Recoveries Corporation Group Ltd v American Express Australia Ltd

[2016] NSWSC 771

Supreme Court

New South Wales

Medium Neutral Citation:

Recoveries Corporation Group Ltd v American Express Australia Ltd [2016] NSWSC 771

Hearing dates:

18, 19, 20, 21, 22 April 2016

Date of orders:

15 June 2016

Decision date:

15 June 2016

Jurisdiction:

Equity - Commercial List

Before:

Emmett AJA

Decision:

1) Direct that each of the parties, within 14 days, make any submissions in writing it wishes to make in the light of the reasons given for the conclusions reached.
2) Direct that, if no further submissions are made, the plaintiffs, within 21 days, bring in short minutes of orders to give effect to the conclusions reached.
3) Direct that the defendant, within 7 days thereafter, make any submissions in writing it wishes to make if it contends that the plaintiffs are not entitled to the usual order for costs and that the plaintiffs respond in writing within a further 7 days.

Catchwords:

CONTRACT – termination of contract – whether plaintiff entitled to payment of commission following termination – where services performed prior to termination date

 

CONTRACTS – construction and interpretation of contracts – whether entitlement arises as an express term of contract – alternatively, whether there is an implied term in the contract – whether services were the effective cause of payments

  DAMAGES – whether specific performance of contract appropriate – unjust enrichment – restitution

Legislation Cited:

Australian Consumer Law
Civil Procedure Act 2005 (NSW)
Competition and Consumer Act 2010 (Cth)
Corporations Act 2001 (Cth)

Cases Cited:

FPM Constructions Pty Ltd v Council of the City of Blue Mountains [2005] NSWCA 340
McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457
Norman v Federal Commissioner of Taxation (1963) 109 CLR 9
Shepherd v Commissioner of Taxation (1965) 113 CLR 385
Westralian Farmers Ltd v Commonwealth Agricultural Service Engineers Ltd (in liq) (1936) 54 CLR 361

Category:

Principal judgment

Parties:

Recoveries Corporation Group Ltd (First Plaintiff) Recoveries Corporation Pty Ltd (Second Plaintiff)
American Express Australia Ltd (Defendant)

Representation:

Counsel:
RPV Carey (Plaintiffs)
TJ Hancock/JRB Pearson (Defendant)

  Solicitors:
Mason Black (Plaintiffs)
DibbsBarker (Defendant)

File Number(s):

2013/344031

Publication restriction:

Nil

JUDGMENT

Introduction

1. Recoveries Corporation Group Limited (RCG) claims to be entitled to payment of commission by American Express Australia Limited (AMEX) in respect of the recovery by AMEX of debts owed to it by customers (Debtors). The debts in question relate to credit card accounts and charge card accounts of Debtors with AMEX. The commission is claimed in respect of debt collecting services provided to AMEX under a Master Professional Services Agreement between AMEX and RCG signed on 9 May 2012 (the Master Agreement). Under the Master Agreement, commission was to be paid to RCG on repayments received by AMEX on accounts of Debtors in respect of which RCG provided such services.

2. While the Master Agreement was not signed until 9 May 2012, it was made and entered into as of 1 April 2012 (the Effective Date). Commission is also claimed in respect of services provided to AMEX prior to the Effective Date. Recoveries Corporation Pty Limited (RCP) claims, in the alternative to RCG, to be entitled to payment of commission in respect of those services.

3. The Master Agreement provided that it was to commence as of the Effective Date and was to expire on the first anniversary of the Effective Date. However, AMEX was entitled to terminate the Master Agreement upon 30 days’ prior written notice. By letter dated 22 February 2013 (the Termination Notice), AMEX gave 30 days’ notice of its intention to terminate the Master Agreement with effect from 23 March 2013 (the Termination Date).

4. Services as described in the Master Agreement were provided to AMEX in relation to various Debtors from 11 August 2011 up to the Termination Date. AMEX has paid to RCG the commission payable in respect of all payments received by AMEX from such Debtors up to the Termination Date. However, RCG contends that it is entitled to commission in respect of all payments made by Debtors after the Termination Date in relation to whom RCG provided such services prior to the Termination Date.

5. RCG claims that its entitlement arises on the proper construction of the express terms of the Master Agreement. Alternatively, it claims entitlement to such commission on the basis of an implied term that commission would be paid where such services were the effective cause of the payments made to AMEX by Debtors. In relation to payments made in respect of services provided before the Effective Date, RCG, or alternatively RCP, relies on a claim that AMEX has been unjustly enriched at the expense of RCG or RCP.

6. AMEX denies that it is liable to pay the commission claimed by RCG and RCP and has refused to pay the commission claimed. RCG and RCP have therefore commenced proceedings in the Commercial List, seeking relief of various kinds. Before stating the issues in the proceedings, it is desirable to say something about the background that led to the relevant contractual arrangements between AMEX and RCG, being matters known to the parties that may have some bearing on the construction of the relevant documents, to the extent that there is some ambiguity. Such matters may also have some bearing on the question of the alleged implied term. I shall then describe the documents that evidence the contractual arrangements, before dealing with the issues in the proceedings.

Background

7. RCP is a wholly owned subsidiary of RCG. The shareholders of RCG are the same as the shareholders of Nimrod Finance Pty Ltd (Nimrod). Thus, although Nimrod and RCG are, in a practical sense, related, from a technical point of view under the Corporations Act 2001 (Cth) they are not related corporations.

8. On 18 August 2009, Nimrod and AMEX entered into a receivables assignment agreement whereby, with effect on and from 18 August 2009, AMEX sold and assigned to Nimrod and Nimrod agreed to purchase from AMEX all of AMEX’s right, title and interest in certain receivables, being the outstanding balance due and payable to AMEX by various Debtors identified in the schedule contained in an annexure to that agreement (the Nimrod Assignment). Beneficial ownership and risk in those receivables was to pass to Nimrod and, upon payment of the sum of $646,537.02, by Nimrod to AMEX, AMEX was to effect an unconditional irrevocable assignment to Nimrod all of the right, title and interest of AMEX in the receivables. RCG undertook debt recovery work for Nimrod in respect of those receivables.

9. Against that background, discussions between RCG and AMEX took place in relation to the provision of services to AMEX. In January 2010, Mr Savage of RCG discussed with Mr Grieve of AMEX the possibility of a further purchase of receivables. As AMEX had no further receivables to sell at that time, the discussion turned to the possibility of RCG performing debt collecting services for AMEX. Such services were described as "contingent" work because RCG would be rewarded by way of commission, but only in respect of the amounts actually paid by Debtors in reduction of outstanding accounts with AMEX. There was then a discussion, between Mr Grieve and Mr Harrak, of RCG, about the possibility of RCG undertaking work as part of AMEX's "Reserve Reactivation Project", which appears to have related to a proposal by AMEX for external agents to undertake "contingent" debt collection work on older receivables.

10. On 1 September 2010, RCG received a "Request for Proposal" (the Request) relating to the appointment of RCG to AMEX's general panel of contingent collection agents. A second version of the Request was sent to RCG on 2 September 2010 and a third version was sent on 7 September 2010. There was no relevant difference between the versions for the purposes of these proceedings. The Request invited RCG to respond to the Request and said that instructions for preparing and submitting RCG’s proposal were detailed in it.

11. The Request was accompanied by the following:

• a “Draft Master Professional Services Agreement”;

• a "Technology Evaluation Questionnaire" (the TEQ);

• various documents describing AMEX’s procedures and data management and transfer in relation to accounts of Debtors, including a document described as “American Express SIFT – Secure Internet File Transfer User Guide”; and

• a "Non-Disclosure/Confidentiality Agreement".

• AMEX apparently uses “Secure Internet File Transmission” software (SIFT) to send business electronically to third party agencies, such as RCG.

12. Under the heading “Background/Current Status Quo”, the Request stated as follows:

American Express Australia Limited engage Debt Collection Services with a number of existing suppliers currently appointed to the panel. The collection agencies deploy phone, letter and legal services in order to recover debt from American Express customers. The services provided cover pre-write off (2 segments) and post-write off (3 segments). The products recovered include Credit Cards, Charge Cards (etc).

American Express Australia deploys a Roll Rate Management approach to it’s Lending portfolio. Bidders are invited to consider how they would operate in a bucket collections environment.

American Express internal collections are done up to the point of card cancellation and then all cancellations 90 days due are outsourced. Additionally, any account 180 days overdue considered to be a write-off.

13. Under the heading "Approach", the Request stated as follows:

… This tender is sourcing supplier/s who will provide services for the following segments:

1)   Pre-Write off under roll rate management strategy. The volume (i.e: volume of debt in dollars) is estimated to be AUD 7.2 mil per month for Australian Revolving Credit cards (i.e: GRCC) and AUD 2-2.5 mil per month for Australian Charge cards (i.e: RCP) and AUD 1.4 mil per month for New Zealand Charge and Revolving Credit Cards.

2)   Recovery portfolio/Post-Write off collection. There are 2 segments (Secondary and Tertiary placement), plus a Recoveries Portfolio. The volume of the Reserve Reactivation is estimated to be AUD $50-100MM. A future opportunity will occur in March 2011 for new suppliers to participate in a Reserve Reactivation program.

3)   Hardship/Insolvency portfolio. The volume (i.e.: volume of debt in dollars) is estimated to be AUD $2MM.

14. Under the heading "Description of the Services", the Request stated:

The services to be provided by the vendor are as follows:

For both Australia and New Zealand:

Pre-write off:

Primary 1 and Primary 2 Segments

American Express places accounts to external agencies at Cancellation at 90 days. The Primary placement is divided into 2 segments. Prime and Mid-Prime. The agencies are allotted a specified time within these placements to obtain payment on the account. If payment is not obtained within the required timeframes, accounts will be moved to Secondary placement

Post-Write off:

Secondary Segment

Accounts move into the Second placement and are retained in this segment for a specified period of time. If payment is not obtained within that specified timeframe, accounts will be moved to the Tertiary placement

Tertiary Segment

Accounts move into the Secondary placement [sic] and are retained in this segment for a specified period of time. If payment is not obtained within that specified timeframe, accounts will be moved to the Tertiary Placement

Recoveries

Accounts will be rested without collections effort for a period of time, post referral through Primary, Secondary and Tertiary placements. From time to time American Express will recommence collections of these accounts and will call on specialist recovery agencies to perform this work.

Hardship:

Customers in severe financial difficulties require specialist customer care. The Hardship program requires premium collections servicing, and appropriate treatment of customers in difficulty. Accounts may be retained in this segment for the period of a long-term hardship, under minimal arrangement.

15. Under the heading "Pricing" and the subheading "Commission, Yield & Volume of Business", the Request then stated:

Based on the quality of the accounts and the description of the segments of accounts, please propose a commission fee that you would offer to American Express.

…

Additionally, please provide your Company's expected yield (revenue per account) on American Express accounts.

Based on the nature of services requested, the profile and quality of accounts and the volumes indicated, please advise whether these volumes of accounts would be cost effective for you.

16. Under the heading "Technology", the Request stated in relation to the TEQ:

For the benefit of those bidders who do not currently provide debt collection services to American Express, American Express reviews each of its suppliers to ensure the certain standards of security are in place to protect its proprietary data.

The review is called "Project Governance Board" review (PGB) and is done by the American Express Technologies team.

In order to prepare for this review, those bidders who do not currently provide debt collection services to American Express, are required to complete the Technology Evaluation Questionnaire (TEQ) document which is provided.

In order to complete the TEQ, you need to be aware of the data process American Express follows for its Debt Collection business. These processes are set out in the provided "SIFT" and "Interface Data Mapping" documents.

Please include in your response the completed TEQ if you are not already providing Debt Collection Services to American Express.

17. Under the sub-heading “Call Recording” the Request stated:

The vendor shall agree to set up facilities to record and store 100% of calls on American Express portfolio (inbound and outbound). The records should be made available to American Express for quality and audit purposes.

18. On 15 September 2010, RCG submitted a response to the Request (the Response), along with the completed TEQ. In the "Pricing Table” included in the Response, bid rates and yields were nominated.

19. On 18 October 2010, a telephone conference call was held between the technology teams from AMEX and RCG. During that conference, AMEX indicated that one of its requirements was that there should be encrypted call recording of all telephone calls to and from Customers/Debtors. RCG did not have such a capacity at that time.

20. On 11 November 2010, Mr Johnson of AMEX wrote to Mr Harrak as follows:

Following the … process that your company participated in with American Express and a full evaluation of your company response, American Express would like to commence with formal discussions in relation to your inclusion onto our contingent collections panel of agencies. This is a conditional offer based on our assessment of your current level of capacity to handle volumes within our card lending portfolio as well as final pricing and contractual agreements.

21. During the period between November 2010 and May 2011, RCG undertook significant implementation work and incurred significant costs, including by the acquisition of a new voice recording telephone system, in preparation for providing the proposed services to AMEX.

22. The progress of the implementation work was the subject of discussions between Mr Harrak and Mr Johnson of AMEX, as well as correspondence between Mr Mond and Mr Coverdale of AMEX. When Mr Mond expressed some concern about the delay in commencing, in light of the significant capital expenditure and an increase in staff by RCG in order to be in a position to perform the proposed services for AMEX, Mr Coverdale acknowledged the concerns in the following terms:

Unfortunately after our November meeting we had a reorganisation and as part of that we now report to the US – as such a lot of decisions and actions were put on hold until such time as we could do a full review and assessment with them of the situation. And also educate them from an end to end perspective on the Australian market!

What I can say is that Robert (plus myself and Steve) have been very strong advocates of Recoveries Corp as we have been going through this review and this has helped tremendously.

I do apologise for the delay and appreciate the costs that you have incurred but I firmly believe we will have an opportunity for Recovery [sic] Corp in the near future in more than one area of our portfolio. It is the complexity of that decision that is taking some time to get agreement on plus the alignment with other regions which is a new dimension for us. We will advise as soon as possible the outcome so I would ask you to bear with us for a while longer. [Emphasis added]

23. On 18 July 2011 Mr Harrak, together with other RCG staff, attended a training session with Mr Grieve and Mr Molden of AMEX, referred to as "On-Boarding Training", which covered multiple topics, with a particular emphasis on regulatory compliance. The session included a 101 page PowerPoint presentation, described as "Agency On-Boarding” (the PowerPoint Presentation). Of the 101 slides that comprise the PowerPoint Presentation, 26 are devoted to regulatory and compliance matters.

24. On 12 August 2011, Mr Johnson, AMEX's Procurement Services Market Manager, sent a letter to Mr Harrak (the Letter of Intent). The Letter of Intent provided as follows:

With regard to the current service provisions being transitioned to Recoveries Corporation as per Table 1 below, this letter represents the intention by AMEX to continue to work with Recoveries Corporation for the purpose of finalising an Agreement for the continuation of supply of these services. This continuation of service is a conditional offer based on agreement to the final contract and the right for AMEX to review the commission fee applied to the Hardship portfolio within 3 months of the signature of this letter.

Table 1

Placement	Segment	Market Share	Fee Rate
First Placement	David Jones Store Card and GPC	30%	10%
Specialty	Hardship – All	30%	20%

If you have any questions or otherwise require further elaboration on the contents of this letter, please contact me…

We look forward to continuing to work with you in relation to the Agreement.

25. On 17 August 2011, Mr Molden sent an email to Mr Harrak and others at RCG attaching a copy of the PowerPoint Presentation, which he described as the "operating procedures". He also attached copies of the ASIC Debt Collection Guidelines (the ASIC Guidelines) and other AMEX materials.

26. From August 2011 to 1 April 2012, AMEX referred accounts to RCG and debt collecting services were provided to AMEX in respect of those accounts during that period. During the course of providing such services during that period, RCG and RCP were subject to, and complied with, AMEX’s audit process.

The Contractual Arrangements

27. The Master Agreement was ultimately signed on behalf of RCG on 9 May 2012 and it is common ground that a binding contract was formed at that time. It is now common ground that the contractual arrangements were evidenced by the following:

1. the Master Agreement;

2. the Statement of Work in the form of Exhibit 1 attached to the Master Agreement (the SoW); and

3. the PowerPoint Presentation.

28. The SoW referred to an “operating manual”, which was intended to be incorporated into the contractual arrangements between RCG and AMEX. It is common ground that the PowerPoint Presentation constituted the operating manual for the purposes of the SoW (the Operating Manual).

29. The contractual documents, being the Master Agreement, the SoW and the Operating Manual, are not felicitously drawn. The Master Agreement is clearly a form used by AMEX for the provision of both “Services” and “Deliverables”, as those terms are defined. The Master Agreement states that such Services or Deliverables will be provided in accordance with a statement of work substantially in the form attached. Each such statement of work is to form a separate agreement that incorporates by reference the Master Agreement, as amended and modified in the applicable statement of work.

28. The SoW, which is in fact Exhibit 1 to the Master Agreement, states that it is issued pursuant to the Master Agreement, is effective when executed by both RCG and AMEX and is to form a separate agreement that incorporates, by reference, the terms and conditions of the Master Agreement, as amended and modified by the SoW. Exhibit 1 itself refers to Attachment 1. Attachment 1 is a document consisting of nine clauses that are the operative provisions of the SoW. Other attachments are also referred to but some were misdescribed or omitted. Numbering of provisions was inconsistent.

29. However, the infelicities involved in the putting together of various documents so as to constitute the contractual arrangements between the parties does not appear to have given rise to any relevant ambiguity for present purposes. I shall describe separately the relevant provisions of each of the three documents that make up the contractual arrangements, being the Master Agreement, the SoW and the Operating Manual.

The Master Agreement

32. By Article 1 of the Master Agreement, RCG agreed to provide the “Services” and “Deliverables” described in one or more “Statements of Work”, which were to be substantially in the form of Exhibit 1 attached to the Master Agreement. Article 2.1 provided that the SoW must include a complete description of Services to be performed, the schedule for completion of the Services, the applicable fixed price or time and material charges, and any additional terms that the parties mutually agreed to include. The term “Deliverable” was defined in Article 2.1 as “Services to be performed, deliverables or other materials, works, products and information to be provided hereunder”.

33. Article 3.3 of the Master Agreement provided that the Project Managers of AMEX and RCG were to meet and review and discuss reports submitted by RCG, proposed changes to the Services, and the monthly executive summary report prepared by RCG for AMEX regarding RCG’s performance of the Services. Under Article 3.6, RCG was required to submit written status reports describing its activities on a monthly basis or more frequently if requested by AMEX. On request, RCG was required to meet with AMEX management to review the status of RCG’s activities.

34. Article 4.1 of the Master Agreement provided that each Deliverable would be subject to “a verification of acceptability” by AMEX to ensure that such Deliverable satisfied AMEX’s requirements. That process was described as an “Acceptance Test”, which was to evaluate whether the Deliverable complied with the agreed upon specifications and other acceptance criteria, if any, for such Deliverable, as set forth in the SoW. In the absence of any such specifications or acceptance criteria, acceptance was to be based on whether a Deliverable met the reasonable expectations of AMEX. AMEX was to determine, in its reasonable discretion, whether a Deliverable had passed the Acceptance Test. Under Article 4.2, if a Deliverable passed an Acceptance Test, AMEX was required to notify RCG promptly in writing. If any Deliverable did not pass an Acceptance Test, AMEX was required to notify RCG, specifying in reasonable detail in what respects the Deliverable had failed to perform.

35. Article 6.1 of the Master Agreement provided that applicable fixed prices were to be specified in the SoW. Under Article 6.2, RCG was required to invoice AMEX monthly in arrears after written acceptance by AMEX of “the applicable Deliverables performed”. All invoices, except for amounts disputed in good faith by AMEX, were to be payable within 60 days’ of receipt of the invoice by AMEX.

36. Under Article 9.1, the Master Agreement was to commence as of the Effective Date and was to expire on the first anniversary of the Effective Date. Article 9.2 provided that AMEX would be entitled to terminate the Master Agreement, “for convenience and without cause”, upon 30 days’ prior written notice.

37. Article 9.5 provided for “Wind-down Assistance”. Under that Article, if provision of the Services ceased for any reason prior to completion of the Services or acceptance of Deliverables to be provided under an SoW, RCG was required to wind down its performance in an orderly manner, including by using commercially reasonable efforts to assist AMEX in the orderly transfer of the affected Services and the transfer of work-in-progress and other materials as may facilitate the orderly, non-disrupted business continuation of AMEX, including the return of AMEX Data and Confidential Information.

38. Article 9.6 of the Master Agreement relevantly provided that, upon termination or expiry of the Master Agreement, any undisputed outstanding indebtedness due by one party to the other was to become immediately due and payable, with the exception that AMEX would not be liable to pay RCG if termination was due to RCG’s breach. RCG was then required to return or destroy, at AMEX’s option, AMEX property, including intellectual property rights and any other material in its possession supplied by AMEX. AMEX was also required to return to RCG any RCG property supplied by RCG to AMEX. However, each party was to remain liable to the other for all of its obligations and indebtedness to the other arising from law, or the Master Agreement, as at the date of termination or expiry of the Master Agreement.

39. In addition, Article 9.7 relevantly provided that no termination or expiry of the Master Agreement would affect any rights of the parties that may have accrued before the date of termination or expiry, or the rights and obligations of the parties under any clauses in the Master Agreement that were expressed as surviving termination or expiry of the Master Agreement. Neither party pointed to any clause that was expressed to survive termination or expiry. Article 23 took up a similar theme to that of Article 9.7. It provided, relevantly, that any provision of the Master Agreement that contemplated performance or observance subsequent to its termination or expiration was to survive termination or expiration and continue in full force and effect.

The SoW

40. Clause 1 of the SoW consisted of definitions. The terms “Service” and “Services” were defined as meaning any of the services to be provided to AMEX under the SoW in the territory of Australia.

41. Clause 2 of the SoW provided that it was to begin on the Effective Date and continue for a period of one year unless terminated early in accordance with the Master Agreement or upon AMEX providing 30 days’ notice to terminate the SoW for its convenience. AMEX was also given the option of extending the SoW upon the same terms and conditions for further periods of one year. Thus, clause 2 duplicated Article 9 of the Master Agreement to some extent.

42. Under clause 3, RCG was to provide the Services from a location identified in that clause. Clause 4 then contained a description of the Services. Under clause 4.1, RCG agreed to perform the Services detailed in the SoW on behalf of AMEX in accordance with:

1. The terms of the Master Agreement.

2. The SoW.

3. The applicable generic procedural service descriptions and service performance standards described in the Operating Manual.

4. The OA Work Standards attached as Schedule A1.

Schedule A1 appears to have been omitted. At the end of clause 9, the last numbered clause of the SoW, the heading “OA Work Standards” appeared. It was followed by another clause referring to “the following section”, which was said to summarise certain performance standards to which RCG must adhere. There was no such section.

43. Clause 4.2 was headed “Overview of Services to be Provided”. Under clause 4.2.1, RCG was required to provide to AMEX call and collect/other collections services to be comprised of RCG attempting to make contact with the Debtor by way of letter and telephone, using agreed work flow strategies, to recover the outstanding debt. Clause 4.3 provided that, in respect of certain accounts, RCG was to perform “Skip Trace activities” in order to obtain contact details for a Debtor.

44. Clause 4.4 specified the nature of the contact that RCG was to make with Debtors. Contact included all verbal and non-verbal contact. In that regard, RCG was required to adhere to the ASIC Guidelines for hours of operations, and clause 4.4 set out reasonable contact times suggested by the ASIC Guidelines for contact by telephone and face-to-face contact. Limits were placed on the number of contacts per week and per month, in accordance with the ASIC Guidelines. RCG was required to demonstrate that system controls were in place to ensure that contact was made in accordance with the ASIC Guidelines.

45. Clearly enough, RCG could only provide Services in relation to any particular Debtor if the Debtor’s account was referred to RCG by AMEX. The SoW described such a referral as a “Placement”, although there appears to be no express provision in the SoW that imposed an obligation on AMEX to make Placements. Further, under clause 4.8 of the SoW, AMEX reserved the right, at its sole discretion, to recall Placements at any time and for any reason. Clause 4.8 stated that specific circumstances where Placements and accounts must be recalled by AMEX were set out in the Operating Manual. That is where one might have expected to find provisions relating to the making of referrals, but there do not appear to be any.

46. Clause 5.1 of the SoW, which dealt with “Pricing Schedule and Payment”, referred to Attachment 2. Attachment 2 consisted of a table that, relevantly, specified a commission rate opposite a particular product segment. Thus, the commission payable by AMEX to RCG was to be calculated by multiplying the amount received by AMEX from a Debtor in respect of an account referred to RCG by AMEX by the percentage in the table applicable to the segment in which the account was located.

47. Under clause 5.5, RCG was required to direct any payments by a Debtor to the relevant AMEX card account of that Debtor. RCG also acknowledged that, in the event that it received a payment directly, the collected amount was to remain the property of AMEX. RCG declared that it would hold such collected amounts in trust until such time as they were remitted to AMEX. Such collected amounts were to be paid to AMEX within 24 hours of receipt.

The Operating Manual

48. The Operating Manual identifies with greater specificity and particularity the Services that were to be provided to AMEX by RCG. As I have said, the Operating Manual consisted of the 101 slides of the PowerPoint Presentation. I shall set out below what I apprehend to be the effect of the relevant slides, in order to indicate the extent of the regulation of the performance of the Services that is inherent in the contractual documents.

49. Under Article 4.1 of the Master Agreement, the Services were to be the subject of an Acceptance Test. However, it is by no means clear how the Acceptance Test was to be applied in relation to the performance of Services by RCG. For example, there was no evidence that the Services provided by RCG were made the subject of an Acceptance Test in relation to particular accounts referred to RCG by AMEX. It may be that, on its proper construction, Article 4.1 relates to the system put in place by RCG following the entry into by RCG and AMEX of the Master Agreement. That is to say, while the system to be adopted by RCG was to be the subject of an Acceptance Test, it was not intended that the provision of Services in relation to a particular account would be the subject of an Acceptance test. Such an arrangement would hardly be practicable in circumstances where thousands of accounts were intended to be referred on a regular basis.

The Proceedings

50. By its amended summons dated 28 April 2014, which was filed on 5 May 2014, RCG claims:

• A declaration that, upon termination of the Master Agreement by AMEX, AMEX remained liable to pay commissions to RCG in relation to payments made by Debtors to AMEX in circumstances in which:

1. RCG had entered into agreements or arrangements with Debtors prior to termination of the Master Agreement, under which the Debtor concerned would make payments to AMEX over time by instalments to clear, in whole or in part, that Debtor’s outstanding account balance (Instalment Plans);

2. payments to AMEX by Debtors under such Instalment Plans remained, either in whole or in part, outstanding as at termination of the Master Agreement (Outstanding Instalment Payments); and

3. payments have been, and continue to be, made by Debtors under or in accordance with Instalment Plans after termination of the Master Agreement (Post-termination Instalment Payments).

• An order that AMEX specifically perform the Master Agreement by paying commissions to RCG in relation to Post-termination Instalment Payments.

• Alternatively, a declaration that, in accepting and retaining the Outstanding Instalment Payments and the Post-termination Instalment Payments, in circumstances in which it has refused to pay commissions to RCG in relation to the Post-termination Instalment Payments, AMEX has been, and continues to be, unjustly enriched at the expense of RCG.

RCG also claims damages, including damages in restitution, together with interest under s 100 of the Civil Procedure Act2005 (NSW).

51. AMEX contends that, on the proper construction of the Master Agreement, RCG was entitled to be paid commissions only on repayments that were made to AMEX before the Termination Date. AMEX also contends that the Court should not grant specific performance of any term requiring the payment of money, on the basis that damages are an adequate remedy. In addition, AMEX denies that it has been unjustly enriched and that the restitution claim by RCG is no more than its contractual claim under another guise, there being no scope for a claim for restitution where the relationship of the parties is governed by an undisputed contract.

52. RCG and RCP also claimed relief in respect of commission that they alleged would fall due in respect of payments received by AMEX from Debtors in the future. However, RCG now accepts that it is not presently entitled to commission in respect of payments not yet received by AMEX and only claims commission in respect of payments received by AMEX to date.

53. Between 11 August 2011 and 22 February 2013, RCP, acting on behalf of RCG, agreed instalment arrangements for each of the Debtors referred to in a spreadsheet prepared by Mr James Higgins, the Group Manager, Finance and Administration for the RCG Group (the Spreadsheet). Mr Higgins generated the Spreadsheet from RCG’s computerised record keeping system. The payment information recorded on that system was provided to RCG by AMEX. The Spreadsheet incorporated the following information:

1. Name of the Debtor;

2. Account number;

3. Date each account was referred to RCG;

4. Date each account was recalled by AMEX;

5. Date of each payment made in respect of the account;

6. Whether each payment was made before or after the Termination Date;

7. The total payments made in respect of each account; and

8. The total payments made both before and after the Termination Date.

54. It is common ground that Services were provided to AMEX by RCG in respect of all of the accounts referred to in the Spreadsheet and that the information recorded in the Spreadsheet is accurate. It is also common ground that AMEX accepted the Services in relation to each of those accounts. Finally, it is common ground that AMEX has paid commission as contemplated by the SoW in respect of all payments made in respect of those accounts up to the Termination Date.

55. If RCG is entitled to commission on debt repayments received by AMEX after the Termination Date, it is common ground that the amount of commission that would be payable up to 5 April 2016 would be $448,416, of which $133,749 relates to accounts of Debtors referred to RCG prior to the Effective Date. That calculation has been made in respect of payments received by AMEX up to 5 April 2016. RCG accepts that it is only entitled to commission in respect of the payments actually received by AMEX. If RCG is entitled to commission after the Termination Date, a further calculation would need to be made up to the date of judgment.

56. RCG and RCP contend that, if Services provided prior to the Effective Date are not governed by the terms of the Master Agreement, they are entitled to commission on payments received by AMEX on or after the Termination Date in respect of Services provided before the Effective Date, on the basis of quantum meruit. Initially, RCG accepted that the Master Agreement did not extend to accounts referred to it by AMEX prior to the Effective Date, since it is expressed to be made as of the Effective Date. However, in the course of argument, RCG adopted the suggestion that, while the Master Agreement does not, in terms, cover those accounts, the effect of the conduct of the parties and in particular the Letter of Intent constituted agreement that the accounts referred on and after 11 August 2011 would be regulated by the terms of any contract to which the parties finally entered. In the end, I do not understand AMEX to dissent from that proposition. I shall address that question below.

57. Initially, RCG and RCP claimed damages under s 236 of the Australian Consumer Law as applied under Division 2 of Part XIII of the Competition and Consumer Act2010 (Cth). They also claimed a compensation order or other similar relief under s 237 of the Australian Consumer Law. However, those claims were abandoned prior to commencement of the hearing.

58. Initially, AMEX contended that the contractual arrangements with RCG were evidenced by the Master Agreement, the SoW, the Operating Manual and a further document entitled “GCA JAPA Collections Operating Manual”. In the course of the hearing, however, AMEX accepted that that document had never been brought to the attention of RCG or RCP. Accordingly, it accepted that it did not form part of the contractual arrangements.

Construction of the Contract

59. The essence of RCG’s contention is that, by its contractual arrangements with AMEX, it agreed to provide Services, as contemplated by those arrangements, in consideration for the provision of which AMEX agreed to pay commission. The Master Agreement, the SoW and the Operating Manual are by no means clear as to the payments upon which commission was to be paid. In order to determine that question, it is necessary to have a clear understanding of the precise Services that RCG agreed to provide to AMEX. While RCG pleaded, in the alternative, an implied term, in truth, the express term pleaded by it and the implied term relied on, depend upon an analysis of the contractual arrangements in order to determine, objectively from the contractual documents, the payments that the parties must be taken to have intended as attracting the commission in question. That entails the background circumstances of which the parties must be taken to have been aware at the time when the Master Agreement was entered into.

60. The principal question is whether, on the proper construction of the contractual documents, a continuing obligation on the part of AMEX and entitlement on the part of RCG survived the contractual termination of the Master Agreement insofar as it was still executory. There is no dispute about the relevant principles of law that are applicable in circumstances where a contract that remains partly executory comes to an end as regards unperformed obligations either under the terms of the contract itself, or by reason of termination by one party on the ground of repudiation by the other. Before dealing with the relevant legal principles, I shall say something about the background circumstances relied upon by RCG as bearing on the question of construction. I shall then say something about the nature of the Services, as gleaned from the express terms of the contractual documents, before stating my conclusion as to the entitlement of RCG to the payment of commission.

Background Circumstances

61. RCP asserts that the implication arises having regard to surrounding circumstances known to both RCP and AMEX. The surrounding circumstances relied on are as follows:

1. The Nimrod Assignment.

2. Discussions between Mr Brian Savage and Mr Nicholas Harrak of RCG, on the one hand, and Mr Robert Grieve of AMEX, on the other, between January 2010 and August 2010.

3. Request for Proposal provided to RCG by AMEX on 1 September 2010.

4. Response to the Request for Proposal submitted by RCG to AMEX on 15 September 2010.

5. Completed Technology Evaluation Questionnaire provided to AMEX with the response of 15 September 2010.

6. Presentation made by RCG to AMEX on 22 September 2010.

7. Telephone conference between technology teams from AMEX and RCG on 18 October 2010.

8. The requirement by AMEX that there should be encrypted call recording of all telephone calls to and from Debtors, as discussed in the telephone conference of 18 October 2010.

9. RCG did not have the capacity for encryption of call recordings in October 2010 and was required to incur expenditure on such a system.

10. Letter dated 11 November 2010 from AMEX to RCG saying AMEX would like to commence with formal discussions in relation to inclusion of RCG in AMEX’s contingent collections panel of agencies.

11. High level meeting on 29 November 2010 between Mr Harrak and Mr David Mond of RCG and Mr Steve Beranek of AMEX, at which the RCG tender was not discussed.

12. Implementation work undertaken by RCG between November 2010 and May 2011, including the acquisition of a new voice recording telephone system, in preparation for the provision of the Services to AMEX.

13. Letter dated 31 January 2011 from David Mond of RCG to Mr Bryan Coverdale of AMEX dealing with implementation work between January 2011 and May 2011.

14. Training and presentation carried out on 18 July 2011.

15. The ASIC Guidelines.

16. Referral of Debtors to RCG from 11 August 2011.

17. The Letter of Intent dated 12 August 2011 written by AMEX to RCG.

18. The provision of the Services by RCG to AMEX from 12 August 2011 up to 9 May 2012, when the Master Agreement was signed.

Relevant Legal principles

62. When a party to a simple contract, upon the breach by the other contracting party of a condition of the contract, elects to treat the contract as no longer binding upon it, the contract is not rescinded as from the beginning. Both parties are discharged from the further performance of the contract. However, rights that have been unconditionally acquired are not divested or discharged. Rights and obligations that arise from the partial execution of the contract, and causes of action that have accrued from its breach, continue unaffected[1] .

    1. McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 476-477

63. When a simple contract is discharged by the election of one party to treat itself as no longer bound, after the other has committed a breach of the contract, rights and obligations that have already arisen from the partial execution of the contract remain unaffected. However, it is open to the parties to provide in advance for such an event and to stipulate for some different consequence. When the parties themselves have provided for the determination of the contract on a given contingency, and provide for particular consequences, the consequences flow from their contractual stipulation and are governed by their intention, either actual or imputed. Where an agreement expressly says that in specified events it shall immediately terminate and be at an end, the application of such a provision to a continuing relationship of a complicated character depends upon the nature of the agreement and the obligations to which it gives rise. Primarily, it is necessary to consider what is involved in the sudden termination of an executory agreement under which liabilities are accruing from day to day[2] .

    2. Westralian Farmers Ltd v Commonwealth Agricultural Service Engineers Ltd (1936) 54 CLR 361 at 379

64. In general, the termination of an executory agreement, out of the performance of which pecuniary demands may arise, has the effect that, just as no further acts of performance can be required on one side, no liability can be brought to existence on the other side, if that liability depends upon a further act of performance. Rights cannot arise if they depend upon the further execution of the contract that has not occurred prior to termination. On the other hand, if all the facts have occurred that would entitle one party to a payment of money or a debt, which is a property right consisting of a distinct chose in action, the fact that the right to payment is in the future or is contingent upon some event that does not involve further performance of the contract, will not prevent that chose in action maturing into an immediately enforceable obligation[3] .

    3. Ibid at 379-380

65. Thus, there is a clear distinction between a right to payment in the future, which is contingent upon an event that does not involve further performance of a contract, on the one hand, and a right to payment in the future that does involve such future performance, on the other. While the latter may not give rise to an accrued right, the former does. The distinction requires analysis of the terms of the relevant contract in order to determine whether a future contingency depends upon the further performance of the contract[4] .

    4. FPM Constructions Pty Ltd v Council of the City of Blue Mountains [2005] NSWCA 340 at [192]

66. The principles outlined above are recognised by the express terms of the Master Agreement. Thus, Article 9.7 expressly provides that termination or expiry of the Master Agreement does not affect any rights of the parties that may have accrued before the date of termination or expiry. Thus, termination by the operation of Article 9.2 will not affect any right of RCG that may have accrued prior to the Termination Date.

The Services

67. The essence of the object of the contractual arrangements between RCG and AMEX, as evidenced by the Master Agreement, the SoW and the Operating Manual, is that AMEX will refer to RCG accounts of Debtors that are in arrears. RCG is then required to provide Services, as defined, in respect of those accounts. Those Services are, in essence, to communicate with Debtors and to put in place arrangements between the Debtor and AMEX for the repayment of the outstanding debt in respect of that account over a period not exceeding 90 days. If RCG provides such Services in respect of a particular Debtor whose account is referred to it, and AMEX accepts the Services so provided by RCG in relation to that account, an entitlement on the part of RCG arises that does not depend upon any further performance under the contractual arrangements by either party, other than payment of the commission in the event of the relevant contingency, namely, the receipt by AMEX of a payment in respect of the relevant account.

68. Slides 11 and 12 of the Operating Manual dealt with the purposes for which contact can be made by RCG with a Debtor. It provided that communications with a Debtor must always be for a reasonable purpose, and should only occur to the extent necessary. Slide 12 specified the reasonable purposes for which contact could be made. Slides 13 and 14 reiterated the hours of contact and the number and types of contact that were permissible, as stated in clause 5 of the SoW.

69. Slide 25 dealt with “Agency Handling Procedure”, which appears to relate to Placements by AMEX with RCG. Thus, slide 25 provided that, “upon placement of the account”, a specified “First Contact letter” was required to be sent and no other letter could be sent before the account was 100 days past due. Slide 25 then stated that AMEX would notify RCG of the expiry date of its default notice “on the download notes of an account placement”. RCG was then required to identify that date and load it into its system to inform its collectors whether a default notice was in force or not. Slide 35 dealt with “Work Flow – the first 24 hours”. It consists of a diagram, which begins with “Account located to agency via SIFT”.

70. Thus, it is appears that the referral of accounts by AMEX to RCG was entirely within the discretion of AMEX. There does not appear to have been any obligation imposed on AMEX to refer a minimum number of accounts to RCG or to require AMEX to refer particular categories of accounts. Clearly enough, however, the communications between the parties prior to entering into the Master Agreement indicated that it was in their joint contemplation that there would be significant numbers of referrals that were to be the subject of the SoW.

71. Slide 36 of the Operating Manual specifies “Call and Collect Requirements” in the following terms:

• OA referral file download within 24 hours of referral.

• [RCG] must make an initial skip trace search, first phone attempt and send letter within 24 hours of receiving the file.

• Attempted contact must be made every five business days until contact established and payment arrangement is put in place.

• Payment arrangements can be set up for a maximum of 90 days. Once payment arrangement is in place, contact cannot be made unless the arrangement is broken. Follow up of broken arrangements must take place within 48 hours.

• Where no contact is established, accounts must be allocated to skip tracing queue within fourteen days. Skip tracing attempts must be made at least every 30 days for all placements after prime placement.

• First 30 day treatment applies for all placements as outlined above.

72. Slides 37 and 38 of the Operating Manual contain suggestions for the communications that might take place between RCG and a Debtor in order to prompt repayment arrangements, as follows:

Good morning, am I speaking to Mr John Martin?

Hello Mr Martin, this is Marianne calling on behalf of American Express.

Could I please confirm your date of birth and address.

*It is not essential to obtain the postcode.

Thank you. I am calling from [RCG] in regards to your American Express Credit Card with an outstanding balance of $13,671.46.

Mr Martin can you pay that today?

The Operating Manual then suggests that the telephonist “negotiate down”, and contains suggestions for “hardship handling”.

73. Slide 39 deals with “Customer Payment Process”. It specifies the manner in which Debtors are able to make payments to their accounts. It states that agencies, RCG in this case, are expected to encourage customers strongly to use “bPay”.

74. Slide 43 deals with “Settlement Policy”. It states that all agencies are required to complete “the settlement tracking form” each time a settlement is accepted by a Debtor and a deadline is agreed. It requires a spreadsheet to be sent on a daily basis and reports to be updated once “the final settlement payment” is received. Slide 43 states that, in order for that process to be effective, it is critical that collectors negotiate firm deadlines that are “realistic to the customer’s ability to pay”. The slide urges that a reasonable grace period be allowed when “updating the deadlines on the tracking sheet to allow for payment processing times”. If a Debtor pays as the result of a settlement offer letter and there has been no conversation with the Debtor, the “settlement tracking sheet” can be updated on the date that the payment is received. The slide suggests that, in order to track successfully all the accounts where a settlement has been offered and accepted at the agency (that is to say, RCG in the present case), it may be beneficial to create an “awaiting settlement” status code that the collectors can apply once a settlement offer has been accepted. The slide states that settlements should be paid in the shortest possible timeframe, with no longer than 80 days between the negotiation date and the date of the final payment. If the settlement terms are renegotiated, such as extension of the timeframe, the account needs to be included again on “the tracking sheet”.

75. Slide 45 deals with “Out of Policy Settlements” and deals with Debtors who may be experiencing severe financial difficulties. It provides that, if a settlement offer “is not within policy” and the collector considers that it may be in the interest of AMEX to accept the offer, the offer may be referred to AMEX, which will approve or request additional documentation within five business days.

76. Slide 47 requires RGC to have separate work queues for the following accounts:

• High balance

• No contact

• Skip trace

• Repayment arrangement.

The succeeding slides deal with each of those categories.

77. Slide 48 deals with “High Balance Account Actioning” and confirms that high balance accounts are required to be kept in a separate work queue. Slide 48 requires that there be a thorough “manager review” of high balance accounts every thirty days and that the manager must offer proactive direction to the collector. Where the Debtor cannot be located, the account must evidence “thorough and detailed skip tracing”.

78. Slide 49 deals with “No Contact Account Actioning” and confirms that accounts where no contact had been made are to be kept separate from other accounts. It states that it is expected that attempts to make contact with customers would occur as frequently as every 14 days and that a contact letter must be sent out every 14 days in relation to “Prime Placement” accounts.

79. Slide 51 deals with “Repayment Arrangements” and confirms that repayment arrangements are required to be kept in a separate work queue. The slide provides that repayment arrangements are to be reviewed no less frequently than every 90 days and that repayment arrangements must be recorded in RCG’s system with the payment method, dates, amounts and frequency of payments that are the subject of the arrangement.

80. Slide 61, which deals with “SIFT – Data Transmission”, states that the SIFT program enables the sending and receiving of files to and from AMEX securely via the Internet. Files are transmitted by means that provide communications privacy over the Internet, by preventing eavesdropping, tampering and forgery.

81. Slide 89 deals with “Invoice Payments and Manual Claims” and relevantly provides as follows:

• Payment process for Australia is automated, but there is still some component of the process that is manual.

• A weekly report is sent to [RCG] by the AMEX invoice analyst. [RCG] is to verify what amounts are actually received by AMEX. If there are discrepancies, then [RCG] can send an email to [a specified email address] to resolve the dispute, if possible, before the end of the month.

• For manual claims, [RCG] is required to use the standard template set up by AMEX and send an email to [a specified email address] by the 9th of each month.

• [RCG] is to receive monthly payments by the 2nd to 3rd week of each month.

• All invoice claims need to be made within 60 days of the invoice date.

• Claims for payment after 60 days will not be entertained.

82. The regime established by the Operating Manual, as described above, indicates the nature of the Services to be provided by RCG to AMEX. That regime involves not only making contact with a Debtor, and endeavouring to make arrangements for the repayment of the balance of the debt owed by the Debtor to AMEX, but also to monitor the performance of the arrangements by the Debtor. It appears that, where there was a default by a Debtor in the performance of the repayment arrangements entered into with RCG, RCG was expected to follow up the default and make further arrangements with the Debtor. Thus, the making of an initial arrangement by RCG with a Debtor was not necessarily the end of the contact between the Debtor and RCG.

Entitlement to Commission

83. AMEX contends that, in order to have an accrued right to a payment of commission as at the Termination Date, the amount of the commission must be a liquidated sum. Clearly, as at the Termination Date, the amount of any payment made by a Debtor and received by AMEX after that time was unknown. AMEX contends, therefore, that as at the Termination Date, any claim by RCG for commission was not a liquidated claim. That is to say, there was no debt in existence because the amount of such a debt could not be ascertained until a payment was actually made by a Debtor.

84. AMEX contends that, in the absence of a liquidated claim, identifiable as at the Termination Date, albeit payable in the future, RCG did not have an accrued right under Article 9.7, because not all of the facts required to create the chose in action for payment of a liquidated sum had yet accrued. Thus, AMEX contends, upon providing Services, RCG acquired only the prospect or possibility of becoming entitled, in the future, to a proprietary right and therefore had only a future chose in action. It says that the right claimed by RCG is not a present chose in action, which depends on a future contingency for payment, but is no more than a future chose in action.

85. AMEX calls in aid of its contention authorities concerning the consequences, for income tax purposes, of the assignment of a right to receive future income. Thus, where a taxpayer assigns, by way of gift, all the interest derived during a year of income from a loan made by the taxpayer, the future interest on the loan was merely an expectancy or possibility, which could not be effectively assigned without consideration. The interest would therefore be assessable income of the taxpayer. Further, where the taxpayer purports to assign all the dividends that may become payable in the future from two estates in which the taxpayer had a beneficial interest in residue, the dividends represent a mere possibility, and therefore cannot be effectively assigned without consideration, and would be assessable income of the taxpayer[5] . On the other hand, where a taxpayer who is entitled under a licence agreement to royalties directly proportionate to the number of products manufactured by a licensee, an assignment by way of gift of the taxpayer’s right, title and interest in and to a fixed proportion of the income that might accrue under the licence agreement is a present assignment of an existing chose in action and not an assignment of an expectancy or a covenant to assign future property. Accordingly, the proportion of the royalties in question would not be part of the assessable income of the taxpayer[6] . I do not consider that those principles afford any assistance in the resolution of the question raised in the present proceedings.

    5. See Norman v Federal Commissioner of Taxation (1963) 109 CLR 9

    6. See Shepherd v Commissioner of Taxation (1965) 113 CLR 385

86. The Operating Manual requires, in effect, that AMEX would supply monthly payment information to RCG to enable RCG, amongst other things, to prepare invoices in relation to commission. Where AMEX was satisfied that the Services provided by RCG passed the Acceptance Test, it was required to pay the relevant invoice within 60 days.

87. As I have said, by the Termination Notice, AMEX gave notice of its intention to terminate the Master Agreement and the provisions of Article 9 became operative. The effect of Article 9 is critical to the outcome of the dispute that then arose between AMEX, on the one hand, and RCG and RCP, on the other.

88. AMEX contends that, on the proper construction of the contractual arrangements, viewed objectively, there is no contemplation of the survival of any payment obligations or liabilities beyond termination in accordance with Article 9.2, which expressly provides for termination for convenience on 30 days’ notice. AMEX says that the reporting and payment provisions described above, read beneficially, would require AMEX to report to RCG at the end of the 30 days’ notice period and RCG would be permitted to render an invoice for that period and require AMEX to pay the commissions claimed in the invoices. However, AMEX says in effect, there would be no obligation on AMEX to report to RCG thereafter.

83. However, the language of Article 9.2 leaves open the question presently under consideration. That is to say, the question is whether the obligation to pay commission at the agreed rates arises in relation to payments received after the Termination Date. By saying that AMEX will pay for Services performed up to the effective date of termination, Article 9 leaves open the question of what payment is to be made. It is clear that no payments were to be made in respect of Services performed after the effective date of termination. The question in the proceedings is concerned with the determination of the amount to which RCG is entitled in respect of Services performed up to the effective date of termination.

84. AMEX also points to clause 5.3 of the SoW, which reserves to AMEX the right, at its sole discretion, to change, at any time, the commission rates associated with any program. AMEX accepts that a beneficial interpretation of that clause would not permit a retrospective change. However, that concession begs the question. A change in a rate of commission could not apply to Services after the Services had been provided. The change in commission would only apply to Services provided after the change.

85. AMEX contends that Article 9.2 must be read consistently with the payment provisions in clause 5 of the SoW, which makes commission payable on “the value of debts recovered”. It says that RCG is therefore entitled to be remunerated for Services provided by it, by reference to the value of debts recovered by AMEX. During the term of the Master Agreement, AMEX must report daily to RCG on the value of payments made by Debtors during each reporting period. RCG must then verify the reports from AMEX, using the AMEX system, and render an invoice for the commission due on such payments. In essence, AMEX contends that, after the Termination Date, there was no regime in place to enable that mechanism to be carried out.

86. AMEX also relies on Article 23 of the Master Agreement, which does not refer to the payment provisions in Article 9.2. AMEX says that Article 9.2 expressly did not contemplate survival, but refers to payment for Services performed up to the effective date of termination. It points out that there is no reference in the Operating Manual, either at slide 89 or elsewhere, to the continuation of the reporting obligations of either party. Similarly, AMEX says, the payment provisions in clause 5 of the SoW do not contemplate survival and must come to an end upon termination.

87. AMEX relies on the fact that there is no reference anywhere in the documents evidencing the contractual arrangements to payment of commission on the value of amounts received by AMEX from Debtors after termination. Rather, AMEX says, the parties expressly contemplated that the SoW would be terminated conterminously with the Master Agreement and that, apart from the terms referred to in Article 23, the whole of the contractual arrangements, including the reporting provisions of the Operating Manual, come to an end at the same time, namely, in the present case, on the Termination Date.

88. AMEX contends that the construction for which RCG contends necessarily contemplates a position completely contrary to those express provisions, and would impose on the parties continuing obligations, with no definite end. AMEX would be obliged to continue to report to RCG daily on receipts from Debtors in respect of accounts referred prior to 23 March 2013, and RCG would be required to verify the reports before it was entitled to render an invoice under the regime established by the contractual arrangements. AMEX asserts that that is not a construction that commercial entities such as AMEX and RCG could reasonably be expected to have entertained when they entered into the contractual arrangements in question.

89. AMEX emphasises that the obligation imposed upon it to provide daily reports referred to in slide 89 of the Operating Manual is not merely a mechanical process. Rather, AMEX says, it is a critical part of its performance obligation, which enables the parties to reach agreement as to what amounts have been received by AMEX from Debtors, which attracts commission. Accordingly, AMEX contends, payment by a Debtor and the subsequent report by AMEX are the critical vesting facts that create a present chose in action in the form of a debt owed by AMEX to RCG. RCG acquires no present right to recover commission once the obligation of AMEX to report has ceased.

90. AMEX contends that the clear intention of the parties, objectively determined by reference to the documents evidencing the contractual arrangements, was that all of their respective obligations and liabilities would come to an end at the date of termination or expiration of the Master Agreement. In particular, AMEX says, the wind down provisions in Articles 9.5 and 9.6 would come into effect and the relationship between the parties would come to an end so far as performance of their substantive obligations is concerned.

91. Clearly enough, Article 9.5 directs attention to the provision of Services that are not complete at the time of termination of the Master Agreement. Thus, for example, where accounts have been referred by AMEX to RCG and Services have not been completed in relation to those accounts, Article 9.5 may be triggered. However, Article 9.5 is not concerned with a situation where Services have been provided and accepted by AMEX in relation to particular accounts, and nothing more is required of RCG in relation to those accounts. That is the circumstance presently under consideration.

92. The essence of the position adopted by AMEX is that it had no obligation to pay any commission to RCG in respect of payments received by AMEX from Debtors after the expiration of the Termination Notice, notwithstanding that RCG had provided the Services in relation to outstanding debts of such Debtors and the provision of those Services had been accepted by AMEX. AMEX contends that, because the contractual arrangements between AMEX and RCG contemplated the provision of regular reports prior to the payment of commission, the expiration of the 30 day period contemplated by Article 9.2 brought to an end the obligation for such reports to be provided and, with it, any obligation to pay commission in respect of payments received by AMEX thereafter. Under the contractual arrangements, AMEX says, RCG is not entitled to invoice it for commission until AMEX has given written acceptance of the Services to RCG.

93. Thus, AMEX contends that RCG’s right to payment is contingent on further performance because it could not invoice AMEX for commission payments until:

• It had provided a monthly status report, which had been dealt with under the procedures contemplated by the SoW and the Operating Manual;

• AMEX had provided RCG with written acceptance of the Services as required by Article 6.2 of the Master Agreement;

• AMEX had provided RCG with payment reports for the relevant period; and

• RCG had reviewed those reports and either agreed with the data in the reports or lodged a manual claim with AMEX.

100. AMEX contends, in effect, that the regime for reporting described above has the effect that RCG’s entitlement to commission in respect of payments received after the Termination Date is dependent upon further performance of the contractual arrangements between them. That seems to me to be a most anomalous and uncommercial consequence.

101. The analysis set out above indicates that the commission payable by AMEX to RCG in respect of Services provided by RCG in relation to a particular account was to be attributed to payments received by AMEX in accordance with arrangements put in place by RCG. To the extent that payments continued to be made by a Debtor following the provision of Services by RCG, being payments that are made in accordance with arrangements put in place by RCG, RCG would be entitled to its commission.

102. Further, where there was default by a Debtor and RCG made further contact with the Debtor that resulted in a modified arrangement, commission would be payable to RCG in respect of payments received by AMEX thereafter. That would be so, whether or not the Master Agreement had been terminated by the Termination Notice. Even if there were default on the part of a Debtor, but payments were thereafter received by AMEX in accordance with arrangements put in place by RCG, RCG would be entitled to its commission in relation to those payments, so long as there had been no other intervening action by or on behalf of AMEX that resulted in the Debtor resuming payments.

103. Thus, the commission would be payable to RCG in respect of payments received by AMEX from Debtors in relation to whom RCG had provided Services irrespective of when such payments are received by AMEX, but only where no further intervention has occurred following any default by the Debtor or to vary the terms of the arrangement between AMEX and the Debtor.

104. The entitlement of RCG is, of course, contingent. That is to say, it is entitled to commission only if a payment is actually made by the Debtor and received by AMEX. Once a payment is received by AMEX, the contingency is satisfied and the right to a commission vests at that time. No further action is required by either party, under the terms of the contractual arrangements, for the entitlement to commission to arise or for the contingency to be satisfied.

105. To construe the contractual documents as requiring that the entitlement of RCG to be paid a commission in respect of payments received by AMEX is contingent on the continuation on foot of the executory obligations thereunder makes no commercial sense. That is to say, the consideration for the provision of the Services by RCG is the payment by AMEX of the commission on payments actually received by AMEX. There would be no commercial rationale for RCG’s entitlement to receive commission in the future to be contingent upon the continued operation of the contractual arrangements concerning the future referral of accounts of other Debtors.

106. The contractual arrangements represent the establishment of a regime whereby many thousands of accounts of Debtors are referred by AMEX to RCG for the provision of Services. The regime applies to each account referred. Where the Services are not provided in relation to an account or the purported provision of Services is not accepted by AMEX, assuming no contravention of the terms of the contractual arrangements, no entitlement to commission would arise on the part of RCG if, subsequently, payments were received by AMEX from that Debtor in respect of that account.

107. In the present case, there is no question of RCG having commenced to provide Services but being unable to complete the provision of the Services. If that were the case, a question might have arisen as to whether RCG was entitled to some compensation for having been deprived of the benefit of any partial provision of Services. However, in the present case, RCG claims only in respect of accounts referred to it by AMEX, in respect of which it has provided Services that have been accepted by AMEX.

108. Had the Master Agreement not been terminated by AMEX, it would have been possible, under the regime established by the contractual documents, for RCG to engage in further communication with Debtors who had defaulted in the performance of arrangements made by RCG with such Debtors on behalf of AMEX, in order to put in place fresh arrangements or to re-establish arrangements already made. Where such fresh arrangements or re-establishment occurred before the Termination Date, all payments made thereafter in accordance with the new arrangements or re-established arrangements would attract commission. However, only payments made in accordance with such arrangements would attract commission.

109. RCG would not be entitled to commission in respect of any payments received from a Debtor after the Debtor has defaulted in the performance of arrangements made by RCG with that Debtor on behalf of AMEX. However, for so long as a Debtor continues to make payments in accordance with the arrangements made, the consideration for the provision of the Services that led to those arrangements would require that the payment attract commission.

Referrals before 1 April 2012

110. The Letter of Intent was written by AMEX to RCG in contemplation of final contractual arrangements being entered into between them. It states that “this continuation of service is a conditional offer based on agreement to the final contract”. That language is slightly obscure. However, I consider that, in the context in which it was written, it was intended by AMEX, and accepted by RCG, as a statement that the accounts that were being referred by AMEX to RCG would, upon the final agreement of the contractual arrangements that were the subject of negotiation, be subject to the contractual arrangements as finally agreed.

111. It is significant that the Request for proposal provided by AMEX to RCG and the Response provided by RCG to AMEX contemplated the documentation that was ultimately brought into existence, in the form of drafts of those documents. The Operating Manual existed and was provided to RCG prior to the commencement of referrals in August 2011.

112. Pending final agreement as to those arrangements, AMEX began referring accounts to RCG as contemplated by the arrangements that were proposed. Further, RCG provided Services in accordance with the arrangements as proposed. In fact, the parties applied the regime established by the final contractual arrangements to the accounts that were referred by AMEX to RCG from 11 August 2011 up to the Termination Date. That is to say, commission was paid at the rates ultimately specified in the SoW in respect of payments received by AMEX up to the Termination Date.

113. Had there been no final contractual arrangement entered into between RCG and AMEX, questions may well have arisen concerning entitlement of RCG to payments of commissions in respect of Services provided to AMEX, in respect of accounts where payments were subsequently received by AMEX. That may well have given risen rise to a quasi-contractual claim. However that is not this case. The parties ultimately reached finality.

114. I do not consider that there is a basis for drawing a distinction between accounts referred to RCG by AMEX prior to the Effective Date and accounts referred after that time. Rather, the clear intention of RCG and AMEX, to be gleaned from the circumstances outlined above, is that RCG would provide Services in respect of accounts referred to it by AMEX on the basis of the regime contemplated by the contractual arrangements that they were then in the process of negotiating. The clear intention to be discerned from the objective acts of the parties was that, once the contractual arrangements were finalised and binding, they would apply to all accounts referred by AMEX to RCG. Accordingly, where RCG provided Services in respect of such accounts and such Services were accepted by AMEX, RCG became entitled to commission, albeit contingently upon payments in respect of such accounts being received thereafter by AMEX.

Implied term

115. RCG alleges that there was an implied term of the Master Agreement to the effect that RCG is entitled to be paid commissions on Post-termination Instalment Payments, regardless of the date on which the payment was made by the Debtor, where the provision of the Services to AMEX by RCG or RCP was an effective cause of the recovery, and the agreement of the Instalment Plan was an effective cause of the Post-termination Instalment Payments. RCG pleads that the term was implied in fact, that it was reasonable and equitable, that it was necessary to give business efficacy to the Master Agreement, that it was so obvious that it goes without saying, that it was capable of clear expression and that it was consistent with the express terms of the Master Agreement.

116. In light of the conclusions that I have reached, there could be no implied term such as is pleaded by RCG in the alternative. Specifically, having regard to the construction of the contractual arrangements that I have indicated above, it is certainly not necessary to imply such a term in order to give business efficacy to the contractual arrangements. Further, having regard to the express terms of the contractual arrangements, and the detailed regime established by those contractual arrangements, I would be disposed to conclude that no such term would be implied in any event.

117. That is to say, the parties went to considerable length to set out the whole of the terms of the arrangements between them that were intended to give rise to any entitlement on the part of RCG to the payment of commission. Detailed provisions were included to avoid dispute. The process was intended to be effected, for the most part, by automation. Manual claims were the exception. However, the proposed implied term would require detailed examination of every payment made by a Debtor to AMEX in order to determine whether the provision of Services by RCG in respect of the account of that Debtor was an effective cause of the payment. That is another factor that militates against the implication of a term.

118. Article 20 of the Master Agreement is entitled “Overall Agreement”. It provides that the Exhibits, the SoWs and attachments to the Master Agreement are incorporated by reference and are part of it and that the Master Agreement constitutes the entire agreement between the parties and supersedes all previous agreements, promises, proposals, representations, understandings and negotiations, whether written or oral, between the parties pertaining to the subject matter of the Master Agreement. Article 20.2 provides that no modification, amendment or supplement to the Master Agreement, any SoW, or any provisions thereof will be binding upon the parties unless made in writing and duly signed by both parties. The implication of a term flies in the face of those provisions.

Causation

119. Had I concluded that there was an implied term, as alleged in the alternative by RCG, it would have been necessary to determine whether the provision of the Services by RCG in respect of accounts referred to it by AMEX was the effective cause of the payments received by AMEX after the Termination Date in relation to such accounts. There are some tens of thousands of payments in question. Strictly, it would be necessary to examine each payment in order to reach a conclusion as to whether the provision of Services was the effective cause of that particular payment. That would clearly not be an effective use of Court time.

120. The parties therefore adopted a course that may have had something to recommend it, had the enquiry become necessary. Each party chose 20 of the accounts in respect of which AMEX has received payments after the Termination Date. RCG prepared a schedule in relation to the 20 accounts chosen by it and AMEX prepared a schedule in relation to the 20 accounts chosen by it. The schedules showed particulars of each Debtor’s account, together with details of the Instalment Plan made in relation to that account before the Termination Date and the Post-termination Instalment Payments made in respect of that account. Each entry in the schedule was supported by relevant documentation relating to the account.

121. In essence, RCG contended that an inference should be drawn that, where, following the provision of Services by RCG, an Instalment Plan had been put in place and payments were thereafter made in accordance with the Instalment Plan, the provision of Services in relation to that account was the effective cause of those payments. Essentially, the inference relied on by RCG is post hoc propter hoc. That is to say, following the default by the Debtor, communications took place between RCG and the Debtor, repayments were made by the Debtor after the communications, therefore the communications were the effective cause of the repayments.

119. Such an inference may be supported by the fact that the underlying object of the contractual arrangements between RCG and AMEX was for RCG to provide the Services, for which AMEX would pay commission in respect of payments thereafter received. That is to say, the underlying basis for the contractual arrangements appears to be the expectation of the parties that the provision of the Services would result in payments to AMEX in respect of which AMEX was prepared to pay commission. That, therefore, could be regarded as a basis for drawing an inference in favour of RCG.

120. RCG relied on the evidence of Mr Nicholas Harrak, the head of the government and commercial business unit of the RCG Group. Mr Harrak has been employed by the RCG Group since 2000 and has worked in numerous roles since that time, including as a debt collector, portfolio analyst, team leader and head of the government and commercial business unit. Mr Harrak gave evidence that, in his experience, the longer a debt is owed without any regular payment being made by the debtor towards its discharge, the less likely it is that the debt will be recovered at all. In his experience, it is more likely that a debtor will discharge his or her obligations in respect of the debt if a payment plan is agreed and implemented early. In that sense, earlier payments are more important than later ones. He says that the earlier a payment plan is agreed with a debtor and the earlier the debtor starts making payments consistently with that plan, the more likely it is that the debt will be collected.

121. An example of the schedule prepared by RCG concerns an account that had been in arrears for at least 90 days prior to referral by AMEX and had been cancelled. The account was referred to RCG on 2 July 2012 and, at that stage, the sum of $56,160.86 was owing. On 12 July 2012, the Debtor agreed to make payments of $600 per month and payments were made on that basis for six months. Following a review phone call by RCG on 12 November 2012, the payments were increased to $630 per month. On 18 March 2013, the Debtor promised to pay the $630 for the month that he had previously agreed to pay. The Debtor’s payments subsequently decreased marginally and then increased again to $700 and then to $816 per month and payments continued at that level until September 2015. RCG contends that the Court would conclude, on the balance of probabilities, that the initial contact by RCG and the making of an Instalment Plan was an effective cause of the recovery of the amounts actually received by AMEX from the Debtor in question. The last payment made by the Debtor before the Termination Date was made on 29 January 2013. No payment was made in February 2013. The first payment made after the Termination Date was made on 27 March 2013. There was no evidence as to the reasons for the failure to comply with the Instalment Plan and the changes in the repayment amounts.

122. There is no evidence of the communications that actually took place between RCG and the Debtor described in the above example, although inferences might be drawn that they followed the suggestions in the Operating Manual. Without knowing something more of the Debtor who is the subject of the example indicated above, it is difficult to draw a conclusion as to whether it is more likely than not that the communications between RCG and the Debtor that led to the Instalment Plan were the effective cause of all of the payments made by the Debtor. That is to say, there may be any number of reasons why the Debtor fell into default in the payment of the account to AMEX in the first place. It may be that contact from an agency such as RCG, which might be described as a “debt collector”, would be sufficient to persuade a defaulting Debtor to make payments that the Debtor would not otherwise make. Further, it is not clear whether the subsequent communication with the Debtor by RCG was as a consequence of a further referral by AMEX. Thus, it is not clear whether, once there has been a referral, RCG was required to continue to monitor the relevant account to ensure that the payments were made in accordance with the relevant Instalment Plan.

123. An example proffered on behalf of AMEX concerned an account that was in debit in the sum of $4,083.71. It is unclear from the material when the account was referred to RCG. However, on 1 October 2012, a letter was written to the Debtor confirming agreement to pay the debt by instalments of $18.00 per week commencing on 5 October 2012. The last payment made by the Debtor prior to the Termination Date was made on 24 September 2012. The first payment made after the Termination Date was made on 17 December 2013. In the meantime, the account had been referred to another debt collecting agency. An inference might be drawn that none of the payments made after the Termination Date were effectively caused by the provision of Services by RCG.

124. If the question arose, I would be disposed to conclude that RCG has failed to discharge its onus of demonstrating that it is more likely than not that the Services were the effective cause of all of the repayments made after the termination date in respect of accounts referred to RCG, other than payments made strictly in accordance with arrangements made by RCG on behalf of AMEX. However, it is unnecessary to reach a final conclusion.

Conclusion

128. I consider that RCG is entitled to judgment against AMEX in a sum representing commission payable in respect of payments received by AMEX from Debtors after the Termination Date up to the date of judgment, being payments by Debtors in accordance with the terms of arrangements made with such Debtors by RCG on behalf of AMEX prior to the Termination Date. RCG may well become entitled to commission, at the rates provided in the contractual arrangements, in respect of payments received by AMEX, after the date of judgment, in accordance with the terms of arrangements made with such Debtors by RCG on behalf of AMEX prior to the Termination Date. No cause of action has yet arisen in relation to such payments, which are a mere possibility at this stage. However, in order avoid future disputation, it would be desirable for the Court to make a declaration as to the extent of the contingent entitlements and obligations of the parties in relation to such payments.

129. Further calculations would be required in order to determine the amount of commission to which RCG is entitled in respect of payments received by AMEX after the Termination Date, up to either 5 April 2016 or to the date of judgment. Ideally the calculation would be to the later date.

130. I am mindful that the conclusion that I have reached does not necessarily accord with the contentions of either RCG or AMEX. Accordingly, I do not propose to make final orders at this stage. Rather, I propose to give the following directions:

1. Direct that each of the parties, within 14 days, make any submissions in writing it wishes to make in the light of the reasons given for the conclusions reached.

2. Direct that, if no further submissions are made, the plaintiffs, within 21 days, bring in short minutes of orders to give effect to the conclusions reached.

3. Direct that the defendant, within 7 days thereafter, make any submissions in writing it wishes to make if it contends that the plaintiffs are not entitled to the usual order for costs and that the plaintiffs respond in writing within a further 7 days.

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Endnotes

Decision last updated: 16 June 2016