MB Fleet Services Australia Pty Ltd t/as Motorfleet v James Frizelle's Automotive Group Pty Ltd
[2014] QCAT 447
•4 September 2014
| CITATION: | MB Fleet Services Australia Pty Ltd t/as Motorfleet v James Frizelle’s Automotive Group Pty Ltd [2014] QCAT 447 |
| PARTIES: | MB Fleet Services Australia Pty Ltd t/as Motorfleet (Applicant) |
| v | |
| James Frizelle’s Automotive Group Pty Ltd (Respondent) |
| APPLICATION NUMBER: | MCDO36/14 |
| MATTER TYPE: | Other minor civil dispute matters |
| HEARING DATE: | 2 September 2014 |
| HEARD AT: | Coolangatta |
| DECISION OF: | Adjudicator Trueman |
| DELIVERED ON: | 4 September 2014 |
| DELIVERED AT: | Coolangatta |
| ORDERS MADE: | 1. THAT the claim is dismissed. |
| CATCHWORDS: | Minor Civil dispute – minor debt – alleged brokerage commission owed – where oral agreement – determination of terms and conditions of agreement – whether broker breached terms and condition of the agreement – entitlement to commissions Queensland Civil and Administrative Tribunal Act 2009 |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Mr Mark Baker, Director of MB Fleet Services Australia Pty Ltd t/as MotorFleet |
| RESPONDENT: | Mr Fraser Perrin, Reresentative of James Frizelles Automotive Group Pty Ltd |
REASONS FOR DECISION
Mr Baker is the Director of MB Fleet Services Australia Pty Ltd trading as Motorfleet (“Motorfleet”). He operates as a Broker and purchases vehicles from James Frizelle’s Automotive Group Pty Ltd (“Frizelle’s”) for his clients. He claims he purchased vehicles from Frizelle’s for two different clients and has not been paid brokerage fees owed to him.
Mr Baker filed a claim for minor civil dispute minor debt on 17 April 2014 claiming payment from Frizelle’s in the sum of $4,675.00 plus costs.
Mr Perrin represented Frizelle’s. Frizelle’s filed a response on 13 May 2014. They allege that they do not owe any monies to Mr Baker and seek orders that the claim is dismissed. Frizelle’s allege that Mr Baker knowingly induced and or misrepresented Frizelle’s as to the true identity of the purchaser of the vehicles from them and that the vehicles were sold to Mr Baker on terms that are in breach of Frizelle’s Dealers Agreement with the Hyundai Motor Company Australia Pty Ltd.
Both parties agree that the Brokerage Agreement was an oral agreement between the parties and that the amounts of calculated brokerage fees are not in dispute.
The issue in dispute are the exact terms and conditions contained within the brokerage agreement.
Legislation
The tribunal can hear matters that involve a claim to recover a debt or liquidated demand of money — a person to whom the debt is owed or money is payable. [1]
[1]Queensland Civil and Administrative Tribunal Act 2009 s 12(4)(a).
The parties agree that they had an agreement for brokerage for payment by Frizelle’s to Mr Baker on cars sold. The parties agree that the amount in this claim is a liquidated sum.
The rights and obligations of parties to a contract or agreement are determined by the terms of that contract. The terms can be express or implied. If a contract or agreement is not in written form and is wholly oral, the terms can still be expressed or implied.
Terms to a contract might be implied by common law (as a result of conduct of the parties, necessity or normal commercial practice) or by statute.
Express terms are terms that the parties articulate prior to concluding their contract. Identifying express terms are simple if the contract is in writing but in the case of oral contracts, they are less clear.
Implied term or terms into a contract are reasonable in some circumstances if it is to reflect the presumed intention of the parties and provide business efficacy to the contract.[2]
[2]For example, BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 discusses implied terms necessary to provide business efficacy.
History
It is not in dispute that Mr Baker was a former employee of the Frizelle’s Group. He was a Fleet Manager.
Mr Baker said he left Frizelle’s and purchased the business Motorfleet about 12 months ago. He stated that he had conducted business with many dealers but that he had recent business deals with Frizelle’s. He said he purchased cars on behalf of his customers and he has been paid brokerage fees for past sales. He said Frizelle’s are refusing to pay him brokerage for the sale of various cars to two clients, they included:
Invoice 010314 for client Inala Wangarra $935.00
Invoice 100314 for client Whitewater $1430.00
Invoice 090314 for client Whitewater $1430.00
Invoice 110314 for client Whitewater $880.00
TOTAL $4675.00
Mr Baker stated that a customer, Whitewater, who are located in Western Australia, contacted him. He said that the client ordered the vehicles and that the client had an ABN number so received a further discount. He said the vehicles were delivered to the client unregistered, and without fuel.
It is not disputed that Frizelle’s sold the vehicles to Mr Baker without fuel, unregistered and that stamp duty was not paid.
Mr Baker said that one car was initially ordered by Whitewater and delivered and that later a further three cars were ordered by the same client. He said that the vehicles were delivered and paid for by the client directly to Frizelle’s. He said that the payment was paid in Australian dollars and that he was not aware until later when he did an Australian Securities and Investments Commission (ASIC) search that he discovered that the Company was in fact an overseas foreign company. A copy of the ASIC search conducted on 15 April 2014[3] was provided to the tribunal.
[3]In bundle of documents marked ‘Exhibit 1’.
Mr Baker stated that the brokerage agreement was founded on a ‘handshake’ and that for each transaction he would telephone Frizelle’s and request a verbal confirmation as to the brokerage fee to be paid. He said that once the fee was agreed upon he placed the orders for the vehicles. He said he purchased cars for clients from various dealers and that he had never had a dispute about brokerage fees before this issue.
Mr Baker alleges that he was not aware that the vehicles were on-sold. He said that the first notice he had about a problem was when he received a telephone call from Frizelle’s’ Fleet Manager advising him that the vehicles has been shipped to New Zealand and that the sale was in breach of the Motor vehicle Dealership Agreement with Hyundai.
Mr Baker said that once the cars were sold to his client, and the client has paid for the vehicles, that he has no say or control over what the customer does with the vehicles. He said he had only ever purchased one other vehicle for a client that was unregistered and there had not been any problems.
Mr Baker said he had no idea the vehicles were shipped to New Zealand and he believed his client, Whitewater, was a plumbing business. He said he never checked up on the business, he had only had telephone contact with them and he does not undertake any checks with any of his clients before arranging the purchase of vehicles.
Mr Baker stated that he could not understand why Frizelle’s had refused to pay the brokerage fee on the invoice for the sale to Inala Wangarra for $935.00 as that sale was not in dispute, only the three invoices for Whitewater sales were Frizelle’s refusing to pay.
Mr Baker claimed that the only terms and conditions that he was aware of were his terms and conditions entitled ‘Motorfleet Terms and Conditions’ attached to the Contract to Purchase a Motor vehicle.[4] He said that he was not aware of any terms and conditions relating to the “on selling” of cars and that if that formed part of the Frizelle’s agreement with Hyundai, he was not privy to that contract.
[4]Copy attached to original claim.
Mr Baker claimed that he was advised by Frizelle’s on or around mid April 2014 that the payment of his invoices issued in March and early April 2014 were on hold pending an investigation to the vehicle sales and any subsequent impact of those transactions upon Frizelle’s.
Mr Perrin provided evidence to the tribunal and relied upon a statutory declaration of Nigel Gregory Martin sworn 2 September 2014[5]. Mr Martin deposed that he was the Group Fleet Manager of Frizelle’s and had been since August 2012. He claimed that prior to that he was a Fleet Manager within the Frizelle’s group. He recalled his first dealings with the ‘Whitewater deals’ when he was informed that sales of motor vehicles were to a ‘Western Australian based client of Motorfleet called Whitewater Investments Limited trading as White Water Services’. He recalls the conversation ‘on or around late February or early March 2014’.
[5]‘Exhibit 2’.
Mr Martin deposes that on 10 March 2014 an order was received. A copy of the order notice was annexed[6] to his affidavit and a new vehicle tax invoice[7] for the sale. He claims that the new vehicle purchase contract[8] noted that there was no stamp duty or registration included in the price as the car needed to be registered in Western Australia. He states that he was advised that the client would register the vehicles upon their arrival in Western Australia. He stated that at no time was he advised that the vehicles were destined for any other location than the address in Western Australia.
[6]Annexure “NGM 1”.
[7]Annexure “NGM 2”.
[8]Annexure “NGM 3”.
Mr Martin deposed that three other transactions were conducted on similar terms with the same broker, Motorfleet, and that all payments were ‘made in Australian dollars and he had no reason at any stage of the transactions to believe that the vehicles were going to New Zealand’. Mr Martin claimed he was ‘shocked and upset’ when he later discovered the four vehicles had been shipped to New Zealand in ‘contravention of our Dealer Agreement’.
Mr Martin stated that the vehicles orders were placed with ‘Gold Coast Hyundai, Tweed Hyundai and Robina Hyundai’. He deposed that he believed that the ‘staff at those dealerships would not have been privy at any stage to the knowledge that these deals were going to New Zealand’.
Mr Martin deposed that Frizelle’s is bound by the terms of a dealership agreement with Hyundai and that they are not permitted to sell vehicles to third parties who acquire those vehicles for resale as new Hyundai vehicles. Because of the sales to Whitewater, Frizelle’s are in breach of their Dealership Agreement. He alleges that Mr Baker was aware of this fact and that his actions have caused financial loss to Frizelle’s. Mr Martin provided a copy of a letter from Hyundai dated 9 April[9] proving financial loss to the company due to loss of bonuses.
[9]Annexure “NMG 4”.
Mr Martin claims that the sale of the vehicles has also caused ‘reputational risk with their manufacturer, which may place at risk the prospect of obtaining future Dealership agreements for the Group’. Mr Martin deposed that it was his opinion that Mr Baker misled Frizelle’s and covered up the fact that he knew the vehicles were destined for New Zealand when he emailed Frizelle’s on 3 March 2014[10] advising that Whitewater were a ‘plumbing company in WA and that they were members of the Plumbers and Gas Fitters Association of WA’.
[10]Annexure “NMG 5”.
Mr Martin annexed to his statutory declaration information relating to Whitewater. He provided copies of pages from their website[11] where they clearly claim to be a company that describe themselves as ‘motor vehicle traders’. Whitewater claims to ‘specialise in the supply and sale of parallel imported brand new and ex-demonstrator vehicles. They claim vehicles are provided to them from Australia, Japan and the U.K’.
[11]Annexure “NMG 6”.
Mr Martin deposed that combining the various factors caused by Mr Baker he should forfeit his fees. They include the matters of a financial loss of bonuses to Frizelle’s from Hyundai, the damage caused to Frizelle’s reputation, the fact that Mr Baker caused Frizelle’s to breach their Dealership agreement with Hyundai, and that Mr Baker himself breached the brokerage agreement with Frizelle’s by selling cars to a client that on-sold them.
Mr Martin claims that Mr Baker was not honest in detailing who his client was, that he misled Frizelle’s to believe the client was a plumbing company, and had Frizelle’s been aware of who the actual buyer of the vehicles were, they would never had sold them to Whitewater.
Mr Martin annexed to his statutory declaration a copy of a motor vehicle search conducted from the NZ Transport Agency database in New Zealand[12]. He claims that it is clear that the vehicles are in New Zealand and were registered on or around April, May and July 2014, and as at 16 April 2014 all vehicle odometer readings were all less than 22 kilometres.
[12]Annexure “NGM 9”.
Mr Perrin stated that the reason that the outstanding invoice for brokerage on the Inala Wangarra order for $935.00 has not been paid is due to the fact that Mr Baker has been paid for a prior invoice for Whitewater by mistake. He said that Mr Baker ordered 4 cars for Whitewater and is pursing payment for three of the invoices as the fourth invoice had been incorrectly paid prior to Frizelle’s becoming aware of the breach of Brokerage agreement and this dispute. Mr Perrin stated that the invoice that was overpaid was for $660.00 and invoiced in March 2012[13].
[13]“Exhibit 3”.
Mr Perrin said that Mr Baker’s evidence regarding the franchise and manufacturing agreement is incorrect as he was privy to the agreement and he knew the obligations Frizelle’s had as he had worked for them for more than 2 years. He said the evidence of Mr Baker that the identity of the client and their full details were given to Frizelle’s was not correct. He said that the Brokers only have contact with their client and that only the Broker has the clients full contact details. He said for Mr Baker to suggest Frizelle’s could contact the client was untrue.
Mr Perrin stated that while the Brokerage agreement was ‘loose’ the fees were agreed upon on a case by case basis, but that the terms and condition of the brokerage agreement was that, the Broker must adhere to the third party sale requirements and obligations that bind Frizelle’s.
FINDINGS
I find that Frizelle’s are bound by strict and tight requirements under their Dealership agreement with Hyundai, and likely, other dealership agreements they hold with various entities. I accept their agreement dated 5 March 2013 requires Frizelle’s to comply with the terms and condition of that agreement. Mr Perrin made submissions as to what the terms and conditions were and Mr Baker did not dispute those terms. The terms relating to third party sales were detailed and particularised as Clause 10 of the Hyundai Franchise Agreement that states:
Obligations of the Dealer
The dealer must:
10.1.1Third Party Sales
Not sell any new Hyundai Vehicles to a sub-distributor, agent, broker, licensee or any other third party who acquires Hyundai vehicles for resale as new Hyundai vehicles apart for other Hyundai Franchisees or authorised resellers, unless the Dealer has obtained Hyundai’s prior written consent.
A letter written from Hyundai to Frizelle’s dated 9 April 2014[14] in response to the Breach caused by the “Whitewater” deal notes that the company ‘reserves the right to review any applicable bonuses paid on those vehicles’.
[14]Annexure “NGM 4” of Statutory Declaration of Nigel Gregory Martin.
I find that Mr Baker would be aware of the requirements and obligations that Frizelle’s had under their Dealers Agreement with Hyundai and that as a past employee he would have knowledge of this provision. Mr Baker said he was not privy to the dealership agreements, and I accept that might be the case. However, for Mr Baker to suggest that he did not know about any provisions regarding third party sales is hard to believe. He was a fleet manager working for Frizelle’s, and I find that he would be well aware that any vehicles that were sold through brokers or agents could not be sold to parties that had intentions of “on selling” the vehicles and present them as new.
Mr Baker stated that he did not do background checks on any of his clients. He stated that if a client rang him and wanted a car, he arranged the sale and sometimes did not even personally meet the client. He said that he did not know who Whitewater was, that he accepted what they told him, and he had no idea that the cars were going to New Zealand.
I am not persuaded that Frizelle’s and Motorfleet did not at some stage discuss and include in the terms and condition of their brokerage agreement the condition of sale, that any cars sold to Motorfleet for their clients, could not be “on sold”.
I find that even if Frizelle’s did not specifically discuss with Mr Baker the Third Party Sales obligations during their short twelve-month business relationship, that Mr Baker would have been well aware of the franchise obligations on Frizelle’s. I find that Mr Baker, as a past employee would be aware of the content of the franchise agreement relating to this issue. I find that Mr Baker would know that Frizelle’s had to comply with Hyundai’s, or any franchisees agreement regarding this clause. Mr Baker may not have specifically read the Franchise agreement but as Fleet Manager he would have detailed and working knowledge of a franchisee’s obligations.
Mr Baker said he did not know anything about Third Party Sales Clauses prohibiting sale of new vehicles to an agent or broker or any third party that might resell the vehicle as new. I do not accept his evidence in that regard and prefer the evidence of Mr Perrin. Mr Perrin said that Mr Baker would have known about this clause as he worked in a role that was familiar with the provisions. I agree with Mr Perrin on that point.
The very nature of the business that Frizelle’s is engaged in would make it obvious to any person that Frizelle’s would not sell their new cars to third parties at a reduced cost so that the third party could on sell and present the cars as new for a higher price, therefore robbing themselves of their own potential profits. On any view it would be clear to any person, that Hyundai would not want Frizelle’s to sell their vehicles to third parties who on sell either, as this would defeat the purpose of them engaging franchisees in various locations that sell their vehicles in those location and retain profits on sales. It makes sense a Clause as stated in the Hyundai Franchise Agreement regarding third party sales exists. In addition, that Frizelle’s may be at risk of loosing the franchise agreement for failure to comply with that clause. I accept and find that Clause 10.1.1 of the Hyundai Franchise Agreement relating to Third Party Sales would apply to Frizelle’s and to all Sub-distributors, agents, brokers, licensees or any person they sell their vehicles through that the vehicles cannot and must not be “on sold”. I find that this clause would be an express term of the agreement between Frizelle’s and Motorfleet, regardless if the agreement was in written or oral form.
Whether Mr Baker knew about Whitewater and the vehicles, being shipped to New Zealand in my view, is immaterial. The fact remains, that in the circumstances I find that Mr Baker has breached his Brokerage Agreement he held with Frizelle’s in that he caused the sale of four vehicles to Whitewater, that on the evidence are clearly presented as new vehicles and are being “on sold” in New Zealand. Mr Baker caused Frizelle’s to be in breach of their Franchise Agreement. The Whitewater sales and subsequent breach could have had serious consequences for Frizelle’s and on the evidence of Mr Perrin, ‘caused the loss of a multi million dollar investment in this business’. I understand from this Whitewater incident that both Hyundai and Frizelle’s have put in place stricter measures, practices and procedures in place to ensure this type of incident never happens again.
On the evidence and having found that Mr Baker breached his Brokerage Agreement I am satisfied that he is not entitled to be paid for the sale of the four vehicles on the Whitewater deals. However, one Whitewater invoice has been paid. Mr Baker may have been entitled to be paid the brokerage for the Inala sale. However, on the evidence, the over payment for the Whitewater sale will be credited against the Inala invoice. Although there is a short fall of a couple of hundred dollars I am not satisfied that Mr Baker is entitled to those funds.
I find that it is likely that Frizelle’s will suffer a financial loss for the bonuses that they received on the sale of the four vehicles and that the bonuses may be clawed back from Frizelle’s. In the circumstances, Frizelle’s will retain the small amount owing to Mr Baker for the bonus losses.
For the reasons given the order I propose to make, to give effect to the decision I have made, is as follows:
1. THAT the claim is dismissed.
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