network of electrical appliance retailers. Fujitsu General’s best-known products are household air-conditioners. They have been promoted on television advertisements in recent years by the former Australian test cricket captain, Mark Taylor. The Japanese parent has another subsidiary operating in Australia known as Fujitsu Australia. This company concentrates on computer products.
2 The plaintiffs, Mr and Mrs Curtis, carry on business under a partnership styled ‘TransActions and Logistics’, which provides consultancy services for customers of freight transport and logistics contractors. The firm’s consultancy services are provided, it would seem, exclusively by Mr Curtis. He described the firm’s business as follows:
“I work for myself as a consultant in the transport business, privately. Anyone that’s really got a large number of billings, I review their billings for them and give them advice on what they’re paying and if there’s any opportunity to improve their position, such as – a lot of things I pick up are in the billing – consolidating of con notes, where they might send five consignments to the same customer on the same day, putting them together as one – saving money. Just reviewing and analysing bills and seeing what rates they’re paying and if – from a background of knowing what market competitive rates are, I can suggest better or improved ways of doing what they’re doing.” (Transcript 88, Lines 5–17)
3 Through a relative of a former business contact, Mr Curtis obtained an introduction to Fujitsu Australia. Mr Curtis says that, by the use of his good offices, he was able to obtain a better deal for Fujitsu Australia. Fujitsu Australia was obtaining its logistics facilities from the national contractor known as Toll Priority. An employee of Toll informed Mr Curtis that Fujitsu General was also purchasing services from Toll on the same basis. The responsible executive at Fujitsu General was Mr Bruce Stuckey, and the transport services related, not to the air-conditioning units, but rather to spare parts. The effect of the better rates which Mr Curtis says he negotiated for Fujitsu Australia automatically flowed through to Fujitsu General.
4 According to Mr Curtis, Mr Stuckey was pleased with the advantage which Fujitsu General had obtained, and offered to introduce him to the executive at Fujitsu General who “looks after the big stuff”; that is, the transport and warehousing of the air-conditioning units, themselves (T90, L22). Mr Curtis was then introduced to Mr Martin Kulmar, who was at that stage a logistics coordinator for Fujitsu General.
5 Fujitsu General had been obtaining its large-scale transport and warehousing services almost exclusively from an organisation known as COPE Sensitive Transport. This company is part of the ‘Federal Group’ and is ultimately owned by a Tasmanian family. Its operation centre is in Derrimut, Victoria. Fujitsu General’s headquarters in Australia are at Eastern Creek in New South Wales. Mr Curtis is a resident of metropolitan Melbourne.
6 COPE provided its services to Fujitsu General under the terms of a master contract originally entered into on 1 May 2010 following an extensive tender process in which Fujitsu General had retained the services of a logistics consultant. The agreement executed was propounded as part of the tender process, presumably by the consultant. It was certainly not COPE’s form. There were transitional issues as to the changeover from the previous contractor to COPE, with the result that the COPE contract did not become operative with the first services being provided, until 18 July 2010.
7 The 2010 agreement contained elaborate provisions for the annual review of rates. The account executive dealing with the contract for COPE was a Mr Quigley. At Fujitsu General the responsible executive was its administration manager, Mr David Higgins. Both these gentlemen, who gave evidence before me, are old-style businessmen. Mr Higgins is now retired. Mr Quigley has ceased full-time work but continues as a consultant to COPE. It seems they reached a ‘handshake’ agreement, which was not evidenced in writing, that, in lieu of the elaborate formula for annual reviews contained in the 2010 agreement, reviews would be made simply by reference to the changes in the Consumer Price Index from year to year. In 2011 such a review was carried out, and a new set of rates was adopted. Mr Higgins calculated the new scale as entailing an average increase of 3.8 per cent. COPE’s system, then operating, rounded rates to the nearest cent, so that in the case of a rate moving from 10 cents for a particular volumetric amount for a particular trip to 11 cents, it would entail a 20 per cent increase. That is, no adjustment to rates of this type could be of a face-value less than 20 per cent, hence the need to view the rate revision by reference to an across-the-board average.
8 It was against this background that Mr Curtis had his first meeting with Mr Kulmar in late March 2012. According to Mr Curtis’ recollection, it was on the 27th of the month (T91, L26). Mr Curtis said he explained to Mr Kulmar that he would review a sample of Fujitsu General’s billings from COPE to ascertain what possible improvements could be made for the benefit of Fujitsu General. According to Mr Curtis, he said to Mr Kulmar:
“If I pick up anything and you get a refund, I get 25 per cent of that or, if I suggest something and you get a benefit from it, I get 25 per cent of that.” (T92, L8–11) (Emphasis added)
9 Mr Kulmar said he regarded the service being offered as simply entailing Mr Curtis’ negotiating refunds from COPE in favour of Fujitsu General, with Mr Curtis being remunerated with 25 per cent of the refund cheque (T680, L30–31). As will appear, this difference in view is of crucial importance in the disputes in this proceeding.
10 Mr Curtis said that in addition to simply seeking refunds relative to invoices he would provide guidance as to a customer’s getting a better deal, better rates, consolidation, avoidance of inappropriate billing practices, such as treating a delivery from Brisbane to Tweed Heads as a Gold Coast delivery rather than a delivery from Brisbane to a New South Wales country centre such as Bathurst (which was the way COPE had been billing these deliveries) (T92 passim). Mr Kulmar agreed that the services which Mr Curtis offered were not confined to finding errors in invoices which had been rendered by COPE. He said that Mr Curtis described to him how:
“He does a health check on the bill, looks for errors in the bill and provides advice on rates.” (T680, L25–27)
11 Mr Kulmar did not believe that the additional services were to be charged for. I asked him if he regarded them “as a free extra?” He replied, “The term I used, your Honour, was ‘value add’.” (T693, L28–29) Mr Kulmar reported on his preliminary discussions with Mr Curtis to his superior, Mr Higgins. At Mr Higgins’ suggestion he sought information on the market rates for these sorts of services. He had difficulty finding a precise analogy on the basis of which to carry out a market analysis. Eventually, he decided the closest “fit” was the business of debt collecting. Mr Kulmar’s investigations showed that debt collectors charged at commission rates between 18 and 38 per cent (T685, L9–11). The 25 per cent charged by Mr Curtis therefore seemed in the middle range and therefore reasonable.
12 Mr Kulmar said that Mr Higgins was particularly concerned not to be “ripped off”. Whilst it was not stated directly, the implication was that Mr Higgins and Fujitsu General had been “stung” by heavy hourly rates charged by the logistics consultants who negotiated the 2010 contract, and Mr Higgins was therefore reluctant to engage any further consultant. Mr Higgins was sceptical and wanted to know if there were any “hidden extras” (T685, L21–23).
13 Mr Curtis signed a confidentiality agreement which he, himself, propounded on 9 April 2012 which obliged Mr Curtis not to disclose information given to him by Fujitsu General. Mr Kulmar signed on behalf of Fujitsu General on 17 April 2012.
14 Mr Kulmar was supportive of the engagement of Mr Curtis. The previous year Fujitsu General had an employee, Petra Reinsch, one of whose major duties was to check billings by COPE for conformity and lack of duplication. Evidently, she identified a number of billing errors and duplication. Mr Grant Douglas, who is the current general manager of COPE, told me that COPE was operating with a manual billing system, and, with the operations spread across the entire country, significant errors and duplications proved impossible to exclude. Mr Kulmar said that when Ms Reinsch ceased employment with Fujitsu General there was no one to carry out that function. It was part of his duties to “sign off” the COPE invoices, and he felt uneasy doing that when the careful checking that Ms Reinsch had previously carried out was not part of the usual system. He warned Mr Higgins that as the responsible manager, he, Mr Higgins, might be in an embarrassing situation if his superiors discovered the situation (T695–6). Mr Kulmar envisaged that Mr Curtis might substitute for Ms Reinsch (T700).
15 It seems that the administrative and reporting arrangements at Fujitsu General require significant engagements to be approved by a senior management committee which meets monthly. Mr Higgins was a member of that committee, but Mr Kulmar was not. Mr Higgins did not inform Mr Kulmar as to whether he intended to raise Mr Curtis’ position with the senior management committee (T701, L29).
16 Mr Higgins sought to have a meeting with Mr Curtis, which took place on 8 May 2012. This meeting, attended by Mr Curtis, Mr Kulmar, and Mr Higgins, followed an agenda provided to Mr Kulmar by Mr Curtis.
17 Mr Curtis analysed and presented data using his overhead projector, which led Mr Higgins to believe that Fujitsu General was being overcharged, based on Mr Curtis’ analysis of the sample that had been provided to him. Mr Curtis was directed to carry out some further analysis. He provided a “USB drive” to Mr Kulmar so that the data for the further analysis could be downloaded onto it and be made available to Mr Curtis for his further analysis (T104–7).
18 On 16 May Mr Curtis had a further meeting with Mr Higgins, at the conclusion of which Mr Higgins ushered Mr Curtis into a meeting with Mr Shimazu, Fujitsu General’s managing director. Mr Shimazu was a Japanese national, and the local managing director on behalf of the Japanese parent company. Some of these managing directors, like the present one, Mr Ishizuka, have a good command of English and perform the full range of functions of a managing director. Others, such as Mr Shimazu, had more limited command of English. In Mr Shimazu’s case, the deputy managing director, Mr Perham, carried out the more hands-on elements of the role of managing director (T702–3).
19 Mr Kulmar was on a holiday to Norway, where his wife was born. Following Mr Curtis’ presentation, Mr Curtis said that Mr Shimazu appeared angered by the costs which were being imposed on Fujitsu General. He said “too much” several times (T114). Following the meeting, Mr Curtis sent an email to Mr Higgins on 18 May thanking him for the opportunity to meet the managing director. He mentioned briefly his experience in providing consultancy services to other Japanese companies in Australia. He said:
“I confirm that I do not charge for my services as I operate on a ‘success fee’ basis only. My share is 25 per cent of any benefit I bring to Fujitsu General by way of credit refund, allowance or cost reduction as a result of my work.
As discussed I have continued in line with the directions from Martin and I am reviewing the last year’s trading by Fujitsu with COPE Transport.
As we discussed, I will continue with the review of the last 12 months invoices from COPE. I will then meet with you again in Sydney next week and we will tee up a meeting for me to have with Grant Douglas from COPE in Melbourne – later that week or the week following. At present we will focus on recovering overcharges from COPE and wait for the approval before any future negotiations take place.” (CB 294)
20 Mr Curtis said that he had suggested that the issues be taken up with Mr Grant Douglas, COPE’s general manager, rather than with the account executive, Mr Quigley, with whom Mr Higgins had been dealing (T116).
21 Mr Higgins then sent an email to Mr Curtis on 23 May 2012 asking him to “arrange a meeting with Grant Douglas to discuss your findings” (CB 38). Mr Higgins had directed Mr Curtis:
“Don’t let it get aggro. Don’t let it get to the point where, you know, you’re trading blows.” (T134, L3‑4)
22 Mr Curtis said that Mr Higgins told him:
“Just take Grant through your findings. Show him the local charges are crazy. Tell him that Quigley should have had this right. Tell him we’ve already had it out with Quigley about the direct load rates.” (T134, L20–24)
23 Mr Curtis said he described many anomalies to Mr Shimazu and Mr Higgins in the course of his meetings with them, including one whereby, in effect, a “bulk rate” was charged by COPE for full truckloads from one Fujitsu General to another, but, where a full truckload was taken from a Fujitsu warehouse to a retailer’s premises, no bulk discount was allowed, and there was a simple charge per kilogram levied with no bulk discount. This had apparently been a matter of debate. There were also issues as to how charges were to be made for certain local deliveries, the basis on which charges were levied for deliveries from Brisbane to Tweed Heads, etc.
24 Mr Higgins spoke to Mr Curtis by telephone in response to the terms which he had set out for remuneration in his email, responding “That’s fine”. (T130, L23) Mr Curtis said the “USB drive” which he had received included about 40,000 lines of data. Mr Curtis then sought to arrange a meeting with Mr Grant Douglas at COPE’s offices. Mr Curtis located these at Laverton. Mr Douglas, who is presumably better informed on the point, describes the locality as Derrimut. Mr Curtis called in person, leaving his business card, and eventually a meeting was arranged on 4 June (T135).
25 Mr Curtis’ account was that a range of issues was covered but Mr Douglas committed to no particular action. Rather, saying that he would look into the matters which had been raised with him.
26 Mr Douglas’ account of this and the other early meetings was that, whilst he was ready to discuss errors in billing, he took the position that rates which were agreed in the contract and the billing principles laid down in the schedule were not open for debate.
27 As to the matter of billing errors, Mr Douglas said that he found the presentation made by Mr Curtis at that and the other two early meetings, to which I will refer below, unsatisfactory.
28 Mr Curtis produced data separately identifying what he said were errors, calling for credits to be raised forthwith. Mr Douglas said that he was concerned that some of the alleged errors might already have been corrected, leading to double crediting. He wanted the whole set of data in a single presentation showing, not merely the allegedly faulty billings, but also the other billings as well as to enable him to view the entire picture and, for instance, to exclude the possibility that a perceived error had already been corrected and credited. (T873)
29 Mr Douglas said that a further reason why he was resistant to any attempt to revisit contractor rates was that, when COPE tendered for and obtained the contract to do Fujitsu General’s carriage and warehousing, it was on the premise that the volume would be approximately $12-12.5 million per year. In fact, the volume actually delivered was about $8.5 million per year, making the contract far less profitable or not profitable at all, as far as COPE was concerned.
30 Two further meetings were held between Mr Curtis and Mr Douglas on 16 July and 19 July 2012. Mr Douglas says that he maintained his position as to the sanctity of contracted rates and the insufficiency of the data with which he was being presented by Mr Curtis.
31 Meanwhile, Mr Higgins had retired from his position as Fujitsu General’s administration manager. Under a rearrangement of administrative responsibilities, Mr Milton Kaloudis was appointed national operations manager. Within his portfolio of responsibilities were matters of freight and warehousing, viz logistics.
32 On 27 June, whilst Mr Curtis was at Fujitsu General’s offices in conference with Mr Kulmar on the COPE project, Mr Kaloudis entered the meeting briefly to introduce himself. Beyond merely announcing his appointment, Mr Kaloudis said little more, though it seems he did make plain that he was in charge of relations with COPE and any project to obtain credit refunds or other advantages by negotiation with COPE.
33 On 6 July, Mr Curtis rendered an account for a consignment charged at $41,988.65 adjusted to $27,000, entailing a credit of $14,988.65, 25 per cent of which was charged at $3,747 plus GST, a total invoice demand of $4,121.70. This invoice was paid.
34 Following his brief introduction on 27 June, Mr Kaloudis had undertaken two overseas trips. With Mr Higgins now retired, the COPE project remained under the control of Mr Kulmar and Mr Curtis, until Mr Kaloudis’ return from overseas on 9 August.
35 In an email dated 7 August 2012, Mr Curtis advised Mr Douglas:
“Hi Grant
Martin and I spent some time today in review of the billing issues.
Attached please find three files for your review and consideration.
They are:
1. Duplicated consignment notes charged.
2.Full load consignments have been charged at the higher rate of basic charge and kilogram rate in place of the Direct Load rates.
3.Consignments where the rates applied vary from the quoted rates.
…In addition to these files we also ask you to review the Storage charges applied to the units incorrectly charged 10 times their cubic mass due to the incorrect measurements applied in the COPE system. These are as follows in the email extract at the end of this email.”
36 Mr Douglas accepted the data in this form as meeting his requirements and he began his investigation.
37 A meeting was arranged for 15 August. By this time, Mr Douglas would have completed his investigation.
38 Despite ultimately accepting the material forwarded to him on 7 August as adequate for his purposes, Mr Douglas initially complained in an email to Mr Curtis, copied to Mr Kaloudis and Mr Kulmar. Mr Douglas thanked Mr Curtis for the data and continued:
“However, at our meeting on Thursday, 19 July we agreed that you would provide on a ‘memory stick’ the full 40,000 line spreadsheet with the proposed errors highlighted. In my recent email I requested this information as this would give us one source of data for all analysis. I discussed this issue with Martin Kulmar on Wednesday last week following his tennis and I believe we agreed that we need one common source of data for analysis to ensure our discussion was based on the same information and if need be we would go through the data line by line.”
39 Mr Douglas closed by asking to be sent “the full data ... as soon as possible”. Mr Curtis responded to Mr Kulmar with a copy to Mr Kaloudis, stating, inter alia:
“The consolidated information that we are requesting him to look at is simply the three files I sent him yesterday. He can just get on with the job instead of procrastinating.” (CB 1006)
40 Later that afternoon, Mr Douglas emailed Mr Curtis that, since Mr Curtis appeared “adamant” in not providing the information on a memory stick, he would proceed with the analysis against invoice data (CB 1016). Whilst this exchange was taking place, Mr Kaloudis sent an email to Mr Curtis at 11.52am saying:
“Please do not reply [to Mr Douglas]. I will contact Grant and speak to him.” (CB 1020)
41 Mr Curtis replied to Mr Douglas at 11.58am stating as follows:
“The ‘memory stick’ you refer to is simply the files John Quigley sent me on 3 July 2012, combined with the weekly bills direct from COPE sent to Martin from then on – with Fuel Surcharge and GST taken out.
You have that data – COPE gave it to me.
The three files I sent you last night are charges extracted from that data – they exclude Fuel Surcharges and GST, as they are added in total to COPE invoices.
Please investigate these charges as per your original invoices to Fujitsu General Australia. That way you can be sure they are from your data.”
42 It would seem therefore, according to the timings, that Mr Curtis defied Mr Kaloudis’ direction that he not reply to Mr Douglas’ email. In his evidence at trial, Mr Curtis denied that he had knowingly defied Mr Kaloudis on that point, and could not explain how, in light of Mr Kaloudis’ 11.52am email, he had nevertheless responded directly to Mr Douglas at 11.58. Mr Kaloudis regarded the occurrence as a piece of insubordination on Mr Curtis’ part. He replied at 1.54pm:
“Paul, not sure if I’m getting through to you or not. PLEASE STOP communicating with Grant. Can you please confirm your understanding of this email.” (CB 1020)
43 At 2.05pm Mr Curtis responded by transmission from his BlackBerry:
“Okay.” (CB 1025)
44 He told me he did not usually send emails from a mobile device, and he concluded that he had checked out of his hotel and was in transit back to Melbourne when he made this transmission.
45 With a meeting set up for 15 August it might be thought that significant progress was about to be made with credits available to Fujitsu General and Mr Curtis becoming entitled to substantial commission. According to Mr Curtis, he and Mr Kulmar were concerned that they should obtain appropriate kudos for what was about to be achieved, rather than leaving all this for Mr Kaloudis, who had arrived relatively late on the scene (T205, L16–22). Mr Curtis noted that at his meeting with Mr Shimazu, the managing director, Mr Shimazu had asked to be kept informed of the progress of Mr Curtis’ project. He took the opportunity therefore to send an email to Mr Shimazu on 14 August. He did this in consultation with Mr Kulmar. Mr Kulmar provided some guidance on forms of address and review of drafts. This email was copied to Mr Kaloudis. The email was lengthy, and covered not only charges which were erroneous according to the contractual scale of charges, but also where COPE’s contractual charges were “incredibly high for the services performed” (CB 1218–1220).
46 When Mr Kaloudis saw this email he was outraged. He sent an email to Mr Curtis at the late hour of 11.41pm on 14 August, stating as follows:
“Paul, thanks for taking the time to write all of the above to our MD when this was never requested and never discussed with me. You mention below that you ‘have the utmost respect for me’ yet you continue to conduct yourself in a manner that I do not agree with nor is in line with what I have requested.
As I explained in our first meeting it is MY responsibility to manage this part of the business and I make the decisions for this part of the business. What this also means is that any previous arrangements or understandings you may have had since and if you want to continue working with Fujitsu, you work on my terms. Trust this clarifies for you. We can discuss more tomorrow.” (CB 1226)
47 Mr Curtis, Mr Kaloudis and Mr Kulmar were to meet the following morning in preparation for the discussions with Mr Douglas on 15 August. The late-night email of the previous day had foreshadowed that the terms of Mr Curtis’ engagement were up for review.
48 At the meeting on 15 August held at Fujitsu General’s premises at Eastern Creek in Sydney, Mr Curtis began by setting up his computer to enable him to review the data which would be the subject of discussion with Mr Douglas the following day. According to Mr Curtis, Mr Kaloudis opened proceedings by telling Mr Curtis not to bother setting up his computer because he would not be staying very long (T206, L27–30). Then, according to Mr Curtis, Mr Kaloudis said that he had had a discussion with Mr Phil Perham, the deputy managing director, and was authorised to say that Mr Curtis could either take a 10 per cent commission or “pack up and go home” (T206, L30–31; T207, L1–4).
49 Mr Kaloudis described fundamentally the same process, but occurring in a somewhat more civilised fashion. Rather than telling Mr Curtis to prepare to pack up and go home, Mr Kaloudis said that he began by seeking to set the relationship between Mr Curtis and Fujitsu General on a more satisfactory basis. He explained that he had investigated matters with the senior management committee, which, according to the administrative arrangements in the company, was required to approve significant contractual arrangements, and the arrangement with Mr Curtis had not been so approved. The committee was not happy with the claims that were now being made, and 10 per cent was the appropriate level of commission.
50 Both agreed that Mr Curtis protested, drawing attention to the large amount of time he had already spent on the project, and his costs of travel and accommodation and so forth. Eventually, Mr Kaloudis said he was authorised to increase the commission from 10 per cent to 15 per cent, which Mr Curtis said he reluctantly accepted. Even accepting the 15 per cent figure, Mr Curtis was thinking, according to his evidence:
“This guy can’t do this. I should take this to Mr Shimazu.” (T211, L10-11)
51 According to Mr Curtis, Mr Kaloudis told him that if he, Mr Curtis, did not agree to the revised commission terms, “You’ll get nothing.” (T211, L14) Mr Kaloudis had satisfied himself that the senior management committee had not approved the 25 per cent commission entitlement for Mr Curtis, and therefore there was no legally enforceable contract to this effect (T667, L11–15). Mr Curtis said that he asked for a break to compose himself, and for a glass of water. Mr Kaloudis presented him with a glass, but the water was hot (T211, L20–29). Mr Kulmar guessed that Mr Kaloudis may have drawn the water from a “mixer” tap, oblivious to the fact that the previous user had just drawn off hot water and it needed to be given some time before it would run cold (T742, L27–T743, L1). Mr Kulmar was shocked at the turn that events had taken. He had had no warning that Mr Kaloudis contemplated taking the stand that he did, and Mr Kulmar said that he, himself, was “the second-most flabbergasted person in the room” (T741, L31–T742, L1).
52 The meeting at Fujitsu General’s office with Mr Douglas took place the following day. Mr Douglas was accompanied by one of his executives, Mr Desmond Morris. Mr Kaloudis acted as spokesman for Fujitsu General. Mr Curtis was in attendance, but said little or nothing, in accordance with Mr Kaloudis’ directions. According to Mr Kulmar’s recollection, Mr Douglas led off with a counterclaim on behalf of COPE (T744, L4–5). Despite the agenda prepared by Mr Douglas providing for Mr Curtis to attend only for the first two items on the agenda, it seems that he attended for the entire meeting (T744, L15–16). The claim which was being advanced by Fujitsu General was for some $784,000, consisting of a whole host of alleged errors and rate demands. It included a claim to recover the compromised $104,000 paid the year previously, based on alleged undercharging. Mr Douglas said that a large part of the claim for allegedly inaccurate application of rates proved to be incorrect when allowance was made for the proper application of various surcharges such as requirements in particular cases for the provision of a two-man crew on the delivery truck, deliveries out of hours, and so forth (T884–885). No agreement was reached at the meeting and negotiations continued.
53 On 27 August 2012 at 8.21am Mr Kaloudis sent an email to Mr Curtis in the following terms:
“Hi Paul,
I hope you had a good weekend.
I just wanted to come back to you and confirm a couple of things.
· Firstly, the agreed (service fee) share of 15 per cent of any benefit you bring to Fujitsu General by way of credit refund as a result of your work
· I have now spoken to Grant [Douglas] and followed up with an email of our demands. This covers both credit I feel we are entitled to and also indication for the need to revise rates on freight and warehousing. Due to the sensitive nature of these discussions, I need to keep this between myself and Grant at this point so please do not engage with Grant or anyone else at COPE in any way until I advise accordingly.
I will advise you once I get a response.”
54 At 8.54am Mr Curtis responded in the following terms:
“Hi Milton,
Thanks for your update – and I confirm the 15 per cent – look forward to hearing from you soon.”
55 Commenting on the terms of this email, Mr Curtis said under cross-examination:
“So if Milton was going to be vague, I was vague back to him.” (T421, L31–T422, L1)
56 By this time Mr Curtis said he was in severe financial embarrassment. He was having difficulty paying his daughter’s school fees. As it turned out, an earlier consultancy unexpectedly yielded a payment for him following the result of a mediated settlement of a court proceeding. Being unaware that this was about to happen, he sought an advance payment from Fujitsu General upon the premise that the negotiations would lead to a recovery of not less than $100,000. As a result he rendered an invoice on 4 September 2012 in the sum of $16,500, representing a $15,000 commission plus Goods and Services Tax (CB 1391).
57 Mr Kaloudis took steps to have this amount approved for payment, taking it up with the deputy managing director, Mr Perham, “out of session” for the senior management committee. Mr Kaloudis believed that the payment was made in September. As it turned out, payment was not made until the final resolution of the dispute with COPE with the execution of a deed of release on 23 November 2012. The deed of release compromised Fujitsu General’s claims against COPE for $216,422.00, which, with the addition of a fuel surcharge and Goods and Services Tax, led to a final payment of $246,539.29 being paid as the settlement sum. A standard confidentiality of information clause was the subject of a handwritten amendment to allow disclosure of the settlement to be made to Mr Curtis. Upon advice of the conclusion of the settlement, Mr Curtis rendered an invoice for the balance of the commission which he said he was entitled to, calculated at the rate of 15 per cent. This invoice was paid.
58 On 27 February 2013 Mr Curtis called by appointment at Fujitsu General’s premises and had a meeting with Mr Kaloudis, Mr Kulmar and Ms Reed of Fujitsu General. They discussed issues surrounding Fujitsu General’s logistics arrangements, but there were no particular “action items” agreed upon. Both Mr Kulmar and Mr Kaloudis gave Mr Curtis to understand that there were no particular tasks for him to undertake in the immediate future. It was a case of “don’t call us, we’ll call you” (T841, L23–28).
59 At the conclusion of the meeting Mr Curtis handed Mr Kaloudis an invoice in an envelope, asking him to ring to discuss it. Mr Curtis said that he would have been willing to discuss the invoice at the meeting but Mr Kaloudis ran out of time and brought the meeting to a conclusion. Mr Kulmar remembered that everyone had risen to their feet before the envelope was handed to Mr Kaloudis. The invoice, dated 25 February 2013, was for $25,843.00 plus Goods and Services Tax of $2,584.30, with a total of $28,427.30. This charge was said to relate to “COPE Transport – 4.5 per cent cost increase withheld 2012”. The invoice was said to relate to COPE Transport’s billings to Fujitsu General for the period 11 July 2012 to 11 January 2013, that is for six months, totalling $3,828,626.27 exclusive of Goods and Services. The 4.5 per cent rate increase said to have been withheld resulted, according to the invoice, in a saving to Fujitsu General of $172,288.17, and the invoice figure was 15 per cent of that amount.
60 Mr Kulmar described Mr Kaloudis’ reaction as “incredulous” (T750, L11). Mr Kulmar believes he told Mr Kaloudis at the time “It’s a bullshit claim,” but he was not certain (T750, L17). Mr Kulmar told me, “I’ve never felt that was part of the deal.” (T750, L22.)
61 Mr Kaloudis sent an email to Mr Curtis on 13 March 2013. He thanked Mr Curtis for a very productive meeting. He continued:
“In all the months we have been dealing with one another the matter of price increase has never been discussed nor raised until that last meeting and to then present me with an invoice claiming that you were instrumental in holding the increase back was extremely disappointing. Made even worse by the fact that there was no substantiation for the invoice or claim.
Irrespective and in fairness, I decided to investigate to see if there was any justification for this claim and unfortunately there is none.
· Firstly, the proposed increase being considered was for 1.5 per cent and not 4.5 per cent as you have claimed for.
· Secondly, the increase being considered was put on hold by COPE as a result of changes within our business, a number of issues between our businesses and the unsatisfactory service levels that I was discussing with them.
· For those reasons, COPE could not justify asking for an increase.”
62 As a result, on behalf of Fujitsu General Mr Kaloudis denied liability for the amount invoiced. He concluded:
“Further, I would like to formally advise that your services will no longer be required. I would like to take this opportunity to thank you for your support over the years and wish you all the best with your future endeavours. Many thanks.” (CB 1770)
63 Mr Curtis followed up with an email of 19 March 2013 stating, inter alia:
“This part of my assignment took place prior to David Higgins leaving Fujitsu. It was also discussed with Mr Shimazu when David Higgins outlined to him my tenure and briefed him on my role.
If you could please confirm this with either or both Mr Shimazu and David Higgins, I am sure they will confirm this as part of my arrangements with Fujitsu.” (CB 1775)
64 Mr Kaloudis did not seek any information from either Mr Higgins or Mr Shimazu. Mr Shimazu had relocated to Russia, and Mr Higgins was retired. In the circumstances, Mr Kaloudis said he did not regard Mr Higgins as a reliable source of information.
65 The next step taken by Mr Curtis was to bring his case to two senior Japanese executives of Fujitsu General, namely Mr Toru Ishizuka, the new managing director, and Mr Mikio Yokokawa. He sent an email on 29 April 2013 to these gentlemen, seeking a meeting to argue his case, and explaining in broad terms the history of his relationship with Fujitsu General. Mr Ishizuka carried out investigations, including consultations with Mr Kulmar, and ultimately a meeting took place. Unlike his predecessor Mr Shimazu, Mr Ishizuka had a full command of the English language. He did not accept liability for the further claims made by Mr Curtis in his February 2013 invoice.
66 Mr Curtis’ solicitors, Hendersons Legal, wrote a letter of demand to Mr Ishizuka dated 25 July 2013. The letter of demand extended over some seven pages and argued Mr Curtis’ claim in detail. First, it asserted that the arrangements entered into in May 2012 amounted to an enforceable agreement between Mr Curtis and Fujitsu General. Secondly, it said that Mr Curtis had provided extensive services to Fujitsu General and he was entitled to a 25 per cent commission for any benefit derived by Fujitsu General. According to the letter, “Such benefit included any credit refund, allowance or cost reduction.” This is a quotation from the terms of the May 2012 email to Mr Shimazu. The letter then asserted that Fujitsu General had “received a minimum benefit of approximately $900,000 from [Mr Curtis’] review of Fujitsu’s logistic costs.” In particular, it asserted that he had forestalled a threatened 4.5 per cent increase in rates by COPE threatening to take effect in July 2012. This constituted a benefit derived by Fujitsu General and therefore created a 25 per cent commission entitlement. Mr Kaloudis’ actions in purporting to cut the commission rate were said to be a breach of contract. The letter stated:
“I have no doubt that a court would find Mr Kaloudis’ conduct on behalf of Fujitsu to be misleading and unconscionable and would reinstate the agreed 25 per cent rate.”
67 The letter said that payments of $44,546.70 had been made by Fujitsu General to Mr Curtis, but that a further $202,709.80 was payable. The letter nevertheless offered to compromise the claim for $154,000.00 on the basis that this compromise offer was `without prejudice except as to costs’.
The present proceedings
68 The following year, the plaintiffs’ solicitors commenced this proceeding. In their statement of claim, dated 22 May 2014, the plaintiffs alleged they were retained by Fujitsu General to carry out a review of the charges made by COPE Sensitive Transport under an arrangement which was partly oral, partly in writing, and partly to be implied, whereby the plaintiffs were to review prices, charges, and practices for freight transport and logistics as charged by COPE Transport, and 25 per cent of all benefits obtained by the defendant “(including, but not being limited to, credit refund, allowance or cost reduction) would be paid by the defendant to the plaintiff.” The claim noted the rendering and payment of the first three invoices but the non-payment of the fourth invoice of 25 February 2013 in the sum of $25,843.00 plus Goods and Services Tax. There was also a claim for benefits obtained for charges for freight, transport, and logistics provided by a company called Cahill Transport Australia Pty Ltd for which a 25 per cent commission was sought.
69 Next, it was said that “on 15 August 2012 the defendant purported to rescind the Agreement by unilaterally amending a fundamental term of the agreement that the plaintiff would receive 25 per cent of all benefit received by the defendant ...”
70 The claim asserted that the plaintiffs’ commission entitlement was unilaterally cut to 15 per cent by Mr Kaloudis, despite protestations, as to the services Mr Curtis had already provided. The cut in commission to 15 per cent was, it was said, accepted “under duress” and without valuable consideration. Therefore, “the unilateral conduct of [Fujitsu General] to reduce the rate of commission payable under the agreement [was] not binding upon [the Curtises]”. Claim was then made for the entire 25 per cent commission. Next, there was a claim for $205,200 said to be “a reasonable sum for [the plaintiffs’ expenses incurred and their hours of work and labour done". Presumably, this is claimed on a quantum meruit in the sum of $205,200 representing what was said to be 684 hours’ work.
71 The relief claimed was:
(a)a declaration that the commission rate was 25 per cent;
(b)an accounting of all benefits obtained by Fujitsu from the review of charges for freight, transport and logistic services from 1 April 2011 to 30 June 2013;
(c)alternatively, $164,703 plus Goods & Services Tax, interest, costs and further or other relief.
Defence
72 In its defence, Fujitsu General said that Mr Curtis advised that he operated on a success-only basis and that he was entitled to no remuneration other than 25 per cent of the value of any credit or refund obtained by Fujitsu General from COPE. It was said that this agreement could be terminated by either party at any time without cause “on reasonable notice”.
73 Next, it was said that on 27 August 2012, Mr Curtis had entered into a revised agreement with Fujitsu General whereby his commission entitlements were cut to 15 per cent “of the value of [any] credit or refund issued by COPE Transport”. This second agreement, it was said, discharged the first agreement or had the effect of mutually abrogating or abandoning it. Alternatively, it was said that this new agreement was a variation of the first agreement “with the consideration being that the defendant would not immediately end the commercial relationship between the defendant and Mr Curtis”. A further alternative alleged was that the first agreement was terminated by providing reasonable notice to Mr Curtis. Next, it was said that there was a repudiation of contract by Mr Curtis’ contacting or seeking to contact Mr Douglas of COPE without Fujitsu General’s authority on 8 August. Finally, it was said the relationship was terminated by Mr Kaloudis in an email dated 13 March 2013.
74 As to the February 2013 invoice which remained unpaid, it said the lack of any 4.5 per cent price increase in 2012 “did not eventuate as a direct result of the services provided by Mr Curtis”. In any event, there was no obligation on Fujitsu to pay commission to Mr Curtis with respect to the non-implementation of price increases and the lack of a price increase “was a result of [Fujitsu General’s] dissatisfaction with COPE Transport’s service levels and not as a direct result of Mr Curtis’ services”. And finally, any increase which was contemplated by COPE was limited to 1.5 per cent.
75 Insofar as the plaintiffs claimed commission relative to prices charged by Cahill Transport Australia, it denied there was an obligation to make any such payment.
76 As to the events of 15 August 2012, it admitted that a meeting took place and said that Mr Curtis confirmed he had been paid all the moneys due to him. Mr Kaloudis informed him that Fujitsu General would not permit to Mr Curtis to receive 25 per cent of credits and Mr Kaloudis and Mr Curtis entered into the second variation of agreement referred to earlier. Fujitsu General said that Mr Curtis was estopped from making a claim for 25 per cent commission; first, by agreeing to a commission rate of 15 per cent; secondly, by issuing invoices in September and December at a rate of 15 per cent and accepting payment of commission at those rates and providing services to Fujitsu General at a 15 per cent commission rate; and finally, by failing to raise the issue of the rate of commission with Fujitsu General before the solicitor’s letter of demand in July 2013. The claim on a quantum meruit was denied based on the agreement which had Mr Curtis remunerated on a commission-only basis.
Reply
77 In the plaintiffs’ reply dated 18 August 2014, aside from joining issue generally, the plaintiffs said that at all times Mr Curtis acted on behalf of the partnership constituted by the two plaintiffs and they referred to a “vendor form in the name of PB and DB Curtis.” Next, they said that the task of reviewing charges by COPE Transport extended to freight transport and logistical services and that there was a request to review charges made by Cahill Transport which reduced its storage charges from $2.50 per cubic metre to $2.00 per cubic metre. They said that if, what was described in the defence as the `second agreement’, is the one providing for commission of only 15 per cent, the matters of duress alleged in the Statement of Claim entitled the plaintiffs to rescind that second agreement, which they did.
78 They said that, until contrary direction from Mr Kaloudis was given on 8 August 2012, the plaintiffs were entitled to communicate with Mr Grant Douglas of COPE Transport.
Further matters
Alleged proposed price increase by COPE
79 Mr Higgins (who, it will be recalled, was the outgoing national administration manager for Fujitsu General in April/May 2012, when Mr Curtis was first introduced to the company) said there was a “4 to 5 per cent pending increase coming” in the charges made to Fujitsu General for freight and storage. (T50, L10) He said that he told Mr Shimazu at the meeting which he and Mr Curtis had with the then managing director “that the 4 to 5 per cent increase was only for the next 12 months and he asked Mr Curtis to investigate the case and try and hold back the rate increase.” (T50, L17-20) As to Mr Curtis’ 25 per cent commission, according to Mr Higgins, he “understood that to cover anything that Paul [Curtis] could find as an overcharge from COPE Transport to ourselves on both storage and/or transport, and also to try – if he thought the rates were too high – to negotiate the rates down, and Mr Shimazu requested that he try to forestall the pending increase of the rates.” (T50, L24-30) According to Mr Higgins, the 25 per cent commission rate would apply to the proposed increase of rates. (T51, L1) Mr Higgins said that the rate increase was foreshadowed by the account executive at COPE (Mr Quigley) in May of 2012. (T51, L4-5) The rate was to be 4.5 per cent. (T51, L16) Mr Higgins said that he regarded this threatened increase as a contractual entitlement of COPE. (T64, L9-11) He said his managing director, Mr Shimazu, regarded the warehousing and distribution charges as excessive already and so was opposed to any increase.
80 In fact, no increase in COPE’s charges was imposed for the period July 2012 to July 2013.
Cahill Transport
81 Mr Curtis said that in the week commencing 23 July 2012, Mr Kulmar asked him to investigate the charges levied by Cahill Transport Pty Ltd upon Fujitsu General. (T187, L26-28) Cahill had been providing some storage facility to Fujitsu General at a rate of $2.50 per cubic metre per week. (T189, L12-14) Mr Kulmar had asked Mr Curtis to review some Cahill bills. (T190, L5-11) In an email of 26 July 2012, Mr Curtis informed Mr Kulmar that Fujitsu General could get a rate of $2.00 per cubic metre at St Marys [a suburb of Sydney]. He said that for block stacked, good clean square boxes $2.00 was more than enough. (CB 709)
82 Mr Kulmar’s recollection which, in light of the text of the email just referred to, appears to be incorrect, is that Mr Curtis advised a rate of $2.20 was a reasonable one. Mr Kulmar, himself, carried out negotiations with Mr Mick Cahill and the rate was reduced forthwith to $2.00 per cubic metre.
Issues
83 On behalf of the defendant, Mr Manos submitted that the issues for determination were:
(i)What was agreed between the parties in early 2012?
(ii)Were new terms agreed in November 2012 and, if so, what were they?
(iii)Are the plaintiffs owed anything and, if so, how much?
84 Mr Bornstein, on behalf of the plaintiffs, put the issues in a slightly different form. Generally, Mr Manos’ formulation summarises the matters which must be determined.
85 Nevertheless, it is convenient to take matters in a somewhat different order. Both parties are agreed that the Curtises and Fujitsu General entered into an arrangement by way of contract in early 2012. They are at odds as to the scope of that agreement. They are, however, completely at odds as to what occurred in August 2012. According to the plaintiffs, whatever purportedly was agreed at the meeting on 15 August and the follow-up exchange of emails on 27 August was contractually ineffective, either because it was affected by duress, or because there was no consideration which could support a new contract between the parties or a variation of the one deriving from the contract made in early 2012.
86 Before proceeding to a legal analysis, it is appropriate to make some factual findings as to what occurred. Mr Curtis’ account had Mr Kaloudis “jumping on him” before he (Mr Curtis) had even set up his computer. Mr Kaloudis, however, gave an account of a far more measured approach on his part in which he explained the lack of authorisation by the senior management committee for the earlier arrangement, whatever it was, and an explanation that, following consultations with the senior management committee, a commission of 10 per cent, only, would be approved which, following an urgent submission from Mr Curtis, he agreed, in accordance with the authority the committee had given him, to enlarge to 15 per cent. On Mr Kaloudis’ account, Mr Curtis reluctantly agreed to these arrangements following a short break in the meeting at some point. Mr Manos submitted I should accept Mr Kaloudis’ account of what transpired at the meeting based on the evidence of Ms Natalie Reeves, a relatively junior Fujitsu General officer, who was also present at the meeting. Ms Reeves said that Mr Kaloudis’ conduct was reasonable and professional.
87 In my view, the account given by Mr Curtis is generally more reliable than the one given by Mr Kaloudis. The scene for the meeting on 15 August was set by Mr Kaloudis’ email sent just before midnight the previous evening and quoted at [46]. The tone of that email and the circumstances of its transmission just before midnight show that Mr Kaloudis was very annoyed. Indeed, as he gave evidence on this subject during the trial, he became visibly enraged, merely remembering these events years later. Again, as I record at [51], Mr Kulmar was “flabbergasted”. Ms Reeves describes a different tone to Mr Kaloudis’ presentation; but she is a much more junior officer than Mr Kulmar. I think that she would be reluctant to be critical of the conduct of Mr Kaloudis who was, at the time of the meeting, the chief spokesman for her employer.
88 In cross-examination, Mr Kaloudis was challenged to identify in the minutes of Fujitsu General’s senior management committee the references to the discussions which he had claimed to have participated in relative to Mr Curtis’ commission entitlements which were said to form the basis for his presentation at the 15 August meeting. He could find none. He was then reduced to the rather unconvincing position of asking the Court to accept that no senior management committee approval had been given to the original deal with Mr Curtis because it was not mentioned in the minutes, yet conclude that the issue of the rate of commission payable to Mr Curtis had been debated by the committee but the minutes secretary had failed to record the debate, in what seemed to be a fairly full and somewhat discursive set of minutes, because the issue was somehow too abstruse for her to grasp. Obviously, the difference between 25 per cent commission on the one hand, and 10 or 15 per cent on the other, was far from abstruse and the relatively full minutes, which are to be found in the Court Book, belie any alleged incapacity of the minutes secretary to capture matters of this type. I believe Mr Kaloudis proceeded on 15 August to deal with Mr Curtis in a spirit of indignation arising out of the email which Mr Curtis had sent directly to the managing director, Mr Shimazu, which Mr Kaloudis saw as an attempt to undermine his authority. I doubt if Mr Kaloudis’ position was based on any preliminary consultation with anyone, though I accept that at some point, perhaps before but more likely after, Mr Kaloudis discussed the issue of commission rates with deputy managing director, Mr Phil Perham.
89 Mr Bornstein said that the apparent cut in commission for the plaintiffs from 25 per cent to 15 per cent was not a valid variation because, as a contractual variation, was unsupported by consideration. He referred to a decision of the Full Supreme Court of New South Wales in TA Sundell & Sons Pty Ltd v Emm Yannoulatos (Overseas) Pty Ltd (1955) 56 SR (NSW) 323. In that case, a buyer had agreed to purchase a quantity of galvanised iron for £109 15s 00d per ton. Subsequently, the seller advised that a price increase was inevitable and insisted upon an increase. The buyer eventually made an order for the iron at £140 per ton. The Court held that, since the consideration for the order of the increased price was merely the performance of the seller’s original obligation to deliver the iron, it was not good legal consideration and the original contract remained in force without any variation.
90 Mr Manos, on behalf of Fujitsu General, referred to and relied on a dictum of Mason J (as he then was) in Wigan v Edwards (1973) 1 ALR 497, 512, where his Honour said that the promise to perform a pre-existing obligation could be good consideration where it operated by way of a bona fide compromise of a disputed claim.
91 It is unnecessary for me to determine whether the exception to the rule that reiteration of a pre-existing contract is generally not good consideration applies here because, in my view, in accordance with the defendant’s defence, good consideration can be found in Fujitsu General’s agreement to continue doing business with Mr Curtis with the possibility for him of further commission earning opportunities in circumstances where there was nothing in the original agreement which obliged Fujitsu General to continue referring business to Mr Curtis.
92 The issue of alleged duress raises more difficult issues.
93 It is well-established that the mere force of economic circumstance without the threat of any improper action by the person allegedly imposing duress does not make out any case for duress in law – Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40. In the present case, Mr Curtis told me that he was under particular economic pressure because of delays with payment in commission on another job he was unable to pay his daughter’s school fees. Doubtless, this pressured him very substantially, but it was not the result of any action on the part of Fujitsu General, much less any improper action. It was a circumstance which was not even known to Fujitsu General.
94 To make out a case of duress against Fujitsu General, Mr Curtis must be able at least to point to some improper action by Fujitsu General. Mr Bornstein said that what Fujitsu General did constituted a repudiation of contract and was therefore improper conduct, such as could constitute duress. He referred to the judgment of McLure P in Electricity Generation Corporation trading as Verve Energy v Woodside Energy Ltd [2013] WASCA 36, where her Honour at [26] said:
“An actual or threatened breach of contract is unlawful conduct for the purposes of the economic duress doctrine.”
Her Honour referred to Furphy v Nixon (1925) 37 CLR 161; Smith v William Charlick Limited (1924) 34 CLR 38 and Sundell’s case. An initial question arises as to whether there was an actual or threatened breach of contract on Fujitsu General’s part at all.
95 The original arrangement between the plaintiffs and Fujitsu General did not oblige Fujitsu General to refer any particular business or volume of business to the plaintiffs. The effect of the arrangement was that, if particular matters were referred to the plaintiffs, they became entitled to commission based upon obtaining a particular result. The precise scope of the agreement will be considered below, including the types of matters which could attract commission. In a general sense, an arrangement such as this is readily capable of prospective amendment. Suppose, hypothetically, that the plaintiffs were providing casual ad hoc services by way of carriage to Fujitsu General as Cahill Transport did. Each individual task would be completed within a relatively short period of time – generally, one would think, within 24 hours. It would be competent, therefore, for Fujitsu General to say, much as Mr Kaloudis did to Mr Curtis in this case:
“Do you have any invoices outstanding?”
“From now on, if you want to keep doing business with us, you will have to cut your rates.”
96 There would be no injustice in such an arrangement because it would have been competent for Fujitsu General simply to give the plaintiffs no further business. What makes the matters in this proceeding more complex than this hypothetical is that the tasks undertaken by the plaintiffs were not simple matters which could be completed in a single day like a contract for the carriage of goods. The evidence showed in this case that Mr Curtis had undertaken extensive research, had a number of consultations with Fujitsu General officers and made a number of presentations to Mr Grant Douglas of COPE. Mr Douglas stipulated presentation of material in a particular form and eventually, by 7 August, Mr Curtis had presented the material to Mr Douglas, following the three inconclusive meetings which had already taken place, in a form which Mr Douglas was willing to deal with. Mr Curtis had completed most of his work and, at least in theory, it appeared that Fujitsu General might be on the cusp of obtaining credit refunds of $750,000. Since the credits had not been earned as at the opening of the meeting on 15 August, Mr Curtis answered correctly when he said that he had no invoices outstanding; yet had he not agreed to the terms by way of commission reduction insisted upon by Mr Kaloudis, he and his wife would have been deprived of any commission entitlement arising out of these matters at all.
97 This analysis suggests that the original arrangement made between the parties in 2012 had some implied term which would preclude the sort of simple revision which could readily be made to remuneration levels in the hypothetical ad hoc carriage arrangement considered above. Mr Bornstein referred to, and relied upon, the remarks of Mason J (as he then was) in Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596, 607 where his Honour said:
“25.But it is common ground that the contract imposed an implied obligation on each party to do all that was reasonably necessary to secure performance of the contract. As Lord Blackburn said in Mackay v Dick (1881) 6 App Cas 251, at p 263 :
‘as a general rule…where in a written contract it appears that both parties have agreed that something shall be done, which cannot effectually be done unless both concur in doing it, the construction of the contract is that each agrees to do all that is necessary to be done on his part for the carrying out of that thing, though there may be no express words to that effect.’ (at 607)
26. It is not to be thought that this rule of construction is confined to the imposition of an obligation on one contracting party to co-operate in dong all that is necessary to be done for the performance by the other party of his obligations under the contract. As Griffith CJ said in Butt v McDonald (1896) 7 QLJ 68, at pp70-71:
‘It is a general rule applicable to every contract that each party agrees, by implication, to do all such things, as are necessary on his part to enable the other party to have the benefit of the contract.’ (at p607)
1979 HCA 51, paragraphs 25 and 26
98 Mr Bornstein stressed that the obligation to cooperate is to be regarded in accordance with the authorities referred to by his Honour applying to all contracts. Inferentially, he submitted that to seek to cut the plaintiffs’ commission in the circumstances and at the point which I have just described was at odds with, and in breach of, Fujitsu General’s obligation to cooperate with the plaintiffs in execution of the contract. Mr Manos noted, correctly, that no such implied condition was pleaded by the plaintiffs. Mr Bornstein submitted that since, as a matter of law, this term is implied in every contract, it was unnecessary to plead it. Mr Manos denied that such a principle existed. I am inclined to think that Mr Manos is correct. He continued by complaining that to treat such a term as implied in the original arrangement between the plaintiffs and Fujitsu General would be unjust because Fujitsu General may have called different evidence and conducted the trial differently had such a term been expressly pleaded. I must say, given that the proposed term was one implied by law to all contracts, there is an air of unreality in this submission.
99 Nevertheless, there is, in my view, a different route which will lead to a similar outcome without reliance upon any unpleaded terms. In its defence, Fujitsu General contended that the original arrangement included a provision that it could be terminated upon reasonable notice. Mr Manos referred to and relied on the well-known analysis of McHugh JA (as he then was) in Crawford Fitting Co v Sydney Valve and Fittings Pty Ltd (1988) 14 NSWLR 438, 443-444, 445 to this effect; New South Wales Cancer Council v Sarfaty (1992) 28 NSWLR 68, 74. He concluded:
“A term of reasonable notice must be implied. The length of the notice is to be determined at the time the termination occurs.”
100 The plaintiffs, in their reply, did not directly address the plea that the first arrangement was terminable upon reasonable notice and therefore, in accordance with paragraph 1 of the reply, they “joined issue”. In final submissions, however, Mr Bornstein did not dissent from the proposition that the first arrangement was subject to termination upon reasonable notice.
101 In its defence, Fujitsu General said at clause 5(e) that the original agreement was terminated by Fujitsu General’s “providing reasonable notice to Mr Curtis … in an email from Milton Kaloudis to Mr Curtis dated 14 August 2012”. In final submissions, however, Mr Manos conceded that, since this email purported to take immediate effect, it gave no notice at all. His submission at that point was that the parties, by their agreement at the meeting of 15 August, agreed to dispense with reasonable notice.
102 Accepting Mr Manos’ written submission that the reasonableness of the notice had to be judged as at the time it was given, I am clear that, first, the concession that no notice was given at all was accurate, and, secondly, that if a “forthwith terminate” advice can ever constitute reasonable notice, it could not in the circumstances which then existed. Mr Curtis had done almost all of the work which might have earned him a very large commission indeed. At the end of his evidence, in answer to a question from me, Mr Kulmar said that he was in no doubt that, had Mr Curtis not accepted the terms laid down by Mr Kaloudis, he would have got nothing at all.
103 Mr Manos submitted that the present case was analogous to the dispute considered by the Judicial Committee of the Privy Council in Pao On v Lau Yiu Long [1980] AC 614. Delivering the advice of their Lordships (Lord Wilberforce, Viscount Dilhorne, Lord Simon of Glaisdale, Lord Salmon and himself), Lord Scarman said:
“Duress, whatever form it takes, is a coercion of the will so as to vitiate consent … In determining whether there was a coercion of will such that there is no true consent, it is material to inquire whether the person alleged to have been coerced did or did not protest; whether, at the time he was allegedly coerced into making the contract, he did or did not have an alternative course open to him such as an adequate legal remedy; whether he was independently advised; and whether, after entering into the contract, he took steps to avoid it.” [1980] AC 614, 635
104 It will be necessary to say more later as to what steps Mr Curtis took to set aside the agreement made, or purportedly made, on 15 August. As to the other matters, all those present at the meeting agreed that Mr Curtis did protest. The evidence of Mr Kulmar was that the alternatives presented to Mr Curtis at that meeting were to accept the cut in commission or be cancelled entirely and therefore recover nothing for the efforts that he had put into Fujitsu General’s claim against COPE.
105 As far as legal remedies are concerned, Mr Curtis had all the usual legal remedies and bringing this proceeding represented the ultimate resort to those remedies. In Pao On’s case, Lord Scarman said later on in the same page:
“In the present case there is unanimity amongst the judges below that there was no coercion of the first defendant’s will. In the Court of Appeal the trial judge’s finding … that the first defendant considered the matter thoroughly, chose to avoid litigation, and formed the opinion that the risk in giving the guarantee was more apparent than real was upheld. In short, there was commercial pressure, but no coercion.”
106 In Pao On’s case, the party allegedly applying the vitiating duress declined to complete a share sale and purchase agreement unless provided with a guarantee and indemnity. The trial judge found that, rather than becoming involved in legal proceedings, the other party determined to give the guarantee and indemnity. It was a calculated risk where the risk at the time seemed very small to give the guarantee and indemnity – [1980] AC 614, 627. The present case stands in contrast to this. The choices presenting themselves to Mr Curtis were, either forgo 40 per cent of his commission entitlement, or obtain nothing at all. As a matter of practicality, resort could not be had to legal proceedings between 15 August and 16 August. It must also be remembered that the commercial bargaining power between the two sides was one-sided indeed. On the one hand stood Mr and Mrs Curtis, literally a Mum and Dad outfit against, on the other hand, a multi-national corporation. Mr Curtis was under particular personal pressure because of delays in deriving income from a previous deal which he had done and the difficulty in paying his daughter’s school fees. These matters were unknown to Fujitsu General and therefore are not properly to be weighed in balance. Mr Manos submitted:
“When one looks at the various factual situations in which duress had been made out, one sees looming and devastating consequences for the victims such as the collapse of the business or not receiving a ship which has been part built and paid for (see North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd [1979] QB 705). The situation which was before Mr Curtis does not reach these extreme lengths.”
107 Despite this submission, there is much to be said for the view that Mr Curtis was in the same situation as the party potentially deprived of the ship which had been partly built and paid for. He had done all the spade work in his consultancy and was being threatened with a denial of any remuneration for his efforts at all. For reasons already explained, I do not accept that Mr Kaloudis was cleaning the slate, clearing the decks or turning the page by simply asking Mr Curtis if there were any outstanding invoices. Mr Manos also noted Mr Curtis’ ability to negotiate his commission up from the 10 per cent stipulated by Mr Kaloudis. This, it was said, indicated that Mr Curtis was not simply “steam-rollered” by Mr Kaloudis. On the other hand, Mr Kaloudis’ evidence was that he had authority, on his account from the senior management committee, to go to 15 per cent. The initial attempt to put Mr Curtis’ commission down to 10 per cent might therefore be regarded as an ambit claim or a mere feint, rather than Fujitsu General’s actual bargaining position. The 15 August arrangements were made under duress.
108 Mr Manos submitted that if, contrary to the defendant’s case, duress was made out at the 15 August meeting, the revised, varied or second agreement was ratified and affirmed after the duress had ceased to be operative by Mr Curtis’ actions such as:
(a)providing services without protest during the remaining seven months of the consultancy; [that is, until February 2013]
(b)issuing three invoices claiming 15 per cent, being the new commission figure;
(c)accepting payment under two of those invoices;
(d)not issuing an invoice or raising the issue in any form of the amounts owing to the plaintiffs as a result of reported advice in relation to Cahill Transport.
109 Mr Bornstein said the plaintiffs conceded that the plaintiffs had not sought to disaffirm the arrangements made, or apparently made, on 15 August 2012 until the plaintiffs’ solicitors sent a letter of demand (in the form of a Calderbank letter) dated 25 July 2013. Mr Manos submitted that this situation was similar to the one which led Mocatta J to regard a party as deprived of the ability to rely on duress because of delay and ratification. In the North Ocean Shipping case, the delay was, according to the judge’s findings, from 27 November 1974 until 30 July 1975. His Lordship concluded that the owners were free from the duress which he found was applied by the ship builders from the date of delivery of the ship, namely 27 November 1974.
110 In the present case, Mr Bornstein submitted that Mr Curtis continued, until the letter of demand, to be subject to the relevant duress.
111 In Caratti v Deputy Federal Commissioner of Taxation (1993) 93 ATC 5192; (1993) 27 ATR 448, the Full Court of the Supreme Court of Western Australia was considering an appeal from a summary judgment granted to the Deputy Commissioner by an Acting Master of the Court upon the basis that the taxpayer had no defence to the Commissioner’s “debt collecting” claim against him. Pidgeon, Ipp and Wallwork JJ (as the latter two judges then were) accepted that the taxpayer had an arguable defence based upon his allegation that the Commissioner’s officers had threatened him with unjustifiable penalties and further assessments to compel him to enter into the compromise and repayment schedule upon which he was being sued. The taxpayer had already made four payments under that arrangement. The Commissioner submitted that the making of those payments constituted an affirmation of the arrangement and it was therefore incompetent for the taxpayer thereafter to allege it had been procured by duress. Ipp J, with whom Wallwork J agreed, held it was arguable there was no affirmation because the payments were made at a time when the alleged duress persisted.
112 It will be seen that these decisions turn upon the view that a person entering into a contractual arrangement under duress may not seek to avoid it if, after the duress has ceased to operate, he or she affirms the relevant obligation. Duress is therefore regarded as rendering a contract voidable, not void. In Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd, (1991) 22 NSWLR 298, the New South Wales Court of Appeal held that where a helicopter charter company had been the victim of duress applied to it by a company servicing its helicopter refusing to release the machine until it promised to pay money and sign a document, had not, in the circumstances of the case, affirmed these obligations after the duress ceased to operate. Priestley JA considered the nature of the document “Affirmation” in this context. His Honour said:
“One question which this statement of the rule raises is whether ‘affirmation’ is an intelligible legal category in its own right. In my opinion it is not but rather covers situations governed by two particular legal theories, election and estoppel. That is, in my opinion, to make a case of affirmation the appellant here needs to show either that the respondent elected not to avoid the contract or became estopped from asserting its right to avoid the contract.
So far as election is concerned, two considerations appear from Sargent v ASL Developments Ltd (1974) 131 CLR 634, a case in which the High Court surveyed the doctrine of election in some detail. One is that the party which has the election is not bound to elect immediately. The party ‘…may keep the question open so long as the delay does not cause prejudice to the other side’, per Mason J (at 656). The other consideration is that ‘The words or conduct ordinarily required to constitute an election must be unequivocal in the sense that it is consistent only with the exercise of one of the two sets of rights and inconsistent with the exercise of the other’: see Stephen J (at 646).”
113 On the basis of these authorities, can it be said that Mr Curtis, on behalf of himself and his wife, “affirmed” the revised arrangements imposed upon him on 15 August 2012. The first step in answering this question is to determine when the duress ceased to operate. Mr Bornstein’s submission was that the duress persisted into the New Year of 2013. The evidence shows that Mr Curtis persisted with the unrealistic hope of being reinstated as a consultant to Fujitsu. This was evidenced by his email to the new managing director, Mr Ishizuka, on 29 April 2013 and their subsequent meeting.
114 I cannot accept Mr Bornstein’s submission on this point. The duress which I have found was the threat that, if Mr Curtis failed to agree to the lower commission rate of 15 per cent, he would receive no remuneration whatsoever for the work that he had done, culminating in the submission of material to Mr Douglas of COPE on 7 August, which was to be the basis of the settlement between Fujitsu General and COPE. That threat had completely passed and the entirety of the 15 per cent commission was paid in November 2012.
115 Whilst it may be accepted that a person may delay making an election to affirm or disaffirm an arrangement, lengthy delay, such as occurred from November 2012 until the solicitors’ letter of demand of 25 July 2013, can in itself be a factor indicating that an election has been made. Certainly, this was part of the reasoning of Mocatta J in North Ocean Co Ltd v Hyundai Construction Co Ltd [1979] QB 705. But this delay does not stand alone. On 27 February 2013 – that is, about three months after the duress ceased to operate – Mr Curtis rendered an invoice for further services with a commission rate of 15 per cent. This seems to be an unequivocal acceptance of the revised arrangements as per the meeting of 15 August 2012. Again, when Mr Curtis sent his email of 29 April to the new managing director and held his meeting with Mr Ishizuka, the commission rate was not raised. At both the February meeting with Mr Kaloudis and the subsequent meeting with Ishizuka, Mr Curtis was seeking further business from Fujitsu General – presumably at a 15% commission rate. In the North Ocean shipping case, Mocatta J reached his determination that the contract procured by duress was affirmed by “taking an objective view of the facts” based upon “the action and inaction of the [ship] owners” – North Ocean Shipping at 721. In Caratti’s case, the majority seems to have proceeded on the basis that the payments made by the taxpayer would have constituted an affirmation of the arrangement but for the fact that, in their view, it was arguable that the relevant duress had not ceased to have effect when those payments were made.
116 It follows that Mr Curtis should be regarded on behalf of himself and his wife as having affirmed the arrangement as to commission rate made on 15 August, despite that arrangement being voidable by reason of duress, as previously explained.
117 Insofar as the plaintiffs’ claim relies on an entitlement to commission at the rate of 25 per cent, rather than 15 per cent, it must fail.
Scope of arrangement
118 I now turn to the question of whether the plaintiffs had a commission entitlement for benefits obtained for Fujitsu General by their efforts other than credit refunds from transport and logistics contractors. The plaintiffs’ claim in this respect is for a commission on a price increase said to have been threatened by COPE but forestalled by the efforts of Mr Curtis and a prospective cut in storage rates imposed by Cahill Transport. The plaintiffs’ claim is that their commission entitlement extended to these rates because, in accordance with Mr Curtis’ email of 18 May 2012, quoted at [19], they fell within the wide words of a commission entitlement calculated by reference to “any benefit I bring to Fujitsu General by way of credit refund, allowance or cost reduction as a result of my work”.
119 Mr Manos, on behalf of Fujitsu General, submitted that in considering what terms were to be regarded as part of the contract between the parties in circumstances where the contract alleged was partly in writing and partly oral, it was proper to consider post-contractual conduct. He referred to the judgment of Spigelman CJ in County Securities Pty Limited v Challenger Group Holdings Pty Limited [2008] NSWCA 193, where his Honour said:
“A need to identify the particular subject matter of the contract has often arisen, even in the case of a written agreement where there is a form of words to be interpreted. In the present case, the subject matter and the concomitant terms of the contract must be inferred from a combination of surrounding circumstances including conversations, documents and conduct none of which provide a definitive form of words. The issue is not one of interpretation, because there are no words to interpret. The issue is one of fact: what did the parties agree?
In the absence of a written document or a conversation constituting the Transfer Agreement in the relevant respect, it is necessary for the Court to consider the full range of relevant surrounding circumstances when determining the subject matter and terms of the contract. Principles of law based on the parol evidence rule are not applicable.
…
In the case of an oral contract, when the issue is not interpreting words but determining the subject matter of the contract as a fact, the position is a fortiori. In such a case the relevant surrounding circumstances extend to both pre-contractual and post contractual conduct.
…
Where what is in issue is the identification of the subject matter of the contract, or the identification of necessary terms which were not the subject of express provision in a contract not reduced to writing, then consideration of post contractual conduct does not contravene the reasons underlying the principle.
There is no authoritative formulation of those reasons. However, the factor most often relied upon is the proposition that such conduct merely reflects the subjective intention of the parties, whereas the Court must ascertain their objective intentions. (See eg Codelfa supra at 352; FAI Traders Insurance Company Ltd v Savoy Plaza Pty Ltd [1993] VicRp 76; [1993] 2 VR 343 at 351; Ryan v Textile Clothing and Footwear Union of Australia [1996] VicRp 67; [1996] 2 VR 235 at 261-262.) In my opinion, subsequent conduct, especially how a contract for purchase and sale was settled, is relevant, on an objective basis, to the identification of the subject matter of the contract or the determination of necessary terms, as distinct from deciding the meaning of words.”
120 Mr Manos also relied upon the remarks of Kirby P (as he then was) in Geebung Investments Pty Ltd v Varga Group Investments (No 8) Pty Ltd (1995) 7 BPR 14,551, 14,570 where his Honour said:
“8.Where a binding agreement is said to have been formed as a result of correspondence, it is necessary to look at that correspondence as a whole. It is wrong to isolate any part of the correspondence from the rest in order to prove or disprove the existence of a binding agreement.”
Mr Manos said that the plaintiffs’ case suffered from default of placing undue influence upon a single set of words in a single item of correspondence.
121 More recently, in their joint judgment in Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570, 582 [35], Gummow, Hayne and Kiefel JJ rejected a suggested interpretation of the contract then before the Court, saying:
“To approach issues of construction in this way would be at odds with the general principle that ‘It is not legitimate to use as an aid in the construction of [a] contract anything which the parties said or did after it was made’.”
The quotation approved by their Honours was from the speech of Lord Reid in Whitworth Street Estates (Manchester) Ltd v James Miller & Partners Limited [1970] AC 583, 603. This unequivocal statement by their Honours appears to be at odds with the line of authority relied on by Mr Manos. Perhaps the reconciliation of the two lies in the fact that in the Agricultural and Rural case, the Court was considering a contract constituted entirely by written documents, likewise in the James Miller case from which the quotation was taken. Here, the question is not the interpretation of a written instrument, but rather, which terms were included in the contract which the parties made which was partly evidenced in writing and was partly oral.
122 Mr Manos submitted that the analysis of the contractual understandings and commitments between the parties was not confined to an objective determination of their objective intentions, but the parties’ subjective intentions were also relevant. He referred to the judgment of Chesterman J in Babsari Pty Ltd v Wong [2000] 2 QdR 576 [30], where his Honour emphasised the importance of a “meeting of the minds”. Next, he said that a contract may be found to exist even though it is not possible to identify with certainty the precise moment or the precise occasion when it came into existence. He referred to Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 VPR 11,110 per McHugh JA.
123 Mr Manos submitted, in the circumstances, the initial agreement between the plaintiffs and the defendant should be regarded as “derived from the conversations between Mr Curtis and Mr Kulmar in late March 2012 prior to the execution of the confidentiality agreement on 17 April 2012. After this agreement was executed, the defendant [Fujitsu General] began almost immediately providing any invoices to Mr Curtis. He said that by around 17 April, Mr Curtis agreed that he had been engaged by Fujitsu – T107, L9–17; T166, L6–7. He referred to Mr Kulmar’s remark at T690, L22–23, “Paul’s work started … when the shovel hits the dirt for the first time”. The result then was, submitted Mr Manos, that the email of 18 May setting out Mr Curtis’ terms was not contractually significant. It was despatched ex post facto after Mr Curtis’ engagement.
124 Mr Bornstein, however, submitted that the contract should be regarded as having been made at the time of the meeting between Mr Curtis and Mr Higgins, which led to the interview with Mr Shimazu and the despatch of the email.
125 It is unnecessary to determine whether, as a result of the initial dealings between Mr Curtis and Mr Kulmar, the review of the first sample of invoices and so forth or some sort of contractual arrangement arose between the parties or whether some type of restitutionary entitlement would have accrued to Mr Curtis had no contract been thereafter made. Mr Bornstein submitted that the relevant contract was made when those with authority to bind Fujitsu General, namely, its administration manager, within whose portfolio responsibility for transport and logistics lay, and its managing director, Mr Shimazu, met and engaged Mr Curtis. I accept that submission. Even if there were an earlier contract, the arrangement arising out of the meeting and the email superseded it, whatever it was. Mr Curtis set out the basis on which his firm (he and his wife) would accept engagement and, with the authority of Mr Shimazu, as the internal records of Fujitsu General demonstrate, Mr Higgins commissioned him to meet Mr Grant Douglas – see above [20]–[22]. Given that the central role that the email of 18 May played, I cannot regard it as just another piece of correspondence whose importance should not be exaggerated. In effect, this document comes very close to the status of a standard written contract. It was not subscribed to by the parties. It might be thought to be the equivalent of the “tickets” considered in the famous Ticket cases about exemption clauses. A written statement by a contracting party upon which that party provides its services. Indeed, in a sense, it is in a stronger position than the “ticket”, which is frequently pressed upon a consumer who has already completed his contract with the service provider. Here, the email was provided at Fujitsu General’s request to enable it to have a written record of the terms of the engagement of Mr Curtis’ firm before engaging him to undertake the task of liaising with COPE. According to Fujitsu General, the commission entitlement extended only to credit refunds; that is, cash recoveries or credits to its account with COPE. According to the plaintiffs, it extends to a wider range of items such as allowances or cost reductions.
126 To answer this question it is unnecessary to determine the vexed question of the continued authority of Sir Anthony Mason’s classic exposition of the circumstances in which it is appropriate to refer to surrounding circumstances to assist in the construction of the words of a written contract in Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337, 352. Whether attention is focused upon the words of the 18 May email or the surrounding circumstances, one is driven to the same conclusion. I should observe that in referring to the Codelfa Construction case I am conscious that his Honour was speaking there, as was the High Court and the New South Wales Court of Appeal in the subsequent cases, of a contract wholly in writing, subscribed to by both parties, which is not the present situation.
127 If I turn, first, to the words of the email, they are clearly supportive of the plaintiffs’ position. The defendant’s case on construction can be accepted only by simply ignoring a number of the words that are to be found in the email. This cannot be legally appropriate, even though it seems to have been, as a matter of fact, the approach that Fujitsu General adopted. When asked about the form of words in the email in re‑examination, Mr Kulmar said:
“I viewed this as just Paul’s standard spiel he sends to anyone, just like if a freight company comes in and talks to me and they’ve got a list of their services I cherry-pick the services I’m interested in”, (T782, L23–26)
though Mr Kulmar conceded he was “keen” to get Mr Curtis’ advice on rates (ibid, L28–29).
128 If we turn to the surrounding circumstances we are driven to a similar conclusion. Mr Curtis came to Fujitsu General upon referral from Fujitsu Australia where Mr Curtis had negotiated a reduction in the prospective rates charged to Fujitsu Australia by its cartage contractor Toll. Again, the email from Mr Curtis to Mr Higgins of 18 May is headed “Freight costs review”, a subject matter much wider than merely the securing of refunds or credit notes. At Mr Curtis’ meeting with Mr Shimazu, the managing director of Fujitsu General, Mr Shimazu was concerned with the general level of charges for freight and logistics, saying on a number of occasions “too much” (see [19]), again a concern wider than the mere issue of credit refunds.
129 According to Mr Higgins, when he, Mr Higgins, informed Mr Shimazu of a proposed rate increase by COPE, Mr Shimazu “asked that Mr Curtis investigate the case and try and hold back the rate increase” (T50, L19–20).
130 As to post-contractual conduct, Mr Manos drew attention to Mr Curtis’ failure to make any claim relative to any matters other than credit refunds until he tabled his last invoice in February 2013 at a time when it had become evident that he would receive no new work from Fujitsu General. Mr Manos, as I understood him, invited me to infer therefore that the claim for commission on prospective rate cuts or increases averted was adopted only ex post facto, and was not genuinely part of the agreement between the parties.
131 One might also note that in his “briefing email” to Mr Shimazu of 14 August 2012 which so enraged Mr Kaloudis, in the course of a communication aimed at establishing his entitlement to “brownie points” Mr Curtis did not claim to have averted a fee increase from COPE. Ultimately, however, these pieces of post-contractual conduct, assuming they are properly to be considered for these purposes, do not require a different conclusion from the other matters referred to above. Mr Curtis said that it was necessary for a substantial period of time to elapse after a negotiation before one could confidently claim that a fee rise had been averted.
132 The contract between the plaintiffs and Fujitsu General should be regarded as having the wider scope asserted by the plaintiffs rather than the narrower one contended for by Fujitsu General.
Claim for commission on COPE rate rise “averted”
133 As noted above, Mr Higgins said that he had received an intimation from Mr Quigley, who was the account manager for Fujitsu General at COPE, that an annual rate adjustment was to be made of the same order as had been made the previous year. That was initially described as being a 4.5 per cent rate increase. The previous rate increase had taken effect on 18 July 2011 and had been calculated by Mr Quigley at 3.8 per cent. The schedule affecting the increase included a handwritten notation to that effect by Mr Higgins. He said:
“The previous rate, I feel, was 4½ per cent and this would be for a proportion of the year, from memory, because we had three months’ delayed start. I think that’s why it dropped back to 3.8. That’s an equation I did only.” (T53, L16–20)
134 In fact, no such rate increase was effected, and the plaintiffs claim a 25 per cent commission, accordingly. I can pass on from the view which Mr Higgins adopted that a 3.8 per cent nominal increase equated in 2012 with a 4.5 per cent increase, because in my view the evidence simply does not establish that such a rate increase was in prospect and therefore could be said to have been averted by Mr Curtis’ negotiation.
135 Mr Quigley, who was at the relevant time Fujitsu General’s account executive at COPE, said either that there was no rate increase in prospect or that, if a rate increase had been in contemplation, it would have been at the rate of 1.5 per cent. The adjustment formula in the contract between Fujitsu General and COPE was a very complex one, which neither party felt motivated to attempt to operate. As a result, it appears there was a “handshake” between Messrs Higgins and Quigley to the effect that the adjustment would be simply in accordance with the Consumer Price Index. At the relevant time in 2012 this would have yielded a 1.5 per cent adjustment.
136 Mr Douglas, who gave evidence for Fujitsu General, said that no rate increase was in contemplation. He was concerned as to a number of service issues, including damage to product and late delivery, and so he felt it would be unpropitious to attempt to increase rates in 2012. Moreover, he said that he took the stand in negotiation with Mr Curtis that the contractual rates had been agreed upon and were therefore not properly the subject of negotiation, at any rate with Mr Curtis. He said he declined to engage in any debate about rates with Mr Curtis.
137 In those circumstances, whilst the scope of the plaintiffs’ retainer by Fujitsu General was wide enough to extend to a commission entitlement for rate increases averted, the evidence did not establish that there was in truth a threat of a 4.5 per cent rate increase which was averted through Mr Curtis’ effort.
138 As a result of guidance given by Mr Curtis to Mr Kulmar at Mr Kulmar’s request, Mr Kulmar was able to negotiate an ongoing cut in storage rates by Cahill Transport from $2.50 per cubic metre to $2.00. Consistent with the scope of Mr Curtis’ retainer, the plaintiffs should be entitled to damages for commission on that reduction at the rate of 15 per cent.
Alleged repudiation by Mr Curtis
139 I should also note pleaded allegations by Fujitsu General that, in the circumstances, Mr Curtis repudiated the plaintiffs’ contract with Fujitsu General by making direct contact with Mr Douglas (see [42] above) and by generally being hostile to Mr Douglas in his dealings with him on behalf of Fujitsu General. In Shevill v Builders Licensing Board (1982) 149 CLR 620, 625–6, Gibbs CJ said:
“... a contract may be repudiated if one party renounces his liabilities under it – if he evinces an intention no longer to be bound by the contract ... or shows that he intends to fulfil the contract only in a manner substantially inconsistent with his obligations and not in any other way.”
140 The conduct alleged against Mr Curtis simply does not rise to this level. A repudiation is a very serious matter indeed, so in Shevill’s case itself, a case of landlord and tenant, a lessee who was constantly late in paying rent and had fallen in arrears for more than 14 days, which entitled the landlord to re‑enter and terminate the lease, which it did, was not regarded as having repudiated the lease. As to the apparent defiance of Mr Kaloudis’ request to Mr Curtis not to respond directly to an email from Mr Douglas, whilst Mr Curtis could not account for his apparent defiance, the timings were so close that the event might be explained by some quirk of the technology which the parties were using to communicate, such as Mr Curtis’ device only picking up the incoming communication from Mr Kaloudis after some delay. Even if the matter were not explained in that way, it is not sufficiently serious to constitute a repudiation.
141 As to the allegation that Mr Curtis had not properly maintained the good relations between COPE and Fujitsu General, this allegation seemed to focus upon an email where Mr Curtis described himself in a meeting with Mr Douglas as having been “very hostile”. Mr Douglas gave evidence, and there was no suggestion from him that anything that Mr Curtis did imperilled the good relations between his company and Fujitsu General. The allegations of repudiation therefore fail.
Relief and disposition
142 I direct the parties within 14 days to bring in short minutes to give effect to these reasons. If there are further matters that need to be determined, such as costs, the parties are requested to make contact with my Associate to arrange a listing.
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