Jessop v McInteer

[2002] QDC 200

DISTRICT COURT OF QUEENSLAND

CITATION:

Jessop v McInteer [2002] QDC 200

PARTIES:

MICHAEL N JESSOP
Plaintiff

-v-

MICHAEL DAVID McINTEER

FILE NO/S:

D214/2001

DIVISION:

Civil

PROCEEDING:

ORIGINATING COURT:

Maroochydore

DELIVERED ON:

16 July 2002

DELIVERED AT:

Brisbane

HEARING DATE:

Maroochydore 16 May 2002; Brisbane 6 June 2002

JUDGE:

Samios DC J

ORDER:

Claim dismissed

CATCHWORDS:

Contract – conditional contract – uncertainty – termination – damages
Upper Hunter County District Council v Australian Chilling & Freezing Co (1968) 118 CLR 429, 436-7
Sellars v Adelaide Petroleum NL (1984) 179 CLR 532, 350 Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64, 92, 102-4, 118-9

COUNSEL:

The plaintiff appeared on his own behalf
Mr Stubbins for the defendant

SOLICITORS:

The plaintiff appeared on his own behalf
Heiner and Doyle for the defendant

1. The plaintiff’s claim against the defendant in these proceedings is for the sum of $69,417 for damages for breach of contract relating to a commission only sales marketing and public relations agreement and for breach of contract relating to the supply of goods and services.

1. Further the plaintiff claims interest.

1. There are three parts to the plaintiff’s claim.

1. I do not propose to use the language used by the plaintiff to describe his claims.   As I understand the plaintiff’s claims, those claims are for:

(a)        $450 for unpaid commission relating to the sale of a boat described as the “Maldives Boat”;

(b)        $3,674 for the loss suffered by the plaintiff for the supply and installation of an outboard engine and equipment for a boat described as a “prototype 5 metre Omega Craft 5000 ‘Bartender’”;

(c)         $65,293.32 for damages for wrongful termination by the defendant of an agreement between the plaintiff and the defendant.

1. The plaintiff and the defendant gave evidence. 

1. The defendant conducts two businesses in Caloundra.  One business is a panel shop and the other business is Omega Marine.  The latter business is a business of building boats.  The defendant commenced building boats in 1998 after bringing a design to Australia from New Zealand.

1. The advertising material tendered in evidence describes the defendant’s boats as an “Omega craft” having the shape of a rigid-bottom inflatable and being a super stable “tinni” available in several sizes from three metres to five metres and being the latest in a growing range of “tinnis” taking their cue from “rubber duckies”.

1. The plaintiff and the defendant met in early 1999. 

1. The plaintiff’s evidence was that he made an agreement with the defendant that entitled the plaintiff to the exclusive right to sell the defendant’s boats.  The plaintiff said he was appointed by the defendant as the sales and marketing manager to the exclusion of any other person to market and sell the defendant’s boats.  The plaintiff said this was the position throughout the period from early 1999 until the defendant by a letter from the defendant’s solicitors to the plaintiff dated 15 December 2000 terminated the agreement.  The plaintiff said the agreement between the plaintiff and the defendant was confirmed throughout that period of time.  In particular the plaintiff relied on two documents.  One of these documents was signed by the plaintiff and the defendant on 11 January 2000 (the January document).  The other was signed by the plaintiff and the defendant on 21 October 2000 (the October document).  The January document is headed “ Confirmation of commission only sales and marketing agreement”.  The October document is headed “Sales marketing and public relations agreement”.   

1. The plaintiff said he expended considerable time and money to market and sell the plaintiff’s boats.  Further, that because of the exclusive nature of his agreement with the defendant any sale by the defendant of one of the defendant’s boats entitled the plaintiff to commission.  Further, because of the wrongful termination of the agreement by the defendant he suffered damages being the loss in value of the  outboard engine and equipment for the Bartender, which was returned to the plaintiff in a used and in some respects damaged condition, and damages representing his business expenses and foregone salary for his efforts for sales, marketing and public relations. 

1. The plaintiff said that on the basis of the work he had done before the termination of the agreement as the majority of the publicity would have taken effect in the following January, February, March and April he believed he could have sold one or two boats a week. 

1. There is no dispute between the parties the plaintiff and the defendant signed the January and October documents and the October document was intended to last two years.

1. Not only did the plaintiff rely upon the January document and the October document in support of his claim that he had an agreement with the defendant giving him the exclusive right to market and sell the defendant’s boats, he said that from the time he met the defendant, the defendant would repeatedly say to him that the defendant “would make the boats and I would sell them”.  The plaintiff claimed that statement implied that the defendant would not sell the boats.

1. When the defendant gave evidence he said when he first met the plaintiff the defendant had one of his boats on the side of the road at the workshop.  The plaintiff approached him wishing to go for a test in the boat.  They went for a test in the boat and the plaintiff agreed to buy the boat.  However, the sale was not completed as the plaintiff did not have the funds to complete the sale.  He said the plaintiff called in again and was interested in buying another boat from the defendant.  The defendant completed that purchase.  That was a boat for the plaintiff’s own use.  He said the plaintiff suggested to the defendant that the plaintiff would not mind selling the boats because the plaintiff was into sales.  The defendant said to the plaintiff “by all means, you go ahead.  It will be a 10 per cent commission”.  The defendant said there was no discussion about exclusive rights for the plaintiff to sell the boats.  He said he expressed to the plaintiff that the defendant would be selling his own boats when he manufactured them.  The defendant said that at a later point in time the plaintiff and the defendant had a discussion to the effect that the plaintiff wished to have an “on-sale agreement”.  The defendant said this was discussed after the January document was signed.  The defendant said the plaintiff explained that there was not enough in the 10 per cent commission and he would be moving it to an on-sale agreement where he could purchase the boats off the defendant and on-sell them.  The defendant said the plaintiff was given a quote for the cost of the boat which was arrived at on the computer and a price would be given that was agreeable to both parties.  The defendant said the plaintiff would place a deposit like anybody else would be required to.  He was not prepared to build any boats without a deposit.  He would proceed to manufacture the boat.  On completion the plaintiff would make the final payment and take possession of the boat.  In the course of the defendant’s evidence he identified a number of boats that were sold by the defendant to the plaintiff on the basis of this on-sale agreement.  Regarding the  October document the defendant said the plaintiff wanted something in writing about the dealings of the boats.  The plaintiff typed up the October document and brought it to the defendant.  There were a couple of things the defendant did not agree with and he instructed the plaintiff to delete them.  One was that the plaintiff would work for him and the other was that the plaintiff would have total control of the defendant’s company.  The defendant said the draft document did not say that the defendant could sell his boats off his own leads.  He said he made it clear to the plaintiff that this was unacceptable.  He said he should be able to sell his own boats off his own leads.  The defendant said that the plaintiff wanted to have the defendant agree not to appoint anyone else over and above him to do the marketing.  The defendant said he had no argument with that.  The defendant said he told the plaintiff that he would like the opportunity to sell his own boats.  The defendant  identified the following paragraph in the October document giving the defendant the right to sell his own boats, namely “this agreement applies to the wholesale distribution and appointment of distributors in and around Australia unless the sale can be identified as a prior customer and lead of Omega Marine”.  The defendant said on the basis of these changes he signed the document.  The defendant said regarding his understanding of the agreement he believed that the plaintiff would go and sell the boats or create sales and the defendant was going to build the boats but that if a friend of his approached him or someone else he retained the right to build the boat for that person. 

1. The defendant said after the October document was signed the plaintiff approached the defendant seeking the return of the deposits on two boats that were the subject of on-sale agreements.  The defendant returned to the plaintiff the deposits and the defendant retained the boats which were subsequently sold by the defendant.

1. In terms of the sequence of events the defendant’s solicitors by letter dated 15 December 2000 to the plaintiff terminated the “Sales Marketing and Public Relations Agreement”.

1. When cross-examined by the plaintiff the defendant said his reasons for terminating the agreement were that the plaintiff was running to track record by making a commitment to buy something and then reneging on the deal.  By this the defendant was making reference to the return of the deposits on the two boats that were subject to the on-sale agreement.  The defendant said he thought how often was this going to happen. He said he had put all the money up front for the boats and he had no idea where he was going to sell them although he eventually did sell them.

1. A letter from the defendant’s solicitors to the plaintiff dated 14 December 2000 and the further letter from the defendant’s solicitors to the plaintiff dated 15 December 2000 were tendered as exhibits.  Neither of these letters expressed that the plaintiff was in breach of any contractual obligation to the defendant.  Neither party sought to tender other letters that have passed between the parties at or about the dates these letters were sent by the defendant’s solicitors to the plaintiff.  The letter dated 14 December 2000 “proposed” that all contractual arrangements between the plaintiff and the defendant be terminated forthwith, by mutual agreement.  Further, this letter states “from our instructions, it appears that the basic arrangement contemplated by the sales, marketing and public relations agreement” has never really been observed by either party for some time.

1. Further, the letter states “Mr and Mrs McInteer wish to terminate the sales, marketing and public relations agreement now, and will not consider themselves liable to comply with any future agreements you may negotiate, for the manufacture or supply of boats”.

1. The letter goes on to state that the sales, marketing and public relations agreement is virtually unintelligible and could not form the basis for the assertion of legal rights in any event.  However, the defendant does not allege in the defendant’s Notice of Intention to Defend and Defence any agreement or part of any agreement between the plaintiff and the defendant  is void for uncertainty. 

1. When the plaintiff was cross examined he agreed that there were occasions when there were quotes provided to him for the cost to construct the boat, he paid a deposit for the boat, the boat was completed, he paid the balance of the purchase price and then took delivery of the boat and on-sold it.  The plaintiff agreed that sales took place from the defendant to the plaintiff on those terms after the January document and before the October document. However, the plaintiff said that occurred under duress.  The plaintiff said that throughout the 18 month period from when he met the defendant to the signing of the October document, the October document was confirmation of what had always been the agreement between the parties.  The defendant did say in his evidence after the October document was signed no further boats were sold to the plaintiff on the terms of the “on sale” agreement.

1. There is a conflict between the plaintiff’s evidence and the defendant’s evidence.

1. I consider when the plaintiff gave evidence he made self-serving statements, engaged in propaganda and often did not give a direct answer to a question that called for a direct answer.  I consider he sought to portray himself as overborne by the defendant and that the defendant took advantage of the plaintiff. 

1. By way of example when the plaintiff was cross examined about entering into an “on sale arrangement” with the defendant, although the plaintiff agreed with the basic elements of such an arrangement, the plaintiff said these arrangements were imposed on him and added the defendant would not supply a demonstration boat to the plaintiff, the defendant did not supply a trailer or an engine for the boat, the defendant increased the price of the boats and finally the plaintiff lost money on the boats.  I consider these additional matters referred to by the plaintiff in his answers were not relevant to the questions he was asked.  Further, when the plaintiff was asked to explain what he meant by “duress” to enter into the “on sale arrangement” he said “we agreed about putting the deposit down for the boats on the confidence that I could sell it” and further said the defendant was financing the materials and manufacturing costs.  Although the plaintiff said he did not have a lot of choice in the matter, I consider the plaintiff in his lengthy answers at T 81-82 revealed a relationship in which both parties “agreed” that it was best for both parties to proceed to build and sell the boats on the terms the plaintiff claimed were imposed on him.  Later in these answers the plaintiff said “we both agreed” it was better to charge the dealers the price of the boat so the dealers had to sell the boats.  The plaintiff said what caused the problems was the defendant putting up the prices.  This answer I consider revealed the problem was not, as far as the plaintiff was concerned, the imposition of the “on-sale” agreement but rather the problem was the defendant was putting up the prices as each boat came to be manufactured.  Therefore, I consider these answers from the plaintiff were inconsistent with his claim he was forced to enter into the “on sale arrangement”. 

1. Further, the plaintiff’s claim to have an exclusive entitlement to sell the plaintiff’s boats I consider is inconsistent with what was written in the January and October documents.

1. I consider throughout the proceedings the plaintiff claimed expertise in “sales” and used language I would be prepared to accept was consistent with at least experience in “sales”.  However, in the January document the word “exclusive” is not used.  Further, there is an express reservation in that document that the plaintiff’s rights would apply to any contract arising between the defendant and the Royal Australian Navy.  I consider that if the plaintiff had intended he would have the exclusive right to sell the defendant’s boats not only would the word “exclusive” have been used in the document there would also have been no need to expressly mention a possible contract with the Royal Australian Navy.

1. Further, with respect to the October document, that document reserves to the defendant a sale to a prior customer and lead of the defendant.  Further, in the first paragraph on the second page of that document reference is made to the defendant possibly selling to another customer provided the sale price was not lower than the price available to the plaintiff.

1. Further, the plaintiff did not dispute he sought the return of the deposit on two boats.  I consider that is consistent with the “on sale arrangements”.  I consider that is contrary to his claim to have been a commission only salesperson throughout. 

1. When the defendant gave evidence I consider he made proper concessions to questions asked of him when cross-examined by the plaintiff.  The defendant impressed me as an honest person who was fair and certainly not “tricky”.  He accepted that to him the agreement he had with the plaintiff was one whereby he agreed not to appoint anyone else over and above the plaintiff to do the marketing.  He thought he had been dealt with fairly by the plaintiff when it came to the drafting of the October document.  That was because he said that the plaintiff had provided in the October document an exception to the plaintiff’s rights by providing that the defendant could engage in sales “identified as a prior customer and lead of Omega Marine”.  Further, when cross-examined by the plaintiff the defendant accepted that even though he had reservations about the plaintiff he was prepared to sign the October document because he was still prepared to let the plaintiff sell the boats.

1. The defendant’s evidence the agreement he had with the plaintiff did not preclude the defendant selling his boats I consider is supported by the terms of the January document and the October document. 

1. I observed the plaintiff and the defendant give their evidence.  I have considered the evidence of the plaintiff and the defendant and the exhibits tendered in the proceedings.  I do not accept the plaintiff was overborne by the defendant nor do I accept the defendant took advantage of the plaintiff.  Where there is a conflict between the evidence of the plaintiff and the evidence of the defendant I accept the evidence of the defendant to that of the plaintiff. 

1. I find there was an agreement between the plaintiff and the defendant at the time the defendant by his solicitors terminated the agreement.

1. Although the terms of the October document were criticised by the defendant’s solicitors as “unintelligible”, the defendant when cross-examined said he had by this document agreed not to appoint anyone over and above the plaintiff although reserving to himself the right to sell in the circumstances he described.  I consider that was an honest answer by the defendant.

1. However, the defendant’s defence was to the effect the parties did not adhere to the October document because of the “on sale” agreements. 

1. I find there were a number of boats sold to the plaintiff by the defendant on the terms of the “on sale” agreement between about March 2000 and the signing of the October document.  I accept it was the plaintiff who proposed the “on sale” agreement because I consider he saw these terms to be in his interests, at the time.  Although I consider the plaintiff saw the terms of the “on sale” agreement to be in his interests, I consider these terms were accepted by the defendant because his circumstances were that he would not financially take on manufacturing a boat without at least a deposit to cover the cost of materials and required the balance to be paid on completion and delivery to ensure he was paid for the boat.  However, I do not accept because a number of boats were sold on these terms and the sale of two boats on these terms remained to be completed when the October document was signed that means the October document was of no consequence.  That is, I do not accept the parties did not adhere to the October document as claimed in the defendant’s defence.

1. I consider in a case such as this in which the defendant does not claim in his defence the October document is void for uncertainty, the parties should be taken to have agreed to the terms contained in the October document (Upper Hunter County District Council v Australian Chilling & Freezing Co (1968) 118 CLR 429, 436-7). However, I consider what may be the proper construction of the terms contained in the October document and what part these terms play in any agreement between the plaintiff and the defendant is another matter.

1. When the October document was signed, I find it was signed in a particular context.  That context was that the defendant required a deposit to be paid before commencing to manufacture a boat, the plaintiff and the defendant had agreed to the sale of a number of boats on the terms of the “on sale” agreement requiring the plaintiff to pay a deposit and the balance of the price upon completion and delivery and there were sales of two boats on these terms that remained to be completed.

1. I consider it is correct as the plaintiff submitted the October document described the plaintiff as a “commission only salesman”, his remuneration is fixed by reference to “10% commission” and there is no requirement for a 10% deposit to be paid by him.  However, I do not accept these features of the October document lead to the conclusion the terms of the “on sale” agreement and the sales of the two boats on these terms that remained to be completed were not relevant to the parties contractual relationship.  Further, the second last paragraph of the October document requires that the defendant be paid the balance of the price for a boat upon completion and delivery of a boat to a purchaser.  I consider upon the proper construction of that clause that would include the plaintiff as purchaser of a boat.

1. Therefore, I have come to the conclusion that when the plaintiff and the defendant signed the October document the terms of that document became part of an agreement between the plaintiff and the defendant. 

1. I find the agreement between the plaintiff and the defendant comprised the terms of the “on sale” agreement and the terms of the October document.  Further, the agreement between the plaintiff and the defendant was comprised of oral conversations between the parties by which the defendant required a deposit and reserved to himself the right to sell his own boats.

1. That is, I find in the context in which the October document was signed the October document was part of the agreement between the parties or it was subject to the “on sale” agreement.

1. Therefore, I find the plaintiff did not have an exclusive right to sell the defendant’s boats. 

1. Further, I find the plaintiff was not the effective cause of the sale of the Maldives Boat.  I find the Maldives Boat was sold by the defendant.  I find that the sale of the Maldives Boat by the defendant was one the defendant was entitled to make without any obligation to pay commission to the plaintiff.

1. Further, I find any loss suffered by the plaintiff for the supply and installation of the outboard engine and equipment for the Bartender is an expense he incurred in his own interests to improve his prospects of earning commission. I find the defendant has no obligation to reimburse the plaintiff for any expense incurred by the plaintiff with respect to the Bartender.

1. I find that the plaintiff could not complete the sale of the two boats on the terms of the “on sale” agreement that were still on foot after the October document was signed.  I find this amounted to a breach on the part of the plaintiff of the agreement between the plaintiff and the defendant or amounted to the non-fulfilment of a condition to which the October document was subject to.  Therefore, I find the defendant, as he did, was entitled to terminate the agreement between the plaintiff and the defendant.

1. If I am wrong to find the defendant was entitled to terminate the agreement between the plaintiff and the defendant, I consider the plaintiff’s entitlement to damages are to be assessed upon the basis of the loss of the chance to earn commission on the sale of the defendant’s boats from mid December 2000 until October 2002.  (Sellars v Adelaide Petroleum NL (1984) 179 CLR 532, 350; Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64, 92, 102-4, 118-9)

1. However, I consider the probability of sales occurring after December 2000 would be so low as to amount to speculation for these reasons:-

(a)        despite the plaintiff’s efforts before December 2000, after December 2000 until the trial (about a period of 15 months) only five boats were built and sold by the defendant;

(b)        despite the plaintiff’s efforts in the period of 18 months before the termination of the agreement only one sale had been made by the plaintiff for which he became entitled to commission;

(c)        the defendant has had no enquiries from any person who may have been interested in buying a number of boats, such as the Navy or services organisations despite the plaintiff’s efforts before the termination of the agreement.

(d)        I do not accept the plaintiff’s estimate given in evidence of possible

sales of one or two boat sales per week has any credible or reliable basis.

1. Therefore, I would value the plaintiff’s loss of chance to earn commission on sales of the defendant’s boats to be nil.

1. Therefore, I find the plaintiff is not entitled to recover from the defendant the sum of $450 for commission upon the sale of the Maldives Boat.  Further, I find the plaintiff is not entitled to recover from the defendant the sum of $3,674 whether as damages or otherwise for the goods and services supplied by the plaintiff in relation to the Bartender.  Finally I find the plaintiff is not entitled to damages from the defendant for the termination of the agreement between the plaintiff and the defendant.

1. Therefore, I dismiss the plaintiff’s claim against the defendant.

1. I will hear the parties on the question of costs.