Dupois v Galley Commodities Pty Ltd
[2016] QSC 167
•3 August 2016
SUPREME COURT OF QUEENSLAND
CITATION:
Dupois & Anor v Galley Commodities Pty Ltd & Anor [2016] QSC 167
PARTIES:
CHARLES DUPOIS and ONE WORLD MUSIC FILM AND TV PTY LTD
ACN 139 986 753
(plaintiffs)v
GALLEY COMMODITIES PTY LTD
ACN 607 868 548
(first defendant)
and
LLOYD GALLEY(second defendant)
FILE NO:
SC No 12607 of 2015
DIVISION:
Trial Division
PROCEEDING:
Civil Trial
ORIGINATING COURT:
Supreme Court of Queensland at Brisbane
DELIVERED ON:
3 August 2016
DELIVERED AT:
Brisbane
HEARING DATE:
24 and 26 May 2016
JUDGE:
Applegarth J
ORDER:
Judgment for the plaintiffs against the defendants in the sum of $100
CATCHWORDS:
CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – INTERPRETATION OF MISCELLANEOUS CONTRACTS AND OTHER MATTERS – where the defendants agreed to invest Trade Currency in the production of music videos for the plaintiffs’ songs – where the defendants agreed to set up a Trade Currency account in the name of the second plaintiff with an amount of $300,000 in Trade Currency in it – where, although not recorded in the contract, the account could only be set up with approval from the operator of the Trade Currency Exchange – where an account in the name of the second plaintiff was not set up – whether the defendants breached the contract by failing to set up the Trade Currency account – whether the plaintiffs have proved loss and damage arising from any breach
McCann v Switzerland InsuranceAustralia Ltd (2000) 203 CLR 579, cited
Rodin v Voyler Pty Ltd [2011] VSC 414, cited
Sellars v Adelaide Petroleum NL (1994) 179 CLR 332, citedSmith v South Wales Switchgear Ltd [1978] 1 All ER 18, cited
COUNSEL:
Mr Dupois appeared for the plaintiffs
T Gray for the defendants
SOLICITORS:
Viana Lawyers for the defendants
The plaintiff, Mr Dupois, is a recording artist. The other plaintiff, One World Music Film and TV Pty Ltd (“One World”), is his company. In November 2015 the plaintiffs were interested in obtaining finance to produce music videos for two of Mr Dupois’ works, songs called “Girls, Girls, Girls” and “It’s a Sexual Thing”.
The first defendant, Galley Commodities Pty Ltd, is controlled by the second defendant, Mr Galley. In November 2015, the defendants were associated with a Trade Currency business named BBX International Ltd.
Discussions occurred between the plaintiffs and the defendants about using BBX Trade Currency to pay for the costs of producing the two music videos. This led to:
(a)an initial contract dated 9 November 2015;
(b)a further agreement dated 10 November 2015, styled “Understanding and Undertaking”; and
(c)an addendum contract dated 24 November 2015.
In essence, the defendants as “The Investor” initially agreed to set up a “Trade Currency Account with Card Access in the sum of AUD $300,000.00 (Trade Currency)” in the name of One World as part of a budgeted amount of $550,000 or its equivalent in Trade Currency. The facility was to be provided within 14 days from the signing of the agreement. The 24 November 2015 addendum to the original contract increased the investment from $550,000 to $1,200,000 through either Trade Currency or Australian dollars.
As matters transpired, an account of sorts was established in a different name, If We Can Dream Universal. No account was set up in the name of One World. It did not become a member of BBX. No amount of Trade Currency was placed in a Trade Currency Account, as the agreement, as varied, contemplated.
The parties fell out. The defendants purported to terminate the arrangements. The plaintiffs sued them for breach of contract, claiming that they had suffered a loss of bargain or expectation loss of $1,200,000, and the loss of the opportunity to market both the finished film clips for global distribution, initially throughout Europe for the summer season of 2016. The plaintiffs’ case is that if $1,200,000 in BBX Trade Currency had been made available to produce video clips of the two songs then the clips would have been made and the songs would have become worldwide hits with as many as 18,000,000 downloads. They assert that had the project proceeded then the projected international sales of downloads and hard copy sales would have been at least $15,000,000.
The defendants deny that they breached the contract. They say that the agreement was subject to a condition that the plaintiffs would establish an appropriate Trade Dollar account with BBX International Ltd, that One World’s application for a BBX account ultimately was unsuccessful and that therefore this pre-condition was not fulfilled. Because BBX declined to establish an account for One World, the defendants could not provide any Trade Dollars to enable the agreement to proceed. The agreement therefore came to an end.
In the alternative, the defendants submit that the plaintiffs have failed to prove the substantial damages claimed by them. This is because the agreement depended on Trade Dollars being used to engage the services and equipment required to produce the videos. There is no evidence that any, let alone all, of the artists, photographers, directors and equipment providers required to produce the two videos were prepared to provide their services and equipment in exchange for Trade Dollars. The plaintiffs’ witness, Mr Blyton, who has experience in the music industry said he had only dealt in “real money”. He knew of no-one in the relevant fields who accepts Trade Dollars in payment. Therefore, on the defendants’ case, the videos simply would not have been able to be produced because the Trade Dollars made available for that purpose would not have been able to be used.
The issues
The parties accept that a Trade Currency Account with Card Access in the name of One World was not established, and therefore Trade Currency in the amount of $300,000 (or any other amount) was not deposited into it. Nor was any amount deposited by the defendants into the account that was set up on or about 17 November 2015 in the name of If We Can Dream Universal.
The substantial issues are:
1.The terms of the parties’ agreement, as varied, in particular:
(a) whether it included a term that the defendants would set up a Trade Currency account with Card Access in the sum of $300,000 in the name of One World; or
(b) whether the establishment of such an account was a condition (sometimes described by the defendants as a “condition precedent”) which was essential to the performance of the agreement.
2.If the defendants breached the agreement, as varied, whether the plaintiffs have proved their claimed loss.
Facts
Mr Dupois is a middle-aged man who has been in the entertainment industry since the age of nine. He has hosted TV shows and produced several songs. He gave no evidence about the sales of those songs, which were recorded by him and other artists. In his address he referred to a film clip called “If We Can Dream” which was said to have cost $1,200,000 to produce, but even this unsworn evidence from the Bar table did not relate to sales or other income generated by that song.
Mr Dupois acknowledged in his final oral submissions that there was no evidence about his previous sales or his “track record” in terms of record sales or downloads. Yet he has been in the entertainment industry for a long time.
At some stage, Mr Dupois recorded a song that he wrote called “It’s a Sexual Thing” and he recorded a cover version of the Elvis Presley song “Girls, Girls, Girls”. He realised that a high quality video was necessary to promote each of his songs. He was told by someone about Trade Currency and about a Trade Currency group called BBX.
Mr Galley worked for BBX, which he described as a business to business exchange, based in Sydney with franchises around Australia and 14 other countries. Mr Galley had worked as an employee for BBX for about four years. In April 2015 he started the process of becoming a BBX franchise owner for the Gold Coast North area. He applied for a franchise in October 2015 and steps were taken at that stage to prepare franchise deeds and other documents.
Mr Galley explained that BBX operates as an exchange between its members. Goods and services are exchanged for BBX Trade Dollars. For example, if a member has excess capacity or a surplus of goods then they are promoted through a “trade coordination network” by which representatives of BBX establish a relationship between a member who wishes to use their Trade Dollars to buy the relevant goods or services and the supplier. In essence, BBX facilitates introductions between members who do business with each other. The members only trade in BBX Trade Currency, or what was referred to in the evidence as BBX Trade Dollars. A person must be a member in order to engage in that trade. BBX charges a percentage fee on the trades it facilitates.
In order to become a member and to be able to use BBX Trade Dollars, a party has to be in business and to have an ABN or ACN. Once a party becomes a member and has an account established, then it obtains a card or cards that can be used to access the Trade Currency in the account. Therefore, if a member wishes to purchase goods or services, it contacts the BBX office and the trade co-ordinator puts them in touch with a member who can provide the goods or services. The first member uses Trade Currency in a BBX account to pay for the goods or services.
BBX’s head office, and not franchise owners, decide who will be a member. There are different membership classes. The entry level membership costs $997. Other classes cost more. The fee to become a Black Card Member is $5,000. To obtain such an account, an applicant must have two years of trading and is required to submit a business plan and a profit and loss statement. In addition to application fees, there is a $250 administration fee and other fees.
After being told about the BBX Trade Currency group, Mr Dupois telephoned Mr Galley. This seems to have occurred in about early November 2015. They had a few meetings at which Mr Dupois, who was described by Mr Galley as having a “big personality”, explained what was required to market the singles. Discussion included the comment that “there’s trade dollars out there in the marketplace that apparently no one has a use for.” The hope or expectation was that Trade Dollars could be accumulated from people who had no use for them and that BBX would introduce BBX members who would be prepared to accept BBX Trade Dollars to supply goods and services for the project of producing the two videos. The initial idea was that $550,000 in BBX Trade Dollars would be made available for this purpose.
At least one of the meetings was attended by Mr Dupois’ associate, Mr Kerry Crinis, who described himself as an Executive Producer for One World and its “in-house counsel and legal officer”. Mr Crinis does not have a practising certificate. He once practised as a lawyer but has not done so for about 15 years. In early November 2015 Mr Crinis drafted the Investment Contract which was signed and dated 9 November 2015.
The initial agreement dated 9 November 2015
For present purposes it is necessary to refer to only a few clauses of this rambling document. “The Artist” is a reference to One World and its director, Mr Dupois. “The Investor” is a reference to Galley Commodities Pty Ltd and Mr Galley. The agreement recites that The Artist and The Investor had entered into a contract to invest “no more than AUD $550,000 through either Trade Currency or Australian Dollars however, the same total currency that is equivalent of AUD $550,000 shall apply”. The recital went on to state:
“This money will be used to produce two state of the art Music Film Clips for the said two bodies of works and all other requirements needed including relevant personnel as outlined in Schedule One in this contract.”
The contract outlines various commitments made by The Investor and various commitments made by “The Artist and his group”. The main commitment by The Artist and his group was to pay The Investor 10 per cent of various amounts, including the net sales of ringtones/downloads, the net profit from downloads of the two songs, downloads from the two film clips, the net profit from the prepaid purchase of the hard copy of DVD packages, and from other activities like licensing, branding and merchandising.
Schedule One of the contract consists of 60 items, including various personnel and types of equipment which were required to produce the state of the art Music Film Clips for the two songs. I shall not list all of them. The first is “A Global Digital Distribution Team for both Songs and Music Film Clips - including all Social Media forums”. The second is “Full cast and crew facilities including film, recording, production studios and post production editing suites”. The list extends to hair and makeup artists, still photographers, choreographers and a personal trainer for Mr Dupois. The personnel included the following:
“11.Two to Four stunning Female Professional Backup Singers
12. One stunning female singer to sing with the Artist in bridge area (It’s a Sexual Thing)
13. One (main part) drop dead Gorgeous model re (It’s a Sexual Thing)
14. Really cool live venue re film shoot (It’s a Sexual Thing)
15. 5 Star Penthouse for (It’s a Sexual Thing) re orgasm introduction in the film shoot
16. Professional Female Dancers – 8
17. Models up to 20 gorgeous bikini girls
18. DOP – Director of Photography
19. Film Director
20. Assistant Director”
The list included items of equipment such as cameras, lighting, a “Cool speedboat and sailing boat” and a range of services such as flights, transport for film shoots and “Global Marketing of all finished products related to this contract”.
The timetable set out in the contract was for casting to start on 14 December 2015, and for the film shoot to start on 25 January 2016 and to last 10 to 14 days with seven days of post-production.
The contract was said to constitute “the entire contract between the parties” and to supersede “all prior representations, agreements, statements and understandings, whether verbal or in writing”.
One of the commitments undertaken by The Investor assumes particular importance in this case. It reads:
“‘The Investor’ agrees to set up a Trade Currency Account with Card Access in the sum of AUD $300,000 (Trade Currency) which at no time is repayable back to the Investor as this arrangement forms part of this contractual arrangement (free of any fee) which will be in the name of One World Music Film and TV Pty Ltd being the Artists [sic] company to be able to be used for any purposes in relation to these project [sic], however this amount is inclusive of the full budget amount allocated in the agreed sum of AUD $550,000.00 or its equivalent in Trade Currency. This facility is to be provided within 14 days from the signing of this agreement.
Furthermore, the Investor agrees that any unused balance shall stay in the account of One World Music Film and TV Pty Ltd at all times.”
The 10 November 2015 agreement
This document referred to the 9 November 2015 agreement and stated:
“For the purposes of accountancy Mr Lloyd Galley requested that Mr Charles Dupois become a member of his BBX International Trade Currency so a portion of the invested funds being the amount of AUD $300,000.00 (Trade Currency) be paid into that trade account which will be fully controlled by Mr Dupois and his group and the balance of the investment sum of AUD $250,000.00 will be controlled by Mr Lloyd Galley making the agreed total investment in the sum of AUD $550,000.00.”
The agreement referred to and quoted the clause of the 9 November 2015 agreement which I have quoted in the previous paragraph about The Investor agreeing to set up a Trade Currency Account.
The 10 November 2015 agreement went on to state:
“It is further agreed and conditional upon Mr Dupois signing the BBX International agreement that upon him signing the said agreement it is made clear that the maximum amount payable by Mr Dupois or any of his businesses or company’s [sic] shall be the one time amount of AUD $250.00 and no more.”
It then dealt with other matters in relation to fees payable to BBX for the transfer of the investment amount of AUD $300,000.
The 10 November 2015 document stated that the “entity name joining is If We Can Dream – Universal (A World Peace and humanitarian Project and Group) – BN Number is 98441811”.
Subsequent events
I accept Mr Galley’s evidence about the subsequent course of events. He obtained information from Mr Dupois to enable him to complete an account application form which was sent to BBX in Sydney. The application form was processed so as to establish an account in the name of “If We Can Dream Universal”. The establishment of the account required payment of a $250 administration fee and this was paid. However, there were no deposits of Trade Currency and the account was inactive.
A day or so after the account was established Mr Galley received a call from BBX’s administration department. He was told that BBX could not proceed with the account because there was no ABN, only a Business Name, and searches did not bring up the name Charles Dupois. I do not rely upon this evidence as going to the truth of its contents. Instead, what Mr Galley was told explains subsequent events. Because Mr Dupois could not provide BBX with an ABN number or an ACN number for If We Can Dream – Universal and BBX reported problems in finding his name when it undertook a search of the BN number, discussions ensued about a different means to establish a BBX account. These culminated in the addendum agreement dated 24 November 2015. Mr Galley and Mr Dupois discussed how Mr Dupois’ company, One World, might apply to become a Black Card Member. This had the attraction of reducing the fee structure. However, it still required an ABN or an ACN, together with records of the company’s previous performance and financial statements. As previously noted, a Black Card membership required a higher joining fee and this had an advantage for Mr Galley and his company.
The 24 November 2015 agreement
At around this stage, Mr Dupois requested an increase in the investment from $550,000 to $1,200,000 through either Trade Currency or Australian dollars, and this was reflected in the 24 November 2015 agreement. That agreement recorded:
“2.The Investor agrees and acknowledges that the investment amount in Trade Currency which is equivalent to AUD Currency is acknowledged to be a dollar for dollar exchange.
3. The Artist has agreed in good faith for his company to become a member of the Trade Currency group called BBX; however this is in no way a condition of the original contact [sic] or the Addendum contract.
The Artist has agreed on the following terms to join this group.
a. That his company will apply to become a Black Card Member.
b.That the normal onetime fee of AUD $5000.00 is split between the Investor and the Artist meaning that the Artist will only pay half the onetime fee of AUD $2,500.00.
c.The Artist agrees in good faith to pay the full sum to the investor for the black card being AUD$5,000.00 however it is a condition of this advanced payment that the Investor will refund in cash to the Artist the full sum of AUD$2,500.00 within no more than 7 days (not business days) of the payment or alternatively the Investor can in advance pay his AUD$2,500.00 portion making the refund to the Artist not a requirement.”
The agreement went on to deal with the treatment of future deposits into the BBX account and recorded that the first transaction on the account would not attract the usual fixed fee of 6.5 per cent. It also provided for an overdraft sum of not less than $100,000 in addition to the amount of $1,200,000. Mr Dupois was keen that the increase in the amount of $550,000 to $1,200,000 should not be divulged to third parties and there was a confidentiality clause to that effect.
Despite this agreement being reached, the application for a Black Card membership did not proceed. The application for the Black Card account was completed and the earlier administration fee of $250 was returned to Mr Dupois in respect of the failed application of If We Can Dream – Universal to become a BBX member. However, Mr Galley said that he was waiting on the payment of the $5,000 and it was never received.
While still awaiting receipt of the $5,000 fee which would be required for BBX’s head office to process the new Black Card application, Mr Galley was told by BBX that it was not interested in him submitting the application and he was to “cease all operations” in respect of Mr Dupois and his company. BBX’s reasons for not wishing to deal with
Mr Dupois and his company are not before me. The important fact is that no account with BBX was established in the name of the plaintiff, One World.The “account” which had been created on 17 November 2015 after BBX received the application from If We Can Dream – Universal was closed on or about 7 December 2015, at Mr Dupois’ instigation and without Mr Galley’s knowledge. This was because Mr Dupois did not want to have any obligation to pay fees on that account.
On 8 December 2015 Mr Galley, on behalf of Galley Commodities Pty Ltd, wrote to Mr Dupois advising him of the cessation of all contact between them and expressing regret that he did not know anything previously of Mr Dupois’ history as Charles Gant. He said that the proposed arrangements between them required faith and confidence, which he did not have. It seems that there were conversations between Mr Galley and Mr Crinis on 9 December 2015 which led to Mr Dupois writing to Mr Galley and also to BBX, rejecting allegations about him and his past and threatening proceedings.
This proceeding was commenced on 14 December 2015.
The issue of contractual interpretation – the parties’ submissions
The essence of the plaintiffs’ pleaded case is that the defendants did not set up a Trade Currency Account in accordance with the agreement, as varied, and thereby breached the contract. The defendants’ pleaded case is that the agreement to invest certain Trade Dollars was based upon “certain conditions including representations made by [Mr Dupois] and the establishment by [the plaintiffs] of an appropriate trade dollar account (the BBX account) by [the plaintiffs] with BBX International Limited”. The representations referred to are not pleaded or particularised and the issue of
pre-contractual representations and their consequences were not pursued at trial by way of defence. The defendants’ amended defences did not plead that certain conditions were implied in fact, or by law, and that the plaintiffs failed to perform obligations imposed on them by virtue of those implied conditions. The defendants did not plead that the contract was entered into on the basis of some mistake, common to the parties, that BBX would approve membership and provide the operational account necessary for the agreement between the parties to proceed. To the extent the defendants’ further submissions rely upon the doctrine of mistake, I disregard them.The defendants plead that, as a matter of contractual construction, the establishment of the BBX account was a “pre-condition to any other agreement” between the plaintiffs and the defendants proceeding, and that the application for the BBX account envisaged by the agreement, as amended by the Addendum Agreement dated 24 November 2015, ultimately was unsuccessful. They defend the fact that they did not provide any Trade Dollars to the plaintiffs on the basis of the alleged pre-condition and say that because the necessary BBX account was not established, the agreement between the parties came to an end. They justify the purported termination of the agreement on 8 December 2015 on the basis that the proposed arrangements were not supported by BBX.
The appropriate Trade Dollar account referred to in the pleading is submitted by the defendants to be the account contemplated by the parties’ agreement, namely one in the name of One World. It is not the “account” which was created when If We Can Dream – Universal submitted an application for an account. That account did not trade and had no Trade Dollars deposited into it. The defendants’ case is that notwithstanding the “If You Can Dream – Universal” BBX account being created as a result of the 10 November 2015 Understanding and Undertaking and the application lodged by the defendants with that business name, the requirement for a One World Account endured. It was this account which did not come into existence because it was never approved by BBX, with the result that neither of the defendants could provide any Trade Dollars to enable the agreement and the proposed arrangements to proceed. As a result, the parties were discharged from their obligations.
The defendants’ submissions note that there seems to be no dispute that the agreement envisaged at least $550,000 in Trade Dollar Currency being placed into an account with BBX to fund the many things listed in the agreement, and that, without funding, none of those things could proceed. The plaintiffs accepted in their evidence that if the project did not proceed and generate revenue, then there would be no reward for anyone associated with it, including the plaintiffs.
Incidentally, the plaintiffs do not allege that if Trade Currency had been deposited into a BBX account in the name of One World but could not be used in the circumstances for its intended purpose, then they could keep it as if they owned the sum in question. The agreement, as varied, envisaged that $300,000 in Trade Currency would be placed in a Trade Currency Account with Card Access in the name of One World.[1] That amount or any unused balance would presumably be held on trust in the event the project could not proceed through no fault of the parties, and if the project and the agreement came to be abandoned it would be refunded. The plaintiffs do not argue that they would have been entitled to retain $300,000 in Trade Currency if the project had not proceeded through no fault of the defendants, and that their damages should be assessed at the Australian dollar equivalent of $300,000 in Trade Currency. They do not seize upon the words “at no time is repayable” in the clause I have quoted and read it out of context to advance such an argument. In short, the $300,000 in Trade Currency which was to be deposited in accordance with the agreement in the One World Trade Currency Account was to be used for the project, and if the contract came to an end it did not become the property of the plaintiffs.
[1] The Addendum Agreement dated 24 November 2015 increased the investment from $550,000 to $1,200,000, but did not make any different allocation or increase the $300,000 sum which was to be paid into the Trade Currency Account in the name of One World.
On the important point of construction previewed at the start of this judgment, the defendants were to “set up” a Trade Currency Account with Card Access in the sum of $300,000 (Trade Currency). Mr Galley’s evidence is that he set up accounts for clients all the time, and by that he meant that he applied to BBX. He understood the obligation to “set up” an account as involving an online application form or a manual form which, if approved, would lead to the establishment of an account in the name of One World. Whether or not an account was established depended upon BBX approval of membership and an appropriate operating account into which Trade Dollars could be deposited.
The defendants’ submissions contend that BBX’s requirement for membership and having an operational BBX account was, on the proper construction of the agreement, a condition precedent, the failure of which entitled the defendants to terminate. They further submit, although it was not pleaded, that because BBX membership and having an operational BBX account were essential to the performance of the agreement, these things must be implied to give business efficacy to the agreements.
Despite its length, the plaintiffs’ written response to the defendants’ case is simple. The plaintiffs focus on the clause of the agreement dated 9 November 2015 which begins “‘The Investor’ agrees to set up a Trade Currency Account with Card Access in the sum of AUD $300,000 (Trade Currency) … in the name of One World”. This clause is submitted to mean what is says, namely that it was the defendants’ responsibility to set up the account. Further, there is no clause in the agreement which states that the setting up of a BBX account or that acceptance of an entity as a member of BBX was a condition precedent to the contract or the parties’ obligations to perform under it.
In reply, the defendants accept that the matter in issue is simply a determination of the contractual obligations of the parties and press the argument that approval by BBX of membership and an operational account in favour of One World was “an essential pre-condition” to the agreements proceeding and that both parties mistakenly believed that this was a fait accompli. In the circumstances, when BBX did not give approval, neither party received what they had bargained for.
How should the agreement, as varied, be construed?
The fact that BBX’s approval of One World’s membership and BBX’s decision to create an operational account for it were essential for the agreement to proceed and for the videos to be produced does not answer the question of whether it was the defendants’ responsibility to “set up” the required Trade Currency Account. Instead, if upon the proper construction of the contract, the defendants assumed that obligation, it is simply a case of their being unable, for reasons beyond their control, to do what the contract obliged them to do. The defendants may have believed that BBX approval of the account required by the parties’ agreement was a fait accompli, on the basis of what they understood to be the plaintiffs’ standing and background and the potential of the two songs to be a great commercial success. Mr Galley presumably was lured by the promise of a 10 per cent share in sales and in profits. He seemingly believed that he could attract and accumulate Trade Dollars which were not being used by members of BBX to fund the investment and that once BBX established the required account in the name of One World, $300,000 BBX Trade Dollars could be deposited into it.
Mr Galley struck me as an honest witness. The relevant document was not drafted by him. It was drafted by Mr Crinis for the plaintiffs. While there is a principle that any ambiguity should be resolved by the contra proferentem rule as a last resort,[2] the relevant term of the agreement dated 9 November 2015 is unambiguous. It required The Investor to do more than complete and submit an application for an account.
[2] McCann v Switzerland InsuranceAustralia Ltd (2000) 203 CLR 579 at 602; Rodin v Voyler Pty Ltd [2011] VSC 414 at [33]; c.f. Smith v South Wales Switchgear Ltd [1978] 1 All ER 18.
Mr Galley gave evidence about the “innuendo and tone of the conversation” that was had at the time the agreement was being discussed and the way it was explained to him after he questioned it and before he signed it. However, he was unable to give any specifics about that part of the conversation.
Mr Galley may have understood the relevant clause to mean that he merely had to apply for a Trade Dollar Account to be established and that it was then up to the BBX head office to decide. In his oral evidence, however, he accepted that this is not how the clause actually reads. He accepted that the relevant clause of the first agreement required him and his company to set up the Trade Currency Account.
Mr Galley added in his evidence that this explains why the Addendum Agreement dated 24 November 2015 was created.
In resolving the issue of contractual construction, I must place to one side Mr Galley’s subjective interpretation of what the agreement meant. I am concerned with the construction of an agreement, which was varied, not the first agreement in isolation. I note, however, that Mr Galley was correct to concede in his oral evidence that the relevant clause in the first agreement cannot be read in any other way than obliging him and his company to set up the required Trade Currency Account.
The second document in point of time, dated 10 November 2015, is not relied upon by either party as affecting the matter. As noted, the defendants’ case is that the requirement for One World to have an account endured. The precise purpose of the 10 November 2015 document is unclear. It seems to have some purpose in the nature of accounting for the disbursement of the expected total investment of $550,000 in Trade Currency. It tended to confirm, not vary, the term of the 9 November 2015 agreement which contemplated the creation of an account in the name of One World.
The critical question then is whether the Addendum Agreement of 24 November 2015 varied the obligation imposed upon the defendants by the 9 November 2015 document. As noted, that agreement did two things. The first was to increase the amount of the investment from $550,000 to $1,200,000. The second was to record the plaintiffs’ agreement in good faith for One World to be a member of BBX and that the company would apply to become a Black Card Member, and pay the $5,000 fee, but that the fee would be split between the plaintiffs and the defendants so that the plaintiffs would end up paying $2,500.
Importantly, clause 3 of that agreement, in recording the plaintiffs’ agreement for One World to become a member of BBX, continued: “however this is in no way a condition of the original contract or the Addendum contract.” These words make clear that the defendants were not being relieved of the obligation, originally created on 9 November 2015, to set up a Trade Currency Account in the name of One World with $300,000 deposited into it by way of Trade Currency. Instead, the Addendum of 24 November 2015 addressed the type of account that it was to be, the split in the initial fee of $5,000 and how future deposits into the account would attract fees. I conclude that the Addendum Agreement did not vary the defendants’ obligation to establish the kind of account referred to in the agreement dated 9 November 2015.
The defendants do not submit that the plaintiffs’ delay in paying the fee of $5,000 referred to in the Addendum contract brought their agreement to an end or that the agreement, as varied, was terminated or able to be terminated on the basis of a delay in payment. The evidence is that the $5,000 was not in fact paid. However, before any issue was made of that, BBX declined to accept One World as a member for some reason. BBX, having declined to open an account in the name of One World, and One World not being accepted as a member of BBX, the defendants could not deliver on their promise to set up an account in the name of One World with $300,000 Trade Dollars in it. The defendants are correct that the agreement became impossible to perform. However, the fact remains that it was the defendants’ responsibility to establish the relevant account and they did not do so. They therefore breached the contract.
Because the defendants did not plead an implied term and the question of an implied term was only raised in final written submissions by the defendants, I am disinclined to decide the issue of contractual construction by reference to an implied term. The defendants point out that they accommodated the plaintiffs’ request to have the matter heard early and the defendants co-operated in ensuring that the evidence in the case took only one day. They point out that the pleadings could have been in better form. For completeness, I should record that I fail to see how any unpleaded case based on an implied term could assist the defendants. The type of implied term being relied upon is one implied as a matter of fact as something necessary to give the agreement business efficacy. The problem with implying such a term is that the parties did not leave the establishment of the required account as something unstated, and it did not go without saying that its establishment was a condition precedent. The parties made express provision for the required account to be established. Their express term imposed an obligation upon the defendants to establish it. Any term which made a different provision concerning the establishment of such an account would be inconsistent with the parties’ express terms. It therefore cannot be implied.
In summary, the plaintiffs have proven a breach of contract by the defendants arising from the failure and inability of the defendants to set up a Trade Currency Account with Card Access in the amount of $300,000 in Trade Currency in the name of One World. They did not do so within 14 days of the agreement, or at all.
Loss and damage
The plaintiffs are to be compensated for the consequences of the defendants’ breach of contract. The assessment of damages involves an inquiry into the position the plaintiffs would have been in if the contract had proceeded, with $300,000 in Trade Currency placed into a Trade Currency Account in the name of One World, and the contract had otherwise been performed with a total investment of $1,200,000 through either Trade Currency or Australian Dollars (on the basis of a dollar for dollar exchange).
There is no evidence that the defendants would have made an investment in Australian dollars. The commercial genesis of the agreement was Mr Dupois being alerted by certain associates to Trade Dollars. He was given to understand that “there’s Trade Dollars out there in the marketplace that apparently no one has a use for”. Mr Galley and his company were always proposing to use Trade Currency, not real money, for the purpose of the investment. Under cross-examination Mr Dupois accepted that without the Trade Dollars nothing would have proceeded.
The contract contemplated the employment of a personal assistant and a production manager who would be paid from the invested amount. The invested amount was to be used to produce “two state of the art Music Film Clips” for Mr Dupois’ two songs, including engaging the personnel referred to in Schedule One to the contract. As previewed, there is no evidence that any personnel in any of those categories are prepared to provide their services in exchange for Trade Dollars. There is no evidence that any suppliers of the required cameras, cranes or other equipment are prepared to do so.
In their pre-contractual negotiations (which neither party relied upon as constituting a term of the contract, possibly in the light of the “entire contract clause”), there was discussion about how BBX members might be involved. However, nothing came of it. Mr Dupois was put in touch with a woman who was a “in marketing” and who had just signed up to BBX. But she had no experience in the music industry and was not suitable for the task. Mr Dupois’ associate, Mr Blyton, had some discussions with Mr Galley about the possibility of filming the videos in Perth or in Thailand. Mr Dupois mentioned in his address another person who was supposed to be a franchise owner of BBX in Western Australia, who had recording studios and who was going to arrange for an inspection of his facilities. I mention this in giving some latitude to Mr Dupois, a self-represented litigant,[3] who neglected to mention this matter in his evidence.
[3] Whilst Mr Dupois is a self-represented litigant, he had the assistance of his “in-house counsel and legal officer”. His self-represented status does not remove the need for him to prove loss by admissible and reliable evidence.
Mr Blyton anticipated having a role in the distribution and marketing of each song once the Music Film Clips were made. However, he did not agree to accept Trade Dollars as a reward. His reward was to be a percentage of net return. He hoped to be paid “real money” if the project proceeded and was a success.
So far as the unnamed suppliers of the 60 categories of goods and services appearing in Schedule One of the agreement are concerned, there is no evidence that BBX had as its members people in these fields, which include a wide array of artists, traders and equipment suppliers. I have noted some of the categories earlier. They are many and varied.
The defendants submit that the plaintiffs have not demonstrated that they have suffered any loss. The Trade Dollars could only be used on expenses for good and services to be provided by members of BBX. Non-members could not receive or use BBX Trade Dollars. As Mr Galley explained in his evidence, the nature of the BBX organisation is that anyone who wants to use Trade Dollars must have a Trade Account. Members of BBX exchange Trade Dollars for goods and services.
The project which performance of the parties’ agreement was intended to achieve was premised upon the parties being able to use Trade Currency to fund the requirements for producing the two state of the art Music Film Clips, including engaging the personnel and other service providers outlined in Schedule One. The Investor was not obliged to invest in Australian currency and there is no evidence that they had any substantial Australian currency to invest. If performed, then the investment would have consisted of a total amount of $1,200,000 in BBX Trade Currency which, for the purpose of the agreement was acknowledged to be equivalent to Australian currency and to be on a dollar for dollar exchange. Some $300,000 of the Trade Currency would have been held in an account established in the name of One World.
Mr Blyton’s evidence lent no support to the proposition that any of the suppliers of goods and services required for the purpose of making the two Music Video Clips would have been prepared to supply those things in exchange for Trade Currency. His evidence was quite to the contrary.
Mr Blyton was born in 1958 and became a broadcasting engineer. He later went into advertising and produced over 1,500 jingles before moving to Los Angeles where he pursued a career as a record engineer. He returned to Australia and worked as a record producer. He was associated with Mr Dupois on a project called “If We Can Dream”. Little evidence was given about this project. Mr Blyton agreed with a leading question that it was a “multi-million dollar production and years of work”, and had a cast of 300 or more. In his closing address, Mr Dupois gave unsworn evidence that the “If We Can Dream” film clip was alone a $1,200,000 production because there were 300 people in the film clip. In any case, Mr Blyton’s sworn evidence was that the requirements of launching the two songs which are the subject of these proceedings would have been “somewhere over a million dollars”. Mr Blyton did not produce the two songs. His anticipated role was to be as a consultant to pursue the marketing and distribution of the product.
The short but effective cross-examination of Mr Blyton revealed that he had never been involved in a project that was funded by Trade Dollars. He did not have a clue what Trade Dollars meant. As he said: “I only ever deal with real money”. His estimates of what the project might yield (he referred to them elsewhere as his “professional guesstimation”) was based on real money, being Australian dollars, being provided to enable services to be purchased. He was not aware of any persons who might have been employed to carry out the functions that he described ever being prepared to accept Trade Dollars in payment. These points were reinforced in re-examination when he said: “The thing is, I’m a businessman. I’ve only ever dealt in money”.
In their oral submissions, the defendants contended that there is no evidence that any one of the people who would have been the service providers in the Schedule were prepared to take Trade Dollars. This submission should be accepted.
On the plaintiffs’ case, if the contract had proceeded then $1,200,000 of Trade Dollars would have been available to fund the production of the two video clips. However, there is no evidence that the parties would have found enough suppliers of the required goods and services who would have been prepared to accept Trade Dollars so as to allow either film clip to be made. Even if it be assumed for the purpose of argument, and in the absence of evidence, that someone, whether a caterer or a crane supplier, would have been prepared to accept Trade Dollars in return for their services, that would not have been sufficient to produce the two film clips or indeed any film clip. A large number and a wide variety of service providers were required to complete the project. There is no evidence that any, let alone many of them, would have been prepared to accept Trade Dollars.
This aspect is one of two major contingencies affecting the plaintiffs’ claim for loss and damages. The second, to be considered below, and which assumes that the two film clips would have been produced, relates to the contingency that the songs would have been a commercial success. As to the first contingency, the plaintiffs provided no real answer to the defendants’ argument that there was no evidence of service providers who were prepared to take Trade Dollars in exchange for the goods and services mentioned in Schedule One and the other services which Mr Blyton mentioned (which included world class publicists, tax lawyers and other consultants).
The plaintiffs’ own arguments serve to undermine their case on loss and damage in respect of the first contingency. When asked during addresses about the absence of any evidence that any of the required people, let alone all of those people, would have been prepared to accept Trade Dollars, Mr Dupois responded by referring to representations which Mr Galley was said to have made about the BBX network and that he had the ability through the network to obtain them. However, these allegations were not pleaded as representations, let alone contractual terms. Relevantly, Mr Dupois asserted that Mr Galley had lied about these matters and that the only BBX members with whom he had any contact were the young woman with an interest in marketing but no experience in this field and someone in Western Australia who had recording studios. The plaintiffs’ case is that the defendants misled them about having BBX members in the variety of fields required to produce the two video clips. On their case, BBX did not have such people as members. In any event, there is no evidence that it did.
I rely on Mr Blyton’s evidence that none of the people whom he would have expected to be involved in such a major project and who supply cameras, lights, equipment and a variety of professional and other services are prepared to do so in exchange for Trade Dollars. It would not be enough for the plaintiffs’ purposes to prove that one or some of the individuals would have been prepared to do so, however, it failed to prove even that. The evidence is that the production of the two videos to the high standards contemplated by the agreement required a large cast and crew. There is simply no evidence that the required service providers would have been prepared to provide their services in exchange for Trade Dollars, whether from BBX or any other Trade Currency organisation.
The plaintiffs submit that damages for loss of opportunity should be assessed in accordance with the principles stated by the High Court in Sellars v Adelaide Petroleum NL[4] and that, based on the evidence, I should find that a valuable opportunity was lost. I decline to find that a valuable opportunity was lost. The plaintiffs’ case in this regard fails for lack of evidence that performance of the contract would have led to two videos or indeed any video being produced. There is no evidence that any, let alone all of the goods and service providers listed in items 1 – 60 of Schedule One to the agreement, as amended, having the professional standards in the fields required to make a state of the art Music Film Clip would have been prepared to provide their services for Trade Dollars. The production of the two state of the art Music Film Clips was only going to be funded by Trade Dollars. That is, after all, why Mr Dupois sought out Trade Dollar opportunities. There is no evidence that anyone with “real money” was prepared to invest it in these projects. There is no evidence that Mr Galley and his company had the real money, namely Australian currency, required to fund the projects. The project was based on the idea of accumulating Trade Dollars that members of the BBX exchange were unable to use.
[4] (1994) 179 CLR 332.
In summary, if the agreement had not been breached and if, instead, the defendants had established the required account with $300,000 in Trade Currency and made available a balance of $900,000 in Trade Currency for the purpose of the projects, the two state of the art Music Film Clips would not have been produced. On the evidence, the prospect of that occurring was negligible.
If the contract had been performed but no Music Film Clips had been produced because of the matters that I have found, then the project would have stalled and the contract would have been abandoned because the investment could not be used for its intended purpose. One World would not have been entitled to retain the $300,000 in Trade Currency held in the One World account for that purpose. There was no argument advanced by the plaintiffs that they had a contractual entitlement to retain the money in such an event.
The plaintiffs’ loss of a bargain claim is based upon its contractually-protected expectation that $300,000 in Trade Dollars would be placed in an account in the name of One World and it, together with the balance of the proposed investment, would be used for the contractual purpose. They do not have a claim for $1,200,000 on the basis that, had the defendants performed the contract, but the invested amount not been able to be used for its intended purpose, they could have retained either $300,000 or $1,200,000.
Therefore, the plaintiffs’ damages claim fails on the basis of a failure to prove any real chance that either of the video clips for the two songs would have been made. The defendants’ breaches did not deprive the plaintiffs of a valuable opportunity in the circumstances. Having regard to this first contingency, the plaintiffs’ damages should be assessed in a nominal amount because the chance of the two film clips being made through the use of Trade Dollars was negligible.
This makes it strictly unnecessary to consider the second contingency. However, I will do so. The plaintiffs’ case rests heavily upon Mr Blyton’s evidence about projections he made. These projections were not in the form of documents which became exhibits before me. Mr Blyton’s “professional guesstimation” was that following the promotion of the songs, using the video clips as a marketing tool, there would have been millions of downloads in Europe, North America, South America and elsewhere. Extraordinary figures were mentioned based on population, totalling $72,000,000 for download sales alone.
With all due respect to Mr Blyton, his guesstimate of sales was unconvincing and he did not explain the basis for his figures or his optimism. I detected that Mr Blyton was something of a reluctant witness. I leave to one side my personal opinion of the quality of the two songs, which were played before Mr Blyton gave his evidence but which neither party wished to have made an exhibit. Neither Mr Blyton nor Mr Dupois gave any evidence of songs of that genre and standard being hits.
No evidence was given by Mr Dupois or anyone else about the record sales which he has achieved in his long career. Mention was made of the costs of production of his earlier song “We Can Dream”, but no evidence was given about the sales which it achieved in any form, including downloads. Mr Blyton gave evidence that “If We Can Dream” involved a multi-million dollar production. Apart from there being no evidence that Trade Dollars were involved, there was no evidence where the money went, from whom the money was raised and what, for example, Mr Blyton received for his involvement in its production. Importantly, neither he nor Mr Dupois gave any evidence about the sales revenue which it achieved.
Mr Blyton’s incredibly optimistic projections begged the question of why two songs with such an asserted potential for massive sales had not been backed by other investors including those with “real money” to invest in such a lucrative project. One European summer may have passed. However, it is remarkable that no investor or group of investors with $1,000,000 would be unwilling to invest in film clips and other promotions for songs with such potential. I infer that the songs have far less potential, if any, than Mr Blyton suggested. I do not regard Mr Blyton as a reliable or objective witness in relation to the songs’ potential. He had an interest in stating that the songs had a potential to return at least $15,000,000 because this is what he told Mr Galley at about the time the agreements were being negotiated.
If Mr Blyton’s opinions were to be adopted, then it would have been helpful to understand the basis for his opinions. However, neither he nor anyone else gave evidence of anyone with similar talents to Mr Dupois with songs of a similar sound and genre to the two songs in question being hits in Europe, South America or anywhere else. No evidence was given of even established artists achieving the kind of download sales and other sales which Mr Dupois and Mr Blyton asserted were “conservative”.
I have no reason to doubt Mr Blyton’s past experience as a record producer. However, he gave no evidence of his current or recent involvement in the marketing of established artists or emerging artists, or someone with the artistic qualities possessed by Mr Dupois. His guesstimates and supposed conservatism in relation to projected downloads and other revenue streams for the two songs were not supported by evidence of sales achieved by comparable artists or other evidence. For example, there was no evidence from Mr Blyton or anyone else of any artist, even an established artist, who had achieved the number of downloads that Mr Blyton thought might be possible for these two songs.
The absence of evidence of Mr Dupois’ past record sales and the absence of evidence of any other artist with similar talents to Mr Dupois achieving sales with songs of this kind make it practically impossible to assess the claim for lost opportunity. This is so, even assuming in the plaintiffs’ favour, that two video clips could have been made by people who were prepared to accept Trade Dollars for their services and equipment, rather than real money.
If the two songs have the potential to achieve millions of downloads and achieve multi-million dollar sales in the order of tens of millions of dollars, then it is noteworthy that the plaintiffs were not able to obtain, and still not have been able to obtain, an investor or a group of investors to provide “real money” in the amount required to produce one or two video recordings, or Trade Currency in an equivalent amount, in order to share in such a commercial success.
In summary, as to the second major contingency, and assuming for the purpose of argument that the two state of the art Music Film Clips had been produced, there is no reliable evidence that the songs had any real chance of being a major hit and returning a profit to the plaintiffs after accounting for expenses associated with their promotion and distribution. I am completely unpersuaded that either song had any prospect of being a hit and achieving large sales. The plaintiffs have not proven the value of this second contingency by acceptable evidence.
Ultimately, the assessment of loss is concerned with two contingencies. When the two contingencies are combined, namely the negligible chance of the two film clips being produced and the small, almost negligible, chance of them being hits and yielding a substantial profit, the conclusion must be reached that the plaintiffs have failed to prove that they lost a commercial opportunity of any real value. They are entitled to only nominal damages, to which I will attribute a figure of $100.
I should mention in this context another matter which arose in the course of submissions. In dealing with the issue of filing fees and hearing fee waivers, Mr Dupois mentioned that he is in receipt of a government pension which he described as an “invalidity pension”, but which I take to be a disability pension. He assured me that the relevant disability would not have prevented him from undertaking the rigours of being involved in the production of the film clips or going on a worldwide tour to promote his songs. He assured me that his condition would not have prevented him from doing so, just as it has not prevented him from being involved in other litigation before various courts and pursuing other projects. I accept Mr Dupois’ assurance in this regard, even though it was not sworn. Therefore, my assessment of loss assumes, in Mr Dupois’ favour, that he would have been fully fit to pursue the project, notwithstanding his other commitments.
Conclusion
The plaintiffs have established their pleaded breach of contract in that the defendants did not set up a Trade Currency Account with Card Access in the sum of $300,000 (Trade Currency) in the name of One World, and continue with the proposed investment of a balance amount of $900,000 in the project. The defendants were not entitled to terminate the agreement, as amended, on the grounds that BBX did not wish to be associated with Mr Dupois and his company.
The plaintiffs have failed to prove that the defendants’ breach of contract caused them the loss and damage which they claim, or any substantial loss. If the contract had been performed then the project would not have achieved its purpose of producing two state of the art Music Film Clips for Mr Dupois’ two songs. This is because there is no evidence that the relevant personnel outlined in Schedule One in the contract, or the suppliers of other goods and services which were required to produce those two Music Film Clips, would have been prepared to provide their goods and services in exchange for Trade Currency after becoming members of BBX. All or most of them would have required what Mr Blyton described as “real money” for their goods and services.
The issues which I have been required to decide, as defined in the parties’ pleadings, concern issues of contractual interpretation and breach of contract. Issues of misrepresentation were not issues which I was required to decide because neither party sought relief by way of claim or counter-claim or defended on the basis that they had been misled. Nevertheless, allegations of misleading conduct featured as part of the narrative. Mr Dupois alleged that he had been misled by Mr Galley about what Mr Galley and BBX could do. The correspondence which became exhibits alleges that Mr Galley was misled about Mr Dupois’ background and track record, and misled about the potential of these two songs to make millions of dollars. I am not required to decide whether the parties were misled. As noted, I found Mr Galley to be an honest witness and I do not accept
Mr Dupois’ contention that Mr Galley lied in his evidence. I accept Mr Galley’s evidence that he misunderstood what he was required to do under the written contract which
Mr Crinis prepared. But no case of mistake was pleaded or pursued.The essential fact is that Mr Galley expected that Mr Dupois’ company would be accepted by BBX as a member, and that an account would be established by BBX in the name of One World into which $300,000 of Trade Currency would be deposited. Both Mr Galley and Mr Dupois, and their respective companies, assumed that the establishment of such an account in One World’s name was a fait accompli. Without such an account the contract could not be performed. However, on a proper construction of the agreement, it was Mr Galley and his company which agreed to establish such an account. The fact that they were unable to do so in the circumstances makes this case no different to any other case in which a party promises to do something which it later finds it is unable to do.
The result is that the defendants are liable for breach of contract, but the plaintiffs are only entitled to an award of nominal damages.
Like many civil cases that come to this Court, this is a story of broken dreams. Mr Dupois dreamed that his two songs would be global hits. Mr Galley dreamed that, as a result, he would benefit from 10 per cent of the financial action. In retrospect, it can be seen that both men were dreaming.
Disposition and orders
On the day of the hearing, I remarked that One World as a joint party to the contract should have been a plaintiff. Mr Dupois explained that he did not include it as a plaintiff because “you don’t get fee waivers on companies”, so he sued as an individual. My immediate response was to seek an undertaking from him that his company would be bound by any judgment. However, after reflecting on the matter and for the reasons which I gave when hearing oral submissions on 26 May 2016, I decided that the proper course was to order the company’s joinder as a plaintiff. I made clear that I was not making any suggestion that Mr Dupois had acted inappropriately in seeking to avoid having to pay filing fees. I ordered the joinder of the company and did not require Mr Dupois to amend his pleadings to include his company. I ordered that any further documents would include One World as a plaintiff along with Mr Dupois. I also ordered the plaintiffs to pay the filing fees and hearing fees which would have been payable if One World had been a plaintiff at the time of filing those proceedings. I gave Mr Dupois the opportunity to seek advice about that and allowed 28 days for the sum to be paid. I ordered the amount to be paid to the Registrar within 28 days, or such further time as may be ordered, failing which the proceeding be stayed until further order.
I later, on Mr Dupois’ written request, and in the absence of objection from the defendants, extended the time for payment to 15 August 2016.
I give judgment for the plaintiffs against the defendants in the sum of $100. I will hear the parties in relation to costs. I grant liberty to the parties to apply upon the giving of at least three clear days’ notice in writing.
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