Sondoananh Trading Company Pty Ltd v Couriers Please Pty Ltd
[2017] VCC 1644
•22 November 2017
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
GENERAL LIST
Case No. CI-15-05583
| Sondoananh Trading Company Pty Ltd | Plaintiff |
| v | |
| Couriers Please Pty Ltd | Defendant |
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JUDGE: | His Honour Judge Woodward | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 16 and 17 October 2017 | |
DATE OF JUDGMENT: | 22 November 2017 | |
CASE MAY BE CITED AS: | Sondoananh Trading Company Pty Ltd v Couriers Please Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2017] VCC 1644 | |
REASONS FOR JUDGMENT
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Subject: CONTRACTS
Catchwords: Franchise agreement – construction of franchise agreement – grounds for termination – whether conduct of franchisee “endangers public health or safety” – meaning of “endanger” – actual or threatened risk to public health or safety – validity of termination notice – admissibility of expert evidence – no evidence of requisite specialist knowledge – no process of reasoning revealed by expert
Legislation Cited: Competition and Consumer Act 2010 (Cth); Competition and Consumer (Industry Codes-Franchising) Regulations 2014 (Cth)
Cases Cited:Becker Group Ltd v Motion PictureCompany of Australia [2004] FCA 630; Dasreef Pty Limited v Hawchar (2011) 243 CLR 588; Gedeon v Commissioner of the New South Wales Crime Commission (2008) 236 CLR 120; Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749; MLW Technology Pty Ltd v May [2005] VSCA 29
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr T Fennessy | MMH Lawyers |
| For the Defendant | Mr J C Hooper | Hall & Wilcox |
HIS HONOUR:
Background, parties and issues
1 “Run 105” is the name given by the defendant (“Couriers Please”) to the courier run in the northern Melbourne suburb of Epping. Son Dihn Nguyen (known as Sonny or Sunny), is the sole director and shareholder of the plaintiff (“Sondoananh”). Mr Nguyen through Sondoananh began working as a contract courier for Couriers Please with responsibility for Run 105, in about October 2005. On 4 May 2012, Sondoananh and Couriers Please entered into a “Contractor’s Franchise Agreement” (“Franchise Agreement”), the effect of which was to appoint Sondoananh as a franchisee for Couriers Please.
2 At about noon on 27 August 2017, Mr Nguyen stormed out of the Couriers Please depot in Port Melbourne, and headed towards Lorimer Street, yelling that he would kill himself by running in front of a car. James Hucker and his colleague Ziggy Maravic who had been meeting with Mr Nguyen, encouraged Mr Nguyen back to the depot car park. The police were called and Mr Nguyen was later taken by ambulance to the Alfred hospital for observation. Mr Nguyen’s alarming behaviour had been precipitated by being told by Mr Hucker that his Franchise Agreement with Couriers Please was terminated, effective immediately.
3 The issues in this proceeding and my brief answers are:
· Was the termination by Couriers Please in accordance with the Franchise Agreement or in breach of it? Answer: the termination was in accordance with the Franchise Agreement.
· Did Couriers Please breach clause 10.3 of the Franchise Agreement by failing to resolve the dispute between Sondoananh and its customer WRO? Answer: no.
· if Couriers Please has breached the Franchise Agreement in either or both of the respects identified, what damages are payable by Couriers Please to Sondoananh? Answer: unnecessary to answer.
The expert evidence
4 In response to orders made by Her Honour Judge Marks on 6 April 2017, the parties filed and served witness statements. Those orders provided that a witness statement, when adopted, would stand as the evidence in chief of the witness. Sondoananh filed and served a witness statement of Mr Nguyen and two statements (in fact in the form of affidavits) of “franchising specialist” Rod Young. The defendant filed and served witness statements from Mr Hucker and Mr Maravic. A former employee of Couriers Please (Aslyn Meneghini) was also called to give evidence, on a subpoena issued by Sondoananh.
5 At the commencement of trial I ruled that the affidavit and report representing the expert evidence of Mr Young was inadmissible and would be excluded. I gave brief reasons for that decision at the time of making the ruling and indicated to the parties that I would provide more detailed reasons as part of my reasons for judgment.
6 Towards the end of his submissions on the admissibility of Mr Young’s report, counsel for Sondoananh proposed that I defer exercising my discretion to exclude the report, until after I had heard the evidence of both Mr Nguyen and Mr Young. I declined to take that course. I said at the time that, based on Mr Young’s report and my review of the material in the court book, it was clear that the report was not admissible. I said that the parties should not be burdened with the cost of having Mr Young appear and give evidence, which ultimately would not be of any assistance to the court. In this context, I note that in Dasreef Pty Limited v Hawchar,[1] the plurality held:
“As a general rule, trial judges confronted with an objection to admissibility of evidence should rule upon that objection as soon as possible. Often the ruling can and should be given immediately after the objection has been made and argued.”[2]
[1](2011) 243 CLR 588
[2]Dasreef Pty Limited v Hawchar (supra) at [19]
7 Mr Young’s CV commences:
“Rod is a versatile management professional with over 40 years’ experience in Australia, New Zealand, the EU, China, South East Asia, India and the United States and is considered one of the world’s foremost franchising, licensing and business network consultants.”
8 The CV also describes Mr Young as “an internationally recognised authority on franchising and business growth and development”, and that:
“[H]is broad range and depth of experience, coupled with a prodigious expertise and knowledge of the sector and a wide domestic and international network make him a highly valued asset to organisations looking to penetrate new markets, gross sales and profitability and expand their brand authority”.
9 The CV states that Mr Young is the “Global CEO of the $250 million 1,000 store/40 country Cartridge World group” and identifies Mr Young’s experience on Boards of, and in providing consulting and advice services to, many other companies. However, neither the CV nor Mr Young’s covering affidavit give details of his qualifications or any involvement by him in research work or academic papers or journals concerning franchising businesses. Nor does it identify that he holds any particular qualifications or experience in accounting or business valuation or in connection with the challenges faced by migrants who purchase service businesses and franchises.
10 In relation to Mr Young’s first report, he was asked for his opinion in response to four questions. I will recite the questions and briefly explain in respect of each why I excluded Mr Young’s evidence. I will then deal with Mr Young’s second report. As will be apparent, the difficulties with Mr Young’s reports stem more from the questions than his answers. He has clearly endeavoured to answer each question to the best of his ability. Having said that, a closer adherence by Mr Young to the Expert Witness Code of Conduct might have seen him more critically examine whether the questions put to him fell within his qualifications or field of expertise.
11 The first question posed for Mr Young was: “In view of the matters referred to above, in your expert opinion is the Franchise Agreement considered to be oppressive/harsh/unjust?” Mr Young’s evidence in response to this question was objectionable on two grounds. First, it is not relevant to any issue in the proceeding. Sondoananh does not seek relief on the basis of the Franchise Agreement being oppressive, harsh or unjust. Second, the question essentially raises an issue of law which is a matter for the court.[3] I note, in any event, that Mr Young expresses the view that the Franchise Agreement is not oppressive, harsh or unjust.
[3]Dasreef Pty Ltd v Hawchar (supra), per Heydon J at [56]
12 The second question was: “What does Couriers Please seeming in action under clause 10.3 in the WRO case tell us about the operation of this agreement? The dominant position of the Couriers Please [sic] or otherwise?” This too raises issues of mixed fact and law that are exclusively matters for the court. Further, large parts of Mr Young’s response to the question refer to matters such as the dominant position of Couriers Please and the fairness of its conduct; none of which is relevant to any issues in the proceeding. Mr Young’s answer the third question is objectionable on the same basis and I need say no more about it. The third question was: “What does the history of this Couriers Please/the industry changing from a “contractual basis” to a “franchise basis” tell us? And has Couriers Please managed to skirt around any proposed reforms?”
13 The fourth and final question dealt with by Mr Young in his first report was: “What is the financial detriment caused to the Plaintiff in this matter noting the financial statements provided, the term of the franchise agreement remaining and the assignment below market rate?” Mr Young’s answer to this question was again objectionable on two bases.
14 First, for Mr Young to proffer an admissible opinion in response to this question, it was necessary for Sondoananh to demonstrate that he had “specialised knowledge based on his training, study or experience that permitted him to measure or estimate”, the alleged loss and damage to Sondoananh.[4] In my view, Sondoananh failed to demonstrate that Mr Young had any relevant expertise in assessing or calculating “financial detriment”. There is no evidence that he holds any accounting qualifications or has any other relevant expertise in calculating capital values, discounted cash flows and the like. I also note that a failure to demonstrate that an opinion expressed by a witness is based on the witnesses specialised knowledge based on training, study or experience is a matter that goes to admissibility of the evidence, not its weight.[5]
[4]Dasreef Pty Ltd v Hawchar (supra), per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ at [35]
[5]Dasreef Pty Ltd v Hawchar (supra), per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ at [42], Evidence Act 2008 (Vic) ss76 and 79
15 Second, the calculations that Mr Young does purport to make are devoid of reasoning or analysis. An expert opinion is inadmissible unless the expert states in chief the reasoning by which the expert conclusion arrived at flows from the facts proved or assumed by the expert, so as to reveal that the opinion is based on the expert’s expertise.[6] To the extent that it is possible to discern how the figure Mr Young postulated was arrived at, it appears to be based on an uncritical acceptance of Mr Young’s instructions without any comparison to market or other third-party sources.
[6]Dasreef Pty Ltd v Hawchar (supra), per Heydon J at [56]. His Honour identifies this as the position at common law and later confirms that this requirement persists under s79 of the Evidence Act 2008 (Vic) – see at [100]ff
16 Mr Young’s second report purports to be an elaboration of his answer to the fourth question in the first report, and is objectionable on the same bases. In relation to Mr Young’s opinion in his second report in response to a question as to “the number of years of unemployment that Sondoananh can claim as damages”, Mr Young discusses his views as to why “migrants buy service businesses and franchises” and how a migrant franchisee can gain both language and commercial skills by operating the franchise business. He then states: “An early termination of this business would mean the Plaintiff has been denied such learnings”, and: “His potential to gain similar employment in the area in which he operated his franchise is restricted for at least 6 months” and, “may be a reality for two or three years”.
17 There are two difficulties with this part of Mr Young’s second report. First, there is nothing in his CV or covering affidavit to suggest that he has any relevant experience or qualifications to discuss particular challenges for “migrant franchisees”. Secondly, it ignores the fact that at the time of the termination, Mr Nguyen representing Sondoananh had been carrying on his courier business in the Couriers Please “Run 105” for nine years, including for over two years as a franchisee.
The Franchise Agreement
18 Before turning to the relevant provisions of the Franchise Agreement, I observe that the Agreement is governed by the provisions of the Franchising Code of Conduct, prescribed under s51AE of the Competition and Consumer Act 2010 (Cth) and made under the Competition and Consumer (Industry Codes-Franchising) Regulations 2014 (Cth). However, it is not alleged by Sondoananh in this proceeding that the Franchise Agreement departs in any relevant respect from the Franchising Code of Conduct. Indeed, clause 17.4(e) of the Franchise Agreement on which Couriers Please relies as the basis for terminating the Agreement, is expressly permitted by, and accords with, s29(f) of the Franchising Code of Conduct. Couriers Please submits (and I agree) that clause 17.4(e) of the Franchise Agreement should be read conformably with s29(f) of the Franchising Code of Conduct.
19 The Franchise Agreement defines Sondoananh as the “Contractor” and relevantly provides as follows:
“3. Obligations of Contractor
3.1 General
The Contractor will:
(a) transact to the Services honestly, promptly, efficiently, with all due care and skill and according to the highest standards applicable to the courier business;
(b) comply with all lawful requirements relating to the conduct of the Contractor’s business;
(c) comply with all directions of Couriers Please; and
(d) not do anything (or omit to do anything) which may adversely affect the reputation of the Couriers Please system, brand or Other Contractors.
…
10. Customers
10.1Contractors to pay monies from customers to Couriers Please
If the Contractor receives any money from a customer, then:
(a) the Contractor will immediately pay that money to Couriers Please;
(b) until this time, the Contractor holds that money on trust for Couriers Please.
10.2 Couriers Please to disperse monies from customers
Couriers Please will be responsible for holding monies from customers and dispersing those monies to the Contractor, Other Contractors and others less any deductions authorised by this Agreement.
10.3 Disputes with customers
On behalf of all Contractors, Couriers please will resolve disputes with customers (including determining any refunds or other payments) and its decision will be final.
…
16. Payments
…
16.3 Other costs of the Contractor is responsible for
The Contractor will pay for:
…
(e) where a coupon system is used:
…
(ii)the total coupon price of all coupons in any coupon book which has been in the possession of the Contractor for more than four weeks, and which has been:
(A)sold to a customer, but in respect of which payment has not been remitted to Couriers Please; or
(B)not return to Couriers Please within that period
…
17. Termination
…
17.4 Immediate Termination
Couriers Please may terminate this Agreement at any time with immediate effect by giving written notice to the Contractor if the Contractor:
…
(e) operates the courier business under this Agreement in a way that endangers public health or safety, including without limitation where:
ithe Contractor or the Driver fails to remain completely sober and free from the influence of all drugs and harmful substances while engaging in transacting the Services; and
ii.the Contractor or the Driver assaults any Other Contractor bracket or Driver of any Other Contractor) any employee of Couriers Please, customer or any other person; or
20 The Franchise Agreement also provides in a number of places for the Contractor to use and comply with “systems” provided by Couriers Please. It was not in dispute that these systems included the Couriers Please “Contractor Business Operations Manual” (“BOM”). The version of the BOM in evidence was dated 1 February 2012.
21 The “Term” of the Franchise Agreement was defined as “12 months from the Commencement Date set out in Schedule 1”. Curiously, despite the fact that the Franchise Agreement was entered into in May 2012, the “Commencement Date” was stated to be 31 October 2005. The evidence established that this was the date on which Sondoananh first acquired Run 105 as a contractor to Couriers Please. However, nothing turns on this apparent anomaly in the Franchise Agreement.
22 It was not in dispute that Sondoananh had been operating Run 105 from 31 October 2005 until May 2012 as a contractor and pursuant to the terms of the Franchise Agreement thereafter, until the events giving rise to this proceeding. Thus the Franchise Agreement continued to govern the parties’ relationship long after any view of the “Term” within the meaning of the Franchise Agreement had expired. The over-holding arrangement under the Agreement relevantly included that either party had a right of “Termination for Convenience” under clause 17.3: on one month’s notice in the case of Sondoananh and on three months written notice in the case of Couriers Please.
Events leading up to the termination
23 WRO had been a long term customer of Sondoananh, spending about $600 each week on courier services. These services were purchased using the Couriers Please “prepaid coupon system”. That system involved the provision by Couriers Please to its franchisees of books of coupons in fixed amounts, which were on-sold by franchisees to customers. The customers would then use one or more coupons out of that book to pay for any courier services they required. The number of coupons used varied based on the weight and size of the parcel to be delivered. Each coupon had a barcode which was scanned into the Couriers Please system as part of the delivery process.
24 The Couriers Please BOM includes a number of sections dealing with coupons. It explains that: “You must take great care with the storage and handling of all coupon books under your control, as they are fully negotiable like postage stamps. IMPORTANT: Having prepaid coupons in your possession is like having CASH”. In relation to the sale of coupon books, the BOM provides that:
“When selling coupons to a customer, it is important that the sale is properly recorded, on a tax invoice and the original copy (white) is given to the customer as a receipt at that time… In some cases the customer will have to go on account until the payment is received and you will need to follow up with the customer to obtain outstanding monies. In all instances, the preferred option is to obtain payment at [sic] same time as the coupons are issued. It is a requirement that all Outstanding Customer Tax Invoices be collected no later than 28 days from issue. Contractors will be deducted for any outstanding invoices unless prior arrangements are made with local branch management.
RULE 20: The customer should pay for the coupon books when they are issued, either by cash, credit card or choose both cheque or by electronic payment systems.”
25 In the case of WRO, it appears that before August 2013 it purchased coupon books from Sondoananh every week or so. Sondoananh issued invoices in respect of those coupon books to WRO but, contrary to the guidance provided in the BOM, did not require WRO to pay for the coupon books on invoice. A typical weekly invoice from Sondoananh to WRO at this time was for $610.50. By about August 2013, WRO had about 10 weeks of outstanding invoices. Mr Nguyen believed that WRO was in arrears for about $7,000, although an email from WRO to Couriers Please dated 2 August 2013 suggests that WRO had calculated the amount outstanding to be $4,884.
26 Importantly, the value of the coupon books that were not paid for by WRO became a cost borne by Sondoananh after four weeks from the date the books had been issued by Couriers Please to Sondoananh. This so-called “four week rule” arose by operation of clause 16(e)(ii)(A) of the Franchise Agreement, as set out above. It was given effect to by Couriers Please deducting the value of the coupon books from its payments to Sondoananh under the Franchise Agreement, once the four weeks had passed.
27 On Friday 1 November 2013, Ms Meneghini, who was then employed by Couriers Please as an accounts officer, contacted Mr Hucker and provided him with a copy of an email that she had been sent by Ms Osborne at WRO. The email read in part:
“We have received a horrendous letter from Sunny threatening to kill himself. He is calling my husband a liar and says that he wants him put in jail etc. I am actually concerned about his mental health to be honest with you”.
28 Ms Meneghini had responded to the email from Ms Osborne by email, relevantly stating:
“I am sorry, after I spoke with you last time I was under the impression you would lodge your insurance claim and once that was finalised you would then make payment. Sonny was supposed to deliver invoice copies to you.
I apologise that you and your husband have had to deal with this and please note that I have passed this on to Management and someone will be in contact with you or your husband to discuss today”.
29 Mr Hucker asked Ms Meneghini to arrange for Ms Osborne to send a copy of Mr Nguyen’s letter to Couriers Please and, in the meantime, sent a message to Mr Nguyen requesting that he call Mr Hucker “regarding one of your customers”. Mr Hucker arranged to meet with Mr Nguyen the following Monday morning. That meeting, also attended by Mr Maravic, took place at around 11:25am on Monday 4 November. Mr Hucker made a file note of the meeting and gave evidence that the file note accorded with his recollection of the meeting.
30 The file note records that Mr Nguyen confirmed during the meeting that he had given a letter to WRO which said that, if payment was not resolved, Mr Nguyen would take his own life. The file note goes on to record that Mr Nguyen assured Mr Hucker that he did not need help with his emotions, he was okay, and he just wanted the customer dispute resolved. The file note continues:
“I reassured Sonny that we would try and help him, and that I would also let Darren Bott know of the situation. Sonny also said he had no problems providing me with a copy of the letter that he wrote to the customer, and that he could have this too [sic] me by Wednesday, 6 November 2013.
Sonny commented that admin have done a decent amount of work helping him and trying to resolve the customer payment issue. I also said to Sonny that although we (Ziggy and I) would try our best to assist however we may not be able to progress any further than admin has, even though we would try to get it fully resolved. Sonny said that he has been very lenient with the customer, and that if the customer does not pay by Christmas, he would have to take things into his own hands. I said that he mustn’t do anything silly, and must let the process continue towards resolution. Sonny said that if the customer didn’t pay up by Christmas he would get the money back somehow, even if it meant he rammed his van into the front of the customers shop to cost the customer an equal amount of money as he has lost. I confirmed with Sonny that this was completely inappropriate and illegal, and that he needed to work with us to resolve this issue. Sonny understood, and promised me that nothing would happen between now and Christmas, however he did say that if it’s not resolved by Christmas, no guarantees. Sonny said he just wanted it sorted once and for all. I repeated to Sonny he must not threaten the customer, or do anything illegal or that would jeopardise his contract. Sonny was happy for Ziggy and myself to try and get involved to resolve the payment issue with the customer.” [emphasis added]
31 Mr Nguyen denied in his evidence that he had said words to the effect of those emphasised in the passage above. He said “I don’t recall and I think this is a made up story from James Hucker. I would not say anything like that”. Mr Nguyen went on to suggest that Mr Hucker had created the file note after Sondoananh’s termination in August the following year, when Mr Hucker had located the letter in Mr Nguyen’s van discussed below. Sondoananh has submitted that there is reason to doubt the accuracy of the file note. In particular, it has submitted that the file note must be incorrectly dated because it predates the email from Ms Meneghini to Mr Hucker of 12 November 2013, providing Mr Hucker with copies of the letters sent by Mr Nguyen to WRO.
32 I reject that submission. Mr Hucker’s evidence was clear, and the file note itself confirms, that Mr Hucker had not seen Mr Nguyen’s letters at the time of the meeting. The date of the meeting recorded in Mr Hucker’s file note also accords with Mr Hucker’s message to Mr Nguyen sent on Friday, 1 November 2013 asking Mr Nguyen to call him, and Mr Nguyen’s response. The meeting took place on the next business day after that exchange of messages. Although Mr Hucker did not give evidence in terms that the file note was contemporaneous, I am satisfied from his evidence as a whole that it was. I am also satisfied that it accurately describes the matters discussed at the meeting.
33 I also do not accept Mr Nguyen’s evidence that he “would not say anything like that” in his meeting with Mr Hucker. The inflammatory content of his emails and letters, as well as his alarming statements and conduct during and shortly after the meeting at which Mr Hucker purported to terminate Sondoananh’s franchise, indicate that this is precisely the kind of threat he would make. I also note that Mr Hucker’s account was supported by the evidence of Mr Maravic.
34 The communications from Mr Nguyen to WRO were forwarded by email on 12 November 2013 by Ms Osborne of WRO to Ms Meneghini and then from Ms Meneghini to Mr Hucker. They comprised a copy of an email with a list of invoices, on which Mr Nguyen had made a number of handwritten annotations, several copy invoices as well as a handwritten letter. These documents are an important part of the backdrop for events in August of the following year. Mr Nguyen’s handwritten annotations on the email were as follows:
“This email confirms it’s from u, pls do not deny it. Police can track down easily ! Liar
Don’t say it’s not from Bill (WRO), who made empty promises from this email?Please pay immidiately [sic] or you and youR wife go to jail. Don’t play games anymore.
Enough Is Enough, Bill. LiaR
I’m extremely upset about U liar
Pay all these invoices and other attached invoices as well. LiaR
Very much appreciate for your kindness!
Your killeR. Sonny victim!”
35 Mr Nguyen’s handwritten letter read as follows:
“Hi Bill,
Pls do the right thing, be a man of your word, pay all these outstanding invoices. You’ve made a lot of funny stories, you talked with me different story, to my account office another story and I guess for sure, you would talk to your friend Bill another story.
Very simple, pay what you’ve used Couriersplease service or I’ll pay for you with this much of money.
If you let me pay, I’ll commit suicide and send a letteR to police, it’s you put me in this desperate situation you’ll be put in jail for sure. You may tell police another story but your outcomes who received youR goods will prove that they receive your products and sent via Couriersplease. My company will also testify against you with all evidence in hands.
It’s better you pay what you’ve used our service, not me. Or go to jail and close down your business foreveR.
Be a decent man, don’t kill me, you’ll kill yourself and your family
Hurry up or you’ll stay in jail Bill.
Your victim, Sunny.
P.S. I keep a copy of this letteR and sent to police before I commit suicide. Don’t make another good. [Illegible] received this letter I’ll show.”
36 There is very little evidence about what was done in the period between November 2013 and August 2014 to recover funds owing by WRO on the Sondoananh invoices . Mr Nguyen gave evidence that:
“In the period November 2013 till August 2014, I did not provide any more coupons to WRO, and there was only one small payment by WRO. During this period, I made many phone calls to WRO and made some visits to WRO and explained how I was personally out-of-pocket.”
37 On Saturday, 9 August 2014 Ms Osborne of WRO sent an email to Ms Meneghini with the subject line “Outstanding WRO Invoices”. The email includes a screen shot showing a payment made that day for $610.50 and listing six further invoices totalling $3,168 that Ms Osborne said were outstanding according to the WRO records. She concludes the email as follows:
“Can you please confirm this amount? We have tried to contact Sonny but he won’t return our calls-he prefers to leave vulgar letters in our letterbox. We need your help to confirm the correct amounts as we have had issues where the payments we have made went uncredited towards our account. We really do want to clear this up.”
38 Ms Meneghini responded to that email the following Monday 11 August 2014 indicating that she would reconcile the WRO account once the payment made had reached the Couriers Please bank account. Ms Meneghini also asked Ms Osborne to send to her copies of the letters from Mr Nguyen for her to “escalate to management”. Ms Osborne responded by email some 15 days later (26 August 2014), including a screenshot of what appears to be a further payment and stating that she would be making another payment shortly. She also attached a photograph of the “last thing that Sonny stuffed in our letterbox”. This was again a copy of the email with the list of invoices sent in August of the previous year, but with different handwritten annotations by Mr Nguyen.
39 Sondoananh has submitted that there is no evidence that Couriers Please took any step to resolve the dispute between Sondoananh and WRO in the 10 month period from November 2013 until August 2014. That is no doubt correct. Indeed, Mr Hucker frankly conceded that his area of responsibility within the Couriers Please business was operational, and it was up to the administration department to deal with the payment issue. His offer to assist with the dispute during the meeting with Mr Nguyen on 4 November 2013 was to discuss the matter with the administration team, “who would have more information about the issue at hand in regards to the payment issue”, and to try and assist if he could.
40 Mr Hucker’s evidence was that he could not say what had been achieved with the dispute in the 10 months leading up to August 2014 or how much was recovered. Mr Hucker said: “I’m unsure. I mean there might have been involvement with Sonny directly with administration outside of myself, the customer and so on”. Mr Hucker could not confirm that Couriers Please had done nothing for the 10 months: “As I said before, I am unsure as it wasn’t my area of responsibility”. Mr Hucker explained that responsibility lay with the State Manager Darren Bott, who oversaw the administration manager who in turn oversaw Ms Meneghini. When asked whether he knew which person should have been involved to make some progress on the payment dispute, Mr Hucker responded:
“Well, I can see that Aslyn [Meneghini] has been involved and has already tried to assist. I am unsure, because I can’t see any records, whether Lee, the head of administration was either supporting her outside of that correspondence or had done anything directly herself, as I am unsure if Darren Bott, as the overseeing manager, had also been supporting outside of having any evidence of that.”
41 This evidence and the emails between Ms Meneghini and Ms Osborne show that the witness who was best placed to give direct evidence about what (if anything) Couriers Please did in the 10 months to August 2014 about the WRO dispute, was Ms Meneghini. As indicated above, Ms Meneghini was called on a subpoena issued by Sondoananh. For reasons that are not explained, counsel for Sondoananh did not ask any questions of Ms Meneghini about this issue. Indeed, Ms Meneghini’s evidence was in fact disarmingly brief. It covered only the question of how much time elapsed between when she received a copy of Mr Nguyen’s second annotated email, and when she passed it on to Mr Hucker.
42 Ms Meneghini’s evidence was to the effect that she received a copy of the second annotated email, she spoke to Mr Nguyen about it saying that: “it was unacceptable it couldn’t be happening, and that we would be passing it on to management”, and that she sent it to Mr Hucker, all on the same day. Her evidence is borne out by the contemporaneous emails and, I have no reason to doubt it. Her email to Mr Hucker of 26 August 2014 forwarding the email from Ms Osborne that attached the second annotated email stated:
“Please see attached another “letter” from run 105 Sonny to the same customer that he was sending threats to last year. I am reconciling the customer’s account once we have processed all payments. I will leave this with you to discuss with Sonny.
43 The annotations by Mr Nguyen on the email that Ms Osborne had supplied included the following:
“When is it? Fucking bastard!!
U’re really shit man ! Disgusting man !WHAT THE FUCK DO U WANT NOW ? U MONGREL !
…Total $2,504.7- = $7.398
DEADLINE IN 4 WEEKS TIME FROM NOW
You fucking liar FUCK YOU & YOUR SELF!
Who mean here? U mean u want free thousands of dollars? U answer!
PAY IT OR !”
44 Sondoananh has submitted that there is a conflict in the evidence as to when after Ms Meneghini received the copy of Mr Nguyen’s second annotated email, the termination took place. Mr Nguyen’s evidence was to the effect that it was in early August when Ms Meneghini and her colleague Lee spoke to him about the further letter he had sent to WRO. He said that they requested that he not do anything like this again in the future and also advised him that Mr Hucker and Mr Maravic knew about the matter. Mr Nguyen explained that he thought following his conversation with Ms Meneghini and Lee that no further action would be taken against him, which explains his shock at being told on 27 August 2014 by Mr Hucker that Sondoananh’s franchise would be terminated.
45 In my view, there is no real conflict in the evidence on this issue. The contemporaneous documents put beyond doubt that Couriers Please first received a copy of the second annotated email from WRO on 26 August 2010, and Mr Hucker thereafter acted swiftly in arranging and preparing for a meeting with Mr Nguyen. Ms Meneghini did receive notice from WRO by email dated 9 August 2014 that Mr Nguyen “prefers to leave vulgar letters in our letterbox”, but no letter was then attached. It is likely that she and Lee took the opportunity on or around the following Monday 11 August (when Ms Meneghini replied to Ms Osborne requesting a copy of the letters for forwarding to management), to speak to Mr Nguyen along the lines alleged.
46 If this is what occurred, Mr Nguyen may well have thought the matter was at an end following his discussion with Ms Meneghini and Lee and I accept that he was taken by surprise by what transpired in the meeting on 27 August 2014 with Mr Hucker and Mr Maravic. However, none of these matters reflect adversely on Mr Hucker or Couriers Please, or are otherwise relevant to the issues in this proceeding. I am satisfied that Mr Hucker first became aware of the gravity of the latest developments in the dealings between Mr Nguyen and WRO when he received a copy of Mr Nguyen’s annotated email from Ms Meneghini on 26 August 2014. Mr Hucker states in his witness statement that:
“Upon reading the Second Letter to WRO [being the letter sent to him on 26 August 2014], I formed the view that the words in the Second Letter were a threat. I immediately then again read the First Letter [the first annotated email and letter sent the previous year]. Having re-read the First Letter in the light of the Second Letter, I appreciated for the first time that Mr Nguyen had previously made a threat to the customer and the customer’s family, in addition to his threat of self-harming. I apprehended that Mr Nguyen posed a risk to the safety of [Mr Osborne] and his family. I also formed the view that Mr Nguyen posed a serious risk to Couriers Please and himself.”
The termination
47 During the afternoon of 26 August 2014, Mr Hucker prepared a draft letter of termination which he sent to the Couriers Please National Operations Manager, Phil Reid for comment. He went on to finalise the letter that afternoon and I am satisfied that he took a signed version of the letter dated 26 August 2014 with him to the meeting with Mr Nguyen the following morning. The letter was addressed to Sondoananh, had the subject line “Immediate Termination-Unprofessional Conduct”, and relevantly stated as follows:
“I was today informed of a hand written communication received by your customer WRO (94086042) from yourself within the last week.
The comments made by yourself in this communication to the customer are utterly appalling and in no way reflect the high standard of professional conduct I expect from all Franchisees within the Victorian operation. You have not only personally attacked the customer, but have used vulgar profanity and provided intimidating open-ended threats in writing.
This is also not the first occasion you have chosen to communicate with the customer in this way, with record of a pre-cursor communication being issued by you to the customer in November 2013. It was outlined in a discussion very clearly that due to the unacceptable nature and severity of your actions, any future occurrences would potentially place your Franchise Agreement with Couriers Please in jeopardy.
Your actions to date have posed the following risks to Couriers Please:
·placing the Couriers Please brand and corporate image into disrepute
·exposing Couriers Please do further litigation/action from the effected [sic] customer[s]
·threatening the customer (S) which could result in action from the authorities”.
48 After setting out the text of clause 3.1 of the Franchise Agreement, the letter concludes:
“Conduct of this nature simply cannot and will not be tolerated within the Careers Please organisation at any time. I therefore issue you immediate termination notice of your Franchise Agreement with Couriers Please.” [emphasis in original]
49 The meeting with Mr Nguyen on 27 August 2014 commenced at 11:10am and was again attended by both Mr Hucker and Mr Maravic. Mr Hucker made a detailed file note of the meeting which he signed and dated on 27 August 2014. It is countersigned and dated by Mr Maravic the same day. The file note begins by describing Mr Hucker’s three attempts to get Mr Nguyen to confirm that he sent the second annotated email to WRO and Mr Nguyen’s initial avoidance of the question. The note confirms that Mr Nguyen did eventually admit that he wrote the document and sent it to WRO. Mr Hucker’s is file note the states:
“Once Sonny had admitted to writing and issuing the letter to the customer, I outlined to Sonny the high level of professional conduct that is expected of all Franchisees within our organisation. I also outlined the contents of his current letter and for that matter subsequent [sic] letters where [sic] appalling. Sonny continued to try and explain why the letters were justified, claiming that every time he writes a letter like this and the customer pays. I informed Sonny once again that his letters were of an escalating nature, and were not only attacking and degrading the customer, but threatening them as well. I told Sonny that this was unacceptable not only from a company perspective, but potentially from a legal one as well.”
50 The file note then refers to discussions of some of the history of the dealings between Mr Nguyen and WRO and Mr Hucker’s impression that Mr Nguyen did not seem to register the gravity of his actions. The file note continues:
“I then told Sonny that I had no choice but to issue him with his immediate termination notice. Sonny then stood up very aggressively and said to both Ziggy and I that if we cancelled his contract he would driver [sic] straight to the customer’s premises and drive right into the front of the customers building and kill himself and anyone else he can.”
The file note concludes by describing Mr Nguyen’s actions in first running to his van and then onto the road and the calling of police and ambulance services.
51 The file note does not say in terms that Mr Hucker handed the termination letter to Mr Nguyen. However, Mr Hucker gave oral evidence that the words in his file note that he “had no choice but to issue him with the immediate termination notice” meant that he provided Mr Nguyen “with a written signed copy by myself in person to his hand”. He said it was not in an envelope but was just a printed A4 piece of paper and, while explaining what he was issuing, “I would have provided it to him and slid it towards him on the table”. He said he recalled Sonny putting his hand on the document and taking the document. Mr Maravic confirmed that Mr Hucker said to Mr Nguyen that he had to terminate the contract and he saw Mr Hucker pass the letter over to Mr Nguyen. Mr Maravic said: “I recall Sonny taking the notice in his hands, and I just found it strange that he actually didn’t read it, so he just kind of like held it in his hands”.
52 Mr Nguyen denied emphatically that he was given anything in writing by Mr Hucker at the meeting on 27 August 2017. Mr Nguyen said he telephoned Mr Hucker the following day and asked: “Where’s my termination letter?”. Mr Hucker replied that he would send it by post. Mr Nguyen’s point was that he would not have asked for the letter if Mr Hucker had already given it to him the day before. Mr Nguyen said he did not receive the termination letter until it came to him by mail on 25 September 2014. I accept that Mr Nguyen did receive the termination letter by mail on 25 September 2014. However, I am also satisfied on the evidence that the termination letter was first handed to Mr Nguyen by Mr Hucker at the meeting on 27 August 2014.
53 The evidence that Mr Hucker prepared the letter, had it approved by his superior and then signed it in advance of the meeting, is conclusive. It makes no sense that, having done this, Mr Hucker would not have taken it with him to a meeting that he had pre-arranged with Mr Nguyen. The whole purpose of the meeting was to deliver the letter. Similarly, having taken it to the meeting, it is highly unlikely that Mr Hucker would then have neglected to hand letter to Mr Nguyen. I accept the evidence of Mr Hucker and Mr Maravic that he did so.
54 On the other hand, the meeting was highly distressing for Mr Nguyen and there is every likelihood that, upon hearing Mr Hucker say his franchise was to be terminated immediately, he took little or no notice of what happened next. This is consistent with the evidence of Mr Maravic that Mr Nguyen held the letter in his hands without reading it and then rushed out of the meeting towards his van. There is no evidence as to what became of the letter during the drama that ensued. However, there must at least be a strong possibility that Mr Nguyen dropped or mislaid it at some point after it had been handed to him. I am willing to accept that Mr Nguyen genuinely does not recall being handed the letter and that he no longer had it in his possession by the time he left the Alfred hospital that evening.
55 After Mr Nguyen had left for the hospital, Mr Hucker checked Mr Nguyen’s van with a view to collecting any customer freight, invoices and coupons that were stored in the van. During this process, Mr Hucker located a further letter written by Mr Nguyen . The letter read as follows:
MR. Bastard,
You have a very strong determination to take other’s nice hard working people’s money. It’s very cleaR that you don’t want to pay, theRe’s no doubt about that. We give you VERY LAST CHANCE to fix this nasty behaviour. After 4 weeks from now, if we do not receive full payment, youR determination will be fixed accordingly. Then you’ll not say IF ONLY I HAD TREATED hardworking people in a better way. You’ll become a madman, running around naked, have sleepless nights as you’ve caused to nice people. Take this seriously, your life’ll be fine, do not rob from anyone, behalf yourself, if not your life’ll a big huge mess. How can this bastard sleep well, when in his mind always says I’ve robbed a biog sum of money from other people ? At times, this kind of man will feel dizzy while driving as nasty things in his brain reminds him that he mercilessly took other people’s money, then he’ll crash his nice car into a big gree, then he’ll go to hell to enjoy his dirty money in that eternal place.
Take this remindeR seriously bastard.
CHEERS ! J
P.S: I want u fucking guy to be famous in Australia so I’ll contact media and police only 5 before I crash my car at full speed into your factory. I’ll tell them in writing that it’s u fucking man who deliberily [sic], maliciously, calculated guy”
56 Mr Nguyen conceded that the addressee of the letter “Mr Bastard”, was a reference to Mr Osborne of WRO, but asserted that he never intended to deliver the letter. He said that he had prepared it before he had prepared and delivered the second annotated email that led to his termination. His evidence was that if he was going to deliver the “Mr Bastard” letter to WRO, he would have done so instead of delivering the second annotated email. I do not accept this evidence. Mr Nguyen had shown no compunction about sending highly inflammatory and abusive letters to WRO in the past. I am satisfied that he prepared the letter with the intention of delivering to WRO at some point, as part of his ongoing efforts to recover money owing on the invoices he had issued that customer.
Post-termination
57 Mr Hucker’s evidence was that on the morning of 28 August 2014, Mr Nguyen attended the Couriers Please depot at Port Melbourne and greeted him at reception. He said that Mr Nguyen’s attendance caught him off guard, but that Mr Nguyen appeared to be calm, relaxed and said to him words to the effect that he “understood the decision of Couriers Please to issue the termination letter”. Mr Hucker’s evidence was that Mr Nguyen asked if Couriers Please would reconsider the immediate termination of the Franchise Agreement and instead allow him to sell his interest in the Agreement within a short period, as a gesture of goodwill. He said that Mr Nguyen told him that he (Mr Nguyen) had already made arrangements for the sale of his interest in the franchise business to an existing Couriers Please franchisee.
58 Mr Nguyen agreed that he apologised to Mr Hucker for his conduct when he returned to the Couriers Please depot on 28 August to collect his van, but denied that he acknowledged the decision to immediately terminate the Franchise Agreement. He said that he tried for some time to persuade Mr Hucker to reconsider his decision, but Mr Hucker still said no. According to Mr Nguyen, it was only then that he asked Mr Hucker if he could be given the opportunity to sell the franchise business. He denied that he already had a buyer at the time of his conversation with Mr Hucker on 28 August 2014.
59 Mr Hucker later sought and obtained approval from Courier Please senior management for Sondoananh to sell its courier franchise notwithstanding the termination, and confirmed this to Mr Nguyen. Mr Nguyen alleges that Mr Hucker told him that he had to finalise the sale within 30 days and he could only sell to an existing Couriers Please franchisee. On 31 August 2014, Mr Nguyen signed a form of assignment of the franchise business to Huang Xuan Dinh (an existing Couriers Please franchisee) for $55,000 (including GST).
60 Although nothing turns on it, I’m inclined to accept that on or about 28 August 2014, Mr Nguyen told Mr Hucker that he had a buyer for Sondoananh’s franchise business, and that the buyer was an existing Couriers Please franchisee. The fact that Mr Nguyen was able to finalise terms and sign an assignment document with an existing franchisee within a few days, would suggest that he was at least well advanced in negotiations when he spoke to Mr Hucker on 28 August 2014.
61 Further, although it is unnecessary for me to consider the detail of Sondoananh’s claim for damages, I am not persuaded that Sondoananh has established on the balance of probabilities any loss on the sale. There is insufficient evidence for me to be satisfied that Sondoananh could have achieved a better price had it been given more time. It chose to take only three of the 30 days it alleges it was given to complete the sale. I otherwise agree with the Courier Please submissions on this issue.[7]
[7]Outline of defendant’s closing submissions at [53] to [56]
Analysis
Was the purported termination by Couriers Please in accordance with the Franchise Agreement or in breach of it?
62 I initially had reservations about whether Mr Nguyen’s conduct leading up to the meeting on 27 August 2014 could fairly be described as conduct falling within clause 17.4(e) of the Franchise Agreement. Is it conduct that “endangers public health or safety”? However, those reservations were essentially answered by Sondoananh’s submission that:
“There is no doubt that the conduct complained of did warrant the Contractor’s immediate termination, and that regardless of its improper form or whether it was an oral termination or delivered four weeks and one day later, the relationship between the parties was from 27 August 2014 at an end, but there are consequences for CP [Couriers Please] not following the agreement. The method used to terminate the Agreement, although effective, was carried out in breach of the Agreement. This raises the second principle issue in this case: does a non-complying notice of termination in breach of contract enable the wrongfully terminated party to continue to operate under the contract, or must it accept the termination and be entitled only to sue for damages?”
63 Notwithstanding the submission to the effect that the conduct complained of did warrant immediate termination, I will provide brief reasons as to why I agree with it. I will then turn to what I understand now to be a submission that the manner of termination was ineffective and in breach of the Franchise Agreement.
64 Couriers Please has included in its submissions[8] a convenient summary of the law relating to construction of a commercial contract, particularly following the decision of the High Court in Mount Bruce Mining Ltd v Wright Prospecting Pty Ltd,[9] It is unnecessary for me to repeat the summary. I would only add that there is a helpful analysis of this case and the earlier authorities, in the decision last year of the Victorian Court of Appeal in Apple and Pear Australia Ltd v Pink Lady America LLC (“Apple and Pear”).[10]
[8]Outline of defendant’s closing submissions at [2]
[9](2015) 256 CLR 104; [2015] HCA 37, per French CJ, Nettle and Gordon JJ at [46]-[52]
[10](2016) 343 ALR 112; [2016] VSCA 280, per Tate JA at [91] to [140] and Ferguson and McLeish JJA at [229]-[232]
65 Couriers Please has submitted that there is nothing in the text of the Franchising Agreement or the purpose or object of the transaction it contemplated, to suggest that the parties intended that clause 17.4(e) only captures conduct that actually endangers public health or safety, as compared to conduct that threatens to endanger public health and safety.[11] In my view, the construction question is less straight forward. In particular, it is at least arguable that the two instances of conduct referred to in the clause support a construction that the clause is engaged only when the endangering conduct is in the process of being carried out. That is, it is the act of being (for example) under the influence of alcohol or drugs or committing an assault, that triggers the right of immediate termination.
[11]Outline of defendant’s closing submissions at [37]
66 There are a number of answers to this. First, the instances provided are expressly “without limitation”. This supports the conclusion that the parties did not intend the opening lines (or chapeaux) of the clause to be read as constrained by (that is, ejusdem generis with) the two following examples. Second, the first of the two examples is, on one view, conduct that threatens (in the sense of being anterior to) actual endangerment. Third, there is some force in the submission by Courier Please that Mr Nguyen’s conduct and his intention to scare WRO and its offices, is tantamount to common law assault,[12] which might therefore be conduct that engages clause 17.4(e)(ii) expressly.
[12]See Halsbury’s Laws of Australia, Trespass to Person, LexisNexis, [415-355]: Assault at common law is an intentional offer of violence to the person of another, who reasonably believes that the threat is about to be committed. The menace must be accompanied by an intention to raise in the mind of the person threatened an apprehension that violence is about to be committed. Such action may constitute assault even through the defendant’s threat of violence is conditional on the other person doing an act.
67 Turning to the construction of the term “endanger”, Couriers Please in its submissions has relied on the unanimous High Court decision in Gedeon v Commissioner of the New South Wales Crime Commission (“Gedeon”),[13] as supporting a construction of the term “endanger” that captures threatened (rather than actual) conduct. In that case, one of the issues the High Court was called upon to determine was whether the NSW Commissioner had validly certified authorities to conduct a “controlled operation”, involving the supply of cocaine to informants. The Commissioner was advised before signing the authorities that it was unlikely that the cocaine would be recovered, since it would be sold to end users. The provisions governing the issuing of the authorities for a controlled operation provided in effect that the Commissioner could certify that controlled operation, if reasonably satisfied that any unlawful activity involved in conducting the operation would “not seriously endanger the health or safety of any person”.
[13](2008) 236 CLR 120 at [52]
68 The court held that a reasonable person in the position of the Commissioner would have foreseen that the conduct of the controlled operation would involve a risk of seriously endangering the health of at least some of the numerous end purchasers of the cocaine. Hence the authorities were invalid. The particular passage from the decision relied on by Couriers Please is as follows:
“The first point to be made here is that the provision … uses the expression “seriously endanger” health or safety and does not speak of damage to health or the sustaining of injury. The emphasis is upon exposure to danger or peril rather than upon the materialisation of that risk”.
69 The High Court’s approach to the term “endanger” in Gedeon is (unsurprisingly) consistent with dictionary definitions of the term; for example: “To expose to danger; imperil”.[14]
[14]The Macquarie Dictionary (1991 Edition: The Macquarie Library Pty Ltd) 576
70 Taking clause 17.4(e) as a whole in the context of the Franchise Agreement, I consider that a reasonable business person would have understood the term “endanger” in that clause to encompass a real threat of not insignificant harm. It defies common sense to suggest that a real and significant threat to public safety must be carried out, before the right to immediate termination is enlivened. Thus in my view, Mr Nguyen’s threats of causing serious injury to people and property as a form of debt collection, amounts to “operating the courier business in a way that endangers public health or safety” within the meaning of clause 17.4(e).
71 Mr Nguyen has given evidence that his threats were intended only to extract payment and he was never going to carry them out. I am unable to conclude one way or the other whether this is so. More importantly, a commercial party in the position of Couriers Please should not be forced to make a finely balanced judgment as to the reality or otherwise of a serious threat, before acting. Mr Nguyen’s behaviour up to that point had shown signs of being impulsive and volatile and I am satisfied that Couriers Please was entitled to take his threats seriously.
72 Indeed, Mr Hucker’s evidence (which I accept) was that reading Mr Nguyen’s second annotated email caused him to revisit the events of the previous year and identify what he saw as a real and serious threats to the safety of Mr Osborne and his family. Mr Hucker also formed the view that Mr Nguyen posed a serious risk to Couriers Please and to Mr Nguyen himself. The inflammatory and offensive words in Mr Nguyen’s second annotated email concluding with “PAY IT OR!”, coupled with Mr Nguyen’s threats during the meeting of November of the previous year to drive his van into the front of WRO’s premises, were in my view a sufficient foundation for Mr Hucker’s concerns. Further, the fact that this threat was repeated in the letter addressed to “Mr Bastard” located in Mr Nguyen’s van immediately following the termination, confirms that it was still very much alive in Mr Nguyen’s mind at that time.
73 I am satisfied that as at the time of the meeting on 27 August 2014, when Mr Hucker handed Mr Nguyen the termination letter, Couriers Please had good grounds for effecting an immediate termination of the Franchise Agreement pursuant to 17.4(e) of the Agreement. And I repeat that this has been conceded by Mr Nguyen in any event.
74 Turning to the method of termination, I have already found that Mr Hucker handed the termination letter to Mr Nguyen during the meeting on 27 August 2014. Accordingly, I am satisfied that written notice in the form of the termination letter was given by Couriers Please to Sondoananh. In my view, Couriers Please also met the notice requirements in clause 30.6 of the Franchise Agreement. That clause relevantly states that: “A party giving notice under this agreement must do so in writing. A notice given in accordance with this clause 30.6 is taken to have been received… if hand delivered, on delivery”. Thus the only question remaining is whether there is anything about the form of the termination letter that disqualifies it from operating as written notice pursuant to clause 17.4.[15]
[15]Submissions of the plaintiff at [13]-[17]
75 Except for what appears in clause 17.4, there is no form of notice prescribed by the Franchise Agreement. Clause 17.4 provides that Couriers Please may terminate at any time with immediate effect by giving written notice if Sondoananh satisfies any of the sub-clauses under clause 17.4. The clause does not require that the notice state which of the subclauses is engaged. Further, the law more generally does not require that an innocent party specify the precise conduct that is said to constitute the breach of a contract.[16]
[16]Becker Group Ltd v Motion PictureCompany of Australia [2004] FCA 630, per Sackville J at [86]
76 It is now well established that the construction of notices must be approached objectively. The issue is how a reasonable recipient would have understood the notice. And in considering this question, the notice must be construed taking into account the relevant objective contextual scene.[17] In my view, a written notice under clause 17.4 of the Franchise Agreement is sufficient if it conveys to the recipient that Couriers Please is electing to terminate immediately, as distinct from the alternative forms of termination provided for in clauses 17.2 and 17.3. I am satisfied that the termination letter did this; both by its title: “Immediate Termination-Unprofessional Conduct”, and its concluding words, “I therefore issue you immediate termination notice of your Franchise Agreement with Couriers Please”.
[17]Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749, per Lord Steyn at 767, cited with approval by the Victorian Court of Appeal in MLW Technology Pty Ltd v May [2005] VSCA 29, per Gillard AJA, Winneke P and Buchanan JA agreeing at [78]-[82], and in numerous authorities since (notably Salta Constructions Pty Ltd v St George Bank [2014] VSCA 289 at [28] and Balanced Securities Ltd v Dumayne Property Group Pty Ltd [2017] VSCA 61 at [128]
77 If it were necessary to have regard to the “contextual scene”, Mr Hucker’s words spoken at the time of handing over the notice were entirely consistent with and confirmed that the notice he was passing to Mr Nguyen terminating the Franchise Agreement was intended to take effect immediately. And although a party’s subjective understanding of the notice is not relevant to the construction of the notice, I note that Sondoananh does not allege any misunderstanding of the effect of the notice. In any event, Mr Nguyen’s actions on being told about the termination would belie any such allegation.
78 The reference in the termination letter to conduct that would not amount to grounds for termination under clause 17.4 and setting out clause 3.1 of the Franchise Agreement, do not detract from the validity of notice if it is otherwise effective. Any ground for termination that exists at the time the innocent party elects to terminate may be relied on at a later date.[18] Thus in Carr v J A Berriman Pty Ltd[19], it was held that the fact that a builder had given a notice of cancellation under a clause that had no application, did not prevent the notice being effective to terminate the contract if the builder otherwise had grounds to do so. It is for this reason that the letter found in Mr Nguyen’s van shortly after the termination, can be considered in determining whether Couriers Please had proper grounds for giving notice of immediate termination at the time the notice was given.
[18]Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359, per Dixon J at 377–378
[19](1953) 89 CLR 327, per Fullagar J at 343, Dixon CJ, Williams, Webb and Kitto JJ agreeing. See also Becker Group Ltd v Motion PictureCompany of Australia (supra) per Sackville J at [86]
79 In the circumstances, it is unnecessary for me to decide whether there were also grounds for termination under clause 17.2 or whether Couriers Please has made out the other matters it relies on for restricting the damages to which Sondoananh is entitled.[20]
[20]Outline of defendant’s closing submissions at [45]-[56]
Did Couriers Please breach clause 10.3 of the Franchise Agreement?
80 I have considered the submissions of Couriers Please on the question of whether it was Couriers Please’s responsibility to collect outstanding payments for prepaid coupons.[21] In my view, the question is not which party bore the responsibility for collecting payment, but rather whether the issue of payment by WRO to Couriers Please had given rise to a dispute within the meaning of clause 10.3. I consider that it had.
[21]Outline of defendant’s closing submissions at [57]-[61]
81 The emails exchanged between Ms Meneghini and Ms Osborne show that WRO was accepting that invoices of about $4,000 were outstanding and was continuing to make payments (albeit very belatedly) of those invoices. However, the emails also show that there was an ongoing dispute about an additional $3,000 in arrears that Sondoananh was claiming. In my view, Couriers Please had an obligation pursuant to clause 10.3 to achieve a resolution of that dispute, and then to make a decision about the resolution as provided for in clause 10.3.
82 On the other hand, I agree with Couriers Please’s submissions in reply that Sondoananh bears the onus of adducing admissible evidence that no steps were taken to resolve the dispute in the period November 2013 to August 2014.[22] I also agree with the submission that Sondoananh has failed to satisfy that onus.
[22]Outline of defendant’s closing submissions at [5]
83 As discussed above,[23] there is no evidence one way or the other about what if any ongoing discussions or negotiations were occurring between Couriers Please and WRO in that period. Given the tenor of the emails between Ms Meneghini and Ms Osborne exchanged in August 2014, I cannot rule out the possibility that there were such discussions or negotiations in the 10 months leading up to those emails. And the person best able to shed light on that issue (namely, Ms Meneghini) was not asked to do so.
[23]At [38] to [40] above
84 I also agree with Couriers Please that, even if a breach by it of clause 10.3 were proved, Sondoananh has not made out its case for damages for any such breach. First (as Couriers Please has submitted), there was insufficient evidence of the amount actually owing by, and potentially recoverable from, WRO at any relevant time. Second, I agree that any argument that Mr Nguyen’s conduct in writing the threatening letters was somehow caused by Couriers Please’s alleged breach of clause 10.3, cannot be sustained. As Courier Please submitted:
“That submission is nonsensical and unsupported by the evidence. Mr Nguyen’s repeated evidence in cross-examination was that the threatening communications were intended to ‘scare’ WRO into paying; that is, they were the product of conscious and deliberate acts taken by Mr Nguyen in order to improve his financial position with respect to WRO.”[24]
[24]Outline of defendant’s closing submissions at [6]
85 For completeness, I note that I agree with Couriers Please that Sondoananh’s submissions on disobedience and misbehaviour and the authorities on which it relies in that regard, are irrelevant. Clause 17.4 of the Franchise Agreement calls for evidence of conduct endangering public health or safety, not merely disobedience or misbehaviour. Conduct of that latter kind is more likely to be caught by the provisions of clause 17.2 of the Franchise Agreement and thus subject to a 30 day notice to remedy. I also note that, in view of my findings above, it is unnecessary for me to deal with any matters going to the assessment of damages, including the circumstances and contractual effect of Couriers Please’s post termination agreement to allow Sondoananh to sell its franchise business.
Judgment and orders
86 For the reasons above, I propose to order that the Sondoananh’s claim is dismissed. I would propose also to order that Sondoananh pay Couriers Please’s costs of and incidental to the proceeding on the standard basis, in default of agreement, unless the parties are able to bring to my attention any matters that might justify a departure from the usual order on costs.
87 I will hear further from the parties on the final form of the orders on interest and costs.
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Certificate
I certify that these 32 pages are a true copy of the reasons for Judgment of His Honour Judge Woodward delivered on 22 November 2017.
Dated: 22 November 2017
Simone Karmis
Associate to His Honour Judge Woodward
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