Kennedy Management Pty Ltd v RFH Group Pty Ltd
[2012] QCAT 464
•17 September 2012
| CITATION: | Kennedy Management Pty Ltd and Anor v RFH Group Pty Ltd [2012] QCAT 464 |
| PARTIES: | Kennedy Management Pty Ltd ATF The Burpengary Central News Trust (Applicant) |
| v | |
| RFH Group Pty Ltd | |
| (Respondent) |
| APPLICATION NUMBER: | MCDO2897-11 |
| MATTER TYPE: | Other minor civil disputes matters |
| HEARING DATE: | 24 May 2012 |
| HEARD AT: | Brisbane |
| DECISION OF: | Ms Williams, Adjudicator |
| DELIVERED ON: | 17 September 2012 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | Within 21 days the respondent is to pay the applicant the sum of $6,306.21. |
| CATCHWORDS: | Minor Civil Dispute – Minor debt – Whether a contra agreement existed between the parties – Estoppel by conduct – Whether the applicant has been unjustly enriched by receiving a benefit at the detriment of the respondent |
REASONS FOR DECISION
Relevant Facts
The applicant claims the sum of $6,306.21 is due and payable by the respondent for the supply of newspapers.
The applicant operated a business known as ‘Burpengary Central News’ (herein referred to as the “Newsagency”) in the same shopping complex as the respondent business (herein referred to as the “Coffee Club”) since early 2007.
Mr Kennedy, for the applicant, states an oral agreement to supply newspapers was made in or about March 2007 when he “was standing outside the door to the newsagency when Mr Roger Ford Holden, a director of the respondent company, approached him and requested … that the applicant establish a standing newspaper supply account for the respondent.”
Mr Holden denies the existence of such an arrangement and maintains that the respondent did not agree to receive newspapers for payment. Although at hearing, Mr Holden did concede that he was “preoccupied with other issues at the time”[1] and it was possible that there was such a meeting that he had forgotten it.
[1] For example, arranging an urgent bank loan.
Instead Mr Holden argues that the delivery of newspapers was by virtue of a contra agreement, in exchange for the supply of discounted/free coffees.
Nonetheless, it is an agreed fact between the parties, that during the period 1 April 2007 to 30 June 2011, the applicant delivered newspapers to the respondent business on a weekly basis.
Despite the passing of some 51 months, invoices were not issued by the applicant for the supply of newspapers throughout this period, until 30 June 2011.
The applicant explains at paragraph five of its written submissions to the Tribunal:
“[T]he reason for the delay in rendering the invoice is because when the respondent’s account was set up on the applicant’s Point of Sale system, the account function was not activated properly such that invoices were not automatically generated as would normally be the case. This was not detected by the applicant until shortly before June 2011.”
It was further explained that the accounting oversight was not detected earlier because “the respondent is the applicant’s only newspaper delivery customer and it forms less than 0.1% of the applicant’s turnover. It was only picked up when it was part of an internal audit” necessary to prepare the business for sale.
The basis of the applicant’s claim is to seek payment for these invoices, being for the standing supply of newspapers (as referred to above at paragraph three) during the said period.
Conversely the respondent seeks the following orders be made:
(a)The applicant’s claim be dismissed due to the existence of a contra agreement between the parties; or
(b)In the alternative, the sum of $4,552.60 is due and payable by the applicant to the respondent for the supply of coffee discounted and/or without charge during the period 22 March 2007 to 30 June 2011.
The respondent states at paragraph seven of its response:
“There was an agreement between Peter John Kennedy who is a director [of the applicant business] and the manager of the respondent’s business that:
(a)The respondent would supply coffee either at a discounted rate or without charge to the respondent (sic) [presumably this should be applicant] and their employees; and
(b)The applicant would deliver newspapers to the respondent.”
In accordance with this agreement, the respondent’s best estimate in the absence of records, during the period 22 March 2007 until 30 June 2011 (being the sum of 221 weeks):
·Discounted coffee was supplied to Mr Kennedy and staff twice per week/5 days per week;
·In addition to one free coffee per week supplied to Mr Kennedy.
The applicant newsagency accepts that its staff received discounted and free coffees from the Coffee Club; but it denies the quantity and frequency as alleged by the respondent. The applicant also argues that the benefit of discounted and free coffees enjoyed by its staff did not arise by virtue of a contra agreement; rather the benefit was conferred as a result of an ongoing promotional offer available to employees of the shopping centre and holders of the Coffee Club VIP loyalty card.
At the heart of this dispute is whether consideration for the supply of newspapers was $6,306.21 (as alleged by the applicant) or the provision of discounted and free coffees to the applicant and staff (as alleged by the respondent).
The Tribunal reserved its decision so it could consider the oral and documentary evidence relied on by the parties at hearing. Leave was granted to the parties to file written submissions at the conclusion of the hearing of evidence.
Findings of the Tribunal
The standard of proof required to support a claim in the minor civil dispute jurisdiction is not as high as the standard ‘beyond a reasonable doubt’ required in criminal matters; instead the civil standard requires proof on the ‘balance of probabilities’. The High Court case of Briginshaw v Briginshaw[2] is the leading case concerning the civil standard of proof.
A. Does the evidence support the existence of a contra agreement, as alleged by the respondent?
[2] (1938) 60 CLR 336.
Evidence was heard that Ms Nyree Stephens, manager of the Coffee Club franchise in question, was originally part of the team that assisted Mr Holden (the franchisee) to establish the operations of the business when it commenced trading.
Mr Holden admitted he did not enter into the alleged contra agreement with the respondent. Instead an oral contra agreement would therefore have had to been entered into between his representative and Mr Kennedy (on behalf of the respondent newsagency) to supply coffee either at a discounted rate or without charge to the respondent and its employees in consideration for the delivery of newspaper.
Mr Holden was not specific as to when this alleged agreement was made and by whom, acting as an authorised agent for the respondent.
(a)First, the respondent alleges the applicant initiated the contra agreement by delivering free newspapers (not at the request of the respondent) on a weekly basis for the three months immediately after the Coffee Club commenced trading.
The applicant refutes the suggestion that its supply of newspapers was self-initiated and unsolicited – arguing that “there would be no basis for the respondent’s staff to come to the applicant’s store to collect the newspapers (in circumstances where the applicant was late in delivering them).”
(b)When he noticed the existence of the newspapers in his store, Mr Holden stated during cross-examination that he “assumed there was a contra agreement” in place with the newsagency.
(c)Then Mr Holden was said to have had a conversation with his manager, Ms Stephens about the alleged free and unsolicited weekly supply of newspapers by the applicant. It was agreed amongst themselves that discounted and free coffees should be provided to the respondent and its staff, in recognition of the alleged free newspapers the Coffee Club was receiving.
Notwithstanding the conversation that allegedly took place with Mr Holden (referred to above at paragraph 18(c)), Ms Stephens was unable to provide the Tribunal with evidence as to: (i) the communication of the Coffee Club’s offer to provide free and discounted coffees to the respondent; and (ii) acceptance of this offer by the newsagency. There was also no evidence of any other person authorised by the respondent to enter into a contra agreement with the applicant.
Therefore without evidence of the formation of the contra agreement and vague details as to its terms, the Tribunal is not satisfied to the requisite civil standard, of the existence of a contra agreement as alleged by the respondent. The Tribunal is satisfied, however, that the weight of evidence supports on the balance of probabilities the existence of a standing newspaper supply arrangement for payment as submitted by the applicant. Therefore the respondent is prima facie liable for cost of those newspapers as set out in the tax invoices.
B. The merits of the respondent’s submission of an estoppel by conduct
An estoppel by conduct arises when one party induces another to adopt and act upon an assumption of fact or an assumption as to the future conduct of the party making the representation.[3]
[3]Waltons Stores Case (1988) 164 CLR 384; Commonwealth v Verwayen (1990) 170 CLR 394.
The effect on an estoppel is to prevent the representor from acting inconsistently with the assumption, without taking steps to ensure that the departure does not cause harm to the representee.
In its final submissions filed in Registry, the respondent argues that by virtue of the applicant’s failure to raise accounts during the said period, it caused the Coffee Club to “believe in a certain state of things”[4] – being the existence of a contra or barter arrangement for the supply of goods between the parties. As such the respondent says it was “induced to supply coffees for free on that belief”[5] in consideration for the regular supply of newspapers it had received throughout the period.
“[A]s no accounting of balances owing to and by the two parties took place during the period in question, it would be unfair of one party to issue an account for the entire value of goods and services provided during the period the [Contra] agreement was in force.”[6]
[4]Per 1.8 of the Final Submissions filed by the respondent.
[5]Ibid.
[6]Per 4.2 of the Final Submissions filed by the respondent.
In determining the merits of an estoppel by conduct, focus is “on the person who was induced to act and not on the party estopped”[7] when considering: (i) if the respresentor caused the representee to adopt an assumption; and (ii) whether that reliance was reasonable.
[7]Hon Justice KR Handley AO, Unconscionability in Estoppel: Triable Issue or Foundation Principle? (2007) Vol 7 No 2 (QUT LJJ).
In other words, the “reasonable standard imposes responsibility on a representee to take care to protect his or her own interests”[8] and “prevent harm to themselves.”[9] Therefore “reliance on a promise alone cannot justify the imposition of liability on the promisor; something extra is required”.[10]
[8]P Cane, The Anatomy of Tort Law, Hart (1997) p42.
[9]P Finn, Commerce, the Common Law and Morality [1989] MelbULawRw 5.
[10]PS Atiyah, Promises, Morals and Law, Clarendon Press (1981) p 68.
In the present matter, evidence was heard that Mr Holden, himself, did not personally enter into a contra agreement with the applicant. Instead he “assumed there was a contra agreement” in place with the newsagency after the Coffee Club had been in regularly receipt of newspapers for at least three months.
After discussing the matter with Ms Stephens, his manager, the respondent would have been aware at that point of the non-existence of a contra agreement for the supply of newspapers with applicant. Yet there is no evidence of Mr Holden investigating with the applicant, why it seemingly provides free and unsolicited product for the enjoyment of the Coffee Club’s patrons.
Mr Kennedy gave evidence that the product delivered to the respondent’s business was not insignificant or ad hoc, being the delivery of:
(a)10 x Courier Mail weekday newspapers per week (2 each week day);
(b)5 x Australian weekday newspapers per week (1 each week day);
(c)2 x Saturday Courier Mail newspapers per week (2 each Saturday);
(d)2 x Sunday Mail newspapers per week (2 each Sunday); and
(e)1 x Saturday Australian newspaper per week (1 each Saturday).
The Tribunal finds it unreasonable that someone in the position of Mr Holden[11], who as a franchisee of another Coffee Club in Morayfield and has a standing supply arrangement with a local newsagency for the supply of newspapers to that particular premises on the usual commercial terms, would not at the very least discuss the matter with the applicant.
[11] Or his agent, Ms Stephens.
Even if Mr Holden’s evidence was accepted – that he instructed Ms Stephens (and effectively his staff) to provide discounted and free coffees to the applicant in recognition of the free newspapers the Coffee Club was receiving – the terms of the agreement are nonetheless vague.
There is no evidence of Mr Holden or his agent, Ms Stephens settling with Mr Kennedy the supply terms of the goods and services; for example determining the quantity, publication type and delivery frequency of the newspapers that would entitle Mr Kennedy to “unlimited free cups of coffee” as testified by Ms Stephens. If such terms were not settled between the parties, it is peculiar that the order delivered was so specific. Instead, the nature of the order fits with the testimony of Mr Kennedy who stated that the set delivery of newspapers was in satisfaction of the standing supply arrangement agreed with Mr Holden (as discussed above at paragraph three). This is one of the matters the Tribunal considered when finding that the supply of newspapers was, on the balance of probabilities, a result of a standing supply arrangement for payment.
Although Mr Holden submits he was under an assumption as to the existence of a contra or barter arrangement for the supply of goods between the parties. The Tribunal finds that assumption and blind reliance on that assumption[12] to be unreasonable. Therefore the respondent’s submission of estoppel by conduct is without merit.
[12]In the circumstances where the respondent has failed to even discuss the details of the assumed contra agreement with the applicant.
C.Has the applicant been unjustly enriched?
By finding the non-existence of a contra agreement and the respondent liable for the supply of newspapers, the respondent seeks in the alternative that the sum of $4,552.60 being the amount of free and discounted coffees received by the applicant, be offset against the claim.
It is argued that the applicant and its employees have received a benefit, in the supply of coffees, at the expense of respondent.
Evidence was heard of three circumstances whereby the applicant and its employees received coffees from the respondent:
(a)At a discounted rate
The respondent asserts in its Response that the applicant and its employees was supplied discounted coffee “twice per day/5 days per week.” Mrs Brinton, an employee of the applicant, testified to receiving discounted coffees from the respondent. However, both she and Mr Kennedy gave evidence that this discount applied to all employees of the shopping centre and was not specific to the newsagency. This evidence was not rebutted by the respondent.
At hearing Mr Holden was unable to demonstrate to the Tribunal that the ‘twice daily free coffees’ provided to the applicant and its staff, was supplied under a contra arrangement and not the broader promotional offer available to all employees of the shopping centre.
(b)Through a VIP loyalty card promotion
Evidence was produced showing that Mr Kennedy had joined the Coffee Club’s VIP loyal card promotion, independent of any commercial dealings with the respondent franchisee. This entitled him to a “buy one coffee get one free” deal when producing his loyalty card. An internal record obtained from the Coffee Club Franchising Company Pty Ltd (the franchisor) shows that Mr Kennedy had obtained 149 beverages using his membership card.
Mrs Brinton gave evidence that when she purchased coffees with Mr Kennedy, he would prefer to use his VIP card to obtain two coffees for the price of one. This she said, worked out cheaper (ie fifty percent) than if they purchased two discounted coffees offered under the promotion to all shopping centre employees, because one coffee was provided free under the VIP loyalty card.
(c)The provision of free coffees
The respondent claims to have provided Mr Kennedy of the applicant, one free coffee per week throughout the period 22 March 2007 to 30 June 2011. Ms Stephens testified that she served Mr Kennedy between “one to five coffees per week over the period.” This evidence grossly differed from that of Mr Kennedy, who stated that he could “count on one hand” the number of free coffees he had received from the respondent during the relevant period (ie five or less cups). He gave examples of how these frees cups arose. For example on the few occasions a document was laminated by the newsagency and given to the respondent as a good will gesture without charge, the respondent would later supply a free coffee presumably in gratitude.
The Tribunal found the evidence of Ms Stephens to be inconsistent and at times vague. By not keeping records of the issue of free coffees the respondent submits, “Ms Stephens was relying on memories of what had happened up to five years ago and was not prepared to risk making a statement in Court based on such.” Whereas the Tribunal found the evidence of Mrs Brinton, the applicant’s witness, appeared to be reliable. It was internally consistent and corroborated with the evidence of Mr Kennedy. She also testified to never having received free coffees from the respondent.
Although the respondent provided a plausible explanation as to why it does not record the issue of free coffees to any of its customers – because it’s “till system will not record zero sales i.e. free coffees or food” – the Tribunal is not satisfied from the evidence, that it can establish the quantum of its counter-claim (one coffee provided per week throughout the entire period to the benefit of the respondent).
There is insufficient evidence before the Tribunal to support the assertions that the receipt of discounted coffee and the weekly free coffee (as referred to above) was a special benefit enjoyed solely by the applicant and was not a benefit which was conferred onto the employees of the shopping centre or VIP loyalty card holders.
Although Mr Kennedy did concede to receiving a benefit, of five or less free coffees, the Tribunal is satisfied this was provided on an occasional gratuitous basis from the respondent. The weight of evidence does not support the respondent’s submissions that the benefit was significantly greater or that it was provided to the applicant on a regular occurrence.
The Tribunal dismisses the counter-claim submitted by the respondent in the alternate.
D. Issues of negligence raised by the respondent
In its final submissions, the respondent states under the heading of “Negligence” that the applicant’s “failure to provide the tax invoices is not only questionable, it was negligent both in the failure to do so and the failure to identify the failure for such a period of four (4) years.”
The application before the Tribunal is a minor civil dispute, minor debt claim. The Tribunal’s jurisdiction to determine this matter is limited to those prescribed in the QCAT Act. An action of negligence, arising from the applicant allegedly breaching its duty of care to the respondent is outside this scope of this hearing.
Much has been made of the applicant’s delay in rendering tax invoices for the supply of newspapers to the respondent. Although such delay is not necessarily prudent business practice, in so far as it relates to the claim, it does not affect the Tribunal’s ability to hear the matter, as it is still within the period allowable to bring an action – namely six years from the date on which the cause of action arose.[13]
[13] Section 10 Limitation of Actions Act 1974.
Conclusion
For the reasons outlined herein, the Tribunal finds in favour of the applicant for the amount of $6,306.21 being the claim, reimbursement of the filing fee and company search fee and interest. The respondent is ordered to pay the amount in full within 21 days from the date of the Order.
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